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Data Science for Social Impact 36

4197

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 298/2023 In the matter between: THE MEMBER OF THE EXECUTIVE COUNCIL FOR HEALTH, GAUTENG PROVINCE APPELLANT and MARIE DE LANGE RESPONDENT Neutral citation: MEC for Health, Gauteng v de Lange (298/2023) [2024] ZASCA 38 (03 April 2024) Coram: GORVEN, MATOJANE and WEINER JJA and COPPIN and SMITH AJJA Heard: 04 March 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives via email, publication on the Supreme Court of Appeal 2 website and released to SAFLII. The date and time for hand-down is deemed to be 11h00 on 3 April 2024. Summary: Civil Procedure – claim for damages – separated issues – not clearly stated – stated case limiting separated issues – judgment on stated case limited to negligence causing death of deceased –– stated not dealing with causation of damages arising from death – amendment of the particulars of claim to include a new head of damages – objection that evidence on new head should have been proved under stated case – no evidence led relating to any damages arising from death in stated case – no basis to object to amendment. ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Collis J, sitting as a court of first instance. The appeal is dismissed. JUDGMENT ________________________________________________________________ Matojane JA (Gorven and Weiner JJA and Coppin and Smith AJJA concurring): [1] This is an appeal against the order of the Gauteng Division of the High Court, Pretoria (Collis J), granting the respondent leave to amend her particulars of claim with costs. The amendment sought to introduce a claim for damages for 3 emotional shock caused by the death of the husband of the respondent. The appeal is before us with leave of this court (per Mbatha and Meyer JJA). [2] Mr. Zacharias Johannes de Lange (deceased) passed away on 21 September 2015 at the Steve Biko Academic Hospital in Pretoria (SBPAH). Prior to being admitted, Mr. de Lange had sustained a blow to his head during a rugby match. [3] Marie de Lange, the respondent herein and the wife of the deceased, issued summons against the appellant out of the Gauteng Division of the High Court, Pretoria (the trial court). She claimed that the negligence of hospital employees for whom the appellant was vicariously liable had wrongfully and negligently caused the death of the deceased. Arising from his death, she claimed that she had sustained damages by way of loss of past and future support for her and her two minor sons, Daniel and Damien. She accordingly claimed payment of R500 000.00 as damages for her past and future loss of support and R600 000.00 and R800 000.00, respectively, on behalf of Daniel and Damien for their past and future loss of support. [4] The parties held a pre-trial conference. It was agreed between them that ‘the issues pertaining to liability/merits (negligence and causality) should be separated from the issues pertaining to the quantum of the plaintiff’s claim in terms of Uniform rule 33(4) and that the matter proceeds initially in respect of the aforesaid issues pertaining to liability only at the first trial.’ [5] Pursuant to that agreement, the parties prepared a stated case in terms of Uniform rule of Court 33(1). This was presented to the trial court (Rangata AJ). It is not clear whether the trial court granted an order in terms of rule 33(4) separating the issues at all, whether in the terms agreed in the pre-trial conference 4 or simply that the issues set out in the stated case would be heard separately in terms of rule 33(4). It seems that the parties and the trial court dealt with the stated case without an order separating the issues having been granted. [6] In Denel (Edms) Bpk v Vorster,1 Nugent JA emphasized the importance of the trial court clearly defining and delineating the specific issues to be tried. He stated that this should be explicitly set out in the court's orders to avoid any ambiguity or confusion between the parties. He stated that although terms like ‘merits’ and "quantum" may seem straightforward initially, their shared understanding often does not endure. Therefore, when making rulings under Uniform rule 33(4) and issuing orders, the trial court has a duty to circumscribe the trial issues with clarity and precision to prevent problems down the line. This the parties failed to do in setting out issues to be decided by the court.2 [7] Be that as it may, the stated case, after setting out medical facts extracted from the hospital records, set out the issues for adjudication as follows: ‘26. The following are the conclusions of the plaintiff’s experts in relation to the negligence of the employees of the defendant resulting in the cause of the death of the deceased. 27. The defendant has not presented any evidence of a factual or expert nature to contest or oppose the conclusions below, and the plaintiff submit that if the Court is satisfied, there is no reason in fact or law that would prevent this Honourable Court from making an order in accordance with the draft order. . . . 34. Had the employees of the defendant treated the deceased appropriately, and not negligently, he would not have died.’ 1 Denel (Edms) Bpk v Vorster [2004] ZASCA 4; 2004 (4) SA 481 (SCA) para 3 (Denel). 2 See also Absa Bank Ltd v Bernert [2010] ZASCA 36; 2011 (3) SA 74 (SCA) para 21 (Bernert); FirstRand Bank Ltd v Clear Creek Trading 12 (Pty) Ltd 2018 (5) SA 300 (SCA) paras 9-11. 5 [8] After hearing argument, Rangata AJ granted an order, the material parts of which are: ‘Having heard argument for counsel for both parties based on the written stated case, it is ordered as follows: 1. The defendant is liable to the plaintiff for her 100% damages as proved or agreed in her personal capacity and in her representative capacity on behalf of her minor sons Daniel de Lange and Damien de Lange, arising from the death of the deceased, Zacharias Johannes de Lange who died at the Steve Biko Hospital on 21 September 2015. Quantum is postponed sine die.’ [9] On 17 August 2020, the respondent gave notice of its intention to amend the particulars of claim in terms of Uniform rule 28. In the proposed amendment, the respondent sought to insert claims for emotional shock and trauma allegedly suffered by herself and the two minor children due to the deceased’s death. She further sought to withdraw her personal claim for loss of support since she has remarried and was advised that she can no longer claim that support from the appellant. She further sought to reduce the claims for the two minor children based on expert reports and the deceased’s lifetime earnings. The new total was some R2.5 million and included general damages for emotional shock and trauma. [10] The appellant objected to the proposed amendment. There were initially four bases of objection. The first contended that the respondent’s amended claim in her personal capacity for emotional shock and trauma would introduce a new cause of action which has been extinguished by prescription. The second was that the proposed amendment would cause prejudice to the appellant as the claims for emotional shock and trauma were not initially pleaded. The third was that, with respect to the children, against whom prescription could not be raised, the appellant had not had an opportunity to investigate the claims or seek a medical 6 opinion. Lastly, the appellant was concerned that if the amendment was allowed, the appellant could become liable to compensate the respondent and the minor children for emotional shock and trauma without the respondent first having established the appellant's liability when the liability for all claims for damages should have been established at the stage of ‘liability/merits’. 11] The respondent accordingly brought a substantive application for leave to amend her particulars of claim to which answering and replying affidavits were delivered. The application was argued before Collis J on 10 May 2021 (the court a quo). Before the judgment on the application could be delivered, Haupt AJ was approached and granted a consent order regarding the children’s loss of support. The issue concerning the amendment claiming general damages and future medical costs was postponed sine die. On 2 September 2021, Collis J granted the respondent leave to amend her particulars of claim and subsequently refused leave to appeal. [12] Before us, the appellant abandoned the first three grounds of objection. The appellant argued that the suffering of psychological trauma should have been dealt with during the ‘liability trial’ phase. And that the subsequent ‘quantum’ phase would be limited to evidence related to the number of counselling sessions and similar details to quantify the psychological trauma claims. The appellant submitted that the order of Rangata AJ had already determined the appellant's liability to compensate the respondent regarding her claim for loss of support. The appellant argued that if general damages were to be claimed arising from psychological trauma and the medical costs required to address it, the ‘liability’ stage of the trial would need to be reopened. It would thus prejudice the appellant if the amendment was allowed. 7 [13] The appellant's argument overlooks the ambit of the order granted by Rangata AJ. As indicated, the sole issue to be decided was whether the appellant’s employees were negligent and whether that negligence caused the death of the deceased. That, too, was the extent of the order. The trial court was not asked to, nor did it, determine whether any damages had been caused by the death of the deceased. For that reason, a claim for general and medical damages sustained as a result of psychological trauma stands on precisely the same footing as the claim for loss of support. The order simply found that negligence on the part of the employees of the appellant had caused the death of the deceased. Counsel for the appellant was constrained to concede that this was the case. [14] The difficulty arose in this matter because the parties and trial court did not observe the cautionary words of Nugent JA in Denel. He explained why that is the case in Bernert: ‘In some cases it might be appropriate to order the separation of the “merits” and the “quantum” of the claim. But to use that terminology when the causative link between the wrongful act and the damage is a contested element of the claim, as it was in this case, is bound to create uncertainty.’3 That is clearly what happened in this matter. [15] In summary, the ‘liability’ determination was restricted to establishing if the defendant's negligence caused the death itself. It did not extend to causation of the various damages allegedly flowing from that death, such as loss of support, medical costs, or emotional trauma. The parties did not include those aspects in the stated case for the trial court to determine. Following the grunt of the amendment, the appellant will be entitled to plead to the claim and provide expect evidence. The owners will remain on the respondent to prove her claim that she 3 Bernert fn 2 para 3. 8 entered the minor and had suffered psychological trauma. As such, the grant of the amendment can in no way prejudice the appellant. [16] The appeal falls to be dismissed. Typically, the losing party bears the legal costs. However, in this case, both parties disregarded the repeated warnings from various courts about the importance of clearly categorizing the issues under consideration. To convey the court's dissatisfaction with the parties' conduct, no order regarding costs will be issued. [17] Accordingly the following order is granted: The appeal is dismissed. _______________________ K E MATOJANE JUDGE OF APPEAL 9 Appearances For the appellant: Ms L Maite Instructed by: State Attorney, Pretoria State Attorney, Bloemfontein For the respondent: Ms WL Munro Instructed by: Adams and Adams Attorneys, Pretoria Lovius Block Attorney, Bloemfontein

1 THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY FROM: The Registrar, Supreme Court of Appeal DATE: 03 April 2024 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 MEC for Health, Gauteng v de Lange (298/2023) [2024] ZASCA 38 (03 April 2024) Today, the Supreme Court of Appeal, per Matojane JA (Gorven, Weiner JJA and Coppin and Smith AJA concurring) has dismissed an appeal by a hospital against allowing a plaintiff to amend her claim to include damages for emotional trauma suffered by her and her two minor sons due to the wrongful death of her husband caused by hospital negligence. The deceased's wife had initially only claimed loss of support damages against the hospital after her husband died due to negligent care by hospital staff. In an earlier "liability" trial, the court had only determined that the hospital's negligence caused the death itself, not any damages flowing from the death. The wife later sought to amend her claim to add damages for emotional trauma 2 to herself and her sons arising from the death. The hospital objected, arguing that emotional trauma should have been addressed in the liability trial, not after a later quantum/damages trial. The SCA ruled that the liability trial was narrowly focused just on negligently causing the death, not on assessing damages like emotional trauma. Allowing the amendment could not prejudice the hospital, as emotional trauma damages were not precluded by the earlier ruling. The court criticized both parties for not clearly delineating the issues in line with prior judicial warnings. As a result, while dismissing the appeal, the SCA made no order for costs to convey its displeasure with the parties’ conduct. *****END*****

4313

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 444/2023 In the matter between: THE MINISTER OF INTERNATIONAL RELATIONS AND CO-OPERATION NO FIRST APPELLANT THE DEPARTMENT OF INTERNATIONAL RELATIONS AND CO-OPERATION NO SECOND APPELLANT and NEO THANDO/ ELLIOT MOBILITY (PTY) LTD FIRST RESPONDENT ADVOCATE MC ERASMUS SC NO SECOND RESPONDENT Neutral citation: The Minister of International Relations and Co-operation NO and Another v Neo Thando / Elliot Mobility (Pty) Ltd and Another (444/2023) [2024] ZASCA 134 (04 October 2024) Coram: ZONDI DJP and MOCUMIE and WEINER JJA and HENDRICKS and DIPPENAAR AJJA Heard: 2 September 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 4 October 2024. 2 Summary: Contract law – jurisdiction – Arbitration Act 42 of 1965 – whether the Arbitrator had jurisdiction to entertain a claim – whether a dispute existed between the parties at the time of the arbitration referral – whether the dispute submitted for arbitration was consistent with the claim presented in arbitration. 3 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Mokose J, sitting as a court of first instance): 1 The appeal is upheld with costs. 2 The order of the high court is set aside and substituted with the following: ‘(a) It is declared that the second respondent did not have jurisdiction to arbitrate the alleged dispute between the applicant and the first respondent. (b) The first respondent is ordered to pay to the second applicant: (i) All the amounts paid by the State Attorney on behalf of the second applicant to the second respondent in respect of his fees for acting as arbitrator; (ii) All the legal costs incurred by the first/and or second applicant in defending the reference to the arbitrator, where the arbitrator lacked jurisdiction. (c) The second respondent’s interim award dated 23 October 2018 is declared invalid and is set aside (d) The second respondent’s award dated 28 July 2020 is declared invalid and is set aside.’ 3. The first respondent is ordered to pay the costs of the application for leave to appeal before the high court. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Mocumie JA ( Zondi DJP and Weiner JA and Hendricks and Dippenaar AJJA concurring): Introduction 4 [1] This is an appeal against the judgment of the Gauteng Division of the High Court, Pretoria (the high court). The central question in the appeal is two fold: whether the second respondent, the arbitrator, had jurisdiction to arbitrate a matter referred to him unilaterally by the first respondent, Neo Thando / Elliot Mobility Pty Ltd (Neo Thando), without the consent of the Department of International Relations and Co-operation (DIRCO), which according to DIRCO, was contrary to the terms of the arbitration clause. Second, whether there was an arbitrable dispute to be referred for arbitration. The appeal is with the leave of the high court. [2] The first appellant is the Minister of International Relations and Co-operation (the Minister), having executive authority over DIRCO. The second appellant is DIRCO, a national government department established in terms of s 7(2) of the Public Service Act 103 of 1994 as amended. It has its principal place of business in Pretoria which falls under the first appellant. Both will be collectively referred to as DIRCO. [3] Neo Thando, is a joint venture with its principal office in Centurion, Pretoria. The second respondent is Advocate M C Erasmus SC, cited in his capacity as the arbitrator appointed to arbitrate the alleged dispute between the appellants and the respondent. Factual background [4] The factual background, which is essentially common cause between the parties, as gleaned from the Statement of Agreed Facts, is as follows. On 11 August 2015, DIRCO invited tenders ‘for the removal, packing, storage (in South Africa only) and insurance of household goods and vehicles of transferred officials, to and from missions abroad’ under Tender No DIRCO 05-2015/2016.’ [5] After due process and on 3 November 2015, DIRCO informed Neo Thando that it was awarded the tender. The value of the contract would be ‘according to the pricing schedule provided as per your bidding document for the amount of R130 112 398’. 5 Subsequently, on 20 and 26 January 2016 the parties signed a Service Level Agreement (SLA) which contained, inter alia, all the responsibilities of both parties. This included who bears the responsibility for the packing for storage or unpacking from storage of a transferred official’s household goods and personal effects or departmental furniture and equipment (the goods) which had to be conducted in the presence of such official (clause 3.6). Importantly, that Neo Thando would be responsible for the packing according to the detailed specifications set out in the technical specifications of a transferred official’s furniture and equipment (clause 3.1). [6] The officials of DIRCO were to be transferred for a period of four years to and from missions abroad during which time their goods had to be kept safe for the duration of the transfer period and for re-delivery thereof, upon their return to South Africa. Based on the SLA, on 11 November 2015, Neo Thando concluded a written lease agreement with a property company, Improvon where the goods were to be stored. The lease commenced on 1 June 2016 to terminate on 31 October 2019. [7] In terms of the SLA, Neo Thando had to take possession of the goods at the premises at which they were to be stored. DIRCO had an existing SLA with AGS Frasers/Gin Holdings (AGS Frasers), which DIRCO contended would terminate when Neo Thando began operating under the SLA. In terms of the SLA, Neo Thando was to arrange with AGS Frasers to collect the goods already stored by the latter. When Neo Thando contacted AGS Frasers they refused to hand over the goods. Neo Thando sought the intervention of DIRCO. [8] On 21 January 2016 and 24 March 2016 respectively, DIRCO wrote to AGS Frasers demanding that it hand over the stored goods to Neo Thando. On 16 March 2016, AGS Frasers wrote back to DIRCO – confirming its refusal to return the goods because according to them ‘the original SLA contractually obliges the two parties, … AGS Frasers …and DIRCO to continue to provide the relevant storage services until the return of the officials from abroad …the original SLA contractually obliges DIRCO to pay the requisite storage fees for the consignment that will remain in storage until 6 the officials return from abroad’. It was common cause that the officials who had left the country for four years had not returned from abroad yet. [9] Correspondence was exchanged between DIRCO, AGS Frasers and Neo Thando without any solution until the parties reached a deadlock. DIRCO wrote to AGS Frasers expressing their view of the matter as follows: ‘9. In the circumstances we hereby afford you up to the end of business on Friday the 22nd of April 2016 to indicate as to when you are prepared to release the goods. You must bear in mind that DIRCO has an obligation to make the goods available to the newly appointed service provider which is suffering damages as a result of the mora of DIRCO.’ [10] On 12 September 2017, Neo Thando instructed their attorneys to issue a letter of demand on DIRCO in which they claimed: ‘15. This letter comprises formal notice to you of our client’s intention to institute legal proceedings against you, under and in terms of section 3(1) of the Institution of Legal Proceedings Against Certain Organs of State Act No 40 of 2002, as amended. To such end, we are instructed to formally demand payment of the said R53 258 416,90, (plus interest thereon, at the rate of 10.25% per annum, calculated from today), within 30 (thirty) days from today, as foreshadowed in section 5 (2) of the said Act, failing which summons will be issued for such amount, together with such additional damages as our client may suffer in the future. 16. To the extent that [clause] 13 of the service level agreement entered into between you and our client makes provision for arbitration, and we quote: “if the parties wish to arbitrate such difference or dispute”, please be advised that our client would prefer to submit this case to arbitration, rather than to litigate through the courts. To this end, and if the claim above is not paid by you within 30 days from today, you are requested to advise within such time period whether or not you are prepared to submit the claim to arbitration in accordance with the service level agreement. If not, summons will be issued through the courts upon expiry of the thirty day time period…’ (Emphasis added). [11] On 2 November 2017, the attorneys for Neo Thando wrote a letter to the Chairperson of the Pretoria Bar Council in which they alleged that a dispute existed between the parties as detailed in the letter of 12 September 2017, a copy of which 7 was attached to the letter. Neo Thando did not hear anything from DIRCO until a month and a few days later, on 8 November 2017, when the State Attorney acting on behalf of DIRCO acknowledged receipt of the letter of 12 September 2017. On 9 November 2017 (seven days after Neo Thando had approached the Bar Council to appoint an arbitrator), the State Attorney responded by saying the letter of 12 September 2017 did not make it clear what the dispute was and that DIRCO did not believe there was any dispute to arbitrate and accordingly did not agree to arbitration. If necessary, the letter stated, DIRCO would appear before the appointed arbitrator only to challenge his or her jurisdiction to entertain the alleged dispute. By then the horse had already bolted, an arbitrator had already been appointed. The law [12] As this Court held in Radon Projects (Pty) Ltd v NV Properties (Pty) Ltd and Another,1 when the jurisdiction of an arbitrator is challenged, an arbitrator does not throw his hands in the air and accept that he does not have jurisdiction. The parties must appear before him or her to argue the point and he or she must decide whether he or she has jurisdiction. He cannot wait for a court to decide that. Recently, this Court in Canton Trading 17 (Pty) Ltd t/a Cube Architects v Fanti Bekker Hattingh N O (Canton Trading),2 grappled with the issue when the jurisdiction of an arbitrator is challenged. After referring to several cases it held: ‘The question as to who decides whether a dispute goes to arbitration or remains in the courts is one of ever greater significance, given the enhanced role that arbitration enjoys in the resolution of disputes, both domestically and in transnational law. This question may arise at different stages. As the present matter illustrates, there may be litigation at the commencement of a dispute as to whether the courts should decide the dispute or whether it should be sent to arbitration. Sometimes, however, the issue crystalizes for the first time before the arbitrators. They are asked to decide whether they enjoy jurisdiction to hear the dispute. The arbitrators may determine the issue. Finally, a court may be called upon to decide 1 Radon Projects (Pty) Ltd v NV Properties (Pty) Ltd and Another 2013 (6) SA 345 (SCA) at paragraph 28. 2 Canton Trading 17 (Pty) Ltd t/a Cube Architects v Fanti Bekker Hattingh N O [2021] ZASCA 163; 2022 (4) SA 420 (SCA) para 32. See also Zhongjing Development Construction Engineering Co Ltd v Kamato Copper Co Sarl [2014] ZASCA 160; 2015 (1) SA 345 (SCA) at para 50; Northeast Finance (Pty) Ltd v Standard Bank of South Africa Ltd [2013] ZASCA 76; 2013 (5) SA 1 (SCA). 8 whether the arbitrators correctly assumed jurisdiction over the dispute, if the arbitrators’ award is taken on review or enforcement proceedings are brought.’ (Emphasis added). [13] In Canton Trading, at para [35], acknowledging the use of the approach of ‘Kompetenz-kompetenz’,3 also known as competence-competence in South Africa, it stated: ‘…Arbitrators enjoy the competence to rule on their own jurisdiction and are not required to stay their proceedings to seek judicial guidance….’ The arbitrator adopted this approach correctly, which DIRCO does not take issue with. What it takes issue with is what happened afterwards which the high court appeared to lose sight of as this judgment will demonstrate. [14] On 22 November 2017, the legal representatives of the parties held a pre-arbitration meeting with the arbitrator, Adv M C Erasmus SC. The pre-arbitration minute recorded that DIRCO indicated that it reserved its right to contend that the matter is not subject to arbitration because of the absence of an arbitral dispute between the parties and or the arbitrator having no jurisdiction to entertain any dispute between the parties, as DIRCO had not consented thereto. 3 Kompetenz -kompetenz is a jurisprudential doctrine whereby a legal body, such as a court or arbitral tribunal, may have competence, or jurisdiction, to rule as to the extent of its own competence on an issue before it. Regarding its German origin, see P Landolt, ‘The inconvenience or Principle: Separability and Kompetenz-Kompetenz’ Journal of International Arbitration 30, no. 5 (2013): 511-530 at 513, footnote 4: ‘This German name for the principle has established itself in English usage. In its original German usage, it designated not the general notion of the arbitral tribunal’s powers to come to a determination on its own jurisdiction but a more specific notion, i.e., a variant of the general notion.’ Furthermore, E Gaillard and J Savage (Fouchard, Gaillard and Goldman on International Commercial Arbitration, Kluwer Law International, The Hague, 1999 at 396-397) explain: ‘German legal terminology lends a meaning to the expression which differs substantially from that which the expression is intended to convey when used in international arbitration. If one were to follow the traditional meaning of the expression in Germany, “kompetenz-kompetenz” would imply that the arbitrators are empowered to make a final ruling as to their jurisdiction, with no subsequent review of the decision by any Court. Understood in such a way, the concept is rejected in Germany, just as it is elsewhere. From a substantive viewpoint, the paradox is all the more marked for the fact that in Germany the question of whether the courts should refuse to examine the jurisdiction of an arbitral tribunal until such time as the arbitrators have been able to rule on the issue themselves (the negative effect of the ‘competence competence’ principle), has never been accepted [. . . ].’ 9 [15] The parties exchanged pleadings in Statements of Claim and Defence. In its Statement of Claim relevant to this appeal, Neo Thando alleged that, based on a proper construction of the SLA or as an implied or tacit term, DIRCO was required to procure from AGS Fraser the goods referred to in clause 8.8 of the Terms of Reference to the Bid Documents. These goods were to be transferred by AGS Fraser to Neo Thando upon the conclusion of the SLA or within a reasonable time thereafter. This defence was not the ‘dispute’ that was referred for arbitration. [16] DIRCO challenged the jurisdiction of the arbitrator on the following bases: First, clause 13.3 of the SLA between it and Neo Thando outlined the circumstances under which a matter could be referred to arbitration. Both parties had not expressed a wish to refer a dispute to arbitration; Neo Thando had done so unilaterally. Nor had it alleged the existence of ‘a difference or dispute’ that it wished to be referred to arbitration. Second, in terms of clause 13 read with sub clause 13.3 and 13.4, a party requiring a ‘difference or dispute’ to be referred to arbitration was obliged to give a written notice identifying the ‘difference or dispute’ to be arbitrated. No such notice was given. The letter of demand of 12 September 2017 was a demand for damages. Third, arbitration agreements are governed by the provisions of the Arbitration Act 42 of 1965 (the Arbitration Act), which require that for a matter to be referred to arbitration, there must be a written agreement to refer ‘a dispute’ to arbitration. Neo Thando had not alleged that there was any dispute, and the matter was accordingly not arbitrable. [17] DIRCO and Neo Thando agreed that the arbitrator didn't need to hear evidence. And thus, he proceeded on the papers. Having read the papers and considered relevant case law, he concluded that ‘the arbitrator has jurisdiction to preside and determine the disputes in the arbitration proceedings’. He thereafter proceeded to deal with the merits. [18] On 23 October 2018, the arbitrator issued what he termed an ‘Interim Award’. In such an award, he concluded that: 10 ‘98.1 The first, second and third special pleas filed by the respondent in its plea, dated 9 February 2018 [were] dismissed. 98.2 In respect of the third special plea it is recorded that the third special plea is dismissed on the basis as it is framed in the respondent’s plea. 98.3 It is therefore found that the arbitrator has jurisdiction to preside and determine the disputes in the arbitration proceedings.’ Subsequently, on 28 July 2020, the arbitrator rendered a ‘Final Award’, in which he determined that DIRCO has a contractual obligation to procure that all goods stored with AGS Fraser are to be transferred by AGS Fraser to Neo Thando. In the high court [19] Not satisfied with this outcome, DIRCO approached the high court for a review of the arbitrator’s awards. Neo Thando filed a counter application in which it sought confirmation of the arbitrator’s awards and to have them made an order of court. The high court granted the following order: ‘(i) the award of the second respondent dated 23 October 2019 is made an order of Court; (ii) the award of the second respondent dated 28 July 2020 is made an order of Court; (iii) the applicants are ordered to pay the costs including the costs of two counsel.’ Before this Court [20] Initially, the attack and the debate focused on the two awards (as presented before the high court). However, through their interaction with the bench, the parties came to appreciate that, although the arbitrator addressed the merits when he commenced with the arbitration; he did so to consider the points in limine raised. One of these points concerned his jurisdiction – whether he had any. And although he referred to the first award as an ‘Interim Award’, it was clear that it related to the 11 jurisdiction point which the appellants had taken. Having said that, we need not say anything further on the first award. [21] The central issue for determination before us is whether the arbitrator had jurisdiction to arbitrate the dispute referred to him by Neo Thando. Flowing from that is the question of whether the dispute that was referred is an ‘arbitrable dispute’ as contemplated in the Arbitration Act. [22] Clause 13 provides: ‘13. DISPUTE RESOLUTION Should any difference or dispute at any time arise which the parties are unable to resolve amicably, whether in regard to the meaning or effect of any terms of the Contract or this SLA, or the implementation of any party's obligations hereunder, or any other matter arising from or incidental to it, then in that event, if the parties wish to arbitrate such difference or dispute, such difference or dispute shall be submitted to arbitration in accordance with the following provisions: 13.1 Except as may be expressly otherwise provided for in this Agreement, arbitration proceedings shall be conducted in accordance with the Arbitration Laws of the Republic of South Africa. 13.2 The arbitration proceedings shall be held on an informal basis, it being the intention that a decision should be reached as expeditiously and as inexpensively as possible, subject only to the due observance of the principles of natural justice. 13.3 Either party shall be entitled but not obliged, by giving written notice to the other, to require that a difference o[r] dispute be submitted to arbitration in terms of this Clause. 13.4 The arbitrator shall be, if the difference or dispute in issue is: 13.4.1 Primarily an accounting matter, an independent practicing accountant of not less than ten (10) years standing; 13.4.2 Primarily a legal matter, a practicing senior counsel or attorney of not less than ten (10) years' standing; 12 13.4.3 Any other matter, a suitably qualified independent person, agreed upon between the parties and failing agreement within three (3) days after the date on which the arbitration has been agreed to, shall be nominated by the chairperson of the Pretoria Bar Association (who may appoint one of their number) who may be instructed by either party to make the nomination at any time after the expiry of that three (3) day period. 13.5 The party referring the difference or dispute to arbitration shall, within ten (10) days of the selection or appointment of the arbitrator as provided for in sub-clause 13.4 above, furnish the arbitrator with an appropriate written notice of appointment, and shall ensure that the for his/her services. arbitrator notifies the parties forthwith of the remuneration which the arbitrator shall require for his/her services. 13.6 Within thirty (30) days after the delivery to the arbitrator of his/her written notice of appointment, each party shall be set out in all evidence, sworn statements, facts, submissions and expert opinion as such party may deem necessary to support its contentions in regard to the matter/s in dispute, and shall simultaneously serve a copy thereof on the other party. 13.7 Within fourteen (14) days of receipt of such copy of the other party’s statement of case, either party may submit a further supplementary statement to the arbitrator and shall provide a copy thereof to the other party. The dispute shall be determined by the arbitrator on the evidence before him/her without legal representation by the parties. 13.8 If the arbitrator considers that the matters in dispute cannot be decided on the papers before him/her, the arbitrator may call for other evidence or for witnesses to testify at a place in Pretoria determined by him in the presence of the parties, who may also question such witnesses. 13.9 The arbitrator shall be entitled to make such award, including an award for specific performance, an interdict, damages or otherwise as the arbitrator in his/her discretion deem fit and appropriate 13.10 The arbitrator shall at all times have regard to the intention of the parties underlying the Agreement and shall resolve the dispute in a summary manner. 13.11 The award made by the arbitrator: 13.11.1 Shall be final and binding on the parties; 13.11.2 Shall be carried into effect by the parties; 13.11.3 May be made an Order of Court by a party if the other party fails to heed the terms of the award; 13 13.11.4 May Include an Order directing the unsuccessful party to pay the cost of the arbitrator and the expenses incurred by the successful party. 13.12 This Clause shall survive the termination or cancellation of Contract or this SLA. 13.13 If both parties decide that the difference or dispute should be submitted to arbitration, such decision shall constitute each party's irrevocable consent to any arbitration proceedings and neither party shall be entitled to withdraw from such proceedings or to claim that it is not bound by the provisions of this Clause. 13.14 lf a party fails to take part in arbitration proceedings conducted in accordance with this Clause, such failure shall constitute consent to an award being made against such a party. (Emphasis added.) [23] The words ‘difference or dispute’ are not defined in clause 13 or anywhere in the SLA. They are neither defined in the Arbitration Act nor in the preamble to the clause. Recently the Constitutional Court in Amabhungane Centre for Investigative Journalism NPC v President of the Republic of South Africa,4 reaffirmed what is now the trite approach to the interpretation of statutory provisions and likewise written contracts and or agreements as follows: ‘. . .one must start with the words, affording them their ordinary meaning, bearing in mind that statutory provisions should always be interpreted purposively, be properly contextualised and must be construed consistently with the Constitution. This is a unitary exercise. The context may be determined by considering other subsections, sections or the chapter in which the keyword, provision or expression to be interpreted is located. Context may also be determined from the statutory instrument as a whole. A sensible interpretation should be preferred to one that is absurd or leads to an unbusinesslike outcome.’ [24] Following the above unitary approach, the point of departure is the language used in clause 13, in ‘light of the ordinary rules of grammar and syntax’.5 To this end, first, the word ‘difference’ in its ordinary grammatical meaning, means ‘the way in 4 AmaBhungane Centre for Investigative Journalism NPC v President of the Republic of South Africa [2022] ZACC 31; 2023 (2) SA 1 (CC); 2023 (5) BCLR 499 (CC) para 36. 5 Natal Joint Municipality Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262; 2012 (4) SA 593 (SCA) para 18 and Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk [2013] ZASCA 176; [2014] 1 All SA 517; 2014 (2) SA 494 para 10. 14 which two or more things which you compare are not the same’.6 Second, the word ‘dispute’, means a disagreement over something. [25] Clause 13 states that the parties must have reached a disagreement over something. They must agree that they disagree in a way that there is no other solution to their problem than to go in a particular direction that they agree upon. It states: ‘then in that event, if the parties wish to arbitrate such difference or dispute, such difference or dispute shall be submitted to arbitration in accordance with the following provisions…’. One of the provisions is clause 13.3 which sets out the route to follow: ‘Either party shall be entitled but not obliged, by giving written notice to the other, to require that a difference o[r] dispute be submitted to arbitration in terms of this Clause. Importantly the party who so wants the issue to be referred to arbitration shall do so by doing one thing: ‘giving written notice to the other.’ [26] As with any clause in a composite agreement, one cannot read clause 13 in isolation. It must be read in conjunction with other clauses of the SLA. Amongst such clauses is clause 8.8. It expressly states that ‘…[Neo Thando] must be willing to enter into a transitional arrangement with the existing service provider [AGS Fraser] with regard to the Household goods and vehicles currently in store with the existing service provider [AGS Fraser]’. [27] This arrangement necessitated that the packing and unpacking of the transferred official’s goods occur in the presence of the official without any intervention by DIRCO. The intervention by DIRCO was merely to establish a relationship between the two service providers for the transitional arrangement to be concluded. [28] The language and syntax of clause 13, starting from its preamble and taking into consideration clause 8.8, indicate that the parties must agree that they disagree over something. And they both ‘wish’ to have that difference or dispute arbitrated and 6 Cambridge English Dictionary. 15 submit the dispute to arbitration. Clause 13.3 expressly states that the referral to arbitration must be at the instance of one of the parties where there is ‘a difference or dispute’. In addition, on the pleaded case, DIRCO did not consent to the referral. It raised both this issue and that there was no ‘arbitrable dispute to be referred for arbitration from the onset (‘the preliminary issues’). It did so before the arbitrator could commence with the arbitration and made its position clear in its Statement of Defence. [29] If it is accepted that the purpose of the letter of 12 September 2017 was to declare a ‘dispute’ or spell out the ‘difference’, it however, fails to achieve that purpose to the extent that it makes no reference to any ‘difference’ or ‘dispute’. It demands payment of damages calculated at R53 million plus interest calculated from 30 days from the date of receipt of the letter of demand. The letter of 12 September 2017 stated that Neo Thando would prefer to arbitrate the matter than go to court. The letter was framed as a conditional proposition should a dispute arise. The clause stipulates that a dispute must arise before any arbitration can take place, indicating that the choice of language was deliberate, allowing for voluntary arbitration agreed to by both parties, rather than compulsory submission. [30] It is trite that where there is a demand by one of the parties for performance or damages, the demand must have been rejected or there must be clear evidence that the other party, having received the demand, then ‘allowed an unreasonable time to lapse without dealing with it properly’, such that it can be inferred on a balance of probabilities that the other party ‘intended’ to reject the demand. In this matter, it is uncontroverted that Neo Thando did not allow DIRCO any time to deal with what it believed was ‘a difference or dispute’ between the parties. The delay of 17 September to 2 November 2017, a month and a few days can hardly qualify as an unreasonable time particularly when the letter of demand stated that if DIRCO did not respond within thirty days, Neo Thando would issue summons; not force DIRCO to arbitrate. [31] Clause 13 provides for a two-fold mechanism, ie for the parties to agree to submit an existing dispute to arbitration, while also permitting a party to instead initiate 16 court proceedings against the other. In other words, if a party opts to pursue legal proceedings instead of seeking arbitration, it cannot later claim a right to submit the dispute to arbitration. DIRCO referenced clause 13.13, which states that ‘if both parties agree to submit a dispute to arbitration’, this decision constitutes irrevocable consent. Without mutual agreement to arbitrate an existing dispute, there is no basis for arbitration under the SLA. [32] The requirement that there must exist a dispute first before the matter may be referred to arbitration was emphasised in Parekh v Shah Jehan Cinemas7 in which the court stated the following: ‘Arbitration is a method for resolving disputes. That alone is its object and its justification. A disputed claim is sent to arbitration so that the dispute which it involves may be determined. No purpose can be served on the other hand, by arbitration on an undisputed claim. There is then nothing for the arbitrator to decide. He is not needed, for instance, for a judgment by consent or default. All this is so obvious that it does not surprise one to find authority for the proposition that a dispute must exist before any question of arbitration can arise.’8 In Telecall (Pty) Ltd v Logan,9 this Court further stated that a ‘[dispute] is more than a mere disagreement; it is ‘one in relation to which opposing contentions are or can be advanced’. [33] There was no dispute, as defined by the Arbitration Act, that existed at the time Neo Thando referred the matter to arbitration. Section 1 of the Arbitration Act defines an arbitration agreement to mean ‘a written agreement providing for the reference to arbitration of any existing dispute or any future dispute relating to a matter specified in the agreement, whether an arbitrator is named or designated therein or not’. As DIRCO correctly contended, as a minimum, there must be an ‘expression by parties, opposing each other in controversy, of conflicting views, claims or contentions’. 7 Parekh v Shah Jehan Cinemas (Pty) Ltd and Others 1980 (1) SA 301 (D). 8 Ibid at 304E-G. 9 Telecall (Pty) Ltd v Logan 2000 (2) SA 782 (SCA) at 786B-787A. 17 [34] DIRCO submitted that a dispute must occur before there can be a referral to arbitration and in support of this proposition it relied on Durban City Council v Minister of Labour and Another, in which the following was stated: ‘…to attempt a comprehensive definition of the word “dispute” …it seems to me that it must, as a minimum so to speak, postulate the notion of the expression by parties, opposing each other in controversy, of conflicting views, claims or contentions.’10 [35] In conclusion, the language of clause 13 is clear. A ‘difference’ or ‘dispute’ must have existed when the matter was referred for arbitration to be ‘arbitrable’ in terms of the Arbitration Act. On these facts and if regard is had to the letter of demand of 12 September 2017, it is clear that there was no ‘difference’ or ‘dispute’ identified. If there was any ‘difference’ between the parties, it was at most a difference of opinion about the extent to which DIRCO should have intervened in persuading AGS Fraser to release the goods of the officials it held in its possession to Neo Thando. Neo Thando was aware that in terms of the agreement that obligation did not fall on DIRCO. Contrary to the clear terms of clause 13.3 and in stark contradiction to the clear language used by the parties, Neo Thando unilaterally referred the matter for arbitration without DIRCO’s consent. Arbitration by its very nature and as understood in the business world is voluntary. To read the arbitration clause as allowing the one party to the agreement to force the other party to submit to arbitration would be ‘unbusinesslike’. [36] For the reasons set out above, on this plain meaning, DIRCO’s interpretation must be correct. The SLA required both parties to consent to arbitration. The words ‘if the parties wish’ makes this clear. Second, the letter of demand was for payment of damages. There was no existing dispute identified as to how the transitional arrangement was to be implemented and/or who was responsible therefor. It follows that the high court misdirected itself in holding otherwise. 10 Durban City Council v Minister of Labour and Another 1953 (3) SA 708 (N) at 712A-E. 18 The issue of costs [37] The issues were straightforward. They were not complex, and the matter did not justify the engagement of two counsel, either before the high court or the arbitrator, particularly senior counsel. Other than that, there is no reason why the general rule should not apply, ie costs must follow the result. [38] In the result, the following order issues. 1 The appeal is upheld with costs. 2 The order of the high court is set aside and substituted with the following: ‘(a) It is declared that the second respondent did not have jurisdiction to arbitrate the alleged dispute between the applicant and the first respondent. (b) The first respondent is ordered to pay to the second applicant: (i) All the amounts paid by the State Attorney on behalf of the second applicant to the second respondent in respect of his fees for acting as arbitrator; (ii) All the legal costs incurred by the first/and or second applicant in defending the reference to the arbitrator, where the arbitrator lacked jurisdiction. (c) The second respondent’s interim award dated 23 October 2018 is declared invalid and is set aside (d) The second respondent’s award dated 28 July 2020 is declared invalid and is set aside.’ 3 The first respondent is ordered to pay the costs of the application for leave to appeal before the high court. ___________________ B C MOCUMIE JUDGE OF APPEAL 19 Appearances For Appellants: G I Hulley SC and L C Segeels-Ncube Instructed by: State Attorney, Pretoria For first respondent: A Subel SC and M Nowitz Instructed by: Nochumsohn & Teper Inc, Johannesburg Phatshoane Henney Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 04 October 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 The Minister of International Relations and Co-operation NO and Another v Neo Thando/Elliot Mobility (Pty) Ltd and Another (444/2023) [2024] ZASCA 134 (04 October 2024) Today, the Supreme Court of Appeal (SCA) upheld an appeal from the Gauteng Division of the High Court, Pretoria (the high court). The issue before the SCA was whether the arbitrator had jurisdiction to arbitrate a matter referred to him unilaterally by Neo Thando/Elliot Mobility (Pty) Ltd (Neo Thando) without the consent of the Department of International Relations and Co-operation (DIRCO) contrary to the terms of the arbitration clause. The factual background is as follows: On 11 August 2015, DIRCO invited tenders ‘for the removal, packing, storage (in South Africa only) and insurance of household goods and vehicles of transferred officials, to and from missions abroad’. After due process, DIRCO awarded the tender to Neo Thando, and they signed a Service Level Agreement (SLA) which contained responsibilities of both parties ie that Neo Thando would be responsible for the packing according to the detailed specifications set out in the technical specifications of a transferred official’s furniture and equipment. The officials of DIRCO were to be transferred for a period of four years to and from missions abroad during which time their household goods and personal effects had to be kept safe for the duration of the transfer period and for re-delivery thereof, upon their return to South Africa. For that reason, Neo Thando wanted to store the goods for DIRCO as per the terms of SLA. Unknown to Neo Thando DIRCO had an existing SLA with AGS Frasers/Gin Holdings (AGS Fraser) which had stored the goods. Neo Thando wrote to AGS Fraser to hand over those goods and sought intervention from DIRCO. Due to no response from them, Neo Thando wrote a letter of demand and gave notice of having the matter heard before an arbitrator. There still was no response from DIRCO, they proceeded to make a request for an arbitration as they contended that there was a ‘dispute’ between them and DIRCO. Seven days after Neo Thando made a request for an appointment of an arbitrator, DIRCO responded by saying the letter from Neo Thando did not make it clear what the dispute was. That it did not believe that there was any dispute to arbitrate and accordingly did not agree to arbitration. The matter proceeded for arbitration. DIRCO contended that the SLA required mutual consent for any referral to arbitration and that Neo Thando’s unilateral action violated this particular requirement. It further contended that no formal notice identifying a dispute had been given as required in the SLA and that the demand letter constituted a claim for damages rather than an arbitrable dispute. Neo Thando maintained that it had followed proper procedures and that an arbitrator should determine jurisdiction. The arbitrator issued a final award and found that DIRCO has a contractual obligation to procure all household goods and vehicles stored with AGS Fraser and the goods to be transferred by AGS Fraser to Neo Thando. Not satisfied with this outcome, DIRCO approached the high court for a review of the arbitrator’s awards. As a counterclaim, Neo Thando sought the high court to confirm the award of the arbitrator. The high court initially held in favour of Neo Thando, affirming the arbitrator’s jurisdiction over the matter. The high court found that an implicit agreement existed allowing for arbitration despite DIRCO’s objections. 2 The SCA held that, without a mutual agreement to arbitrate an existing dispute, there is no basis for arbitration under the SLA. It further held that, an arbitration by its very nature and as understood in the business world is voluntary. To force parties to arbitrate is ‘unbusinesslike’. It also held that, the high court and so too the arbitrator misunderstood the crisp issue for determination and the interpretation of the SLA. Therefore, the SCA overturned the high court’s decision and concluded that the arbitrator lacked jurisdiction as there was no mutual agreement between parties to submit disputes for arbitration as required by their SLA. It further found that, at the time of referral, no substantive dispute existed between DIRCO and Neo Thando that warranted an arbitration. The SCA also highlighted that, proper procedures outlined in both the SLA and the Arbitration Act 42 of 1965 were not adhered to by Neo Thando when it unilaterally referred the matter for arbitration. As a result, the SCA upheld the DIRCO’s appeal with costs, and the award issued by the arbitrator was declared invalid and set aside. ~~~~ends~~~~

4307

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1089/2022 In the matter between: DIE NEDERDUITSCH HERVORMDE KERK FIRST INTERVENING VAN AFRIKA GEMEENTE MEYERSPARK APPLICANT DIE NEDERDUITSCH HERVORMDE KERK SECOND INTERVENING VAN AFRIKA GEMEENTE PRETORIA TUINE APPLICANT DIE NEDERDUITSCH HERVORMDE KERK THIRD INTERVENING VAN AFRIKA GEMEENTE DIE WILGE POTCHEFSTROOM APPLICANT DIE NEDERDUITSCH HERVORMDE KERK FOURTH INTERVENING VAN AFRIKA GEMEENTE KOSTER APPLICANT In Re: DIE NEDERDUITSCH HERVORMDE KERK VAN AFRIKA APPELLANT and DIE WILGE HERVORMDE GEMEENTE FIRST RESPONDENT DIE WILGE VERENIGING SECOND RESPONDENT HERVORMDE GEMEENTE GROOTVLEI THIRD RESPONDENT DIE GEMEENSKAP VAN GELOWIGES GROOTVLEI FOURTH RESPONDENT HERVORMDE GEMEENTE KOSTER FIFTH RESPONDENT DIE DIAMANT VERENIGING SIXTH RESPONDENT HERVORMDE GEMEENTE MEYERSPARK SEVENTH RESPONDENT MEYERSPARK CHRISTELIKE VERENIGING EIGHTH RESPONDENT HERVORMDE GEMEENTE NOORDELIKE PIETERSBURG NINTH RESPONDENT YSTERBERG VERENIGING TENTH RESPONDENT HERVORMDE GEMEENTE 2 SCHWEIZER-RENEKE ELEVENTH RESPONDENT HERVORMDE KERK VERENIGING SCHWEIZER-RENEKE TWELVTH RESPONDENT HERVORMDE GEMEENTE PREMIERMYN THIRTEENTH RESPONDENT HERVORMDE GEMEENTE PRETORIA TUINE FOURTEENTH RESPONDENT SAAMSTAAN VERENIGING FIFTEENTH RESPONDENT HERVORMDE GEMEENTE THERESAPARK SIXTEENTH RESPONDENT THERESAPARK VERENIGING SEVENTEENTH RESPONDENT HERVORMDE GEMEENTE RUSTENBURG EIGHTEENTH RESPONDENT RUSTENBURG CHRISTELIKE VERENIGING NINETEENTH RESPONDENT HERVORMDE GEMEENTE VREDE TWENTIETH RESPONDENT NH VREDE EIENDOMSVERENIGING TWENTY-FIRST RESPONDENT HERVORMDE GEMEENTE DENDRON/VIVO TWENTY-SECOND RESPONDENT DE LOSKOOP/BLOUBERG VERENIGING TWENTY-THIRD RESPONDENT HERVORMDE GEMEENTE OOSTELIKE PIETERSBURG TWENTY-FOURTH RESPONDENT MOREGLOED HULPVERENIGING TWENTY-FIFTH RESPONDENT Neutral citation: Die Nederduitsch Hervormde Kerk van Afrika and Others v Die Wilge Hervormde Gemeente and Others (1089/2022) [2024] ZASCA 128 (30 September 2024) Coram: SCHIPPERS, MABINDLA-BOQWANA, SMITH and KEIGHTLEY JJA and HENDRICKS AJA Heard: 10 September 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives via email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 11h00 at 30 September 2024. Summary: Civil procedure – whether intervening parties should be joined in application for leave to appeal – whether high court misdirected itself in introducing new issue – privity of contract – not in dispute nor canvassed in pleadings – intervening applicants have direct and substantial interest in appeal – privity of contract irrelevant to dispute – appeal upheld. 3 ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Janse Van Nieuwenhuizen J, sitting as court of first instance): 1 The Nederduitsch Hervormde Kerk van Afrika Gemeente Meyerspark, the Nederduitsch Hervormde Kerk van Afrika Gemeente Pretoria Tuine, the Nederduitsch Hervormde Kerk van Afrika Gemeente Die Wilge Potchefstroom, and the Nederduitsch Hervormde Kerk van Afrika Gemeente Koster (the intervening parties) are granted leave to intervene, and are joined as applicants in the application for leave to appeal. 2 The application for leave to appeal is granted. 3 The appeal is upheld. 4 The order of the Gauteng Division of the High Court, Pretoria (the high court), that the issue between the parties has become moot in the action instituted by the respondents against Die Nederduitsch Hervormde Kerk van Afrika, under case number 5167/2016 (the action), is set aside and replaced by the following order: 4.1 The action is remitted to the high court for hearing by a judge other than Janse van Nieuwenhuizen J. 4.2 The plaintiffs shall pay the costs of the proceedings incurred in the high court from 25 January 2022. Such costs shall be paid jointly and severally, one plaintiff paying, the others to be absolved, and shall include the costs of two counsel where so employed.’ 5 The respondents shall pay the costs of the intervention applications, the costs of the application for leave to appeal, and the costs of appeal. Such costs shall be paid jointly and severally, one respondent paying, the others to be absolved, and shall include the costs of two counsel where so employed. 4 JUDGMENT Keightley JA (Schippers, Mabindla-Boqwana, Smith JJA and Hendricks AJA concurring): [1] This is an application for leave to appeal, which was referred for oral argument in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013. The applicant is the Nederduitsch Hervormde Kerk van Afrika (the NHKA). It seeks leave to appeal against the judgment and order of Janse Van Nieuwenhuizen J (the trial judge), in the Gauteng Division of the High Court, Pretoria (the high court), in an action instituted by the respondents in that court. The respondents are former congregations of the NHKA and entities to which they transferred properties previously registered in the names of congregations affiliated to the NHKA. [2] In addition, there are intervention applications by four parties (the intervening parties). They seek an order to be joined in the application for leave to appeal to this Court and, if successful, in the appeal. The intervention applications were also referred for oral argument. [3] The parties have been at loggerheads for many years. While the origin of their dispute lies in theological and political differences between them, the legal dispute giving rise to the appeal has a more material focus. It concerns certain immovable properties, and the property rights attached to them; in particular, the professed right of certain of the respondents to transfer the properties to entities falling outside of the NHKA. These entities form the remainder of the respondent group. [4] Until the decisive rift between the parties, the properties were registered in the names of various congregations of the NHKA. These congregations were all juristic entities with legal personality separate from that of the NHKA itself, and with the capacity to own property. The intervening parties describe themselves as being four of the congregations in whom ownership of the affected properties originally vested. They are Die Nederduitsch Hervormde Kerk van Afrika Gemeente Meyerspark (Meyerspark congregation); Die Nederduitsch Hervormde Kerk van Afrika Gemeente Pretoria Tuine (Tuine congregation); Die Nederduitsch Hervormde Kerk van Afrika Gemeente Die Wilge Potchefstroom (Wilge congregation); and Die Nederduitsch 5 Hervormde Kerk van Afrika Gemeente Koster (Koster congregation). I refer to them simply as the original congregations. [5] In approximately 2010 and 2011, some members of the original congregations expressed dissatisfaction over the formal stance adopted by the NHKA on apartheid and its purported theological justification. This led ultimately to a breakdown in the relationship between these dissatisfied members and the NHKA. By majority vote within the original congregations, the dissatisfied members donated and transferred the affected properties from the original congregations to new juristic entities. The new entities were established and controlled by the dissatisfied members with the express purpose of taking transfer of the properties. The dissatisfied congregants broke completely from the NHKA and formed new congregations outside the NHKA, while retaining possession and use of the transferred properties for their own religious purposes. [6] The first, third, fifth, seventh, ninth, eleventh, thirteenth, fourteenth, sixteenth, eighteenth, twentieth, twenty-second and twenty-fourth respondents are the new congregations formed by the dissatisfied NHKA members (the new congregations). The second, fourth, sixth, eighth, tenth, twelfth, fifteenth, seventeenth, nineteenth, twenty-first, twenty-third and twenty-fifth respondents are the juristic entities to whom the immovable properties in question were transferred. They are the current registered owners of the properties (the new owners). [7] Against this background, the respondents instituted proceedings in the high court against the NHKA as defendant. They sought certain declaratory relief which, in essence, would confirm that they had the authority to transfer the properties to the new owners. The only party cited by the respondents in the high court action was the NHKA. None of the original congregations were cited albeit that, until the contested transfers, they were the registered owners of the affected properties. After summons was issued, the NHKA filed its plea and instituted a counterclaim. The original congregations applied to intervene as co-defendants in the action and as co-plaintiffs in the NHKA’s counterclaim. [8] Subsequently, a case managing judge, Fourie J, was assigned to manage the litigation between the parties. By agreement between them, Fourie J formulated a separated issue for determination prior to the hearing of further disputes 6 (the separated issue). It is important to record that the parties agreed that the intervention applications by the original congregations would be held over until the separated issue had been determined. So too, would the exchange of further pleadings in the counterclaim. Consequently, as things stand at present, the pleadings in the action, including the counterclaim and application for intervention, have not closed. [9] The separated issue was formulated by Fourie J in Afrikaans as: ‘Kan lidmate of 'n gemeente van die NHKA wat probleme het binne of met die NHKA en/of wil wegbreek en/of weggebreek het uit die NHKA, by meerderheidsbesluit die bates van 'n gemeente van die NHKA aan vrywillige verenigings of gemeentes wat buite die NHKA funksioneer vervreem.’ The English translation of the question being: ‘Whether members or a congregation of the NHKA who have problems within or with the NHKA and/or want to break away and/or has broken away from the NHKA by a majority decision sell or donate its assets to a voluntary association or another congregation that does not form part of the NHKA.’ [10] The separated issue was set down for hearing on 25 January 2022, before the trial judge. During the course of the proceedings, matters took a turn that ultimately led to this appeal and the associated applications. The trial judge mero motu (of her own accord) raised an issue of ‘privity of contract’ and directed the parties to address her on it. The trial judge’s view was that a determination of this issue would obviate the necessity of making a finding on the separated issue identified by Fourie J and would bring the proceedings to an end. [11] The privity of contract issue was whether the NHKA, which was not the registered owner of the affected properties, could legally challenge the validity of the contracts of donation in terms of which the new congregations had alienated the properties to the new owners. As the trial judge expressed it, only the parties to a contract of donation are bound by it, and a third party, like the NHKA, cannot sue or be sued on it. Counsel for the respondents aligned himself with the view of the trial judge. Counsel for the NHKA disagreed with the trial judge and with counsel for the respondents. He contended that the issue raised in the pleadings and separated issue was whether the dissatisfied members had the necessary authority to transfer the properties, rather than the question of privity of contract. However, his submissions 7 found no traction with the trial judge, who ordered that ‘the issue of whether the (NHKA) has privity of contract in respect of the contracts of donation between (the respective dissatisfied members and the new owners) is separated from the remainder of the issues between the parties’. She directed that this issue be argued the following day. [12] At the resumption of proceedings the following day, it was recorded that counsel for the NHKA conceded that it was not a party to the donation agreements. Consequently, the matter stood down to the following day for submissions to be made on the legal and procedural consequences of the trial court’s finding that there was no privity of contract between the NHKA and the relevant respondent parties. Having heard the parties’ submissions, the high court handed down the judgment and order that form the basis of the applications before this Court. [13] The high court concluded that its finding on the privity of contract issue meant that the NHKA had no legal standing to challenge the relief sought by the respondents and that, consequently, the dispute between them was moot. It made an order to this effect and directed the NHKA to pay costs from 25 January 2022, being the date on which the high court had raised the privity of contract issue. [14] I start with the intervention applications, which are opposed by the respondents. They contend that there is a factual dispute as to whether the intervening parties exist as congregations, and hence as legal personae, at all. They say that the new congregations are in fact and in law the same congregations that were originally part of the NHKA, save that they no longer function within the NHKA. According to the respondents, once the new congregations left the NHKA, all that remained were the individual church members who had decided to retain their ties with the NHKA. It follows, they say, that the intervening parties have no locus standi to apply to intervene as parties in the appeal. [15] The respondents submit further that this Court cannot consider the intervention applications without resolving what they describe as the factual disputes concerning the existence of the intervening parties as congregations. Based on the principles laid down in Plascon-Evans Ltd v Van Riebeeck Paints (Pty) Ltd,1 (Plascon-Evans) the 1 Plascon-Evans Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634C-I and 635A-C. 8 respondents submit that their factual version must prevail, with the consequence that this Court must accept that the intervening parties do not exist as congregations and cannot be joined in the appeal. [16] There are several difficulties with the respondents’ opposition to the intervention application. I highlight only two. In the first instance, this Court is not called upon to resolve any factual dispute about whether the intervening parties exist as congregations or not. This is not an issue that calls for purely factual determination. It is an issue that will be determined substantially on an interpretation and application of the NHKA’s governing documents, being the Church Order and Constitution. The respondents are, therefore, incorrect in their assertion that Plascon-Evans resolves the dispute in their favour. [17] Secondly, the respondents’ argument disregards the agreement in the trial to place the joinder applications on hold until the separated issue is decided. The only question for this Court is whether the intervening parties have a legal interest in the application for leave to appeal, and the appeal against the high court’s order. The trite principle that governs intervention applications is whether the intervening parties have a direct and substantial interest that may be prejudicially affected by the judgment of the court in the relevant proceedings. In other words, do they have a legal interest in the subject matter of the dispute?2 [18] It seems to me axiomatic that as the original title holders to the property before the disputed transfers took place, the intervening parties have an obvious and very real interest in the outcome of the appeal. In fact, the high court expressly recognised that the original congregations have a direct interest in the dispute. The trial judge noted the following in an exchange with counsel for the respondents: ‘Ja maar daar is geen sulke gemeentes voor my tans nie. Ek sou verwag het dat daardie gemeentes, as hulle dan bestaan het, die verweerders in hierdie saak is want hulle het 'n direkte belang.’ This statement may be translated as: 2 See South African Riding for the Disabled Association v Regional Land Claims Commissioner and Others [2017] ZACC 4; 2017 (8) BCLR 1053 (CC); 2017 (5) SA 1 (CC) para 9, affirmed in Lebea v Menye and Another [2022] ZACC 40; 2023 (3) BCLR 257 (CC). 9 ‘Yes, but there are no such congregations presently before me. l would have expected those congregations if they existed, to be defendants in this case because they have a direct interest.’ [19] It is accepted by all parties that the trial judge was not aware, nor was she made aware, of the applications for joinder by the intervening parties, or that these applications had been placed on hold by agreement between the parties to the action, pending the determination of the separated issue. It is clear that had the trial judge been made aware of those applications when she made the above remarks, the case before her would not have proceeded as it did. [20] I conclude on this issue that the intervening parties, as the original titleholders of the properties forming the objects of the dispute, have a legal interest in the application for leave to appeal and the appeal. They must be joined as parties. [21] As to the merits of the appeal, this turns on the simple question of whether the high court misdirected itself in raising the privity of contract issue mero motu and concluding on that basis, that the dispute between the NHKA and the respondents was moot. This Court stated in Fischer and Another v Ramahlele and Others (Fischer)3 that it is for the parties in civil litigation, and not for a court, to set out and define the nature of their dispute. The nature of the dispute appears from the pleadings.4 It is not for a court to raise new issues not traversed in the pleadings.5 [22] Fischer recognises that: ‘There may . . . 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. . . . 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.’6 Further, that: 3 Fischer and Another v Ramahlele and Others [2014] ZASCA 88; 2014 (4) SA 614 (SCA); [2014] 3 All SA 395 (SCA). 4 Ibid para 13. 5 Ibid para 14. 6 Ibid paras 13-14. 10 ‘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.’7 [23] The high court found support in Fischer, on the basis that all it had done was to suggest a line of argument or an approach to the case, in accordance with what Fischer considers acceptable. Counsel for the respondents submitted to this Court that the high court was correct in this respect. [24] The question is whether the nature of the dispute, as defined in the pleadings, turned on the issue of privity of contract. If it did, then it may have been open for the high court to suggest to the parties that they consider separating this issue from the remainder of the trial for pre-determination. If the parties were agreeable to this, there would have been no difficulty with matters taking such a course. In fact, this is what appears to have occurred when Fourie J identified the original separated issue which was adopted by agreement between the parties. [25] However, the nature of the dispute as set out in the pleadings was not about privity of contract. The respondents approached the high court for declaratory relief, including an order that: ‘… elke eiser wat as gemeente enige roerende of onroerende eiendom geskenk het aan enige eiservereniging, geregtig was om dit te doen ingevolge die grondwet en kerkorde van die NHKA, by wyse van meerderheidstem van die gemeente.’8 What the respondents sought was confirmation from the court that the new congregations had the right in terms of the Constitution and Church Order of the NHKA to donate property to the current owners by a majority vote. In short, the dispute turned on the question of whether the new congregations had the authority under the governing documents of the NHKA to alienate the relevant properties to the new owners. The centrality of this issue to the dispute was expressly recognised in the separated issue formulated by Fourie J. 7 Ibid para 14. 8 The English translation is: ‘…[whether] each plaintiff as a congregation, which has donated any movable or immovable property to any plaintiff association, was entitled to do so in terms of the Constitution and Church Order of the NHKA, by means of a majority vote of the congregation.’ 11 [26] As plaintiffs, the respondents bore the onus of establishing that under the NHKA Constitution and the Church Order they had the authority to donate the properties to the new owners in the manner adopted. The high court misinterpreted the nature of the dispute by re-framing the NHKA’s opposition to the respondents’ case as being an attack on the validity of the contracts of donation. The high court failed to appreciate that the dispute turned on the question of authority, as determined by the Constitution and Church Order. The NHKA obviously has a legal interest in the question of whether congregations may, under its constitutive documents, alienate property to third parties outside of the NHKA. The high court’s misunderstanding of the issues in dispute had the further consequence that it erroneously found that the NHKA had no legal interest in the matter and that the dispute between the parties was moot. [27] I conclude that, contrary to the high court’s view that it had acted within the bounds of Fischer, it clearly acted outside of them. It did not simply raise a new ‘issue’ or ‘approach’. It raised an entirely new question of law not in issue in the pleadings. Counsel for the respondents had attempted to make this clear to the high court when the matter was heard. However, as I noted earlier, his submissions were rejected. In this respect, too, the high court failed to heed the caution for judicial restraint expressed in Fischer, and instead directed the parties to deal with an issue that was not pleaded. This was clearly to the prejudice of the NHKA, which was denied its right, as a cited defendant, to properly oppose the relief sought by the respondents. [28] Since Fischer, this Court has repeatedly emphasised that courts must decide only the issues as pleaded by the parties.9 In this case, the unfortunate consequence of the high court’s failure to comply with this oft-stated principle, is that the matter will have to be remitted to the high court, with the attendant waste of costs for the parties, court time and resources. [29] For all of these reasons, the appeal must be upheld. I make the following order: 1 The Nederduitsch Hervormde Kerk van Afrika Gemeente Meyerspark, the Nederduitsch Hervormde Kerk van Afrika Gemeente Pretoria Tuine, the Nederduitsch Hervormde Kerk van Afrika Gemeente Die Wilge Potchefstroom, and the Nederduitsch 9 See, for example, Advertising Regulatory Board NPC and Others v Bliss Brands (Pty) Ltd [2022] ZASCA 51; [2022] 2 All SA 607 (SCA) para 9; Road Accident Fund v Taylor and Others [2023] ZASCA 64; 2023 (5) SA 147 (SCA) para 31. 12 Hervormde Kerk van Afrika Gemeente Koster (the intervening applicants) are granted leave to intervene and be joined as co-applicants in the application for leave to appeal. 2 The application for leave to appeal is granted. 3 The appeal is upheld. 4 The order of the Gauteng Division of the High Court, Pretoria (the high court), that the issue between the parties has become moot in the action instituted by the respondents against Die Nederduitsch Hervormde Kerk van Afrika, under case number 5167/2016 (the action), is set aside and replaced by the following order: 4.1 The action is remitted to the high court for hearing by a judge other than Janse van Nieuwenhuizen J. 4.2 The plaintiffs shall pay the costs of the proceedings incurred in the high court from 25 January 2022. Such costs shall be paid jointly and severally, one plaintiff paying, the others to be absolved, and shall include the costs of two counsel where so employed.’ 5 The respondents shall pay the costs of the intervention applications, the costs of the application for leave to appeal, and the costs of appeal. Such costs shall be paid jointly and severally, one respondent paying, the others to be absolved, and shall include the costs of two counsel where so employed. ___________________ R M KEIGHTLEY JUDGE OF APPEAL 13 Appearances For appellant: J G Cilliers SC with M Barnard Instructed by: Awie Moolman Attorneys, Pretoria McIntyre van der Post Inc, Bloemfontein For respondent: R du Plessis SC with M Boonzaaier Instructed by: Ross and Jacobsz Inc, Pretoria EG Cooper Majiedt Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 30 September 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 Die Nederduitsch Hervormde Kerk van Afrika and Others v Die Wilge Hervormde Gemeente and Others (1089/2022) [2024] ZASCA 128 (30 September 2024) Today the Supreme Court of Appeal (SCA) made an order granting leave to intervene and joining The Nederduitsch Hervormde Kerk van Afrika Gemeente Meyerspark, the Nederduitsch Hervormde Kerk van Afrika Gemeente Pretoria Tuine, the Nederduitsch Hervormde Kerk van Afrika Gemeente Die Wilge Potchefstroom, and the Nederduitsch Hervormde Kerk van Afrika Gemeente Koster (the intervening parties) as applicants in the application for leave to appeal. The SCA further made an order granting leave to appeal, thereafter, upholding the appeal and setting aside and replacing the order of the Gauteng Division of the High Court, Pretoria (the high court). In the last instance, the SCA ordered the respondents to pay the costs of the intervention applications, the costs of the application for leave to appeal, and the costs of appeal, jointly and severally, one respondent paying the others to be absolved, including the costs of two counsel where so employed. The applicant, the Nederduitsch Hervormde Kerk van Afrika (the NHKA), sought leave to appeal against the judgment and order of the trial judge in the high court, in an action instituted by the respondents in that court. The respondents are former congregations of the NHKA and entities to which they transferred properties previously registered in the names of congregations affiliated to the NHKA. In addition, there were intervention applications by the intervening parties who sought an order to be joined in the application for leave to appeal to the SCA and, if successful, in the appeal. The legal dispute giving rise to the appeal concerned certain immovable properties and the property rights attached to them, in particular, the professed right of certain of the respondents to transfer the properties to entities falling outside of the NHKA. Until the decisive rift between the parties, the properties were registered in the names of various congregations of the NHKA which were all juristic entities with legal personality separate from that of the NHKA itself, and with the capacity to own property. The intervening parties (original congregations), as cited above, were four of the congregations in whom ownership of the affected properties originally vested. In approximately 2010 and 2011, some members of the original congregations expressed dissatisfaction over the formal stance adopted by the NHKA on apartheid and its purported theological justification, ultimately leading to a breakdown in the relationship between the dissatisfied members and the NHKA. By majority vote within the intervening parties, the dissatisfied members donated and transferred the affected properties from the original congregations to new juristic entities. The new 2 entities were established and controlled by the dissatisfied members with the express purpose of taking transfer of the properties. The dissatisfied congregants broke completely from the NHKA and formed new congregations outside the NHKA, while retaining possession and use of the transferred properties for their own religious purposes. Against this background, the respondents instituted proceedings in the high court against the NHKA as defendant seeking certain declaratory relief which, in essence, would confirm that they had the authority to transfer the properties to the new owners. Except for the NHKA, none of the original congregations were cited in the high court action. After summons were issued, the NHKA filed its plea and instituted a counterclaim. The original congregations then applied to intervene as co-defendants in the action and as co-plaintiffs in the NHKA’s counterclaim. After being assigned to manage the litigation between the parties, Fourie J, by agreement between the parties, formulated a separated issue for determination prior to the hearing of further disputes (the separated issue). The parties agreed that the intervention applications by the original congregations would be held over until the separated issue had been determined. The separated issue, which related to ‘Whether members or a congregation of the NHKA who have problems within or with the NHKA and/or want to break away and/or has broken away from the NHKA by a majority decision sell or donate its assets to a voluntary association or another congregation that does not form part of the NHKA’ was set down for hearing on 25 January 2022, before the trial judge, however, the trial judge, of her own accord, raised and directed the parties to address her on an issue of ‘privity of contract’ (whether the NHKA, which was not the registered owner of the affected properties, could legally challenge the validity of the contracts of donation in terms of which the new congregations had alienated the properties to the new owners), holding the view that a determination of this issue would obviate the necessity of making a finding on the separated issue and bring the matter to finality. The trial judge expressed that only the parties to a contract of donation are bound by it, and a third party, like the NHKA, cannot sue or be sued on it, concluding that its finding on the privity of contract issue meant that the NHKA had no legal standing to challenge the relief sought by the respondents and that, consequently, the dispute between the parties was moot. In coming to a conclusion on the intervention applications, the SCA held that there were difficulties with the respondents’ opposition to the intervention application as, firstly, the SCA was not called upon to resolve any factual dispute about whether the intervening parties exist as congregations or not – it was not an issue that called for purely factual determination. Secondly, the respondents’ argument disregarded the agreement in the trial to place the joinder applications on hold until the separated issue was decided – the only question for the SCA was whether the intervening parties had a legal interest in the application for leave to appeal, and the appeal against the high court’s order. On this point, the SCA concluded that the intervening parties, as the original titleholders of the properties forming the objects of the dispute, had a legal interest in the application for leave to appeal and the appeal, and, therefore, must be joined as parties. With regard to the merits and the issue of whether the high court misdirected itself in raising the privity of contract issue mero motu and concluding, on that basis, that the dispute between the NHKA and the respondents was moot, the SCA held that the high court raised an entirely new question of law, not in issue in the pleadings and failed to heed the caution for judicial restraint, and instead, directed the parties to deal with an issue that was not pleaded. This prejudiced the NHKA as it was denied its right, as a cited defendant, to properly oppose the relief sought by the respondents. In the result, the SCA granted the intervening parties leave to intervene and be joined as co-applicants in the application for leave to appeal and granted the leave to appeal, further upholding the appeal and setting aside and substituting the order of the high court. --------oOo--------

4204

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1289/2022 In the matter between: CENTRE FOR CHILD LAW FIRST APPELLANT MOTHER OF TZ SECOND APPELLANT MOTHER OF MPM THIRD APPELLANT and SOUTH AFRICAN COUNCIL FOR EDUCATORS FIRST RESPONDENT KHUTSO FRANCINAH SATHEKGE SECOND RESPONDENT VANGILE MIRRIAM MOKOENA THIRD RESPONDENT MEMBER OF THE EXECUTIVE COUNCIL FOR EDUCATION: GAUTENG PROVINCE FOURTH RESPONDENT MEMBER OF THE EXECUTIVE COUNCIL FOR EDUCATION: LIMPOPO PROVINCE FIFTH RESPONDENT MINISTER OF BASIC EDUCATION SIXTH RESPONDENT 2 SCHOOL GOVERNING BODY: MADUME PRIMARY SCHOOL SEVENTH RESPONDENT SCHOOL GOVERNING BODY: REABILWE PRIMARY SCHOOL EIGHTH RESPONDENT THE CHILDREN’S INSTITUTE AMICUS CURIAE Neutral citation: Centre for Child Law and Others v South African Council for Educators and Others (1289/2022) [2024] ZASCA 45 (9 April 2024) Coram: Nicholls, Mbatha and Mothle JJA and Tolmay and Mbhele AJJA Heard: 26 February 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 8 April 2024. Summary: Administrative law – when does the clock begin to run under s 7(1)(b) of the Promotion of Administrative Justice Act 3 of 2000 (PAJA), in the absence of reasons – held SACE unlawfully fettered its statutory discretion by applying its mandatory sanctions policy as a rigid set of rules that permitted no discretion – held that it was impermissible for SACE to deny the children and their parents the opportunity to be heard on the question of appropriate sanctions – held that SACE committed a material error of law by not considering rehabilitative and corrective sanctions. 3 ORDER On appeal and cross-appeal from: Gauteng Division of the High Court, Pretoria (Fourie J, sitting as court of first instance): 1 The appeal is upheld. 2 The order of the high court is set aside and substituted with the following: (i) The decision of the first respondent of 11 February 2020 and confirmed in a letter dated 25 February 2020 to approve the plea and sentence agreement and to confirm the sanction imposed on the second respondent, Mrs Vangile Mirriam Mokoena, following a disciplinary hearing finalised on 20 September 2019, is declared unlawful and invalid, and is set aside. (ii) The decision of the first respondent of 16 October 2019 to approve the plea and sentence agreement and to confirm the sanction imposed on the third respondent, Mrs Khutso Francinah Sathekge, following a disciplinary hearing finalised on 18 September 2019, is declared unlawful and invalid, and is set aside. 3 The decisions and sanctions are remitted to the first respondent for reconsideration in order to comply with its constitutional obligations to act in the best interests of learners and to consider appropriate rehabilitative sanctions to ensure that the two educators referred to above are assisted and enabled to apply appropriate and non-violent disciplinary measures. 4 The first respondent is ordered to pay the costs of the appeal and cross appeal, including the costs of two counsel. 4 JUDGMENT Tolmay AJA (Nicholls, Mbatha and Mothle JJA and Mbhele AJA concurring): Introduction [1] This appeal finds its genesis in an application brought primarily by the first appellant, the Centre for Child Law, to review and set aside the decision of the first respondent, the South African Council for Educators (SACE) in disciplinary proceedings against two educators, who assaulted children in the school environment. The complaint was that the 2016 Mandatory Sanctions that applied at the time were unlawful, as they did not provide for the exercise of any discretion when imposing a sanction and did not provide for any rehabilitative or corrective sanctions. The disciplinary proceedings also fell short as they did not allow for meaningful participation by the learners and their parents in the hearings. During 2020, SACE revised the mandatory sanctions but the appellant and the Children’s Institute, that was admitted as amicus curiae, were still not satisfied that the amended mandatory sanctions catered for the best interests of the child. In addition, they failed to follow a child centred approach and the sanctions to be imposed did not provide for any rehabilitative measures to address the unlawful conduct of the educators. [2] The appellants in the high court sought three primary forms of relief. The first form of relief was in terms of the Promotion of Administrative Justice Act No 3 of 2000 (PAJA) and the constitutional principle of legality, seek essentially to set aside the decisions of the disciplinary hearings and to remit the matters back to SACE with appropriate directions. The second what was referred to as systemic relief, in that SACE be ordered to reconsider and review its ‘2020 Mandatory Sanctions on the Code of Professional Ethics’ in order to make provision for corrective and 5 rehabilitative sanctions, to consider the best interests of the child and the need for a child centred approach. Finally, the appellant sought condonation, to the extent necessary for bringing the application outside the time periods prescribed by PAJA. [3] The court of first instance dismissed the review on the basis that there was an undue delay in the launching of the application. The court, however, granted the systemic relief. It found that it was appropriate in the circumstances of the case to exercise its discretion to grant a just and equitable remedy in terms of s 172(1)(b) of the Constitution. The court ordered SACE to reconsider and revise the revised mandatory sanctions adopted in June 2020 to address the deficiencies in the decision-making process, with particular regard to the need for the inclusion of corrective and rehabilitative sanctions, the need to consider the best interests of the child and the need for a child centred approach. [4] The appellants appeal against paragraph 1 of the order1 that dismissed prayers 1 to 5 of the amended notice of motion2 and the part of the judgment that dealt with 1 The order of the High Court delivered by Fourie J on 13 October 2022 reads as follows: ‘1. The application with regard to prayers 1 to 5 of the amended notice of motion, is dismissed. 2. The first respondent is ordered, within six months of the granting of this order, to reconsider and revise its “Mandatory Sanctions on Contravention of the Code of Professional Ethics”, adopted in June 2020, to address the deficiencies in the decision-making process and, in particular, to pay due regard to: 2.1 the need for the inclusion of corrective and rehabilitative sanctions such as anger management and training on non-violent child discipline techniques; 2.2 the need to recognise the best interests of the child and the rights of learners in the guiding principles; and 2.3 the need for a child-centred approach, which requires that children and their parents be consulted on the appropriate sanction and be afforded a meaningful opportunity to make representations on an appropriate sanction; 3. The first respondent is ordered to engage meaningfully with the first applicant and the amicus curiae in order to give effect to the order in paragraph 2 above; 4. The first respondent must serve on the applicants and the amicus curiae, and lodge with this Court, affidavits setting out the process that have been followed to reconsider and revise its mandatory sanctions referred to above, and to furnish and file copies of the revised mandatory sanctions, by no later than one month after the expiry of the six month period referred to in paragraph 2 above; 5. The first respondent is ordered to pay the costs of the applicants, including the costs of two counsel where so employed, with no order as to costs regarding the amicus curiae.’ 2 Amended notice of motion at pages 196-197 reads as follows: ‘1 The following decisions of the first respondent (SACE) are declared to be unlawful and invalid, and in breach of SACE’s obligations to protect the constitutional rights of learners: 1.1 The decision of 11 February 2019, communicated in a letter dated 25 February 2019, to approve the plea and sentence agreement and to confirm the lenient sanction imposed on the second respondent, Mrs Vangile Mirriam Mokoena, following a disciplinary hearing finalised on 20 September 2019; 6 the delay in bringing the application. SACE cross-appealed against paragraphs 2, 3, 4 and 5 of the order and the paragraphs of the judgment which deals with the revised mandatory sanctions. At the hearing the court was informed that SACE was not proceeding with the cross-appeal, as a result the part of the order that obliged SACE to reconsider its revised mandatory sanctions of 2020 is no longer in dispute. Because the Children’s Institute interest lay only in making submissions on this aspect, the fact that the cross-appeal was not proceeded with put an end to its 1.2 The decision of 16 October 2019, communicated in a letter dated 30 October 2019, to approve the plea and sentence agreement and to confirm the lenient sanction imposed on the third respondent, Mrs Khutso Francinah Sathekge, following a disciplinary hearing finalised on 18 September 2019; 1.3 Which resulted in the following sanctions being imposed on the second and third respondents: 1.3.1 Removal from the roll of educators, wholly suspended for 10 years on condition that the educator is not found guilty of further misconduct during the period of suspension. 1.3.2 A fine of R15 000 of which R5 000 is suspended, with the R10 000 being payable to SACE over a period of 12 months. 2 The following decisions and recommendations of the SACE disciplinary hearing presiding officers and SACE Ethics Committee are declared to be unlawful and invalid and in breach of SACE’s obligations to protect the constitutional rights of learners: 2.1 The recommendations and decisions of SACE disciplinary hearing presiding officer, Ms Malele, dated 13 October 2019, and the SACE Ethics Committee, dated 11 February 2020, in respect of the second respondent. 2.2 The recommendations and decisions of SACE disciplinary hearing presiding officer, PM Molabe, dated 18 September 2019, and the SACE Ethics Committee, dated 16 October 2019, in respect of the third respondent. 3 The impugned decisions in paragraphs 1 and 2 are reviewed and set aside. 4 The decisions in paragraph 1 and 2 are remitted back to SACE for reconsideration, subject to appropriate directions. 5 Pending the outcome of any further disciplinary proceedings and SACE’s further decision on the appropriate sanction, as contemplated in paragraph 4 of this order: 5.1 The sanctions referred to in paragraph 1.3 of this order remain binding; and 5.2 The second and third respondents are not relieved of any obligation to comply with those sanctions and accompanying conditions. 6 SACE is directed, forthwith, to reconsider and revise its “Mandatory Sanctions on Contravention of the Code of Professional Ethics (Towards a robust SAGE Sanctioning Philosophy)” (Revised Mandatory Sanctions), adopted in June 2020, to address the deficiencies in the decision-making process identified in this review application. In particular, SACE is directed to pay due regard to: 6.1 The need for the inclusion of corrective and rehabilitative sanctions such as anger management and training on non-violent child discipline techniques; 6.2 The need for the mandatory removal from the educators register in circumstances of serious assaults of learners. 6.3 The need to recognise the best interests of the child and the rights of learners in the guiding principles; and 6.4 The need for a child-centred approach throughout the disciplinary proceedings, so that children and their parents/ guardians can participate in the entire process. In light of this case, this would include that children and their parents be consulted on the appropriate sanction and afforded a meaningful opportunity to make representations on the appropriate sanction. 7 To the extent necessary, the applicants’ delay in bringing this application outside of the 180-day time limit contemplated n section 7(1) the Promotion of Administrative Justice Act 3 of 2000 (PAJA) is condoned and/or the 180-day time period is extended so as to terminate one day after the institution of this application. 8 The costs of this application are to be paid by SACE together with any other respondents who oppose this application, jointly and severally. 9 Further and/or alternative relief.’ 7 concerns. It however persisted with the request that the evidence provided by Ms Quail, an expert in non-violent discipline skills be allowed and entered into the record. This was not opposed by the other parties and the evidence was duly admitted. Background [5] This case concerns the disciplinary proceedings by SACE of two educators. Ms Mokoena assaulted TZ and NT, during August 2015, with a piece of PVC pipe; both learners were in grade two at the time. TZ allegedly started having headaches that became progressively worse and was eventually hospitalised for two weeks and had to undergo emergency surgery for a brain haemorrhage. During his hospital stay Ms Mokoena visited him and allegedly threatened him not to tell anyone of the assault. TZ’s mother set out in a supporting affidavit how this incident had negatively impacted on TZ’s life. The other incident concerns Ms Sathekge who assaulted MPM by hitting her on the head. Her mother said she bled from her ear, was taken for several medical examinations, and was admitted to hospital twice. Her mother also explained how this incident negatively impacted on MPM’s life. SACE disputed that these injuries were caused by the assaults as well as the severity and consequences of the assaults. [6] During 2019 the mothers of both children were assisted by their attorneys in lodging formal complaints with SACE against the two teachers. SACE investigated the matters and recommended that both teachers be charged with assault. Ms Mokoena pleaded guilty to four breaches of SACE’s Code of Professional Ethics (the Code), which included two charges of assault and two charges of threatening the children not to report the assault. Ms Sathekge pleaded guilty on one charge of assault. Ms Sathekge’s disciplinary hearing occurred on 18 September 2019 and Ms Mokoena’s hearing was on 20 September 2019. 8 [7] In both instances the appellants and the children were invited to attend the disciplinary hearings, but they were made to wait in a separate room at SACE’s office. They were not present in the hearings and were not afforded an opportunity to present evidence, or to make representations, nor were they consulted about the sanctions imposed. They were subsequently merely notified about the fact that the teachers pleaded guilty and the sanctions that were imposed. Both teachers received identical sanctions, despite the circumstances and the severity of the assaults not being comparable. Both were removed from the roll of educators, wholly suspended for ten years; and a fine of R15 000 payable over a period of twelve months, of which R5 000 was suspended. [8] At the hearing of the appeal only two issues were persisted with by SACE. The first was that the court of first instance correctly found that there was an unreasonable delay in the launching of the application and correctly dismissed the review on that ground and the second was that the appeal was moot. Undue Delay [9] Section 7(1) of PAJA requires judicial proceedings to be instituted without unreasonable delay and not later than 180 days from the day on which the proceedings have been concluded, or on which the person concerned was informed, or could reasonably be expected to have been aware of the administrative action and the reasons for it. It is common cause that no reasons were provided despite various requests by the attorneys of the appellants. The court of first instance accepted that the appellants requested reasons and that none were provided.3 The court a quo 3 Paragraphs 53-54 in the judgement of the court a quo, reads as follows: ‘53. . . . A request for reasons was already made on 15 November 2019 with regard to the third respondent as well as on 12 March 2020 in respect of the second respondent. This presumption would therefore operate in favour of the applicants. 54. . . . When these proceedings were ultimately instituted, the applicants had still not received any reasons.’ 9 found that in a case like this, where no reasons were provided, s 7(1) of PAJA came into play which, on the court’s interpretation, meant that the applicants would have to show that there was no unreasonable delay in the bringing of the application.4 [10] The court of first instance’s reasoning is at odds with the decisions of both the Constitutional Court and this Court where it was held that: ‘s 7(1) of PAJA explicitly provides that the proverbial clock begins to tick from the date on which the reasons for the administrative action became known (or ought reasonably to have become known) to the applicant’.5 As a result there is only one trigger date for both the unreasonable delay and the calculation of the 180 day period under PAJA. [11] The appellants, before launching the application made repeated requests for reasons to no avail. SACE was generally unresponsive and when it did respond it blamed the closure of offices during Covid-19 and indicated that a response would be forthcoming once circumstances improved. The importance of investigating matters before launching review applications to set aside administrative action in order to avoid unnecessary litigation was stressed in Joubert Galpin Searle Inc and Others v Road Accident Fund and Others.6 The appellants cannot be faulted for attempting to obtain reasons before proceeding with litigation. In the absence of reasons, the 180-day period did not even commence before the application was 4 Paragraph 55 in the judgement of the court a quo, reads as follows: ‘55. The argument that in the absence of reasons, the 180-day period had not yet started at the time the applicants launched this application cannot, in my view, be stretched too far. If that were to be the only consideration to be taken into account, it would mean that in the absence of reasons, an applicant can wait as long as it pleases him or her before launching a review application. The short answer to this argument is that in such a case the first part of s 7(1) will become relevant in which event the applicant will have to show that the application was instituted without unreasonable delay, notwithstanding the absence of reasons. Put differently, the absence of reasons did not prevent the applicants to launch their application within a reasonable time. Taking into account all these considerations, I am of the view that the applicants failed to institute these proceedings without unreasonable delay as contemplated in s 7(1) of PAJA. This means that the applicants’ application for condonation must now be considered.’ 5 Commissioner, South African Revenue Service v Sasol Chevron Holdings Limited [2022] ZASCA 56; 85 SATC 216 para 30. See also City of Cape Town v Aurecon South Africa (Pty) Ltd [2017] ZACC 5; 2017 (6) BCLR 730 (CC); 2017 (4) SA 223 (CC) para 41. 6 Joubert Galpin Searle Inc and Others v Road Accident Fund and Others [2014] ZAECPEHC 19; [2014] 2 All SA 604 (ECP); 2014 (4) SA 148 (ECP) paras 52 and 55. 10 launched. The court of first instance misdirected itself when finding that there was an unreasonable delay in the launching of the application. Mootness [12] The second point raised by SACE is that the appeal is moot. The two educators were sanctioned in terms of the 2016 Mandatory Sanctions. It was argued on behalf of SACE that the application is moot for two reasons. Firstly, the educators have served their sentences and secondly, the 2016 Mandatory Sanctions were replaced by the 2020 Mandatory Sanctions. For these reasons, it was argued, the issues between the parties had been rendered abstract, academic, and hypothetical and the court should therefore refrain from exercising its discretion in favour of the appellants.7 [13] The Constitutional Court in Police and Prisons Civil Rights Union v South African Correctional Service Workers’ Union and Others8 confirmed that courts exist to determine concrete live disputes, but that mootness is not an absolute bar to justiciability when justice so requires. A court must exercise a judicial discretion, taking into account various factors including whether an order will have some practical effect.9 There can be no doubt that if this Court were to set aside the administrative action and remit this matter to SACE, it would have a practical effect. SACE would be obliged to reconsider the sanctions. That the educators have partially complied with the sanctions imposed on them, is a consideration when determining an appropriate remedy. However, it does not render the matter moot. In 7 JT Publishing (Pty) Ltd and Another v Minister of Safety and Security and Others [1996] ZACC 23; 1996 (12) BCLR 1599; 1997 (3) SA 514 para 15. 8 Police and Prisons Civil Rights Union v South African Correctional Services Workers' Union and Others [2018] ZACC 24; [2018] 11 BLLR 1035 (CC); 2018 (11) BCLR 1411 (CC); (2018) 39 ILJ 2646 (CC); 2019 (1) SA 73 (CC) para 44. 9 Ibid paras 43-44. See also Minister of Tourism and Others v Afriforum NPC and Another [2023] ZACC 7; 2023 (6) BCLR 752 (CC) paras 22-23 and National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others [1999] ZACC 17; 2000 (2) SA 1; 2000 (1) BCLR 39 Id at fn18. 11 any event the suspension imposed on the educators during September 2019 is for a period of 10 years and therefore it cannot be convincingly argued that the educators have served their sentences. The inappropriate conduct that led to the sanctions can, and should, still be addressed in an appropriate manner. [14] The second point raised on the issue of mootness is that the 2016 Mandatory Sanctions had been replaced by the 2020 Mandatory Sanctions. These sanctions postdate the sanctions imposed. It was pointed out by the appellants that these sanctions still do not address the lacunae that were apparent in the 2016 Mandatory Sanctions. The dispute remains very much alive as the constitutional concerns have not been addressed. The 2020 Mandatory Sanctions still do not address the need for corrective rehabilitative sanctions, the need to recognize the best interests of the child, the rights of children and the need for a child centred approach. These concerns were addressed by the systemic relief granted by the court of first instance and does not require any further consideration by this Court. The issue is however not moot as it must be addressed by SACE in compliance with the systemic relief granted in the context where the cross appeal was only abandoned at the hearing before this Court. The review [15] The question of whether a case has been made out for a review in terms of PAJA or the principle of legality now needs to be determined. The decision taken falls squarely within the definition of an administrative action as defined in PAJA and the review will be considered as such.10 10 Section 1 of PAJA reads as follows: ‘1 Definitions In this Act, unless the context indicates otherwise – “administrative action” means 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 12 [16] There is no doubt, that SACE’s exercise of disciplinary powers must be guided by its constitutional obligations. The appropriate starting point for all matters relating to children is s 28(2) of the Constitution that dictates that a child’s best interests are of paramount importance in every matter concerning a child. This principle is echoed in s 9 of the Children’s Act.11 Section 6(3) and s 10 goes further and emphasises that the views of a child and the family of the child must be given due consideration. There is thus no doubt that the best interests of a child take centre stage in all matters concerning a child. A child and its family have a right to be heard and to participate in proceedings concerning the child. SACE is as an organ of state in terms of s 7(2) of the Constitution obliged to respect, protect, and fulfil the rights in the Bill of Rights.12 [17] Section 39(1)(b) of the Constitution creates a further obligation to consider international law when interpreting the Bill of Rights. Section 233 states that when interpreting legislation, the court must prefer any reasonable interpretation of legislation that is consistent with international law.13 South Africa is a signatory to the United Nations Convention on the Rights of the Child (CRC)14 and the African Charter on the rights and Welfare of the Child (ACRWC)15 and is duty bound to protect and ensure that the rights of children as envisaged in these instruments are prioritized. (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.’ 11 Children’s Act 38 of 2008. 12 Christian Education South Africa v Minister of Education [2000] ZACC 11; 2000 (4) SA 757; 2000 (10) BCLR 1051 para 47. 13 S v M [2007] ZACC 18; 2008 (3) SA 232 (CC); 2007 (12) BCLR 1312 (CC); 2007 (2) SACR 539 (CC) para 16. 14 Articles 19(1), 28(2) and 37 the African Charter on the Rights and Welfare of the Child (ACRWC). 15 Preamble and articles 3 and 11(5) to take all appropriate measures to protect children from violence. 13 [18] The South African Schools Act16 in s 10 outlawed corporal punishment in all schools and by doing so ensured that no child should be subjected to any form of physical violence in the school environment. This legislative prohibition should have been the end of any notion that an educator is allowed or justified to use any form of physical violence against a learner. Sadly, as illustrated by the incidents that form the subject matter of this case and the expert evidence provided by the amicus, corporal punishment is still rife in the school environment. [19] In a society besieged by violence this must be of grave concern, and it cannot be gainsaid that violence as a form of ensuring corrective behaviour should be addressed at its roots. In the process of creating an environment that is conducive to the protection and development of children as citizens who will not resort to violence as a solution to conflict. It is imperative that educators not only be prohibited to resort to physical violence as a form of discipline, but also be assisted to develop the necessary skills to discipline appropriately and with the required measure of personal control. It is by example that children are taught to navigate a complex conflict-ridden world, without resorting to violence as a solution. [20] SACE is established under The South African Council for Educators Act17 (the SACE Act). SACE must, as all organs of state, exercise its powers in accordance with the constitutional injunction set out above. This includes its powers to adopt disciplinary proceedings. In terms of s 21 of the SACE Act all teachers are required to be registered with SACE on the national roll of educators and fall under SACE’s disciplinary jurisdiction. [21] Section 14 of the SACE Act deals with the disciplinary committee and ss 2 provides inter alia that the disciplinary committee must inter alia from time to time 16 The South African Schools Act 84 of 1996. 17 The South African Council for Educators Act 31 of 2000. 14 review the code of professional ethics. The SACE Code of Professional Ethics (the Code) is compiled in accordance with s 5 the SACE Act18 and is binding on all 18 Section 5 of the South African Council for Educators Act No 32 of 2000, reads as follows: ‘5 Powers and duties of council Subject to this Act and the National Education Policy Act, 1996 (Act 27 of 1996), the council – (a) with regard to the registration of educators - (i) must determine minimum criteria and procedures for registration or provisional registration; (ii) must consider and decide on any application for registration or provisional registration; (iii) must keep a register of the names of all persons who are registered or provisionally registered; (iv) must determine the form and contents of the registers and certificates to be kept, maintained or issued in terms of this Act, the periods within which they must be reviewed and the manner in which alterations thereto may be effected; and (v) may prescribe the period of validity of the registration or provisional registration; (b) with regard to the promotion and development of the education and training profession – (i) must promote, develop and maintain a professional image; (ii) must advise the Minister on matters relating to the education and training of educators, including but not limited to – (aa) the minimum requirements for entry to all the levels of the profession; (bb) the standards of programmes of pre-service and in-service educator education; (cc) the requirements for promotion within the education system; (dd) educator professionalism; (iii) must research and develop a professional development policy; (iv) must manage a system for the promotion of the continuing professional development of all educators; (v) may develop resource materials to initiate and run, in consultation with an employer, training programmes, workshops, seminars and short courses that are designed to enhance the profession; (vi) may compile, print and distribute a professional journal and other publications; (vii) may establish a professional assistance facility for educators; (c) with regard to professional ethics – (i) must compile, maintain and from time to time review a code of professional ethics for educators who are registered or provisionally registered with the council; (ii) must determine a fair hearing procedure; (iii) subject to subparagraph (ii), may- (aa) caution or reprimand; (bb) impose a fine not exceeding one month's salary on; or (cc) remove from the register for a specified period or indefinitely, or subject to specific conditions, the name of, an educator found guilty of a breach of the code of professional ethics; and (iv) may suspend a sanction imposed under subparagraph (iii) (bb) or (cc) for a period and on conditions determined by the council; (d) with regard to fees – (i) must, in consultation with the Minister, determine fees payable to the council by registered educators and educators applying for registration; (ii) may require from the relevant employers to deduct fees from the salaries of educators and to pay it over to the council; (iii) may, after a fair hearing – (aa) caution or reprimand; or (bb) remove from the register for a specified period or indefinitely, or subject to specific conditions, the name of, an educator found guilty of failing to pay the fees determined by the council; and (iv) may suspend a sanction imposed under subparagraph (iii) (bb) for a period and on conditions determined by the council; and (e) in general – (i) must advise the Minister on any educational aspect which the Minister may request it to advise on; (ii) may appoint staff and determine their conditions of service; (ii) may establish committees and assign duties to them; (iv) must perform any duty which is necessary for the proper functioning of the council; and 15 educators. Paragraph 3 of the Code inter alia includes that an educator must respect the dignity of learners,19 exercise authority with compassion20 and avoid any form of humiliation and refrain from any form of physical or psychological abuse.21 [22] The 2016 Mandatory Sanctions on Contraventions of Professional Ethics applied at all relevant times. These sanctions did not allow for the exercise of any discretion, whatever the circumstances of a matter. The sanctions imposed on the educators were in accordance with this document. In the answering affidavit it was confirmed that, according to SACE, these sanctions allowed for no discretion whatsoever and any deviation from them would have amounted to an illegality. This approach loses sight of the fact that the sanctions are policy and not law. In Long Beach Home Owners Association v Department of Agriculture, Forestry and Fisheries and Another22 the following was said: ‘Although not strictly necessary for the determination of this appeal, I should say something concerning the Policy, referred to above, which has been adopted by the first and second respondents. As stated in Computer Investors Group Inc & another v Minister of Finance 1979 (1) SA 879 (T) at 898C-E: (affirmed in MEC for Agriculture, Conservation, Environment and Land Affairs v Sasol Oil (Pty) Ltd and Another 2006 (5) SA 483 (SCA)): ‘Where a discretion has been conferred upon a public body by a statutory provision, such a body may lay down a general principle for its general guidance, but it may not treat this principle as a hard and fast rule to be applied invariably in every case. At most it can be only a guiding principle, in no way decisive. Every case that is presented to the public body for its decision must be considered on its merits. In considering the matter, the public body may have regard to a general principle, but only as a guide, not as a decisive factor. If the principle is regarded as a decisive (v) may advise the Minister on any relevant educational aspect.’ 19 Paragraph 3.1 of the SACE Code of Professional Ethics, reads as follows: ‘3.1 respects the dignity, beliefs and constitutional rights of learners and in particular children, which includes the right to privacy and confidentiality.’ 20 Paragraph 3.4 of the SACE Code of Professional Ethics, reads as follows: ‘3.4 exercises authority with compassion.’ 21 Paragraph 3.1 of the SACE Code of Professional Ethics, reads as follows: ‘3.5 avoids any form of humiliation, and refrains from any form any form of abuse, physical or psychological.’ 22 Long Beach Homeowners Association v Department of Agriculture, Forestry and Fisheries (South Africa) and Another [2017] ZASCA 122; 2018 (2) SA 42 (SCA) para 17. 16 factor, then the public body will not have considered the matter, but will have prejudged the case, without having regard to its merits. The public body will not have applied the provisions of the statutory enactment.’ [23] SACE argued that the 2016 Mandatory Sanctions were revised and replaced by the June 2020 Mandatory Sanctions. The revised sanctions, however, still suffer from certain impediments. This was however sufficiently addressed in the systemic relief granted by the high court; those orders remain operative and SACE will be well advised to carefully consider the systemic relief and comply with it when revising the Code. [24] In AB and Another v Pridwin Preparatory School and Others23 it was confirmed that s 28(2) incorporated a procedural component affording the child concerned an opportunity to make representations.24 That the rights of children, which include the right to be heard is part of our law is undeniable.25 It follows that if legislation and policies impact on the rights of children, those must refer back to what is contained in the Constitution, related legislation and applicable international law. How the child will participate in the proceedings will depend on the circumstances of the specific case and must be approached in a manner that will best serve the interests of the child. [25] SACE has a duty to assess, inter alia, the impact of the actions of educators on the children, including whether it is advisable that the educators return to the classroom; whether it is necessary to protect the children from harm; and, whether the underlying causes of the educator’s violent behaviour require addressing. I would 23 AB and Another v Pridwin Preparatory School and Others [2020] ZACC 12; 2020 (9) BCLR 1029 (CC); 2020 (5) SA 327 (CC). 24 Ibid paras 73-74. 25 Centre for Child Law v The Governing Body of Hoërskool Fochville [2015] ZASCA 155; [2015] 4 All SA 571 (SCA); 2016 (2) SA 121 (SCA) paras 19-22. 17 add to that, that the question of whether the child may need assistance psychological or otherwise to limit the harm done to her must also be considered. [26] A perusal of the record leaves one none the wiser as to the reasons for the educators’ defiance of the law and this illustrates the necessity to consider rehabilitative measures. To merely impose a sanction without addressing the root cause of the problem is counterproductive. There is no impediment in law to impose such sanctions when appropriate, nor should there be.26 Such sanctions should protect the best interests of the child and should assist the educator in developing the appropriate skills to function appropriately in the workplace. [27] The decisions taken by SACE in relation to these incidents did not comply with numerous provisions of PAJA. The decisions taken in accordance with these sanctions were procedurally unfair as envisaged in s 6(2)(c) of PAJA as the children and their parents were not given an opportunity to be meaningfully heard or participate in the proceedings. In terms of s 6(2)(d) of PAJA the decisions were materially influenced by an error of law, in that it did not take into consideration any of the provisions in the Constitution and Children’s Act relating to the best interests and protection of the rights of children. The decisions were also taken capriciously and arbitrarily as envisaged in s 6(2)(e)(vi) as no discretion was allowed when the sanctions were imposed. It is undoubtedly so that the 2016 Mandatory Sanctions unlawfully fettered the discretionary powers of the disciplinary committee. [28] In light of the above the review should have been granted as the decisions taken in terms of the 2016 Mandatory Sanctions are unlawful and stand to be reviewed and set aside. The court of first instance correctly acknowledged the need for compliance with SACE’s constitutional and statutory obligations and the 26 Preddy and Another v Health Professions Council of South Africa [2008] ZASCA 25 para 15. 18 remedies provided for in terms of section172(2)(b) will address the existing defects. Due to the decision to abandon the cross appeal this part of the order of the court of first instance remains in force. [29] The analysis of the law in relation to the facts requires of this court to declare the decisions by SACE in relation to the two educators unlawful, invalid and in breach of its obligations to protect the rights of learners. The question that remains is what the appropriate remedy is, because part of the sanctions has already been complied with. The appellant’s main concern at this stage is that the core issues were not addressed, namely the possibility of rehabilitative sanctions, the child’s right to be heard and the absence of a child centred approach to be followed. [30] It was argued by SACE that due to the effluxion of time this court should not remit the matter as it would result in the educators being punished twice for the same transgressions. If, however, the matter is remitted on a limited basis to address the educators’ apparent inability to act appropriately and to ensure no further unconscionable conduct on their part there will be no prejudice to them. On the contrary, they can only benefit if the sanctions are rehabilitative in nature. The matter should therefore be remitted to SACE to consider the imposition of corrective rehabilitative sanctions, like anger management and alternative corrective discipline skills programmes to assist the educators in executing their duties properly. [31] The following order is made: The appeal against the first order of the court of first instance is upheld, that order is set aside and substituted with the following: 1 The appeal is upheld. 2 The order of the high court is set aside and substituted with the following: 19 (i) The decision of the first respondent of 11 February 2020 and confirmed in a letter dated 25 February 2020 to approve the plea and sentence agreement and to confirm the sanction imposed on the second respondent, Mrs Vangile Mirriam Mokoena, following a disciplinary hearing finalised on 20 September 2019, is declared unlawful and invalid, and is set aside. (ii) The decision of the first respondent of 16 October 2019 to approve the plea and sentence agreement and to confirm the sanction imposed on the third respondent, Mrs Khutso Francinah Sathekge, following a disciplinary hearing finalised on 18 September 2019, is declared unlawful and invalid, and is set aside. 3 The decisions and sanctions are remitted to the first respondent for reconsideration in order to comply with its constitutional obligations to act in the best interests of learners and to consider appropriate rehabilitative sanctions to ensure that the two educators referred to above are assisted and enabled to apply appropriate and non-violent disciplinary measures. 4 The first respondent is ordered to pay the costs of the appeal and cross appeal, including the costs of two counsel. ___________________________ R G TOLMAY ACTING JUDGE OF APPEAL 20 Appearances For appellants: C J C McConnachie (with him T Pooe) Instructed by: Section 27, Johannesburg Webbers Attorneys, Bloemfontein For first respondent: M M Mojapelo (with him F N Zulu) Instructed by: Mketsu & Associates Inc., Pretoria Matsepes, Bloemfontein For amicus curiae: E Webber Instructed by: Equal Education Law Centre, Cape Town Care of Savage Jooste and Adams, Pretoria

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 April 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 Centre for Child Law and Others v South African Council for Educators and Others (1289/2022) [2024] ZASCA 45 (9 April 2024) Today the Supreme Court of Appeal (SCA) handed down judgment in the matter. The appeal was upheld and the Court held that the South African Council for Educators (SACE), in disciplinary proceedings against two educators, who assaulted children in the school environment, acted in contravention of several sections of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). In terms of s 6(2)(c) of PAJA the decisions were procedurally unfair as the learners and their families were not given an opportunity to be meaningfully heard or participate in the proceedings. In terms of s 6(2)(e) the decisions were materially influenced by an error of law, in that SACE did not take into consideration any of the provisions of the Constitution and Children’s Act relating to the best interests and protection of the rights of children. The decisions were also taken capriciously and arbitrarily as envisaged in s 6(2)(e)(vi) as no discretion was allowed when the sanctions were imposed. The 2016 Mandatory Sanctions unlawfully fettered the discretionary powers of the disciplinary committee. The Court held that there was no undue delay in the launching of the review application in terms of s 7(1) of PAJA, as no reasons were provided for the decisions. The clock only begins to run once reasons are provided. It was held that the appeal was not moot and the Court held that if the decisions are reviewed, set aside and remitted to SACE, it would have practical effect. SACE would be obliged to reconsider the sanctions. Seeing that the educators have partially complied with the sanctions the matter is remitted on a limited basis, and SACE is to consider the imposition of rehabilitative and corrective sanctions against the educators. The court of first instance correctly acknowledged the need for compliance with SACE’S constitutional and statutory obligations in the systemic relief granted. ~~~~ends~~~~

4198

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 251/2023 In the matter between: PORTIA KHENSANI MHLARI NO FIRST APPELLANT/ FIRST RESPONDENT IN CROSS-APPEAL PATRICK JEALOUSY MALABELA NO SECOND APPELLANT/ SECOND RESPONDENT IN CROSS-APPEAL PORTIA KHENSANI MHLARI THIRD APPELLANT/ THIRD RESPONDENT IN CROSS-APPEAL PATRICK JEALOUSY MALABELA FOURTH APPELLANT/ FOURTH RESPONDENT IN CROSS-APPEAL LULAMA BUSINESS ENTERPRISES CC FIFTH APPELLANT/ FIFTH RESPONDENT IN CROSS-APPEAL MAMPEPU PROJECTS CC SIXTH APPELLANT/ SIXTH RESPONDENT IN CROSS-APPEAL PATIENCE LETHABO MLENGANA NO SEVENTH APPELLANT/ SEVENTH RESPONDENT IN CROSS-APPEAL and 2 NEDBANK LIMITED RESPONDENT/APPELLANT IN CROSS-APPEAL Neutral citation: Mhlari NO and Others v Nedbank Limited (251/2023) [2024] ZASCA 39 (4 April 2024) Coram: GORVEN and MATOJANE JJA, COPPIN, SMITH and KEIGHTLEY AJJA Heard: 27 February 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives via email, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down is deemed to be 11h00 on 4 April 2024. Summary: Unjust enrichment ─ conditio indebiti and conditio sine causa specialis ─ when available ─ not required to plead reliance on one to the exclusion of the other ─ where the pleading puts the claim in the ambit of the condictio indebiti to the exclusion of the condictio sine causa, not entitled to an election ─ the requirements of the pleaded condictio must be proved to succeed. 3 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Mdalana-Mayisela J sitting as court of first instance): 1. The appeal is upheld. 2. The cross-appeal is upheld with costs, including the costs of two counsel where so employed. 3. The order of the High Court is set aside and is substituted by the following order: ‘(1) The trustees of the PATRICK MALABELA FAMILY TRUST are ordered to pay the amount of R5 436 347.57 to the plaintiff, together with mora interest thereon, calculated from 12 September 2019 to date of final payment, both days inclusive. (2) The plaintiff is directed to take such steps as may be necessary for the cancellation of the covering mortgage bond executed in its favour and registered with the Registrar of Deeds, Pretoria, with registration number B2260/2023. (3) In the event of the plaintiff failing to comply with paragraph (2) within 30 days from the date of this order, the sheriff is hereby authorized to sign and execute all such documents, and do all such things as may be necessary, for the implementation of paragraph (2). (4) The trustees of the PATRICK MALABELA FAMILY TRUST are ordered to pay the plaintiff’s costs of suit.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Smith AJA (Gorven and Matojane JJA, Coppin and Keightley AJJA concurring): Introduction [1] The appellants appeal against the judgment of the Gauteng Division of the High Court in terms of which they were, inter alia, ordered to pay the respondent, Nedbank Limited (Nedbank) the sum of R12 316 632,37. The order also declared specially executable an immovable property owned by the trustees of the Patrick Malabela Family Trust (the Trust), situated in Sandton, Johannesburg. The respondent has filed 4 a conditional cross-appeal against the dismissal of its alternative claim based on unjust enrichment. Both appeals are with the leave of the High Court. The appellants will be referred to as in the main appeal. [2] The first, second and seventh appellants are trustees of the Trust, and the third to sixth appellants were cited as sureties for and co-principal debtors with the Trust for the due performance of its contractual obligations vis-a-vis Nedbank. [3] Nedbank is a duly registered and incorporated public company with limited liability. It trades as a deposit-taking institution in terms of the Banks Act 94 of 1990, and is a credit provider duly registered in terms of the National Credit Act 34 of 2005. The common cause facts [4] The following material facts are common cause. On 7 May 2013, Nedbank and the Trust, represented by the second appellant, purportedly concluded a loan agreement in terms of which the former lent R14 million to the Trust. As security for the loan, a covering mortgage bond was registered over the Trust’s immovable property and the third to sixth appellants bound themselves as sureties for, and co-principal debtors with, the Trust. [5] After the registration of the bond, Nedbank duly paid the sum of R14 million to the Trust in accordance with the terms of the loan agreement. The Trust initially made regular payments by way of debit order but subsequently defaulted, with the last payment having been made on 23 June 2018. Nedbank consequently instituted civil action against the Trust and the appellants on 12 October 2018, claiming the sum of R12 316 632,37, an order declaring the mortgaged immovable property specially executable, and other ancillary relief (the contractual claim). [6] In their plea, the appellants disputed that the Trust had the requisite capacity to conclude the agreement. They averred that the trust deed required that there should be no fewer than three and no more than five trustees in office at any time. One of the trustees had resigned in October 2010, leaving only the first and second appellants as trustees. However, it was only on 4 October 2018 that the Master issued the certificate appointing a third trustee, namely the seventh appellant. Thus, when the loan 5 agreement was concluded on 7 May 2013, there were an insufficient number of trustees in office to bind the Trust legally. The appellants asserted that the loan agreement and the mortgage bond registered in pursuance of the invalid loan agreement were consequently also null and void. [7] Nedbank thereafter successfully applied to join the seventh appellant in her capacity as the third trustee. It also amended its particulars of claim to introduce an alternative claim based on unjust enrichment (the unjust enrichment claim). [8] In response, the appellants filed a counter-claim for the cancellation of the mortgage bond and amended their plea, averring that Nedbank’s alternative claim had become prescribed. They asserted furthermore that by the exercise of reasonable care, Nedbank could have ascertained more than three years prior to 12 September 2019 (when it filed its unjust enrichment claim) that the Trust did not have the requisite number of trustees at the time of contracting. In terms of s 12(b) of the Prescription Act 68 of 1969 (the Prescription Act), it is consequently deemed to have had knowledge of that fact when the loan agreement was concluded. The appellants contended for this reason that Nedbank’s alternative claim had prescribed. Proceedings in the High Court [9] At the trial, Nedbank called only one witness, namely Mr Perie Kemp, who was employed in its Paarl recoveries division. Mr Kemp confirmed that: (a) the capital sum was duly advanced to the Trust in terms of the loan agreement: (b) the Trust had made various payments by way of debit order; and (c) the Trust had defaulted on its contractual obligations and no further payments were made after 23 June 2023. [10] Certificates of Indebtedness, issued in terms of the loan agreement and reflecting an outstanding amount of R5 436 347.57, were also admitted into evidence. The appellants did not dispute any aspect of Mr Kemp’s testimony and closed their case without calling any witnesses. [11] In respect of the contractual claim, Nedbank relied on ostensible authority and estoppel as defences to the appellants' contention that the loan agreement was null and void. The High Court upheld Nedbank’s argument that the Trust should be 6 estopped from relying on the invalidity of the loan agreement. The Court found that there was no ‘legitimate basis upon which it can be asserted that these defences [ostensible authority and estoppel] cannot be invoked in the case of the action of the Trust, where the other party was lured to believe that informal (sic) formalities were complied with when in fact it was not so.’ The Court therefore concluded that the agreement was enforceable against the Trust and the sureties. In the light of that finding, the Court declined to pronounce on Nedbank’s unjust enrichment claim or the first, second and seventh appellants’ counter-claim. And, having found that the appellants were in material breach of their contractual obligations, the Court granted the order prayed for by Nedbank. [12] Nedbank has conceded in its written argument that the loan agreement is null and void because at the material time there were an insufficient number of trustees in office to legally bind the Trust.1 This concession was correctly made and nothing further needs to be said about that issue. Nedbank has consequently also conceded that the main appeal should succeed, the agreement must be set aside, and the mortgage bond cancelled. It follows that Nedbank’s claim against the third and fourth appellants, as sureties, shares the same fate. [13] Thus, only the appellants’ special plea regarding prescription and Nedbank’s alternative claim based on enrichment remain for consideration. Did Nedbank’s unjust enrichment claim become prescribed? [14] Because the High Court found for Nedbank on the issue of the Trust’s capacity, it declined to decide the prescription issue. Nonetheless, that defence can be dismissed out of hand. Section 12(3) of the Prescription Act provides that ‘[a] debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and 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 1 Land and Agricultural Development Bank of SA v Parker and Others [2004] ZASCA 56; 2005 (2) SA 77 (SCA); [2004] 4 All SA 261 (SCA) para 11, where Cameron JA said that: ‘It follows that a provision requiring that a specified minimum number of trustees must hold office is a capacity-defining condition. It lays down a prerequisite that must be fulfilled before the trust estate can be bound. When fewer trustees than the number specified are in office, the trust suffers from an incapacity that precludes action on its behalf.’ 7 care.’ The first and second appellants represented to Nedbank that they were duly authorised to bind the Trust and that the latter had the requisite capacity to conclude the loan agreement. They also provided Nedbank with the necessary resolutions and other relevant written instruments in support of those representations. [15] Furthermore, it is common cause that the appellants had, at least until June 2018, acquiesced in the implementation of the loan agreement. The Trust made regular payments in terms thereof and had by that date repaid more than half of the capital amount. [16] There was, in my view, therefore nothing that could have alerted Nedbank to the fact that the loan agreement was invalid, until the appellants raised the point in their plea. The onus was on the appellants to adduce evidence in support of their contention that Nedbank could have become aware of that fact ‘by exercising reasonable care.’2 They have failed to do so, and the prescription defence must accordingly fail. The unjust enrichment claim [17] The requirements for a claim based on unjust enrichment are that the defendant must be enriched, the plaintiff must be impoverished, the enrichment must be at the expense of the plaintiff, and the enrichment must have been unjustified (sine causa). Although there is no unified general enrichment action, these are requirements common to all enrichment actions.3 [18] A person who pays money (or delivers a thing) to another because of a reasonable error of fact or law in the belief that the money is owing, whereas it is not, has a claim for repayment in terms of the condictio indebiti, to the extent that the person who received the payment has been enriched at his or her expense.4 The condictio sine causa specialis lies where the money is in the hands of the defendant without cause, whether due to the plaintiff’s mistake or not. Therefore, a defendant may raise as a defence to the condictio indebiti that the mistake was unreasonable 2 McLeod v Kweyiya [2013] ZASCA 28; 2013 (6) SA 1 (SCA). 3 McCarthy Retail Ltd v Short-distance Carriers CC [2001] ZASCA 14; [2001] 3 All SA 236 (A) paras 8-10; Kudu Granite Operations (Pty) Ltd v Caterna Ltd [2003] ZASCA 64; 2003 (5) SA 193 (SCA). 4 Govender v Standard Bank of South Africa Limited 1984 (4) SA 392 (C) at 400 (Govender). 8 and negligent, but in a claim based on the condictio sine causa specialis that consideration is irrelevant. [19] In Willis Faber Enthoven (Pty) Ltd v Receiver of Revenue,5 this court held that the condictio indebiti is an equitable remedy and its object is to prevent one person being unjustifiably enriched at the expense of another. The principles underlying the condictiones are not immutable but are constantly evolving to accommodate new circumstances.6 [20] In its written argument, Nedbank relied on the condictio sine causa specialis and in the alternative, on the condictio indebiti. Nedbank’s purported reliance on the condictio sine causa specialis is understandable. As mentioned, if the unjust enrichment claim were to be decided based on the conditio sine causa specialis, any negligence on Nedbank’s part is irrelevant. If, however, it were to be determined according to the principles applicable to the condictio indebiti, Nedbank’s negligence, if proved, may preclude reliance on that condictio. [21] Before us, counsel for Nedbank argued that notwithstanding the factual matrix pleaded in its counterclaim, which brings its enrichment claim within the ambit of the condictio indebiti, Nedbank is not precluded from relying on the condictio sine causa specialis. He submitted that in circumstances where the underlying causa for the payment was an invalid contract, the latter condictio is the correct remedy. In such a case the payment was not made indebiti because Nedbank was not settling a debt when making the payment to the Trust but was purportedly performing in terms of a void contract. There was consequently no causa for the payment, and Nedbank’s counterclaim must accordingly be decided in terms of the legal principles applicable to the condictio sine causa specialis. The issue regarding the reasonableness of its mistake therefore does not arise, or so he argued. 5 Willis Faber Enthoven (Edms) Bpk v Receiver of Revenue and Another [1991] ZASCA 163; 1992 (4) SA 202 (A) (Willis Faber). 6 Bowman, De Wet and Du Plessis NNO and Others v Fidelity Bank Ltd 1997 (2) SA 35 (AD), at page 40A-C, where Harmse JA said that the principles underlying the condictio are not immutable and that, in principle, a party is entitled to rely “op die analogiese aanwending van die condictio indebiti…”’ 9 [22] In my view, even though that submission is legally sound as a general proposition, the facts pleaded in this matter bring the enrichment claim squarely within the ambit of the condictio indebiti. Although it is not necessary for a claimant to commit in its pleadings to either condictiones to the exclusion of the other,7 Nedbank has firmly nailed its colours to the mast of the condictio indebiti. It has pleaded, inter alia, that the payment was made ‘in the reasonable, but mistaken, belief that it was owing in terms of the loan agreement.’ And furthermore, that the payment was made ‘indebiti,’ in that there was no legal obligation to make it. It is furthermore common cause that Nedbank made the payment to the Trust in the mistaken belief that the underlying agreement was valid and enforceable. Nedbank’s counterclaim must accordingly be decided based on the legal principles applicable to the condictio indebiti.8 In any event, for reasons that follow below, holding Nedbank to its pleaded cause of action makes no difference to the outcome of the case. [23] That the trust has been enriched at Nedbank’s expense is manifest and incontrovertible. On the common cause facts, the Trust has been enriched in the sum of R5 436 347,57, being the original loan amount advanced to it in terms of the invalid agreement, less the payments it made from time to time. It is also not disputed that, apart from the issue whether Nedbank’s mistake was reasonable and thus excusable, all the other requisites for a claim based on enrichment have been established. The only issue that thus remains for determination is whether Nedbank’s mistake was reasonable and excusable. Was Nedbank’s mistake reasonable? [24] The reasonableness of Nedbank’s mistake depends on the facts, on which the Court must exercise a value judgment. In this regard the Court must consider the relationship between the parties, the conduct of the Trust, whether the trustees were aware of the mistake, whether their conduct contributed to the mistake, Nedbank’s 7 Govender at 396C-D, cited with approval in B & H Engineering v First National Bank of SA Ltd 1995 (2) 279 (A). See also: First National Bank of Southern Africa Ltd v Perry NO and Others 2001 (3) SA 60 (SCA) at para [23]. 8 In Kudu (supra), at 201G-H, this court dealt with a void contract, albeit when void due to statutory prohibition. The court held that the condictio applies if the contract which gave rise to the transfer of property was ab initio unenforceable or has subsequently become unenforceable. And that ‘[t]he same principle applies if the contract is void due to a statutory prohibition (Wilken v Kohler 1913 AD 135 at 149-50), in which case the condictio indebiti applies.’ 10 state of mind, and the culpability of its ignorance in making the payment.9 It is trite that Nedbank bears the onus of proving that its conduct was not so slack that it is undeserving of the Court’s protection. [25] In my view, it would be unreasonable to ascribe negligence to Nedbank’s failure to perform a due diligence exercise to verify the Trust’s capacity beyond its reliance on the documents provided by the trustees. Before the conclusion of the loan agreement, Nedbank was provided with a Trust resolution indicating that the first and second appellants had been duly authorized to conclude the agreement on its behalf. In addition, in terms of the loan agreement the first and second appellants warranted the correctness of the information provided to Nedbank and declared that ‘no information that may affect Nedbank’s decision to approve the loan has been withheld.’ The first and second appellants also provided Nedbank with a certificate confirming that the loan agreement was for the benefit of the Trust beneficiaries and proof that the agreement has been duly authorized in terms of a resolution adopted by the Trust. In addition, the loan was secured by a covering mortgage bond, as well as by suretyships. [26] While it is possible that the first and second appellants initially acted in the bona fide but mistaken belief that their actions conformed to the trust deed, as trustees they nevertheless bore the primary responsibility of ensuring that the Trust complied with all its internal formalities before concluding the contact.10 The Trust acquiesced in the implementation of the loan agreement for some five years and purported to perform its contractual obligations in terms thereof. It is common cause that it continued to pay the monthly instalments and had in fact paid about 60 instalments, amounting to more than R11 million. It also went so far as to mortgage its immovable property as security. Thus, the undisputed evidence regarding the appellants’ conduct, both before and after the conclusion of the loan agreement, significantly attenuates Nedbank’s culpability and renders its mistake excusable. 9 Willis Faber at 224G-226A. 10 Land and Agricultural Bank of South Africa v Parker & Others 2005 (2) SA 77 (SCA). 11 [27] In conclusion then, I find that Nedbank’s reliance on the first and second appellants’ representations regarding the capacity of the Trust was reasonable in the circumstances. Nedbank’s failure to undertake a due diligence exercise in respect of the trust deed under these circumstances was therefore understandable and, in my view, did not constitute inexcusable slackness. Its mistake was therefore reasonable and excusable, and the counterclaim must consequently succeed. Costs [28] There can be little doubt that Nedbank was substantially successful and is therefore entitled to its costs, including the costs of two counsel. There are, however, different considerations in respect of the main appeal. In concluding the loan, the first and second appellants purported to act on behalf of the Trust and in the process made extensive representations to Nedbank regarding the Trust’s capacity. They did so in circumstances where they ought to have been aware of the trust deed terms and should have known that the Trust had been incapacitated because there were an insufficient number of trustees in office at the material time. It is therefore only fair that they should bear their own costs in respect of the main appeal. Order [29] In the result the following order issues: 1. The appeal is upheld. 2. The cross-appeal is upheld with costs, including the costs of two counsel where so employed. 3. The order of the High Court is set aside and is substituted by the following order: ‘(1) The trustees of the PATRICK MALABELA FAMILY TRUST are ordered to pay the amount of R5 436 347.57 to the plaintiff, together with mora interest thereon, calculated from 12 September 2019 to date of final payment, both days inclusive. (2) The plaintiff is directed to take such steps as may be necessary for the cancellation of the covering mortgage bond executed in its favour and registered with the Registrar of Deeds, Pretoria, with registration number B2260/2023. (3) In the event of the plaintiff failing to comply with paragraph (2) within 30 days from the date of this order, the sheriff is hereby authorized to sign and execute all such documents, and do all such things as may be necessary, for the implementation of paragraph (2). 12 (4) The trustees of the PATRICK MALABELA FAMILY TRUST are ordered to pay the plaintiff’s costs of suit.’ ________________________ J E SMITH ACTING JUDGE OF APPEAL 13 Appearances For the appellants: L Hollander Instructed by: Faber Goërtz Ellis Austen Inc, Bryanston Lovius Block Inc, Bloemfontein For the respondent: JG Wasserman SC and JM Kilian Instructed by: O’Connell Attorneys, Bryanston Honey & Partners 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: 4 April 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 Mhlari NO and Others v Nedbank Limited (251/2023) [2024] ZASCA 39 (4 April 2024) _________________________________________________________________________________ Today, the Supreme Court of Appeal (SCA) upheld an appeal and a cross-appeal against a judgment of the Gauteng Division of the High Court, Johannesburg (the high court), in terms of which, amongst others, the Patrick Malabela Family Trust (the Trust) was ordered to pay Nedbank the sum of R12 316 632,37. The order also declared specially executable an immovable property owned by the Trust situated in Sandton, Johannesburg. During May 2013, Nedbank and the Trust, represented by one of its trustees, purported to conclude a loan agreement in terms of which the former lent R14 million to the Trust. As security for the loan, a covering mortgage bond was registered over the Trust’s immovable property and several of the appellants bound themselves as sureties for, and co-principal debtors with the Trust. For approximately five years, the Trust duly paid the monthly instalments in accordance with the terms of the loan agreement. When it defaulted on the payments during 2018, Nedbank cancelled the agreement and issued summons against the trustees and the sureties for payment of the outstanding balance of the loan. It also sought an order declaring the mortgaged immovable property specially executable. The trustees defended the action on the ground that the loan agreement was void and unenforceable because the Trust did not have the requisite number of trustees in office at the time it concluded the agreement. The trust deed provided that the Trust must have at least three trustees in office at any time. At the time it concluded the loan agreement there were only two trustees in office and the Trust consequently lacked contractual capacity. In response, Nedbank filed an alternative claim based on unjust enrichment, asserting that it paid the money to the Trust in the mistaken belief that the loan agreement was valid and enforceable. The trustees in turn filed a counter-claim for the cancellation of the mortgage bond and amended their plea, averring that the unjust enrichment claim had become prescribed. The high court found for Nedbank on its main claim on the basis that the Trust had ostensible authority to conclude the loan agreement. It was accordingly not necessary for the high court to decide the trustees’ counter claim or prescription defence. The trustees appealed the judgment and Nedbank filed a cross-appeal in respect of its unjust enrichment claim. Both appeals were with the leave of the high court. On appeal to the SCA, Nedbank conceded that the Trust lacked capacity to conclude the loan agreement and that it was therefore void and unenforceable. That concession meant that the main appeal should succeed. Regarding the Trust’s prescription defence, the SCA found that Nedbank could not reasonably have been expected to have knowledge of the Trust’s lack of capacity before the point was raised by the trustees. It accordingly dismissed that defence, leaving only the issue of Nedbank’s unjust enrichment claim for decision. It was not disputed that the Trust had been enriched at Nedbank’s expense and the only issue that therefore fell for decision by the SCA was whether Nedbank’s mistake was reasonable and not as a result of inexcusable slackness on its part. In this regard the SCA found that when considered against the backdrop of the trustees’ conduct, Nedbank’s mistake was reasonable and excusable. The trustees had represented to Nedbank that the Trust had the necessary capacity to conclude the loan agreement and had provided it with various documents in proof of that assertion. The SCA accordingly upheld both the main appeal and the cross-appeal. It also set aside the high court’s order and substituted it with an order compelling the trustees to pay Nedbank the sum of R5 436 347.57, together with interests and its legal costs. It also directed Nedbank to take the necessary steps to cancel the mortgage bond. ----------oOo----------

4330

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1032/2022 In the matter between: WYNAND DU PREEZ N O APPLICANT (In his representative capacity of Estate Late NPN 6910/2023) and THE MEMBER OF THE EXECUTIVE COUNCIL RESPONDENT FOR HEALTH & SOCIAL DEVELOPMENT OF THE EASTERN CAPE PROVINCE Neutral citation: Du Preez N O v The Member of the Executive Council for Health of the Eastern Cape Province (1032/2022) [2024] ZASCA 147 (28 October 2024) Coram: NICHOLLS, KGOELE, SMITH JJA and COPPIN and MJALI AJJA Heard: 02 September 2024 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 28 October 2024 at 11h00. 2 Summary: Reconsideration of application for leave to appeal – s 17(2)(f) of the Superior Courts Act 10 of 2013 – whether exceptional circumstance exists – claim for medical negligence damages – brain injury sustained during birth – whether hospital staff were negligent – if so, whether such negligence caused the brain injury – no exceptional circumstances. 3 ORDER On application for reconsideration: referred by Petse AP in terms of s 17(2)(f) of the Superior Courts Act 10 of 2013: The application for leave to appeal is dismissed. JUDGMENT Kgoele JA (Nicholls, Smith JJA and Coppin and Mjali AJJA concurring) [1] This is an application for reconsideration in terms of s 17(2)(f) of the Superior Courts Act 10 of 2013 (the Act)1. The application stems from an action for damages instituted by Ms Veliswa Ngqobongo (Ms VN) on behalf of her minor child (PN). The claim was dismissed by the Eastern Cape Division of the High Court, Port Elizabeth (the high court). Ms VN applied for leave to appeal, which was denied by the high court on 17 June 2022. She petitioned this Court for leave to appeal which was dismissed on 12 September 2022. Aggrieved by the dismissal of her petition, she applied to the President of this Court to reconsider the application for leave. On 19 December 2022, the Acting President of this Court granted the application for reconsideration of this Court’s descision to refuse leave. He further referred the application for oral argument in terms of s 17(2)(d) of the Act, and the parties were informed that they should be prepared to argue the merits of the appeal. 1 Section 17(2)(f) provides that where leave to appeal has been refused by two judges of the Supreme Court of Appeal, the President of the Supreme Court of Appeal may refer the decision for reconsideration and, if necessary, variation. 4 [2] The factual background relevant to the consideration of this application is this. In her representative capacity, Ms VN instituted an action on behalf of her daughter, PN, against the MEC, for damages in respect of the injuries suffered by PN at the time of her birth. The allegations were that the injuries were sustained due to the negligence of the staff employed by the MEC. It is common cause that PN was born on 25 October 2009 at the Dora Nginza hospital, Gqebhera, and that she suffered from cerebral palsy. [3] Unfortunately, PN passed away on 7 May 2023 at the age of 13 years, after the pleadings were closed but before the hearing of this application. As a result, Ms VN was substituted in this application by the Executor of the estate, Mr Du Preez (the applicant). [4] The issues for determination by the high court were twofold. First, whether the medical staff employed by the MEC were negligent in the care and treatment of Ms VN during labour and the delivery of PN, and if so, whether such negligence caused PN to suffer a severe brain injury resulting in the cerebral palsy. [5] Before the high court, the applicant alleged that the hospital staff were at least negligent in three respects, which caused or contributed to the brain injury suffered by PN. These were: (1) an unchecked and un-remedied tapping of the foetal reserves during labour, which resulted in the foetus being unable to cope with the event that ultimately caused it to sustain the brain injury; (2) the application of excessive forceful fundal pressure to Ms VN’s pregnant abdomen that injured the foetus (PN); and, (3) the ineffective resuscitation of PN after birth. The applicant called three expert witnesses to support these propositions, namely Dr Hofmeyer, a specialist 5 obstetrician and gynaecologist, Professor Kirsten (Prof Kirsten), a specialist neonatologist and Professor Nolte (Prof Nolte), a professor of nursing. [6] The MEC denied liability, pleading that there was no negligence on the part of the hospital staff. In support of its denial, the MEC called Sister Minnaar, who monitored Ms VN’s labour along with two colleagues, Sisters Laminie and Bosman, all being professional nurses. In addition, two expert witnesses, Dr Nel, an obstetrician and gynaecologist, and Professor Cooper (Prof Cooper), a paediatrician and neonatologist, testified on behalf of the MEC. [7] Shortly before the application was heard in this Court, the applicant applied for the introduction of new documentary evidence. The MEC opposed the application. The new evidence which the applicant sought to introduce was a letter, dated 23 August 2024, and penned by Dr van der Walt, the medical doctor involved in PN’s resuscitation by administering four doses of adrenalin. [8] The new evidence sought to be introduced would, if it were allowed, impact the factual matrix that will underpin this Court’s reasoning and findings in respect of the application for reconsideration. It is therefore necessary for me to deal with the application for its admission upfront. [9] During the hearing in the high court, the MEC stated that he wished to call Dr van der Walt as a witness but was unable to locate him. The applicant’s legal team eventually managed to find him in Canada. A detailed account of the numerous attempts made to locate him is set out in the affidavit filed in support of the application. According to the applicant, the purpose of the evidence is to corroborate the expert evidence of Prof Kirsten, who, the applicant submitted, was of the firm 6 view that the fact that adrenalin was administered by Dr van der Walt demonstrated severe bradycardia (very low heart rate), probably of less than 60 beats per minute. [10] In the letter a series of questions, crafted by the applicant’s legal team, were put to Dr van der Walt. His answers to most of the questions were that he could not recall the specific details as it had been almost 15 years since the incident. Regarding administering adrenalin, and whether ‘it was possible that he would have given adrenalin if the heart rate was normal’, he said that ‘his usual practice’ is to give adrenalin if he found the patient to have no pulse or severe bradycardia.There is no indication whether this was his usual practice at the relevant time. [11] The test for the admission of further evidence on appeal is set out in S v de Jager2 and also in Moor and Another v Tongaat-Hulett Pension Fund and Others.3 It is as follows: (a) There must be a reasonably sufficient explanation, based on allegations which may be true, why the new evidence was not led in the court a quo; (b) There should be a prima facie likelihood of the truth of the new evidence; and (c) The evidence should be materially relevant to the outcome of the case. [12] In Rail Commuters Action Group & Others v Transnet Limited t/a Metrorail and Others,4 the Constitutional Court re-affirmed the decisions of this Court that new evidence can be admitted on appeal only in exceptional circumstances. Further, it stated that one of the most important criteria was that the ‘evidence tendered must 2 S v de Jager 1965 (2) SA 612 (S) at 613 C-D. 3 Moor and Another v Tongaat-Hulett Pension Fund and Others [2018] ZASCA 83; [2018] 3 All SA 326 (SCA); 2019 (3) SA 456 at para 36. 4 Rail Commuters Action Group & Others v Transnet Limited t/a Metrorail and Others [2004] ZACC 20; 2005 (2) SA 359 (CC); 2005 (4) BCLR 301 (CC). 7 be weighty and material and presumably to be believed, and must be such that if adduced it would be practically conclusive, for if not, it would still leave the issue in doubt and the matter would still lack finality’.5 (Emphasis added.) [13] I agree with the applicant that he managed to prove the first requirement, taking into consideration the reasons provided as to why the evidence was not produced at the time of the hearing. However, I am not convinced that the applicant succeeded in satisfying the second and third requirements. [14] According to the applicant, this evidence is necessary to counter Sister Minnaar's version that the minor child’s heart rate was 120 bpm when Dr van der Walt arrived. The applicant contends that if the heart rate had been 120 bpm, no adrenalin was required, as opined by Dr Kirsten. The contention of the applicant is that this evidence will also add to the other aspects of the whole picture that the ten minutes of resuscitation performed by Sister Minnaar was woefully inadequate and negligent. It would undoubtedly have compounded the brain injury. [15] I disagree with the applicant’s contention that the new evidence is relevant to the outcome of the case. In my view, the ‘new evidence’ is irrelevant. The high court indicated that even if it were assumed in favour of the applicant that the resuscitation of PN by the hospital staff after her birth was negligent in the manner suggested, the crucial question is whether such negligence was causally connected to the injury sustained by PN. The high court’s conclusion that ‘it was not proven that the negligence, if any, on the part of the hospital staff during resuscitation contributed to an already existing severe injury to the brain’ is fatal to this submission. In the 5 Ibid para 41. 8 circumstances, the evidence regarding the issue of resuscitation which the applicant seeks to introduce is irrelevant and will have no bearing on the outcome of the application for reconsideration. [16] In addition, Dr van der Walt’s conjecture as to why he could have administered four doses of adrenaline is not only irrelevant but amounts to ex post facto speculation. What is significant is that Dr van der Walt does not, in his response, purport to reflect on what ‘his usual practice’ was at that time (in 2009), when he was an intern. He only states what his ‘usual practice’ is presently. [17] The submission that the new evidence is prima facie correct or the truth suffers the same fate. It is clear that Dr van der Walt honestly admits that he has no recollection of this particular child or the circumstances surrounding her birth or resuscitation. Furthermore, in his notes, he recorded that he arrived in the labour ward at 23:45 on 25 October 2009 (10 minutes after PN’s birth), and that on ‘initial examination’ he found a neonate heart rate of 120 beats per minute, ‘gasping respiration 2-3/min, a flaccid tone, pink, no response to stimulation, this with bag-mask ventilation by nurse for [approximately] 10 min.’ These notes are the contemporaneous records of what happened at the time. [18] It is also of concern that Dr van der Walt did not reply to the leading question posed by the applicant’s legal team as to whether the heart rate recorded by him (120 bpm) was as a result of his own observations or was provided to him by the midwives. The significance of this is that the recording is at odds with the contention that the new evidence will counter the evidence of Sister Minnaar that the heart rate was 120 beats per minute. Instead, it materially corroborates the version of Sister Minnaar. 9 [19] I cannot conclude without emphasising that the documentary evidence sought to be introduced is a mere letter wherein Dr van der Walt was requested to reply to questions crafted by the applicant’s attorney. It was not in the form of an affidavit. Therefore, no weight can be attached to it. Furthermore, the prejudice caused to the MEC is that his counsel will not be able to cross-examine Dr van der Walt. As a result, the application for the introduction of the new documentary evidence is refused. [20] I now return to the application for the reconsideration of this Court’s order refusing the applicant leave to appeal. The applicant relied primarily on expert evidence in support of the propositions made before the high court. The expert opinions were based on the cardiotocograph (CTG) trace, the notes of the hospital staff, and the views expressed in the reports compiled by the doctors and specialists from both parties. [21] It is not necessary to deal with the evidence of these witnesses in detail since the main issues to be adjudicated upon, have been crystallised. However, it is essential to summarise the undisputed evidence of these witnesses relevant to the grounds raised in this application. First, the clinical records indicated that during the first stage of labour, Ms VN experienced a spontaneous rupture of her membranes at 19:00 on 25 October 2009. The amniotic fluid from her uterus was and remained clear - there was no meconium. The hospital staff discontinued the CTG monitoring approximately an hour into Ms VN’s labour. [22] The evidence revealed the following. During the second stage of labour, Ms VN started bearing down at 23:25 and not at 22:15 (which was an incorrect reading 10 by the applicant’s experts of the entry made by Sister Minnaar in the medical records). This was the erroneous premise upon which all of the applicant’s experts expressed their opinions. [23] PN was born in a “severely compromised condition” and required immediate resuscitation. PN was born with neurological (brain) injury and a low Apgar score at one minute of life, which improved to 5/10 after 5 minutes. The hospital staff called Dr van der Walt to assist with the resuscitation. He arrived in the labour ward approximately ten minutes after the birth of PN. He took over the further resuscitation and administered four doses of adrenalin to PN. PN’s foetal heart rate after the birth and during the resuscitation was recorded independently by both Sr Minaar and Dr van der Walt as about 120 beats per minute. PN was born with some caput and moulding (of the then still mobile cranial bones) of “+1”.’ [24] The evaluation of the evidence and reports of the expert witnesses of both parties by the high court reveals that the following key aspects were either agreed upon or ultimately conceded to. Regarding the monitoring of the labour, Dr Hofmeyr conceded that CTG monitoring is not a substitute for good clinical observation and judgment. The use of and interpretation of CTG tracings as a determinant of negligence is unreliable. Dr Hofmeyer acknowledged that worldwide the use of CTG monitoring has not reduced the incidences of foetal compromise. Dr Hofmeyr and Professor Kirsten reported that Ms VN’s labour “progressed well” until full dilation. Having regard to the partogram in particular, Dr Hofmeyr conceded that Ms VN probably endured a normal first stage of labour up to the time of full dilation. [25] Regarding the cause of the injuries, both the Magnetic Resonance Imaging (“MRI”) brain reports by radiologists Prof. Lotz and Dr Alheit Lotz are to the effect 11 that PN suffered an “acute profound (central) hypoxic-ischaemic injury involving the deep grey matter” and that these injuries in a term infant “occur suddenly” or “over a short period of time” and “progress rapidly”. It was recorded that: PN suffered the acute, profound hypoxic-ischaemic brain injury intrapartum during the second stage of labour; that almost total disruption of the blood supply and oxygen to the brain of PN must have endured for a minimum period of ten minutes; the aforesaid acute profound brain injury led to PN suffering from cerebral palsy; there was no known sentinel event which caused the hypoxic-ischaemic event. Although the experts could not identify the cause of the hypoxic ischaemic event, they all accepted the fact that an acute profound injury can occur in the absence of an identifiable “sentinel event”. [26] In considering an application of this nature, the Constitutional Court remarked in Liesching and Others v S6 that, s 17(2)(f) was not intended to afford disappointed litigants a further attempt to procure relief that had already been refused. It was designed to enable the President of the Supreme Court of Appeal to deal with a situation where injustice might otherwise result. The threshold for granting an application in terms of section 17(2)(f) is therefore high. The applicant has to satisfy this Court that the circumstances are truly exceptional to hear this matter again after the application for leave to appeal was dismissed by the court of first instance and this Court (by two colleagues). [27] As in the high court, the applicant in this Court first challenged the adequacy of the monitoring of the applicant’s labour during the first stage of labour. The submission was that the high court did not give sufficient attention to the fact that 6 Liesching and Others v S [2018] ZACC 25; 2018 (11) BCLR 1349 (CC); 2019 (1) SACR 178 (CC); 2019 (4) SA 219 para 139. 12 during the first stage of labour, the foetus showed signs of distress. As a result, so it was argued, the foetus reached the second stage of labour in a compromised condition and was, therefore, unable to cope with the event that ultimately caused it to sustain the brain injury. [28] Several propositions were advanced as a basis for the above submissions. These were: that the midwives did not properly interpret the decelerations recorded by the CTG, which decelerations provided evidence of foetal distress; the hospital staff stopped the CTG monitoring at a critical point; the foetal head descended slowly, which indicated that the passage of the foetus through the birth canal was somewhat obstructed hence the degree of the caput was huge. The applicant thus argued that the foetus suffered a tapping of her reserves as a result of these shortcomings. The condition, according to the applicant, was exacerbated by the fact that no doctor was called to advise on a properly controlled method of delivery, including the possibility of delivery by ventouse or caesarean section. [29] The grounds of appeal relied upon by the applicant in the application for leave to appeal are basically a rehashing of the three issues raised during the trial before the high court. They are in the main factual matters that the high court determined after evaluating all the evidence. The applicable test has always been that a court of appeal will not lightly interfere with the factual findings of a trial court unless there is a demonstrable and material misdirection or a finding that is clearly wrong.7 The principles to be applied to guide an appeal court in dealing with an appeal purely on the facts have been set out extensively in Rex v Dhlumayo and Another.8 7 Mashongwa v PRASA [2015] ZACC 36; 2016 (2) BCLR 204 (CC); 2016 (3) SA 528 (CC) para 45. 8 Rex v Dhlumayo and Another 1948 (2) SA 677 (A) at 705 – 706. 13 [30] In addition to the above, the principles dealing with opinion evidence are trite. In the law of evidence, “opinion” means any reference from observed facts, and the law on the subject is derived from the general rule that witnesses must speak only to that which was directly observed by them.9 An expert’s opinion represents his reasoned conclusion based on certain facts or data, which are common cause, or established by his own evidence or that of some other competent witness. Except possibly where it is not controverted, an expert’s bold statement of his opinion is not of real substance.10 [31] The cogency of an expert opinion depends on its consistency with the proven facts and on the reasoning by which the conclusion is reached.11 In general, it is crucial to bear in mind that it is ultimately the task of the court to determine the probative value of the expert evidence placed before it and make its own findings with regard to the issues raised.12 [32] Applying the principles as mentioned earlier, I am of the view that the criticism that the high court misdirected itself in finding that the foetus was not in a weakened state and suffered a tapping of her reserves just before the second stage of labour started cannot be sustained. The same applies to the finding that there was evidence of an obstructed labour based on the degree of the caput. First, the high court dealt with the issue of the interpretation of the CTG monitoring and the obstructed labour issue pertinently in its judgment. Furthermore, these propositions 9 Cross on Evidence 7th Ed at page 489; See also McGregor and Another v MEC for Health Western Cape (1258/2018) [2020] ZASCA 89 (31 July 2020) at para 21. 10 Ruto Flour Mills (Pty) Ltd v Adelson (1) 1958 (4) SA 235 (T) at A-B. 11 MEC for Health and Social Development, Gauteng v TM obo MM (380/2019) [2021] ZASCA 110 (10 August 2021) at para 125. 12 Van Wyk v Lewis 1924 AD 438 at 447.See also MEC for Health, Eastern Cape v ZM obo LM (576/2019) [2020] ZASCA 169 (14 December 2020) para 11. 14 are inconsistent with the evidence of the applicant’s expert witness, Dr Hofmeyer, who eventually conceded that Ms VN probably endured a normal first stage of labour up to the time of full dilation. [33] Secondly, it was common cause amongst all the experts that the foetus suffered a severe acute, profound central brain injury intrapartum during the second stage of labour, which only lasted 20 minutes, of which only the last 10 minutes involved active pushing by Ms VN. Not a single expert witness, including those called by the applicant, suggested that there might have been an injury indicative of a partially prolonged hypoxic-ischaemic brain injury. All the experts agreed that these kinds of injuries occur suddenly or over a short period, progress rapidly, and are unanticipated. [34] Lastly, the applicant is conspicuously silent about the fact that Ms VN’s amniotic fluid was recorded as normal and that there was no meconium present. The significance of this, as all experts agreed, is that the presence of meconium may be indicative of foetal distress. The submission by the applicant that the foetus may have been in a compromised condition from the outset, amounts to nothing more than speculation. As the high court correctly found, there is no measure to determine in what condition the foetus arrived at the event that caused the injury. There was, therefore, insufficient evidence before the high court to conclude that the foetus was in distress in the first stage of labour, or that the labour was prolonged, thereby rendering the foetus unable to cope with the catastrophic event shortly before birth. [35] The next challenge by the applicant is based on the evidence tendered by Ms VN that a male security guard was asked to exert physical pressure (fundal pressure) to her abdomen shortly before she gave birth, as the foetus was ‘stuck’. Sister 15 Minnaar, who testified on behalf of the MEC, denied these averments. The applicant criticised the high court for preferring the evidence of Sister Minnaar over that of Ms VN on this aspect. Apart from the fact that this ground of appeal is based on factual matters, it also calls for the trite principles applicable when a court evaluates two mutually destructive versions. There is no indication in the high court’s judgment that demonstrates that its assessment of the credibility of these two witnesses, i.e. Ms VN and Sister Minnaar, the reliability of their version, the weighing of the probabilities or improbabilities of the particular aspects of their versions, were clearly wrong. In my view, this criticism must fail. [36] The last challenge to the high court's findings is premised on the contention that the resuscitation undertaken by the hospital staff, particularly Sister Minnaar, was inadequate and poor. Her evidence was that the minor child, who was born without any inherent respiratory effort, was bagged (oxygen applied through an ambubag) for 30 seconds. The bagging was then halted for 30 seconds whilst the heart rate was assessed. This method of resuscitation went on for ten minutes. After that, a period of 5 minutes passed when there was no resuscitation until Dr van der Walt arrived. According to the applicant, this explanation is an admission that the resuscitation by the hospital staff was improper. Much emphasis was placed on Prof Kirsten’s opinion that inadequate resuscitation would cause exponential injury to the brain. [37] To bolster this submission, the applicant argued that all the experts testified that the neonate requires continuous respiratory support during resuscitation. Thus, according to the applicant, stopping every 30 seconds for 30 seconds over ten minutes is partly the reason why the minor child’s recovery was so poor. The applicant further relied on the opinion of Prof Kirsten, who testified that the first 16 thing to do in resuscitating a neonate with a low heart rate, is to apply cardiac compressions. And in this case, the argument continued, it is common cause that cardiac compression was not done. The applicant contends further that failure to give cardiac compressions rendered the resuscitation futile as the heart requires mechanical encouragement to restore blood circulation (with the necessary oxygen), which will show up in improved skin colour and temperature. [38] Lastly and in addition to the above, the applicant relies on the opinion expressed by Prof Kirsten that the only reasonable conclusion that can be drawn from the administration of adrenaline by Dr Van der Walt during the birth of PN is that the foetal heart rate was below 100 beats per minute and probably as low as 60 beats per minute. Furthermore, that the use of adrenaline would be a last resort to normalising the heart rate. The applicant maintains that they ought to have succeeded at the very least on this point and 50% apportionment of the damages should have been awarded in favour of the applicant following the findings in Minister of Safety and Security & Another v Rudman & Another.13 In the alternative, the applicant sought 100% of the damages based on the reasoning of the English authorities.14 [39] Unfortunately, all of the above submissions made by the applicant fly in the face of the undisputed evidence of the experts that the minor child suffered an extremely severe and profound brain injury intrapartum and was born flat, cold and apnoeic. The extent, if any, to which the alleged sub-standard resuscitation aggravated an already existing brain injury, as correctly found by the high court, 13 Minister of Safety and Security & Another v Rudman & Another [2004] ZASCA 68; 2005 (2) SA 16 (SCA); [2004] 3 All SA 667 para 81. In that matter, divisibility of damages was raised and the court found that where it is difficult to separate the damage, then a policy decision is necessary to make a finding. The court awarded the plaintiff in that matter 50% for the interrupted rescutitation. 14 CNZ v Royal Bath Hospitals NHS Foundation Trust and Another [2023] EWHC 19 (KB) at 391. In that matter, the court found that any delays in excess of the first ten minutes, contributed materially to the brain damage. 17 could not be proven with any degree of certainty by all the experts, leaving it in the realm of speculation. This Court lamented reliance on speculative opinions of experts in MEC for Health and Social Development, Gauteng V TM obo MM.15 [40] The applicant misses the point that all the experts agreed that it is impossible to prove any material contribution to the already extremely severe brain injury sustained in utero. Therefore, the arguments regarding the divisibility of damages including the reasoning in the English authority relied upon by the applicant are misplaced. In addition, the high court thoroughly evaluated these arguments and the opinions of Prof Kirsten, and cogent reasons were provided for the rejection thereof. I am not persuaded that the rejection thereof by the high court can be disturbed. [41] In conclusion, it is also important to state that it is trite that negligence is not presumed but must be established by substantive evidence. The applicant (the plaintiff in the high court) bore the overall burden of proof, to show what the required standard of skill and competence was in this matter. And in the final analysis, negligence ought to be determined by the court in the light of all the evidence.16 In my view, the high court did precisely that. [42] The applicant failed to demonstrate that exceptional reasons exist for leave to appeal to be granted by this Court. The upshot of these findings is that the applicant did not meet the stringent test required in this application and has merely re-argued all the factual submissions made before the high court. 15 Footnote 6 above at para 126. 16 Meyers v MEC of Health, Eastern Cape 2020 (3) SA 337 (SCA) at para 69. 18 [43] The MEC did not press for an order of costs against the applicant. I fully agree that this is the correct approach. There is no reason whatsoever why the applicant should be mulcted with costs of this application. [44] The following order is made: The application for leave to appeal is dismissed. ________________________ A M KGOELE JUDGE OF APPEAL 19 Appearances For appellant: W L Munro SC Instructed by: W Langson & Associates, Gqeberha Webbers Attorneys, Bloemfontein For respondent: C J Mouton SC (with A Rawjee SC and N Karsan) Instructed by: The State Attorney, Gqeberha 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: 28 October 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 Du Preez N O v The Member of the Executive Council for Health & Social Development of the Eastern Cape Province (1032/2022) [2024] ZASCA 147 (28 October 2024) Today, the Supreme Court of Appeal (SCA) dismissed an application for reconsideration of an application for leave to appeal, which the Acting President of the SCA referred for oral argument in terms of s 17(2)(f) of the Superior Courts Act 10 of 2013 (the Act). The application arises from an action for damages instituted by Ms VN on behalf of her minor child, PN, against the respondent, the Member of the Executive Council for Health and Social Development of the Eastern Cape (the MEC). The Eastern Cape Division of the High Court, Port Elizabeth (high court) dismissed the action. An application for leave to appeal by the applicant was refused on 17 June 2022. A petition to this Court was dismissed on 12 September 2022. Ms VN applied to the Acting President of SCA to reconsider the dismissed petition. On 19 December 2022, the Acting President granted the application for reconsideration of this Court’s decision to refuse the petition and referred it for oral arguments. Unfortunately, PN passed on before this application was heard, and the Executor of her estate, Mr Du Preez, substituted Ms VN as the applicant. The issues before the SCA were whether the medical staff employed by the MEC were negligent in the care and treatment of PN’s mother during labour and the delivery of PN, and if so, whether such negligence caused PN to suffer a severe brain injury resulting in cerebral palsy. The applicant’s main contention was that the hospital staff were negligent in that the monitoring of the first stage of labour of Ms VN was inadequate; fundal pressure was applied to the pregnant abdomen of Ms VN by a security guard; and resuscitation of PN was woefully insufficient. In dismissing the application, the SCA held that the application did not meet the stringent threshold required in this type of application. It reasoned that all the experts agreed that PN suffered an extremely severe and profound brain injury in utero during the second stage of labour, while the first stage of labour proceeded normally. The SCA further found no reason to disturb the factual finding made by the high court that no fundal pressure was applied to Ms VN’s pregnant abdomen. Further that, the issue of poor resuscitation would not have played any role because all the experts agreed that it was impossible to prove any material contribution to the already highly severe brain injury sustained in utero. Finally, the SCA also dismissed the application to introduce further evidence brought by the applicant shortly before the hearing of the application. It held that the new evidence sought to be introduced is irrelevant and would not advance the applicant's case any further. ~~~~ends~~~~

4292

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 972/2022; 973/2022; 974/2022 In the matter between: MAGDELINE SEKGOPI NYHONYHA N O APPELLANT and THE NATIONAL DIRECTOR OF PUBLIC RESPONDENT PROSECUTIONS (Case no 972/2022) and in the matter between: MAGANDHERAN PILLAY N O FIRST APPELLANT ERGOLD PROPERTIES No 8 CC SECOND APPELLANT and THE NATIONAL DIRECTOR OF PUBLIC RESPONDENT PROSECUTIONS (Case no 973/2022) and in the matter between: ASH BROOK INVESTMENTS 15 (PTY) LTD FIRST APPELLANT CORAL LAGOON INVESTMENTS SECOND APPELLANT 194 (PTY) LTD 2 KGORO CONSORTIUM (PTY) LTD THIRD APPELLANT and THE NATIONAL DIRECTOR OF PUBLIC RESPONDENT PROSECUTIONS (Case no 974/2022) Neutral citation: Nyhonyha N O and Others v NDPP (Case no 972; 973 & 974/22) [2024] ZASCA 113 (16 July 2024) Coram: NICHOLLS, WEINER and MOLEFE JJA and COPPIN and SMITH AJJA Heard: 7 March 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email publication on the Supreme Court of Appeal website and by release to SAFLII. The date and time for hand-down is deemed to be 11h00 on 16 July 2024 Summary: Prevention of Organised Crime Act 121 of 1998 – trust assets – realisable property in terms of s 14 – restraining orders in respect of property held by persons other than a defendant – unilateral powers of the defendants to dispose of trust assets – shareholding in an entity – proportional shareholding in the underlying property of a subsidiary company – consideration of other shareholders. 3 ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Keightley and Adams JJ and Randera AJ sitting as full court): In case number 972/2022 The appeal is dismissed with costs, such costs to include those of two counsel where so employed. In case number 973/2022 The appeal is dismissed with costs, such costs to include those of two counsel where so employed. In case number 974/20222 The appeal is dismissed with costs, such costs to include those of two counsel where so employed. JUDGMENT Molefe JA (Nicholls and Weiner JJA, Coppin and Smith AJJA concurring): [1] The crisp issue that falls for decision in these appeals is whether the appellants hold ‘realisable property’ within the meaning of s 14(1) of the Prevention of Organised Crime Act 121 of 1998 (POCA), on behalf of defendants cited in a restraint application brought by the National Director of Public Prosecutions (the NDPP) in terms of ss 25 and 26 of POCA (the restraint application). The three appeals were consequently consolidated and heard simultaneously. 4 [2] The NDPP alleged that the appellants are holding property for and on behalf of some of the defendants in the restraint application, namely Dr Eric Anthony Wood (Dr Wood), Mr Magandheran Pillay (Mr Pillay) and Mr Litha Mveliso Nyhonyha (Mr Nyhonyha), and accordingly sought an order restraining their property on the basis that it falls within the definition of ‘realisable property’ in terms of POCA. Those defendants (the Regiments directors) have been indicted on various charges relating to corruption, money laundering and fraud. Dr Wood was cited as the first defendant in the restraint proceedings, and Mr Pillay and Mr Nyhonyha, as the second and the third defendants, respectively. [3] Regiments Capital (Pty) Ltd (Regiments Capital), which is in liquidation, Regiments Fund Managers (Pty) Ltd (Regiments Fund Managers) and Regiments Securities (Pty) Ltd (Regiments Securities) were also cited as the fourth, fifth and sixth defendants resepectively in the restraint proceedings. I also refer to these corporate defendants collectively as the Regiments Group, or ‘Regiments’. Where appropriate, Regiments Capital is specifically referred to. [4] On 18 November 2019, the Gauteng Division (per Wright J) granted a provisional restraint order in respect of certain property owned by the Regiments directors and their co-accused, as well as the entities which hold properties on their (the Regiments directors’) behalf. The appellants were also cited as defendants in that matter and the order consequently also implicated their property. [5] That order was discharged on the return date, namely 26 October 2020 (per Mahalelo J). The respondent (NDPP) subsequently filed appeals against the discharge of the provisional order. The appeals were heard simultaneously by a 5 specially constituted full court of the Gauteng Division of the High Court, Johannesburg (per Keightley and Adams JJ and Randera AJ) (the full court). [6] On 3 May 2022, the full court delivered its judgment in terms of which it, inter alia, upheld the appeals and confirmed the provisional restraint order, subject to a variation of the amount, and the exclusion of Regiments Capital (the fourth defendant in the restraint application), against whom liquidation proceedings had been instituted. The full court held that the appellants’ property (excluding that of Regiments Capital) should be included in the restraint order in terms of s 14(1) of POCA. [7] This Court granted the appellants special leave to appeal only on the issue ‘whether the appellants hold realisable property within the meaning of s 14(1) of POCA on behalf of Mr Nyhonyha and Mr Pillay.’ The restraint order against Mr Nyhonyha and Mr Pillay is final, special leave to appeal having been refused by this Court, and in the case of Mr Nyhonyha, also by the Constitutional Court. The Parties [8] The appellant in case no 972/2022 is Mrs Magdeline Sekgopi Nyhonyha (Mrs Nyhonyha), in her capacity as a trustee of the Nyhonyha Family Trust. Prior to October 2018, Mr Nyhonyha was a co-trustee of that trust. The beneficiaries of the Nyhonyha Family Trust are the members of the Nyhonyha family. [9] The first appellant in case no 973/ 2022 is Mr Magandheran Pillay (Mr Pillay), in his capacity as a trustee of the Pillay Family Trust. The trust has two trustees, Mr Pillay and his brother, Mr Indheran Pillay. The beneficiaries of the Pillay Family Trust are Mr Pillay and his family. The second appellant is Ergold 6 Properties No 8 CC (Ergold). The Pillay Family Trust is the sole member of Ergold and Mr Pillay is in control of Ergold’s affairs through authority given by the Pillay Family Trust. [10] The first and second appellants in case no 974/2022 are Ash Brook Investments 15 (Pty) Ltd (Ash Brook) and Coral Lagoon Investments 194 (Pty) Ltd (Coral Lagoon), entities which are special purpose vehicles. Both were established in 2006 as property holding companies and for the purpose of taking advantage of a black economic empowerment (BEE) offer made by Capitec Bank Holding Limited (Capitec), to a number of blacked-owned entities, including Regiments Companies. Ash Brook has at all times housed the Capitec shares issued under the BEE transaction. Coral Lagoon is wholly owned by Ash Brook. Initially Regiments Capital owned the majority stake in Coral Lagoon. Presently Ash Brook is wholly owned by Regiments Capital after the minority shareholders were bought out for value following the provisional restraint order. Mr Nyhonyha and Mr Pillay are its directors. The third appellant in case 974/2022 is Kgoro Consortium (Pty) Ltd (Kgoro), a company which is majority owned by Regiments Capital. Its assets are regarded as part of the Regiments Group’s ‘primary assets’. I also refer to these appellants as the ‘subsidiaries’. Factual background [11] The restraint application had its origins in the criminal charges preferred against the Regiments directors, namely Dr Wood, Mr Pillay and Mr Nyhonyha, relating to financial advisory services provided through the Regiments Group. Dr Wood had left the Regiments Group during late 2016 or early 2017 as a result of a fall-out between the directors. 7 [12] The Regiments Group provided services to state-owned entities, including Transnet SOC (Transnet) and the Transnet Second Defined Benefit Fund (the Fund). The restraint order flowed from alleged corrupt activities involving these entities, which were part of the State Capture project and enriched the defendants. [13] Transnet had paid the Regiments Group more than R1 billion arising from the alleged corruption and unlawful contracts. All of this is alleged to constitute the proceeds of crime. The Fund sued the defendants for some R848 million in losses which it allegedly suffered as a result of the Regiments Groups’ unlawful conduct. Although the defendants denied the allegations, they paid the Fund approximately R639 million in settlement of those claims. The legislative framework Restraining of property owned by a person other than a defendant [14] As mentioned, this appeal concerns the circumstances in which a restraint order under ss 25 and 26 of POCA may be made in respect of property owned by a person other than a defendant, and must be determined in the context of the legal framework put in place in Chapter 5 of POCA. The material question is not who formally owns the property, but who controls it or has its use and benefit. Chapter 5 provides for conviction-based forfeiture. A confiscation order may be made against a defendant after conviction, who is found to have benefitted from an offence of which he or she is convicted1 or to have benefitted from a sufficiently closely related offence.2 1 S 18(1)(a) and s 18(1)(b) of POCA. 2 S 18(1)(c) POCA. 8 [15] This Court in National Director of Public Prosecutions v Gardener and Another (Gardener), explained the framework created by Chapter 5 of POCA with reference to the confiscation enquiry under s 18 as follows: ‘In the exercise of its discretion a court must bear in mind the main object of the legislation, which is to strip sophisticated criminals of the proceeds of their criminal conduct. To this end the legislature has, in Ch 5 of POCA, provided an elaborate scheme to facilitate such stripping. The function of a court in this scheme, as appears from what I have said above, is to determine the “benefit” from the offence, its value in monetary terms and the amount to be confiscated. It is undoubtedly so that a confiscation order may often have harsh consequences, not only for the defendant, but also for others who may have innocently benefited, directly or indirectly, from the criminal proceeds. This is what the legislation contemplates, and a court may not, under the guise of the exercise of its discretion, disregard its provisions – harsh as they may be ….’3 [16] This Court further noted that the confiscation phase involves a three-stage post-conviction enquiry under s 18 of POCA: ‘Once a defendant’s unlawful activities yield proceeds of the kind envisaged in s 12, he or she has derived a benefit as contemplated in s 18(1)(a). This entitles a prosecutor to apply for a confiscation order, and triggers a three-stage enquiry by the court. First, the court must be satisfied that the defendant has in fact benefitted from the relevant criminal conduct; second, it must determine the value of the benefit that was obtained; and finally, the sum recoverable from the defendant must be established.’4 [17] Section 26(2) of POCA specifies the subject matter of a restraint order. It provides: ‘(2) A restraint order may be made – (a) in respect of such realisable property as may be specified in the restraint order and which is held by the person against whom the restraint order is being made; 3 National Director of Public Prosecution v Gardener and Another [2011] ZASCA 25; 2011 (1) SACR 612 (SCA); 2011 (4) SA 102 (SCA) para 19. 4 Ibid para 17. 9 (b) in respect of all realisable property held by such person, whether it is specified in the restraint order or not; (c) in respect of all property which, if it is transferred to such person after the making of the restraint order would be realisable property.’ [18] Section 14(1) of POCA defines ‘realisable property’ for purposes of Chapter 5 as follows: ‘(14) Realisable property (1) Subject to the provisions of subsection (2), the following property shall be realisable in terms of this Chapter, namely- (a) any property held by the defendant concerned; and (b) any property held by a person to whom the defendant has directly or indirectly made any affected gift.’ [19] The purpose of a restraint order is to preserve assets pending the final determination of criminal proceedings. If the legislation did not provide for the preservation of assets, the key purpose of Chapter 5 of POCA, namely, ‘to ensure that no person can benefit from his or her wrongdoing’,5 could not be achieved. Assets are preserved to cater for the possibility that the criminal proceedings may culminate in a confiscation order. [20] Section 12(3) of POCA provides that a person will have benefitted from unlawful activities if he or she has received or retained any proceeds of unlawful activities. Therefore, what constitutes a ‘benefit’ is defined by reference to what constitutes ‘proceeds of unlawful activities’. [21] It was held in S v Shaik,6 that a court should bear in mind that the definition of ‘proceeds of unlawful activities’ in POCA makes it possible to confiscate 5 S v Shaik [2007] ZACC 19; 2008 (2) SA 208 (CC); 2007 (12) BCLR 1360 (CC); 2008 (1) SACR 1 (CC) para 51. 6 Ibid para 69. 10 property that has not been directly acquired through the commission of crimes, but through related criminal activity. A court should also bear in mind that one of the objects of the broad definition of ‘proceeds of unlawful activities’ is to ensure that wily criminals do not evade the purposes of the Act by a clever restructuring of their affairs. A court should have regard to the nature of the crimes and how closely these are connected to the purpose of the statute. The reason for this is that the larger the value of the confiscation order, the greater the deterrent effect of such an order.7 [22] Regarding the restraining of property in the hands of third parties, it was held in National Director of Public Prosecutions v Phillips (Phillips) that: ‘…It is significant that the Act does not refer to the ownership of realisable property. The concept of “holding” immovable property can occupy one or more of many semantic slots in a range through ownership, possession, occupation, and holding as a nominee … The context is decisive. In the POCA, the primary concern of the Legislature is not the title, registered or otherwise. On the contrary, one major evil which the Legislature contemplates and sets out to neutralise is the concealment by criminals of their interest in the proceeds of crime. That suggests that “holding” of property should be given a meaning wide enough to further that end. That is, no doubt, why the concept and consequences of a “gift” have been extended, as is found in ss 14 and 16….’8 [23] The leading authority on when property is ‘held’ by a defendant is Phillips where Heher J explained the approach of POCA as follows: ‘…The respondents point out that the Act does not allow the seizure of assets owned by another entity unless it is an affected gift. Only misuse or abuse of the principle of corporate personality warrants piercing the veil … I do not agree with these submissions. The restraint order has been made in respect of all realisable property held by the first respondent. “Realisable property” is “property held by the person concerned” (s 14(1)(a)) and “any property held by a person to whom the defendant 7 Ibid para 71. 8 National Director of Prosecutions v Phillips and Others 2002 (4) SA 60 (W) para 81. 11 has directly or indirectly made an affected gift” (s 14(1)(b)) other than property in respect of which a declaration of forfeiture is in force….’9 [24] When a person stands in this kind of relationship to the property in question, he or she will have, in the language of s 12(2)(a), ‘any interest in the property’ and will therefore ‘hold it’. The enquiry is a contextual one, which must take into account the totality of the case in issue. To find otherwise would frustrate the purpose of POCA. Whereas the confiscation order is determined at the end stage of criminal forfeiture proceedings, POCA makes provision for the grant of a restraint order as an interim measure. Regarding disputes of fact in restraint applications [25] As mentioned, the NDPP’s case is that the defendants will be prosecuted, at least in respect of the offences of corruption, money laundering and fraud. The purpose of a restraint order is to preserve assets pending the final determination of a criminal prosecution, to cater for the possibility that the defendants may be convicted at the conclusion of the criminal trial, and that a confiscation order may be made against them. [26] Counsel for the NDPP correctly submitted that this Court has repeatedly held that a restraint order is only of interim operation and like interim interdicts and attachments orders pending trial, it has no definite or dispositive effect.10 A restraint merely preserves the status quo pending the final determination of the criminal proceedings against the defendant(s). It is thus for all intents and purposes an interdict pendente lite. In an application for a restraint order, the NDPP need only to make out a prima facie case for granting of such an order. 9 Phillips para 80-81. 10 Phillips and Others v National Director of Public Prosecutions 2003 (6) SA 447 (SCA) para 18. 12 Her application is not defeated merely because her prima facie evidence is disputed. [27] It is the NDPP’s contention that the purpose of a restraint order would be wholly defeated if, once the NDPP has made out a prima facie case that a defendant ‘holds’ property through a respondent, a court was to decline to grant the restraint order merely because the respondent disputes this allegation. Most defendants will dispute that property which they formally own is ‘held’ on their behalf, as will the respondent who ‘holds’ it. It is undoubtedly for this reason that POCA provides that the confiscation enquiry under s 18 of POCA, which determines the benefit a defendant has obtained and the appropriate amount of any confiscation order, is to be undertaken by the court that has convicted the defendant(s) having heard all the evidence. The confiscation enquiry must also determine ‘the values of all realisable property held by the defendant’ as well as the value of an affected gift made by the defendant.11 This is because a confiscation order may not exceed the value of the realisable property.12 [28] The clear legislative policy in the structure of Chapter 5 of POCA is that applications for restraint orders should not be waylaid by disputes of fact that are to be properly determined by the court at the conclusion of the criminal proceedings. This includes the enquiry into what realisable property is held by the relevant defendants or on their behalf. It is inappropriate for the appellants to demand a full-scale enquiry into the realisable property held by Mr Pillay and Mr Nyhonyha, and also a judicial finding on the merits of an issue that POCA reserves for the court which holds the confiscation enquiry at the conclusion of the criminal proceedings. Thus, the NDPP need to do no more than to establish 11 POCA section 20 (1)(a) and (b). 12 POCA section 18(2)(b). 13 a prima facie case that the respective appellants hold property on behalf of Mr Pillay and Mr Nyhonyha, respectively. [29] The appellants, other than the subsidiaries, rely to a greater or lesser extent on the existence of Mr Pillay and Mr Nyhonyha’s respective family trusts for the submission that their property is beyond the reach of the restraint order. The trustees of the family trusts say this is so because they are separate and distinct juristic entities. Ergold says this is so because its sole member is not Mr Pillay, but the Pillay Family Trust. [30] This Court flagged the potential misuse of the trust form as a concern in Land and Agriculture Bank v Parker and Others.13 There Cameron JA, dealt with the challenge posed in recent times by family trusts designed to secure the interest and protect the property of a group of family members, usually identified in the trust deed by name or by descent or by degree of kinship to the founder. He concluded that the ‘essential’ notion of trust law, namely, that enjoyment and control should be functionally separate, is frequently lacking.14 [31] In National Director of Public Prosecutions v Van Staden and Others,15 this Court confirmed a provisional restraint order in respect of assets which the defendant controlled through his family trust, companies and his family members, which were the formal owners, and found that they were realisable assets. Counsel for the NDPP correctly argued that it is not necessary in a matter such as this, where the question is whether the defendant ‘holds’ the property in terms of s 14(1) of POCA, to demonstrate that a notional corporate veil should be lifted, or to show that there has been an abuse. It is sufficient to show that the 13 Land and Agriculture Bank v Parker and Others 2005 (2) SA 77 (SCA). 14 Ibid para 25. 15 National Director Public Prosecutions v Van Staden and Others [2012] ZASCA 171; 2013 (1) SACR 531 (SCA) paras 27 and 28. 14 defendant is, in substance, the person who controls or enjoys the property. This conclusion also flows from POCA’s wide and encompassing notion of a defendant having ‘any interest’ in the realisable property he holds. The appellants’ submissions Regarding the Nyhonyha Family Trust [32] Counsel for the Nyhonyha Family Trust submitted that the evidence does not establish that the trust holds assets on behalf of Mr Nyhonyha. He asserted that Mr Nyhonyha was but one of the four trustees of the family trust until his resignation on 29 October 2018, approximately a year before the Wright J order. The allegation that Mr Nyhonyha used the cash assets of the trust for his benefit was introduced by the NDPP for the first time in her replying affidavit. It was based on the information she requested from the South African Revenue Service (SARS) on 3 February 2020, approximately three months after the ex parte application was launched on her behalf. Thus, so it was argued, the full court erred in allowing the introduction of new facts by the NDPP without any explanation why such evidence was not contained in the founding affidavit. [33] Counsel also argued that the full court’s conclusion that the cash assets of the trust were being used consistently for the benefit of Mr Nyhonyha is not supported by the evidence. The NDPP persisted with her submission adopted in the full court based on loans allegedly advanced by the trust to various individuals, including Mr Nyhonyha, between 2011 and 2019. However, she could only point to loans advanced during 2014 to 2017, accounting for only four of the nine years during which the trust is alleged to have advanced loans to him. 15 [34] Counsel further argued that Mr Nyhonyha was not in exclusive control of the trust as there were three other independent trustees when loans were allegedly advanced to him. Mr Nyhonyha resigned as a trustee on 29 October 2018, eighteen months before the provisional restraint order. In the circumstances, the NDPP did not make out a case that Mr Nyhonyha had exclusive use or effective control over the assets of the trust, and the full court therefore erred in finding that the trust holds assets for Mr Nyhonyha. [35] Regarding affidavits previously filed by Mr Nyhonyha and relied upon by the NDPP for the assertion that he is a shareholder in Regiments and owned and managed Regiments either directly or through the trust, counsel submitted that the quoted extracts were taken out of context by the full court. Mr Nyhonyha owns 15% shares in Regiments in his personal capacity and the Family Trust owns 20% shares in Regiments. Counsel submitted that those affidavits were deposed to by Mr Nyhonyha in his capacity as a Regiments director and as a trustee looking after the interests of the trust. [36] Finally, the thrust of the Nyhonyha Family Trust’s contention is that a defendant must have the exclusive use and effective and unilateral control over the property in question before he can be found to ‘hold’ the property. It argued that the NDPP has not advanced any facts supporting the full court’s finding that it held property on behalf of Mr Nyhoyha within the meaning of s 14(1) of the POCA and the provisional restraint order against the trust should therefore not have been confirmed. Regarding the Pillay Family Trust and Ergold [37] The submissions by counsel for the Pillay Family Trust and Ergold were as follows. The trust was registered in 2003 and has always had at least two 16 trustees. Until 7 August 2019, the trust had three trustees, one of whom was an independent trustee, who later resigned. Mr Pillay and his brother Mr Indheran Pillay remained the only two trustees. The trust owns 100% shareholding in Ergold and 33% shareholding in Regiments Capital. The trust’s purchase of Mr Pillay’s shares in Regiments Capital was funded by a loan from Mr Pillay, which was repaid in full. The trust also purchased Mr Pillay’s shareholding in Ergold, using a loan advanced by Mr Pillay, which has also been repaid over time. [38] Mr Pillay, his wife and their descendants are beneficiaries of the trust. Mr Pillay did not participate in the day-to-day management of the trust, nor did he enjoy any type of majority or veto vote when it came to making decisions for the trust. [39] According to this argument, Ergold is a property-owning entity in which Mr Pillay acquired the controlling interest around September 1997. Ergold continued to run a rental portfolio for more than 20 years and evolved to include property development, property trading, and share trading. It built its assets over time and these acquisitions were purchased using its own resources and by way of loans from Mr Pillay, the Pillay Family Trust and Standard Bank. It did not receive any donations from Mr Pillay for these acquisitions. [40] Counsel for the Pillay Family Trust and Ergold submitted that neither appellant received any realisable property as defined in POCA from Mr Pillay or any of the defendants, nor do they possess any realisable property as defined in POCA. It is contended that the trust is not a defendant as contemplated in POCA, nor is it alleged that the trust received a gift from a defendant, namely Mr Pillay. It was argued that the only basis on which the assets of the trust, which are its shareholding in Ergold and Regiments, can be made subject to the 17 restraint, is if the NDPP could show that, despite the existence of the trust, Mr Pillay in fact holds its assets as contemplated in POCA. [41] It was further argued that the Pillay Family Trust is a discretionary trust of which a beneficiary may only claim a distribution to the extent that the trustees have exercised their discretion in favour of that beneficiary.16 Mr Pillay was therefore not guaranteed anything from the trust and there is no evidence or allegation that the income of the trust was used to benefit him exclusively or disproportionately in relation to the other beneficiaries. It therefore cannot be said that the trust’s assets and income were administered for the sole benefit of Mr Pillay. [42] The submissions made concerning Ergold were as follows. Other than the fact that the Pillay Family Trust is the sole member of Ergold, a factual basis was never laid for the restraint of Ergold’s assets. Ergold is not a defendant as defined by POCA, or an entity that received a gift from Mr Pillay. There is no evidence that Ergold benefitted or was enriched by proceeds of crime. It is a property-owning entity and was registered on 20 May 1997, long before any of the alleged offences occurred. The business activities of Ergold were completely distinct from the business activities of Regiments or Mr Pillay, and Ergold did not receive any donations from Mr Pillay or any of the defendants. [43] Counsel for Ergold argued that the full court misdirected itself when it restrained the assets of the appellants. On the full court’s approach, every property held by a third party in which a defendant can be said to have an interest would be susceptible to restraint by virtue of that fact only. That approach, it was argued, is inconsistent with the import and purpose of POCA. 16 Commissioner for Inland Revenue and Others v Sive’s Estate 1955 (1) SA 249 (A) at 258 and 266. 18 Regarding Ash Brook, Coral Lagoon and Kgoro [44] Counsel for Ash Brook, Coral Lagoon and Kgoro (the subsidiaries) submitted that the full court confirmed the restraint order which included, inter alia, all the assets of the subsidiaries, without catering for the third parties who owned shares in Ash Brook and Kgoro. At the time the provisional restraint order was granted, Ash Brook had shareholders unrelated to the defendants. The minority shareholders, Lemoshanang Investments (Pty) Ltd and Rorisang Basadi Investment Holdings (Pty) Ltd held approximately 18% of Ash Brook shares. Regiments thus held approximately 60% of the issued share capital of Ash Brook. Regiments held approximately 84% shares in Kgoro, while various minority shareholders held approximately 16%. [45] Counsel submitted further that the effect of a finding that a defendant ‘holds’ realisable property, formally owned by a third party, is that the property is, in all relevant respects, considered to be the property of the defendant and not of the third party. The property may be restrained until confiscation proceedings in respect of the defendants are completed, and the value of the restrained property may be used to satisfy a confiscation order. For these reasons it was submitted that the meaning of ‘holding’ realisable property should not be extended any further than what was accorded to it in Phillips, despite textual indications in the POCA to the contrary. The defendants, whether through the family trusts or otherwise, were not the sole shareholders in Ash Brook, Coral Lagoon and Kgoro. [46] It was further argued that the NDPP has not shown that, first, the defendants, had the power to dispose of the Capitec shares or the Sandown property. Second, that the defendants were ‘the real’ beneficiaries of the income 19 from that property, and third, that the defendants treated the subsidiaries’ property as their own. According to this argument, the full court therefore erred in finding that shareholding in an entity equated to having a proportional interest in the underlying property of a subsidiary of that entity, several layers removed, and failing to pay attention to other minority shareholders. The full court’s test therefore results in an irrational and arbitrary application of POCA, which in turn results in an arbitrary deprivation of property, contrary to s 25(1) of the Constitution. [47] According to the subsidiaries, the effect of the final winding-up of Regiments Capital is that the court had no power to make a restraint order against its assets as those assets are dealt with by the liquidators of Regiments Capital. For that reason, the full court correctly did not confirm the restraint order as against Regiments Capital. The subsidiaries contend that the full court failed to consider the effect of the liquidation of Regiments Capital on the test for ‘holding’ property as set out in Phillips.17 [48] Finally, counsel for the subsidiaries argued that the full court erred in failing to recognise that the effect of the liquidation was to sever any link between the defendants and the appellants which could establish the defendants’ power of disposal, control, use and enjoyment over the assets of the appellants. It thus bypassed the Phillips test. The liquidators will control Regiment’s 60% shareholding in Ash Brook and its 84% shareholding in Kgoro. By including the subsidiary companies in the restraint order, and concomitantly excluding the 17 In this regard the full court held: ‘However, what are the assets of these subsidiaries? They do not fall under the control of the liquidators and there is no impediment to confirming the restraint order in respect of those assets. The NDPP submitted that the assets of the subsidiaries could however, fall under the curator. This because, although those assets are not owned by Regiments Capital (or for that matter the Regiments Capital shareholders), they are ‘held’ by the ultimate shareholders as envisaged in s 14(1)(a) of POCA, and therefore constitute realisable property vis-à-vis Dr Wood, Mr Nyhonyha and Mr Pillay. This seems to us to be consistent with the broad definition of realisable property, and its interpretation in jurisprudence. The assets of the subsidiaries ought properly to be placed under restraint’. 20 income or proceeds on disposal of their assets from the effects of the concursus creditorum, it was argued that the full court preferred the NDPP, a non-creditor of the subsidiaries, above the creditors of Regiments Capital and that this negates the purpose of s 36(2) of POCA. In addition, for policy reasons, the full court should have held that the necessary implication of s 36 is to exclude from a restraint order the subsidiary companies of a company liquidated before the restraint order was granted. The NDPP’s submissions Regarding the Nyhonyha Family Trust [49] The NDPP contended first, that the Nyhonyha Family Trust’s cash assets have consistently been used by Mr Nyhonyha for his personal benefit. Second, Mr Nyhonyha and Mr Pillay previously filed affidavits on behalf of Regiments stating that they are shareholders in Regiments, directly or through their family trusts and confirmed the use of the family trusts to hold their respective shareholdings in Regiments Capital on their behalf. And third, Mr Nyhonyha stated under oath that Regiments was owned, managed and funded by himself, Mr Pillay and Mr Wood, either directly or through their family trusts. [50] In her founding papers, the NDPP put up several affidavits previously filed on behalf of Regiments Capital by Mr Nyhonyha and Mr Pillay, which referred to the use of the respective family trusts to ‘hold’ their respective shareholdings in Regiments Capital on their behalf. The NDPP referred in particular to: (a) Mr Nyhonyha’s answering affidavit on behalf of the Regiments Companies in an application launched by Dr Wood, in which he said that after the initial shareholders in Regiments Capital had been bought out, he, Dr Wood and Mr 21 Pillay ‘were the only remaining shareholders, either directly or through our family trusts.' (b) In an affidavit filed in an application for the removal of Dr Wood as a delinquent director, Mr Nyhonyha said that he, Mr Pillay and Dr Wood had managed and owned Regiments Capital through their respective trusts and ‘[s]ince then, Regiments has been owned, managed and funded by the three of them’. (c) In an answering affidavit in opposition to an Anton Pillar application brought by the Fund, Mr Pillay said that he and Mr Nyhonyha (and not the trusts) had caused Dr Woods to be removed as a director at a shareholders’ meeting. [51] The NDPP’s argument is that neither Mr Pillay nor Mr Nyhonyha has denied or attempted to explain these statements, beyond Mr Nyhonyha’s complaint that they have been taken out of context. The NDPP submits that, contrary to their bare disavowals, these affidavits are borne out by the facts. [52] The NDPP submitted further that, although Mr Nyhonyha alleged that he resigned as a trustee on 29 October 2018 and Mrs Nyhonyha confirmed that she is a trustee, neither of them disclosed if there are other trustees and who they are. The NDPP argued that it must accordingly be assumed that Mrs Nyhonyha is the sole trustee of the Nyhonyha Family Trust. [53] According to the NDPP, Mr Nyhonyha’s assertion that the trust is there to provide for the Nyhonyha family has been shown to be untrue through the trust’s financial statements for the 2015 and 2017 financial years. Those statements show: (a) Substantial interest-free loans to unidentified persons totalling some R50 million. 22 (b) During the 2015, 2016 and 2017 financial years all but a small amount thereof was lent to Mr Nyhonyha. (c) Apart from the trust’s shares in Regiments Capital, almost the entire assets of the trust had been disbursed, interest-free, to Mr Nyhonyha. [54] Mr Nyhonyha has thus benefitted, not only from the use of the capital sums lent to him, but also because he was exempted from paying any interest on those substantial loans. In addition, no repayment date was specified. The NDPP argued that it is thus undisputable that the trust assets have and are being used for Mr Nyhonyha’s benefit. The inference is therefore ineluctable that the trust holds its assets on his behalf. Regarding the Pillay Family Trust [55] Regarding the assets of the Pillay Family Trust, the NDPP contended that: (a) The two trustees, namely Mr Indheran Pillay and Mr Tewodros Gebreselasie are not independent trustees. Mr Indheran Pillay is Mr Pillay’s brother. Both he and Mr Gebreselasie have represented Regiments in a related corrupt locomotives project and received payments from Regiments. (b) Ergold’s company documents show that Mr Pillay has been involved in the running of the trust, since in those documents he is listed as the representative of the Pillay Family Trust. (c) Ergold’s registered address is Mr Pillay’s home address. (d) Mr Indheran Pillay and Mr Gebreselasie appointed Mr Pillay as their agent for the purposes of dealing with the trust’s member’s interest in Ergold. (e) Mr Indheran Pillay has been unable to provide the financial statements reflecting that loans had been repaid to Mr Pillay. (f) Mr Pillay is a beneficiary of the trust along with his wife and descendants. The financial statements show that some R1.75 million of the trust assets had 23 been distributed to unidentified beneficiaries and some R591 405 was disbursed in respect of school fees. (g) The financial statements of the trust for the 2019 financial year show that it made an interest-free long-term loan to Ergold with no repayment date. In 2019, the outstanding loan amount was some R103 million. [56] The NDPP argued that the evidence thus established that Mr Pillay had acquired the shareholding in Regiments Capital through the trust and the latter holds those shares on his behalf. He and his family have enjoyed the fruits of that shareholding. It is also undisputable that Mr Pillay is in control of Ergold through the trust. There can accordingly be little doubt that the trust holds property on his behalf as contemplated in terms of s 14(1) of POCA. This includes interests in the subsidiaries, namely Ash Brook, Coral Lagoon and Kgoro. [57] The NDPP argued that, save for the implications of the liquidation of Regiments Capital, Mr Pillay and Mr Nyhonyha have always been in control of Ash Brook and Coral Lagoon and had caused their assets to be distributed to entities under their control. It is common cause that Regiments Capital owns 84.36% of its share capital and its assets have always been regarded as part of the Regiments Group’s primary assets. Insofar as the interests of minority shareholders are concerned, the NDPP submitted that they are recognised and protected by s 30(3) of POCA.18 18 Section 30(3) reads as follows: ‘A High Court shall not exercise its powers under subsection (2)(b) unless it has afforded all persons known to have any interest in the property concerned an opportunity to make representations to it in connection with the realisation of that property. (4) If the court referred to in subsection (2) is satisfied that a person – (a) is likely to be directly affected by the confiscation order: or (b) has suffered damage to or loss of property or injury as a result of an offence or related criminal activity referred to in section 18(1) which was committed by 10 the defendant, the court may allow that person to make representations in connection with the realisation of that property.’ 24 Discussion [58] The appellants each put forward a narrow and decontextualised version of what they describe as the ‘Phillips test’, which they say limits the property which a defendant can be said to ‘hold’ indirectly. The Nyhonyha Family Trust says that a defendant must have the exclusive use and effective control over the property in question before he can be found to ‘hold’ the property. Ergold and the Pillay Family Trust say that before property can be said to be ‘held’ for the purposes of s 14(1)(a), the defendant must narrowly meet what they say is the test communicated in Phillips. They effectively treat the circumstances in Phillips as a prescriptive closed list. The subsidiaries say that what Phillips requires is that the defendant must meet at least one of the four requirements: he or she must be the sole shareholder or member of the respondent; he or she must have provided the funds for the acquisition of the property; he or she must have control over the assets and treat them as their own; or the defendant must have used the trust form as a substitute for his or her own estate. [59] Heher J in Phillips explained the approach of POCA as follows: ‘Without attempting to place strict limits on the expression, I have no doubt that when a person exercises control over the disposal of property… or has the exclusive use of or control over the property… and is the real beneficiary (albeit through shareholding) of the income from those properties or any proceeds of disposal of them, then he “holds” such properties within the meaning of s 14(1) of the Act and it is unnecessary to invoke the doctrine of “lifting the veil”….’19 (Emphasis added.) [60] I agree with the NDPP’s submissions that Phillips does not support the approach of the appellants. The evidence does indeed make out a prima facie case that Mr Nyhonyha and Mr Pillay have control over the assets of each of the 19 Phillips para 81. 25 appellants; that they are the real beneficiaries of those assets and the income generated thereby, and that they have treated them as their own. [61] The Pillay Family Trust and Ergold, as well as the subsidiaries, further complained of the full court’s use of the phrase ‘any’ to denote the kind of interest which a defendant has in the realisable property and submitted that this amounts to a misdirection because it is not what Phillips required. There is no merit in this submission as these are the very words which s 12(2)(a) of POCA employs to determine when a person holds property. [62] The subsidiaries also contended that s 15 of POCA assists in determining what kind of interest will suffice before a defendant can be said to ‘hold’ property. They contended that it must be a proprietary interest, but do not state what consequences flow from this. The definition of ‘property’ in POCA is expansive and includes ‘any rights, privileges, claims and securities, and any interest therein and any proceeds thereof’. It is not limited to ownership and includes other forms of possessing, holding, enjoying and using. Counsel for the NDPP correctly submitted that this is the kind of interest which Mr Pillay and Mr Nyhonyha have in the appellants’ property. [63] Mrs Nyhonyha argued that the Nyhonyha Family Trust has never been used as Mr Nyhonyha’s alter ego and has been established and managed in the interest of the beneficiaries. The trust is there to provide for the Nyhonyha family. The NDPP however demonstrated through the trust’s income tax returns from the years 2011 to 2019, and its financial statements for the 2015 and the 2017 financial years, that the trust holds its assets for Mr Nyhonyha. Each year since 2015, including the 2019 financial year, the trust’s income tax returns record outstanding interest-free loans to Mr Nyhonyha exceeding R50 million. 26 In 2015, 2016 and 2017 financial years, the trust’s financial statements show that all but R16 903 of the trust’s assets was loaned to Mr Nyhonyha. [64] The result is that since at least 2011, virtually all the assets of the Nyhonyha Family Trust, save for the shares in Regiments Capital, have been loaned to Mr Nyhonyha indefinitely and interest-free. For practical purposes, Mr Nyhonyha has, for eight years, been the sole beneficiary of the trust. Evidence therefore shows that the Nyhonyha Family Trust holds its assets on behalf of Mr Nyhonyha. The NDPP’s contention that it is therefore not necessary to pierce the trust’s corporate veil in those circumstances is well founded. [65] Mr Pillay denied that he is in control of the assets of the Pillay Family Trust and states that he does not involve himself in the day to day running of the trust. However, the evidence shows that in 2012, the trustees appointed Mr Pillay as the trust’s agent for the purpose of holding and dealing with the trust’s interest in Ergold, and he is listed as the representative of the trust in Ergold. Mr Pillay’s brother Mr Indeheran Pillay, who is not an independent trustee, stated under oath that Mr Pillay had placed funds in the trust by way of loans that have been repaid over time and that the repayments are ‘reflected in the financial statements’. However, upon request by the NDPP for financial statements in terms of rule 35(12) of the Uniform Rules of Court, the trust was only able to provide financial statements dated after Mr Indheran Pillay’s affidavit was deposed to. The trust’s attorneys say there are no other financial statements. [66] The statement by Mr Indheran Pillay regarding the fact that the financial statements reflect the repayment of loans over time by Mr Pillay must in the circumstances be disregarded. The most recent financial statements for the Pillay Family Trust show that in 2019 the trust distributed R1.72 million to ‘beneficiaries’ who are not identified, and R591 405 in respect of school fees. 27 [67] Mr Pillay acquired the shareholding of Regiments Capital shares through the trust, and the trust holds those shares on his behalf. He controls the Pillay Family Trust’s shareholding in Regiments, and has enjoyed the fruits of that shareholding, both personally and by providing for his family. [68] The sole member of Ergold is the Pillay Family Trust, represented by Mr Pillay. Ergold contended that the NDPP did not make out a case for the restraint of Ergold’s property on the basis that it was not under the control of Mr Pillay. This even though the Pillay Family Trust’s financial statements record an interest-free long-term loan to Ergold, with no repayment date. The loan stood at nearly R114 million in 2018 and nearly R103 million in 2019. Mr Pillay plainly holds his assets through Ergold (as well as the Pillay Family Trust) as contemplated by POCA. [69] I now come to the subsidiaries which stand on a somewhat different footing, not least because their formal ownership structure has shifted significantly over the years that this matter has been pending. Save for the potential implications of the liquidation of Regiments Capital, Mr Pillay and Mr Nyhonyha have been in control of Ash Brook and Coral Lagoon at all relevant times and caused its assets to be distributed to entities under their control. In regard to Kgoro, it is common cause that Regiments Capital owns 84.36% of its share capital, and its assets have been regarded as part of Regiments Group’s ‘primary assets’. Kgoro, too, holds assets on behalf of Mr Pillay and Mr Nyhonyha. [70] As for Kgoro’s minority shareholders, their rights are recognised and protected by s 30(3) of POCA. The court which is ultimately seized with an application for the realisation of the defendants’ property, including that of 28 Kgoro, must afford all persons with an interest in the property a hearing before exercising its powers, and may recognise their interest for this purpose. [71] In essence, Mr Pillay and Mr Nyhonyha’s argument is that the intercession of their family trusts places their shareholding in Regiments beyond the reach of the court and that an order restraining the assets of the trust is not permissible. Sophisticated criminals will rarely permit the benefits they obtain to be linked to them directly or hold their realisable assets in their own names. POCA recognises this and casts its net widely to answer the two questions. Did the defendants benefit? And do the defendants hold realisable property? If the legislation did not provide for the preservation of assets, the key purpose of Chapter 5 of POCA to ‘ensure that no person can benefit from his or her wrongdoing’ could not be achieved.20 [72] The full court’s findings on the principles set out in Phillips and the proper interpretation of s 14(1)(a), read with s 12(2)(a) of POCA, that the appellants’ property is held on behalf of Mr Nyhonyha and Mr Pillay, are well founded. The NDPP has met the case she is required to make, namely, prima facie showing that the appellants’ assets are held by Mr Nyhonyha and Mr Pillay as envisaged by s 14(1) of POCA. Order [73] In the result, the following order is made: In case number 972/2022 The appeal is dismissed with costs, such costs to include those of two counsel where so employed. In case number 973/2022 20 S v Shaik para 51. 29 The appeal is dismissed with costs, such costs to include those of two counsel where so employed. In case number 974/20222 The appeal is dismissed with costs, such costs to include those of two counsel where so employed. ________________________ D S MOLEFE JUDGE OF APPEAL 30 Appearances Case no 972/2022 For appellant: D Dorfling SC (with him G Ngcangisa) Instructed by A B Scarrott Attorneys, Sandton Moroka Attorneys, Bloemfontein For the respondent G M Budlender SC (with him K Saller) Instructed by: State Attorney, Pretoria State Attorney, Bloemfontein. Case no 973/2022 For 1st and 2nd appellants: M du P van der Nest SC (with him AC Mckenzie) Instructed by A B Scarrott Attorneys, Sandton Moroka Attorneys, Bloemfontein For the respondent G M Budlender SC (with him K Saller) Instructed by: State Attorney, Pretoria State Attorney, Bloemfontein. Case no 974/2022 For 1st, 2nd and 3rd appellants: D Smit (with him T Scott) Instructed by Sewgoolam Incorporated, Johannesburg McIntyre Van der Post, Bloemfontein For the respondent G M Budlender SC (with him K Saller) 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: 16 July 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 Nyhonyha N O and Others v NDPP (Case no 972; 973 & 974/22) [2024] ZASCA 113 (16 July 2024) Today the Supreme Court of Appeal (SCA) handed down judgment, wherein the appeals were dismissed, with costs, such costs to include those of two counsel, against the decision of a specially constituted full court of the Gauteng Division of the High Court, Johannesburg (the full court). This matter involved appeals by several parties against a restraint order granted by the full court. The restraint order was sought by the National Director of Public Prosecutions (NDPP) under the Prevention of Organised Crime Act 121 of 1998 (POCA) in relation to alleged corruption, money laundering and fraud offences committed by directors of Regiments Capital (Pty) Ltd, which is in liquidation, Regiments Fund Managers (Pty) Ltd and Regiments Securities (Pty) Ltd (the Regiments Group of companies). The Regiments Group had provided financial advisory services to state-owned entities such as Transnet and the Transnet Second Defined Benefit Fund (the Fund). The NDPP alleged that the Regiments directors, Dr Eric Anthony Wood, Mr Magandheran Pillay and Mr Litha Mveliso Nyhonyha, had engaged in unlawful activities that resulted in over R1 billion being paid to the Regiments Group, constituting the proceeds of crime. The Fund sued the appellants for some R848 million in losses which it allegedly suffered as a result of the Regiments Groups’ unlawful conduct. Although the appellants denied the allegations, they paid approximately R639 million in settlement of those claims. The appellants in this case were various entities and trustees who were holding property on behalf of the Regiments directors. They were cited as defendants in the NDPP's restraint application, as the NDPP alleged that the property they held qualified as ‘realisable property’ under section 14(1) of POCA and should be included in the restraint order. The NDPP contended that the property held by the appellants should be included in the restraint order, as it constituted ‘realisable property’ belonging to Mr Nyhonyha and Mr Pillay under POCA. The NDPP argued that the focus should be on who controls the property, rather than on formal ownership. The appellants, on the other hand, argued that their property should not be included in the restraint order, as they did not hold the property on behalf of the Regiments directors. They contended that the NDPP had to ‘pierce the corporate veil’ to include their property, which was not warranted in the circumstances. The full court upheld the NDPP's appeals and confirmed the provisional restraint order, subject to a variation of the amount, and the exclusion of Regiments Capital. The full court held that the appellants' property (excluding that of Regiments Capital, which was in liquidation) should be included in the restraint order under section 14(1) of POCA. The SCA granted the appellants special leave to appeal only on the issue of whether they held ‘realisable property’ within the meaning of section 14(1) of POCA on behalf of Mr Nyhonyha and Mr Pillay, such that their property could be restrained under the NDPP's application. 2 The SCA held that the purpose of a restraint order under POCA is to preserve assets pending the final determination of criminal proceedings, in order to ensure that no person can benefit from their wrongdoing. The Court noted that the focus is not on formal ownership, but on who controls the property or has its use and benefit. The SCA held that the full court was correct in finding that the appellants' property should be included in the restraint order, as they were holding the property on behalf of Mr Nyhonyha and Mr Pillay. The Court explained that when a person stands in a particular relationship to the property, such that they have an ‘interest’ in it, they will be considered to be ‘holding’ it for the purposes of POCA, even if they are not the registered owners. The SCA further held that POCA is intended to have a broad reach, in order to prevent sophisticated criminals from concealing their interest in the proceeds of crime through clever restructuring of their affairs. The Court held that the high court's decision was in line with this purpose and the principles established in previous judgments. As a result, the SCA dismissed the appeals, with costs, including the costs of two counsel where so employed. ~~~~ends~~~~

4240

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 314 /2022 In the matter between: STEPHANUS PETRUS LATEGAN FIRST APPELLANT JOHANNES RETIEF LATEGAN SECOND APPELLANT and THE DIRECTOR OF PUBLIC PROSECUTIONS, WESTERN CAPE FIRST RESPONDENT REGIONAL MAGISTRATE, WYNBERG SECOND RESPONDENT Neutral citation: Lategan and Another v The Director of Public Prosecutions, Western Cape and Another (314/2022) [2024] ZASCA 74 (10 May 2024) Coram: Molemela P, Hughes and Weiner JJA and Windell and Keightley AJJA Heard: 15 August 2023 Delivered: 10 May 2024 Summary: Interpretation of statutes – sexual offences – Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007(the Act) – whether sections 58, 59 and 60 apply retrospectively to common law sexual offences committed prior to the commencement of the Act, but instituted thereafter – appeal of appellants dismissed. 2 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Ndita J and Nziweni AJ sitting as a full court): The appeal is dismissed with costs, including costs consequent on the employment of two counsel. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Hughes JA (Molemela P, Weiner JA, and Windell and Keightley AJJA concurring): Introduction [1] In 2018, the appellants were charged in the Wynberg Regional Court under the common law for sexual offences which were committed from 1974 and 1979. Conspicuously, these offences were committed before the commencement of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007 (the Act). The charge sheet indicated that the first respondent, the Director of Public Prosecutions, Western Cape (the DPP) would rely on ss 58, 59 and 60 of the Act, even though the Act had not been in existence when the appellants committed the offences. Because the offences were committed prior to the commencement of the Act, the appellants sought an amendment to the charge sheet. The basis thereof being that the Act was not applicable to the offences for which they were charged under the common law, as the Act was not in existence when these offences were committed. [2] In the regional court proceedings, the court ordered that the DPP remove the offensive sections objected to by the appellants. In making such an order, that court found that the DPP’s defence to the appellants’ objection was not competent, as the offences they were charged with were predicated on the common law and not on the Act. The regional court reasoned that nowhere in the sections sought to be added to the charge sheet was there an indication that these sections would apply retrospectively. 3 [3] Subsequently, in the Western Cape Division of the High Court, Cape Town (the high court), the DPP instituted a review of the decision of the regional court. In the review application, the DPP sought a determination that the sections of the Act could apply retrospectively to common law crimes committed prior to the promulgation of the Act even in instances where the institution and investigation of such offences took place after its promulgation. In respect of the proceedings adopted by the DPP, it contended that the order of the regional court was irregular, and was hence subject to review. [4] In the high court, the appellants submitted that the proceedings in the regional court were procedurally and substantively correct and that, if the DPP was unsatisfied with that court’s decision, they should have proceeded by way of an appeal and not review. To this end, they stated that the correct avenue that the DPP ought to have pursued was s 310 of the CPA.1 A further concern for the appellants was the DPP’s reliance on s 69 of the Act. They submitted that this section only applies to offences committed, investigated and instituted before the Act, and so it did not apply in the circumstances of this case. [5] The high court concluded that the DPP was correct in proceeding by way of review as the regional court committed an irregularity when it ruled that ss 58, 59 and 60 be deleted from the charge sheet. The high court reasoned that, even though the Act was not retrospective, the sections above had retrospective effect and as such were applicable in the appellants’ case. This appeal is with the leave of the high court. The law [6] Fundamentally, the Act’s purpose was to repeal the common law offence of rape and replace it with a new expanded statutory offence of rape; to comprehensively and extensively review, amend all aspects of the laws and the implementation of the law 1 Section 310 of the CPA provides as follows: ‘Appeal from lower court by prosecutor (1) When a lower court has in criminal proceedings given a decision in favour of the accused on any question of law, including an order made under section 85 (2), the attorney-general or, if a body or a person other than the attorney-general or his representative, was the prosecutor in the proceedings, then such other prosecutor may require the judicial officer concerned to state a case for the consideration of the provincial or local division having jurisdiction, setting forth the question of law and his decision thereon and, if evidence has been heard, his findings of fact, in so far as they are material to the question of law.’ 4 relating to all forms of sexual penetration without consent, irrespective of gender.2 The preamble of the Act is also instructive on the need for a new and amended Act. The legislature took cognisance of the fact that the commission of sexual offences in South Africa is an issue of grave concern against disadvantaged and vulnerable members of society at large, women and children being the most vulnerable members of society.3 [7] The Bill of Rights contained in the Constitution of South Africa guarantees that one has the right not to be subjected to violence, in whichever form, and protects the rights of children and vulnerable persons. In light of the Bill of Rights, it is evident that the common law and statutory laws have not dealt with the commission of sexual offences adequately, effectively and in a non-discriminatory manner. Section 2 of the Act succinctly sets out the objective of the Act, which is to afford complainants of sexual offences with the least traumatizing protection that the law can provide. It does this by the introduction of measures which encompass repealing the relevant common law offences, and expanding and extending these offences in some instances in order to eradicate the high prevalence of sexual offences in our country. [8] The sections of the Act in issue, respectively, are couched as follows: ‘58. Evidence relating to previous consistent statements by a complainant shall be admissible in criminal proceedings involving the alleged commission of a sexual offence: Provided that the court may not draw any inference only from the absence of such previous consistent statement’; ‘59. 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’; ‘60. Notwithstanding any other law, a court may not treat the evidence of a complainant in criminal proceedings involving the alleged commission of a sexual offence pending before that court, with caution, on account of the nature of the offence.’ [9] Relevant to this matter is s 68 (1)(b), which repealed the common law crimes of ‘rape, indecent assault, incest, bestiality and violation of a corpse, in so far as they 2 Evident from the long title of the Act. 3 The Preamble of the Act. 5 relate to the commission of a sexual act with a corpse’. Of significance is the transitional provision, s 69, which reads as follows: ‘(1) All criminal proceedings relating to the common law crimes referred to in section 68(1)(b) which were instituted prior to the commencement of this Act and which are not concluded before the commencement of this Act must be continued and concluded in all respects as if this Act had not been passed. (2) An investigation or prosecution or other legal proceedings in respect of conduct which would have constituted one of the common law crimes referred to in section 68(1)(b) which was initiated before the commencement of this Act may be concluded, instituted and continued as if this Act had not been passed. (3) Despite the repeal or amendment of any provision of any law by this Act, such provision, for purposes of the disposal of any investigation, prosecution or any criminal or legal proceedings contemplated in subsection (1) or (2) remains in force as if such provision had not been repealed or amended.’ The issue [10] The issue in this appeal is whether ss 58, 59 and 60 of the Act apply retrospectively when dealing with common law offences where the criminal acts occurred before the Act came into operation, but were only investigated and prosecuted after the commencement of the Act. Further, whether the correct procedure in these circumstances was an appeal in terms of s 310 of the CPA rather than a review as initiated by the DPP. Discussion [11] The case of the appellants is that if they are charged under the common law, ss 58, 59 and 60 cannot be applicable, as the Act does not apply retrospectively. For this assertion, the appellants placed reliance on S and Another v Regional Magistrate Boksburg: Venter and another (Boksburg), where the Constitutional Court made a determination that a presumption exists against retrospectivity of a statute, unless the legislature either expressly or by implication intended such a statute to apply retrospectively.4 Since the Constitutional Court has pronounced that sexual offences 4 S and Another v Regional Magistrate Boksburg: Venter and Another [2011] ZACC 22; 2011 (2) SACR 274 (CC); 2012 (1) BCLR 5 (CC) para 16. 6 committed by individuals prior to the Act are to be charged in terms of the common law,5 the incorporation of ss 58, 59 and 60 of the Act to the appellants’ case, would undermine and contradict the ruling of the Constitutional Court in Boksburg, so they aver. They contended that s 69 of the Act specifically creates a clear divide between matters that fall under the common law and those that fall under the Act. The intention of the legislature is therefore clear: common law sexual offences, regardless of the status of their prosecution, ought to be concluded under common law as if the Act did not exist. [12] In contrast, the DPP contends that ss 58, 59 and 60, being the sections sought to be incorporated in the charge sheet, are procedural in effect. They relate to evidence and issues of admissibility that are applicable during the trial proceedings. They do not relate to the elements of the charges preferred and, as such, they will not be determinative of the outcome, whether the appellants are acquitted or convicted. As such, the provisions would not impact on the appellants’ substantive rights, in respect of their rights to a fair trial in terms of s 35 of the Constitution as well as their rights under the common law. The DPP contends that these sections, being procedural rather than substantive in nature, are prospective in operation. However, as they ‘attach new consequences for the future to an event that took place before the statute was effected’, these sections, the DPP contended, do not encroach on any of the appellants’ existing rights, nor are they detrimental to any of their substantive rights. Further, there can be no doubt in relation to the applicability of these sections in the future prosecution of the appellants. [13] It is prudent that I reiterate what the situation is in this matter before dealing with the concerns of the appellants. In this matter the sexual offences occurred before the enactment of the Act. However, the criminal proceedings in the matter were only instituted after the date that the statute took effect (16 December 2007). Hence, the old procedure is no longer applicable. In terms of s 69, only in matters where investigations had commenced, or where the trial was already underway before the promulgation of the statute, would the old procedure be applicable. The fact that this 5 Ibid para 19-23. 7 case deals with the procedure to be adopted for those matters investigated, instituted and prosecuted after the Act, is notable. [14] The starting point is to restate that which is trite, that is, that there is a presumption in our common law against the operation of statutes retrospectively unless the ‘contrary intention is indicated, either expressly or by clear implication’. In Boksburg, the Constitutional Court affirmed that, even though the crime of rape had been repealed in terms of s 68(1)(b), it had not been repealed retrospectively. It reasoned that, if that were so, it would have resulted in extinguishing criminal liability incurred before the Act.6 [15] It is trite that no statute is to be construed as having retrospective effect unless the legislature clearly intended it to have that effect. Thus, it is prospective in operation, that is forward or future operating, rather than retroactive, that is backward operating, with effect from its enactment. In respect of the issue of retrospectivity, it is imperative to restate the time-honoured principle that is globally recognised on the premise that the legislature would not promote an unjust result: ‘An important legal rule forming part of what may be described as our legal culture provides that no statute is to be construed as having retrospective operation (in the sense of taking away or impairing a vested right acquired under existing laws) unless the legislature clearly intended the statute to have that effect: see Peterson v Cuthbert & Co Ltd 1945 AD 420 at 430. . . Consistent with the underlying rationale of the presumption and the requirement that it can be rebutted only by express terms or clear implication, is the rule that if the court is left in doubt as to the operation of the statute, the law as existing before the enactment must be applied. . . . This canon of interpretation was described by my brother Olivier JA in Transnet Ltd v Chairman, National Transport Commission 1999 (4) SA 1(SCA) at 7 A as a “time-honoured principle” and in Gardner v Lucas (1878) 3 App Cas. 582, a decision of the House of Lords, Lord Blackburn (at 603) described it as a “general rule, not merely of England and Scotland, but, I believe, of every civilised nation”. . . . 6 Boksburg para 16; National Director of Public Prosecutions of South Africa v Carolus and Others [1999] ZASCA 101; [2000] 1 All SA 302 (A); 2000 (1) SA 1127 (SCA) para 31-32 (Carolus). Approved by the Constitutional Court in Veldman v Director of Public Prosecutions, Witwatersrand Local Division [2005] ZACC 22; 2007 (3) SA 210 (CC); 2007 (9) BCLR 929 (CC); 2006 (2) SACR 319 (CC) para 26-27. 8 In Benner v Canada (Secretary of State) (1997) 42 CRR (2d) 1 (SCC), a decision of the Supreme Court of Canada, Lacobucci J referred (at 17) to the fact that the terms “retroactivity” and “retrospectivity” can be confusing and he quoted with approval definitions of the two terms given by the well-known Canadian writer on the interpretation of statutes, Elmer A Driedger, in an article in (1978) 56 Canadian Bar Review 264 at 268-9 as follows: “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 changes the law from what it otherwise would be with respect to a prior event.” In terms of this terminology the expression “retroactivity” is used for retrospectivity in the “strong” sense while the expression “retrospectivity” is reserved for what is described as retrospectivity in the “weaker” sense’. 7 [16] It is important to recognise, as noted in the above extract, that the presumption against retrospectivity is founded on the need to avoid unjust interference with vested, substantive rights. The same principle does not apply in respect of matters of procedure. At the hearing of this appeal, the appellants’ counsel was invited to point out which substantive rights, of the appellants, if any, would be affected if the sections in question were to be applied in the appellants’ prosecution and trial. At best, the appellants’ counsel submitted that the provisions in question created uncertainty. He submitted that unless the Act stipulates retrospectivity, then they are entitled to the presumption against retrospectivity in their favour. Astonishingly, the additional response from counsel for the appellants was that they had the right not to be charged with offences which were no longer an offence. Evidently, they rely on the repeal of the crime of rape in terms of s 68(1)(b) of the Act. The gist of the submission was that new procedures laid down in a statute cannot be applied in circumstances where the accused person has been charged under the common law. 7 Carolus para 31-35. 9 [17] In my view, the appellants’ reliance on Boksburg and Kaknis v Absa Bank Limited & Another,8 in this case, is misplaced. In Boksburg, the court did not deal with the procedural aspects of the Act at all. That case dealt with the elements of the offence, and thus with the accused person’s vested substantive rights. On behalf of the DPP, it was argued that the appellants’ contention that ss 58, 59 and 60 will extinguish existing rights and affect the appellants detrimentally in the future trial is wrong. I agree. This Court’s judgment in National Director of Public Prosecutions of South Africa v Carolus and Others9 is apposite when assessing whether the presumption against retrospectivity has been rebutted. This Court held that an important legal principle forming part of our legal culture is that ‘no statute is to be construed as having retrospective operation (in the sense of taking away or repairing a vested right acquired under existing laws) unless the legislature clearly intended the statute to have that effect’.10 [18] There is no provision in the Act, for it to apply retrospectively. However, the sections in question deal with procedural aspects. As such, where the statute deals with procedural matters, it is termed a ‘procedural exception’. Though it equates to retrospectivity, it does so in the ‘weak sense’. As the provisions of the Act operate forward it does not amount to retroactivity, being retrospectivity in the ‘strong sense,’ as discussed in Carolus.11 [19] In Boksburg,12 the Constitutional Court reiterated that the exclusion does not apply to prosecutions not yet instituted at the date of enactment. There is, therefore, no ambiguity. This is particularly so if one also has regard to the long title and the preamble referred to earlier in this judgment. No substantive rights of the appellants are affected or encroached upon. As such, the presumption is that the legislature intended, ex facie the sections in question, that the prosecution of sexual offences outside the provided exclusion be in terms of the procedure as set out in the Act. 8 Kaknis v Absa Bank Limited & Another [2016] ZASCA 206; [2017] 2 All SA 1 (SCA); 2017 (4) SA 17 (SCA) para 37. 9 Carolus para 31. 10 Carolus para 31. 11 Carolus para 35. 12 Boksburg para 19. 10 Therefore, it is apparent that the sections are applicable to the future prosecution of sexual offences which are in the prosecutorial system after the enactment of the Act. [20] The question is whether any of the appellants’ existing rights have been adversely affected. In answering this question, it is necessary to juxtapose the provisions of ss 58, 59 and 60 vis-à-vis the common law position. In doing so, the courts’ interpretation of the applicable common law position is relevant. The common law requirement pertaining to the admission of a previous consistent statement was that such evidence was admissible if presented voluntarily by a complainant who had made the complaint within a reasonable time after the commission of a sexual offence. [21] As regards the statutory position introduced by the Act, the essence of ss 58 and 59 is to clearly stipulate that no adverse inferences may be drawn solely from the absence of a previous consistent statement made by the complainant in a sexual offence (s 58), and from the length of the delay between the alleged commission of that offence and the reporting thereof (s 59). Although the approach of the courts in dealing with the admission of a previous consistent statement in sexual offences has not always been uniform, there are many judgments, decided before the commencement of the Act, that have laid down the correct approach to the evaluation of such evidence. [22] In S v S,13 the accused was charged with the rape of an eleven-year-old girl. In considering the evidence that the complainant had not reported the incident at her school at all and had subsequently not reported it to her mother in detail, the court said: ‘Out of context, this erratic behaviour might well present the prosecution with an insuperable problem, for it is a generally accepted evidential requirement that the complainant should report the offence at the earliest opportunity. I should emphasise that this requirement … admits of exceptions in appropriate cases.’ In S v Cornick and Another,14 the sexual offences were allegedly committed before the coming into operation of the Act. This Court confirmed rape convictions even though the charges pertaining to the offences perpetrated on a 14-year-old complainant were only laid against the perpetrator 19 years later. Responding to the contention that it 13 S v S 1995 (1) SACR 50 (ZS) at 56. 14 S v Cornick and Another 2007(2) SACR 115 (SCA). 11 was improbable that the complainant, if she had been raped, would have failed to report the incident to her grandmother or her parents, this Court said: ‘It does not seem to me to be improbable that a young woman who has tried to bury memories of a traumatic event for many years would not appreciate until her mid-twenties … the full extent of what happened only later’.15 [23] The aforementioned authorities attest to the fact that the presence or absence of a previous consistent statement or the delay in reporting a rape have always been assessed in the context of all the circumstances of the case as opposed to being considered in isolation. In my view, the effect of ss 58 and 59 is not prejudicial to the appellants because it accords with a long-established approach of this Court; courts have consistently been cautioned to consider all the circumstances of the case when evaluating evidence. [24] In terms of s 60 of the Act, a court may not apply a special cautionary rule to sexual offences. It is noteworthy that in S v J,16 approximately nine years before the enactment of the Act, this Court held that the cautionary rule in sexual offences cases was based on an irrational and outdated perception, and that it unjustly stereotyped complainants in sexual offences cases. It stated that ‘[t]he evidence in a particular case may call for a cautionary approach, but that is a far cry from the application of a general cautionary rule'. It is therefore clear that s 60 of the Act reiterates the legal position that was laid down by the courts even before the enactment of the Act. [25] Thus, the conclusion I reach is that the retrospectivity, in this instance, does not impinge on any of the substantive rights of the appellants in respect of their future criminal proceedings. Insofar as this retrospectivity is a ‘weak’ retrospectivity relating only to procedural rules of evidence, no unfairness will be visited upon the appellants in respect of the defence that they may wish to mount during the criminal proceedings. The high court was therefore correct in finding that the provisions of ss 58, 59 and 60 were applicable to the future criminal proceedings of the appellants. Review or appeal 15 Ibid para 32. 16 S v J 1998 (1) SACR 470 (SCA) at 476E. 12 [26] The appellants argued that the DPP ought to have dealt with this matter in terms of s 310 of the CPA and not by way of review. As the high court confirmed, review proceedings were correctly instituted. The DPP submitted that the institution of review proceedings was in terms of s 22(1)(c) of the Superior Courts Act 10 of 2013 and s 24(1)(c) of the Supreme Court Act 59 of 1959, in that, the court a quo committed ‘a gross irregularity’ when it misinterpreted the law and applied the law incorrectly. Conspicuously, these two sections, which appears in the current and old act, respectively, are the same. [27] This Court, through its jurisprudence, has had occasion to deal with what warrants review rather than appeal proceedings in circumstances where a magistrate made a material error in interpreting the law. The process to be adopted, if the exercise of the judicial officer’s powers is exercised wrongly and the process leads to a decision which is challenged, is that of review and not of appeal. In Hira and Another v Booysen and Another, this Court explains why the position is so in the following passage: ‘Whether or not an erroneous interpretation of a statutory criterion, such as is referred to in the previous paragraph (ie where the question of interpretation is not left to the exclusive jurisdiction of the tribunal concerned), renders the decision invalid depends upon its materiality. If, for instance, the facts found by the tribunal are such as to justify its decision even on a correct interpretation of the statutory criterion, then normally (ie in the absence of some other review ground) there would be no ground for interference. Aliter, if applying the correct criterion, there are no facts upon which the decision can reasonably be justified. In this latter type of case it may justifiably be said that, by reason of its error of law, the tribunal" asked itself the wrong question", or "applied the wrong test", or "based its decision on some matter not prescribed for its decision", or "failed to apply its mind to the relevant issues in accordance with the behests of the statute"; and that as a result its decision should be set aside on review’.17 [28] I agree with the DPP’s contention that the decision taken by the second respondent that the provisions of the Act do not apply to the prosecution of the appellants, flies in the face of the significance and interpretation of s 69 of the Act. As is evident from a reading of s 69, no mention is made of crimes committed before the 17 Hira and Another v Booysen and Another [1992] ZASCA 112; 1992 (4) SA 69 (AD); [1992] 2 All SA 344 (A) at 93G-I. 13 commencement of the Act, but prosecuted thereafter. It stands to reason that those crimes would not be affected by this section and as such the section ‘does not confer prosecutorial power on the State in respect of common law crimes, but rather confirms it’. This is apparent as ‘[i]t would therefore be inappropriate to interpret it as a provision that could curtail the State’s prosecutorial power, which is sourced elsewhere: in the National Prosecuting Authority Act and, ultimately the Constitution’.18 This misinterpretation by the second respondent culminated in a gross irregularity having been committed by the second respondent and as such, is susceptible to review proceedings. In addition, the proceedings have not reached finality and were adjourned for determination of the review application; finality being a requisite for appeal proceedings to be instituted. [29] For all those reasons the appeal must fail. I make the following order: The appeal is dismissed with costs, including costs consequent on the employment of two counsel. ___________________ W HUGHES JUDGE OF APPEAL 18 Boksburg para 19 and 20. 14 Appearances For the appellant: R Liddell with S Webb Instructed by: Liddell, Weeber & Van der Merwe Inc Webbers Attorneys, Bloemfontein For the respondent: AC Webster with MD Titus 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: 10 May 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 Lategan and Another v The Director of Public Prosecutions, Western Cape and Another (314/2022) [2024] ZASCA 74 (10 May 2024) Today the Supreme Court of Appeal (SCA) dismissed an appeal with costs including the costs of two counsel. The initial proceedings took place in the Wynberg Regional Court (the regional court) where the appellants, in 2018, were charged under common law for sexual offences which were committed from 1974 and 1979. These offences were committed before the commencement of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007 (the Act) and the charge sheet indicated that the Director of Public Prosecutions, Western Cape (the DPP) would rely on ss 58, 59 and 60 of the Act, even though the Act had not been in existence when the appellants committed the offences. Due to the offences being committed prior to the commencement of the Act, the appellants sought an amendment to the charge sheet, alleging that the Act was not applicable to the offences for which they were charged under the common law, as the Act was not in existence when these offences were committed. In the regional court proceedings, the regional court ordered the DPP to remove the offensive sections objected to by the appellants. In making such an order, that court found that the DPP’s defence to the appellants’ objection was not competent, as the offences they were charged with were predicated on the common law and not on the Act. The regional court reasoned that nowhere in the sections sought to be added to the charge sheet, was there an indication that these sections would apply retrospectively. Subsequently, the DPP instituted a review of the decision of the regional court in the Western Cape Division of the High Court, Cape Town (the high court). In the review application, the DPP sought a determination that the sections of the Act could apply retrospectively to common law crimes committed prior to the promulgation of the Act, even in instances where the institution and investigation of such offences took place prior to its promulgation. In respect of the proceedings adopted by the DPP, it contended that the order of the regional court was irregular, and was hence subject to review. The appellants submitted that the proceedings in the regional court were procedurally and substantively correct and that, if the DPP was unsatisfied with that court’s decision, they should have proceeded by way of an appeal and not review. The high court concluded that the DPP was correct in proceeding by way of review as the regional court committed an irregularity when it ruled that ss 58, 59 and 60 be deleted from the charge sheet. It 2 reasoned that, even though the Act does not apply retrospectively, the sections above applied retrospectively and as such were applicable in the appellants’ case Before the SCA, the issue for determination was whether ss 58, 59 and 60 of the Act apply retrospectively when dealing with common law offences where the criminal acts occurred before the Act came into operation, but were only investigated and prosecuted after the commencement of the Act. Tied to that, was whether the correct procedure in the present case was an appeal in terms of s 310 of the CPA rather than a review as initiated by the DPP. In reaching a conclusion on the first issue, the SCA reasoned that the question to examine was whether any of the appellants’ existing rights had been adversely affected and by answering this question, it was necessary for the SCA to juxtapose the provisions of ss 58, 59 and 60 vis-à-vis the common law position. In doing this exercise, the SCA found that the effect of ss 58 and 59 is not prejudicial to the appellants because it confirms a long-established approach of the SCA, in terms of which courts were reminded to consider all the circumstances of the case when evaluating evidence, and cautioning against the consideration of any aspect of the case in isolation. With regards to s 60 of the Act, the SCA similarly found that the retrospectivity, in that instance, also did not impinge on any of the substantive rights of the appellants in respect of their future criminal proceedings. Insofar as the retrospectivity was a ‘weak’ retrospectivity relating only to procedural rules of evidence, no unfairness would be visited upon the appellants in respect of the defence that they may wish to mount during the criminal proceedings. The SCA, on this issue, therefore held that the regional court was therefore correct in its finding that the provisions of ss 58, 59 and 60 were applicable to the future criminal proceedings of the appellants. With regards to the second issue of the correct procedure to be employed by the DPP, the SCA held that the misinterpretation of the law and applying the law incorrectly by the second respondent culminated in a gross irregularity having been committed by the second respondent and as such, was susceptible to review proceedings. In the result, the SCA dismissed the appeal with costs, including costs consequent on the employment of two counsel. --------oOo--------

4247

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not reportable Case no: 90/2023 In the matter between: CITY OF TSHWANE METROPOLITAN MUNICIPALITY APPELLANT and MALVIGENIX NPC T/A WECANWIN FIRST RESPONDENT PIETER NICOLAAS GROBLER SECOND RESPONDENT ANNA ELISABETH GROBLER THIRD RESPONDENT ETHEL MARGARET COETZEE FOURTH RESPONDENT MARTHA MARGARETHA DU PLESSIS FIFTH RESPONDENT JOHANNES JACOBUS LOMBARD SIXTH RESPONDENT RESEANE KAIZER HUMPHRY MAKOLE SEVENTH RESPONDENT YVONNE GOOD EIGHTH RESPONDENT LYNN EAST PROP (PTY) LTD NINTH RESPONDENT DIANA EDITH GEORGIADES TENTH RESPONDENT FREDERIK JACOBUS VAN DER SANDE ELEVENTH RESPONDENT JEANNE LOUISE VAN DER SANDE TWELFTH RESPONDENT EDMOUR MARCHAND THIRTEENTH RESPONDENT 2 NADIA MARCHAND FOURTEENTH RESPONDENT MARC RICHARD TRUMAN N O FIFTEENTH RESPONDENT GREGORY JOHN BOUWER SIXTEENTH RESPONDENT CORNELIA JOHANNA BOUWER SEVENTEENTH RESPONDENT CHARLES KGOMOTSO TSOKU EIGHTEENTH RESPONDENT Neutral Citation: City of Tshwane Metropolitan Municipality v Malvigenix NPC t/a Wecanwin and Others (90/2023) [2024] ZASCA 76 (16 May 2024) Coram: SCHIPPERS, NICHOLLS and MOTHLE JJA and TOLMAY and MBHELE AJJA Heard: 5 March 2024 Delivered: 16 May 2024 Summary: Local government – Municipal Property Rates Act 6 of 2004 – valuation rolls – setting aside of valuation rolls – consequence – appeal against the judgment and order of the High Court in favour of the respondents, which sought to declare unlawful the refusal by the appellant to comply with an order of the Gauteng Division of the High Court, Pretoria, as confirmed by an order of the Supreme Court of Appeal (SCA) – whether the invalidation of the appellant’s 2012 supplementary valuation roll and 2013 general valuation roll, as a judgment in rem, required the appellant to reverse the property rates imposed in terms of the invalid valuation rolls in respect of properties owned by the respondents. 3 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Potterill J sitting as court of first instance): The appeal is dismissed with costs, including costs of two counsel. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Mothle JA (Schippers and Nicholls JJA and Tolmay and Mbhele AJJA concurring) Introduction [1] The appellant, the City of Tshwane Metropolitan Municipality (the City) appeals against the judgment and order of the Gauteng Division of the High Court, Pretoria (the high court), granted in favour of the first respondent, Malvigenix NPC t/a Wecanwin (Wecanwin), and the second to eighteenth respondents. The high court essentially ordered the City to reverse the rates levied on properties in Lombardy Estate and Health Spa (Lombardy Estate), in terms of invalid valuation rolls. Lombardy Estate is a privately owned housing development, situated within the jurisdiction of the City. The second to eighteenth respondents are current and former property owners in the Estate. [2] The genesis of the dispute between the City and Wecanwin is an application instituted in 2016 by the Lombardy Development (Pty) Ltd and 13 property owners in the high court, namely Lombardy Development (Pty) Ltd and 13 Others v The City of Tshwane Metropolitan Municipality1 (Lombardy). In that case the high court declared invalid and set aside the City’s 2012 supplementary valuation roll and 2013 general valuation roll (the valuation rolls), which unlawfully recategorised as ‘vacant’ certain properties which had until then been categorised as residential in Lombardy Estate. 1 Lombardy Development (Pty) Ltd and others v City of Tshwane Metropolitan Municipality and Another [2021] ZAGPPHC 521. 4 The 13 applicants in Lombardy and the 17 members of Wecanwin in this appeal, were and some still are, property owners and ratepayers in Lombardy Estate. [3] The declaration of invalidity of the 2012 SVR and the 2013 GVR was confirmed by this Court on appeal, in City of Tshwane Metropolitan Municipality v Lombardy Development (Pty) Ltd and Others (City of Tshwane).2 This appeal is a sequel to Lombardy and City of Tshwane. I am thus constrained to frequently refer to these two judgments. Background [4] Section 229 of the Constitution empowers a municipality to impose rates on property, including other taxes, levies and duties appropriate for local government. National legislation promulgated to exercise that authority is the Local Government: Municipal Property Rates Act 6 of 2004 (the Rates Act). Section 8 of the Rates Act authorises the municipality to levy different rates for different categories of properties. The categories of properties for levying rates are determined according to the actual or permitted use of that property such as use for agriculture, residence or vacant and its location within the municipality. The Regulations as published by the Minister in terms of s 19 of the Rates Act, determines the effective rate to be levied on the properties. The rates are based on the market value of the property, determined by a valuer appointed by a municipality. The valuations of the properties are published in the valuation roll in terms of s 30, 33(1) and 49(1) of the Rates Act. [5] The City, acting in terms of the Rates Act, published the valuation rolls, promulgated for the City’s newly incorporated geographic area, which previously fell under the disestablished Kungwini Local Municipality (Kungwini). In terms of the valuation rolls, the City categorised the properties in Lombardy Estate as ‘vacant’. These properties were previously categorised by Kungwini as ‘residential’. The rates charged on vacant properties attract far greater revenue for the City, than those categorised as residential. Consequently, the ratepayers received invoices from the 2 City of Tshwane Metropolitan Municipality v Lombardy Development (Pty) Ltd and Others [2018] ZASCA 77; [2018] 3 All SA 605 (SCA). 5 City, reflecting massive increases in their liability for imposed rates, by as much as 700% of what they originally paid under Kungwini.3 [6] The Lombardy Development (Pty) Ltd and 13 property owners in Lombardy Estate, instituted review proceedings in the high court, wherein they sought a declaration of invalidity and the setting aside of the City’s valuation rolls in terms of which the City had unlawfully categorised their properties as ‘vacant’. The unlawfulness of the categorisation was as a result of the City failing to comply with the public consultation process provided for in s 49 of the Rates Act, when preparing the valuation rolls. On 31 May 2016, the high court declared invalid and set aside the impugned valuation rolls, in terms of which the properties were categorised as vacant. [7] Three of the Lombardy orders relevant to the issues raised in this appeal, read as follows:4 ‘1 . . . 2 The respondent’s [the City’s] 2012 supplementary valuation roll is declared invalid and set aside to the extent that it recategorises as “Vacant” properties situated in the municipal area of the former Kungwini local municipality formerly categorised as “Residential” (the affected properties). 3 The respondent’s 2013 general valuation roll, and all subsequent valuation rolls of the respondent are declared invalid and set aside to the extent that they categorise the affected properties as “Vacant” unless and until the affected properties are lawfully re-categorised as such. (Own emphasis.) 4 The imposition of the assessment rate applicable to vacant land on those of the affected properties which belonged to the applicants on 28 June 2013, the date upon which this review application was instituted, is declared invalid and set aside.’ [8] Paragraph 4 of the order concerned the assessment rate of vacant land that was imposed as a result of the categorisation introduced by the impugned valuation rolls. Tuchten J limited paragraph 4 of the declaratory order to the property rates of the applicants before him. In its judgment the court reasoned that the declaration of invalidity of the assessed rates would not extend to all affected properties in the 3 Ibid para 5. 4 Ibid para 10. 6 area, because the court knew nothing of the circumstances of the property owners who were not before it. [9] This Court in the City of Tshwane confirmed the invalidity and the setting aside of the valuation rolls. It also considered whether the judgment granted by Tuchten J was confined to the properties owned by the Lombardy applicants. It held that it was not, and stated in paragraph 28 of its judgment: ‘. . . What is more, the City’s complaint misconstrues the nature and effect of the high court’s judgment. For, whilst a judgment in personam relates only to the rights inter se the parties before the court and binds only the parties to the proceedings, one in rem fixes the status of the matter in the litigation. A Judgment in rem has effect against the whole world – inter omnes and not merely as between parties to the litigation before the court. As the judgment pronounced upon the status of the particular subject-matter of the litigation in this case, it is one in rem and is conclusive against all persons whether parties or strangers to the litigation.’5 (Own emphasis.) Wecanwin’s case [10] Emboldened by the success of the property owners in Lombardy, Wecanwin and its members demanded that the City place them in the same position as the applicants in Lombardy concerning the relief granted in paragraph 4 of the order. That included claims for refunds of overcharged rates. The City declined to do so, on the ground that paragraph 4 read with paragraphs 7 and 9 of the Lombardy order, related only to the applicants before the high court in that application. Correspondence exchanged between Wecanwin and the City on this issue failed to yield a mutually acceptable solution. [11] In 2017, Wecanwin approached the high court, seeking a declaratory order that the City’s refusal to comply with Tuchten J's judgment and order, read with ’City of Tshwane, was unlawful. In support of this relief, Wecanwin contended that since the judgment by Tuchten J in Lombardy, was accepted by this Court as one in rem, it applied to all affected properties in Lombardy Estate. Therefore the setting aside of the valuation rolls affected the categorisation of all properties in Lombardy Estate. 5 Tshabalala v Johannesburg City Council 1962 (4) SA 367 (t) at 368H-369A; Pattni v Ali [2007] 2 AC 85 para 21. 7 Consequently, the declaration of invalidity of the valuation rolls reversed the categorisation of the properties from ‘vacant’ to ‘residential’. Wecanwin contended that the City was obliged to charge rates on the basis that the properties were categorised as residential until the situation was regularised. [12] The City in response contended in essence that it is bound by the ‘Oudekraal’6 principle that ‘an unlawful act can produce legally effective consequences, is constitutionally sustainable, and indeed necessary. Therefore, the imposition of the vacant land rates for Wecanwin stands with legal consequences up until it is successfully challenged in the right proceedings and set aside by a court of law’. [13] Wecanwin did not seek relief in the form of a review. It sought a declaratory order that the City refused to comply with the orders in Lombardy, which this Court characterised as a judgment in rem. It appears from paragraph 3 of the Wecanwin judgment of Potterill J, that the crux of the matter as she understood the declaratory relief sought, was not an attack on the imposed vacant land rates charged by the City. In that instance, Wecanwin would have had to institute an application to review and set aside the imposition of the rates. The high court understood the question posed in the Wecanwin application as being ‘whether the Tuchten [J] order, as confirmed by the SCA-order, is applicable to the applicants before me as non-parties to the Tuchten [J] order and can be extended to Wecanwin’. Potterill J extended paragraph 4 of the Lombardy orders, essentially directing the City to refund Wecanwin the overcharged rates of the vacant land categorisation. (Own emphasis.) [14] Therefore, the issue in this appeal turns on whether it was necessary for Wecanwin to institute review proceedings for the relief they sought, despite the finding made by this Court in paragraph 28 of City of Tshwane. In this appeal, the City persisted in characterising paragraph 4 of the Lombardy order, as a judgment in personam and not in rem. Consequently, they contended, that for Wecanwin to obtain the appropriate relief as in Lombardy, it had to institute review proceedings. 6 Oudekraal Estates (Pty) Ltd v City of Cape Town and Others [2004] ZASCA 48; [2004] 3 All SA 1 (SCA); 2004 (6) SA 222 (SCA). 8 For the reasons that follow, I find the City’s contentions to be unmeritorious and misplaced. [15] First, the City in the present appeal, again inexplicably misconstrued or ignored paragraphs 28 and 29 of City of Tshwane. In paragraph 28 of that judgment quoted above, this Court stated unequivocally that the Lombardy judgment was one in rem. The Court further stated: ‘…As the judgment pronounced upon the status of the particular subject-matter of the litigation in this case, it is one in rem and is conclusive against all persons whether parties or strangers to the litigation.’ (Own emphasis.) [16] This Court went on to explain in paragraph 29 of City of Tshwane: ‘The high court’s order must be interpreted contextually and not by peering at words in a paragraph of the order in isolation. The context includes the application papers and the judgment of the court as a whole. Such an approach solves any ostensible difficulties in interpreting and implementing paragraph 7 of the order. It is plain from the context that the respondents’ grievance was not concerned with the particular level of the rate levied against their properties (in the sense of the rate of cents in the rand made applicable to vacant property) but with the re-categorisation of these properties as ‘vacant’, thereby attracting the higher vacant land rate. Until properly re-categorised, the respondents contend that the City’s residential rate should be charged in respect of their properties, and they tendered to pay that rate. That, as the judgment makes clear, is what the high court means by its order that the “rate” previously applicable must be levied in the former Kungwini area until the City remedies the defects in its process of re-categorisation. In other words, the Kungwini vacant properties must be rated at the rate that in terms of the City’s current rates resolution is applicable to residential properties, whatever that rate is from time to time.’ (Own emphasis.) [17] Lombardy, therefore, adjudicated a complaint against the categorisation of the properties in Lombardy Estate as vacant. The high court in Lombardy had, in paragraphs 2 and 3 of its order, declared invalid and set aside the categorisation in the valuation rolls, of the properties as ‘vacant’, which concern all affected properties in Lombardy Estate, including those of Wecanwin members. The last sentence of paragraph 29 of City of Tshwane, (as quoted in the preceding paragraph of this judgment) accurately captures the essence of the declaratory relief sought by 9 Wecanwin. In the circumstances, it is unnecessary for Wecanwin to institute a review application to invalidate that which has already been declared invalid. [18] Second, it seems there is a growing trend by some parties in litigation, to irresistibly seek refuge in the Oudekraal7 principle, and in the process distort the court’s reasoning in that seminal judgment. The City in this appeal did exactly that, by contending that the imposition of vacant land rates on the respondent’s properties stands until set aside by a court. This principle is not applicable in this case and therefore this contention is not correct. [19] This Court in Seale v Van Rooyen NO and Others; Provincial Government, North West Province v Van Rooyen NO and Others8 (Seale) held as follows: ‘Thus, the proper enquiry in each case – at least at first – is not whether the initial act was valid but rather whether its substantive validity was a necessary precondition for the validity of consequent acts. If the validity of consequent acts is dependent on no more than the factual existence of the initial act, then the consequent act will have legal effect initial for so long as the act is not set aside by a competent court. … (T)he reliance by counsel on the decision in Oudekraal, [is] misplaced. As appears from the italicized part of the judgment just quoted, the analysis was accepted by this court as being limited to a consideration of the validity of a second act performed consequent upon a first invalid act, pending a decision whether the first act is to be set aside or permitted to stand. This court did not in Oudekraal suggest that the analysis was relevant to the latter decision. …I think it is clear from Oudekraal, and it must in my view follow, that if the first act is set aside, a second act that depends for its validity on the first act must be invalid as the legal foundation for its performance was non-existent…’ (Footnotes omitted.) [20] In Corruption Watch NPC v President of the Republic of South Africa9 (Corruption Watch), the Oudekraal principle as clarified in Seale, was cited with approval and accepted by the Constitutional Court. The Court held as follows: 7 Oudekraal Estates (Pty) Ltd v City of Cape Town and Others [2004] ZASCA 48; [2004] 3 All SA 1 (SCA); 2004 (6) SA 222. 8 Seale v Van Rooyen NO and Others; Provincial Government, North West Province v Van Rooyen NO and Others [2008] ZASCA 28; [2008] 3 All SA 245 (SCA); 2008 (4) SA 43 (SCA) para 13. 9 Corruption Watch NPC and Others v President of the Republic of South Africa and Others [2018] ZACC 23; 2018 (10) BCLR 1179 (CC) para 34. 10 ‘In Kirland this court accepted what was decided in Seale. Writing for the majority, Cameron J had this to say: “In Seale… the court, applying Oudekraal, held that acts performed on the basis of the validity of a prior act are themselves invalid if and when the first decision is set aside…(T)he court rightly rejected an argument, in misconceived reliance on Oudekraal, that the later (second) act could remain valid despite the setting aside of the first.” ‘‘it is clear from Oudekraal…that if the first act is set aside, a second act that depends for its validity on the first act must be invalid as the legal foundation for its performance was non-existent.’ [21] Construed in its proper context, Oudekraal addresses a situation where the substantive validity of the one act is a necessary pre-condition of the validity of the consequent second act, in two instances. The first is where a court declares conduct invalid but does not set aside that conduct.10 In such a case, the consequent conduct whose validity is dependent on the conduct declared invalid, remains valid. A challenge to the validity or otherwise of the consequent conduct, would require review proceedings. In the second instance where the court declares conduct invalid and sets it aside, the consequent conduct dependent on the invalidated conduct also becomes invalid and is set aside. (Emphasis added.) [22] Applying this principle to the issue in this appeal, as dealt with in Lombardy; the imposed rates were determined on the basis of the categorisation of the properties in Lombardy Estate as ‘vacant’. The validity of the imposed rates depended on the categorisation. When the court in Lombardy declared the categorisation invalid and set it aside, the imposed rates as a consequence of the categorisation also became invalid. There is thus no need for an application to review and set them aside again, as the City contends. (Emphasis added.) [23] Third, the City has a misconceived notion of its duty and role as a sphere of local government. Despite being a constitutional structure, the City supinely assumes that the duty to correct its unlawful conduct lies with those adversely affected by that conduct, in this instance, the property owners. The Constitutional Court has, in at least three cases, addressed this misconception. 10 In such an instance, the court may decide to invoke the provisions of s 172(1)(b) of the Constitution Act 1996, to make any order that is just and equitable, as an alternative to setting aside the invalid conduct. 11 (a) In Njongi v Member of the Executive Council, Department of Welfare, Eastern Cape11 (Njongi), the Constitutional Court stated: ‘…Indeed, the Provincial Government should have taken proactive measures to fully reinstate every improperly cancelled social grant. This is a necessary consequence of the duty of every organ of State to “assist and protect the courts to ensure the … dignity … and effectiveness of the courts.” It would also be mandated by the constitutional injunction that an order of court binds all organs of State to which it applies acceptable. The Provincial Government had every right to appeal the order in Bushula. Once it did not do so however, it had the duty in my view to ensure full redress for every person in the position of Mr Bushula…’ (b) In Khumalo and Another v MEC for Education, KwaZulu-Natal,12 the Constitutional Court held thus: ‘Section 195 provides for a number of important values to guide decision-makers in the context of public-sector employment. When, as in this case, a responsible functionary is enlightened of a potential irregularity, section 195 lays a compelling basis for the founding of a duty on the functionary to investigate and, if need be, to correct any unlawfulness through the appropriate avenues. This duty is founded, inter alia, in the emphasis on accountability and transparency in section 195(1)(f) and (g) and the requirement of a high standard of professional ethics in section 195(1)(a). Read in the light of the founding value of the rule of law in section 1(c) of the Constitution, these provisions found not only standing in a public functionary who seeks to review through a court process a decision of its own department, but indeed they found an obligation to act to correct the unlawfulness, within the boundaries of the law and the interests of justice.’ (Emphasis added.) (c) In Merafong City Local Municipality v Anglo Gold Ashanti Limited,13 the Constitutional Court held: ‘. . . state functionaries are enjoined to uphold and protect the rule of law by, inter alia, seeking the redress of their departments’ unlawful decisions. Generally, it is the duty of a state functionary to rectify unlawfulness. The courts have a duty “to insist that the state, in all its dealings, operates within the confines of the law and, in so doing, remains accountable to 11 Njongi v Member of Executive Council, Department of Welfare, Eastern Cape [2008] ZACC 4; 2008 (6) BCLR 571 (CC); 2008 (4) SA 237 (CC) paras 16-18. 12 Khumalo and Another v MEC for Education, KwaZulu-Natal [2013] ZACC 45; 2014 (3) BCLR 333 (CC); (2014) 35 ILJ 613 (CC) 2014 (5) SA 579 (CC) paras 35 and 36. 13 Merafong Local Municipality v AngloGold Ashanti Limited [2016] ZACC 35; 2017 (2) BCLR 182 (CC); 2017 (2) SA 211 (CC) para 61. 12 those on whose behalf it exercises power”. Public functionaries “must, where faced with an irregularity in the public administration, in the context of employment or otherwise, seek to redress it”. Not to do so may spawn confusion and conflict, to the detriment of the administration and the public. A vivid instance is where the President himself has sought judicial correction for a process misstep in promulgating legislation.’ [24] More pointedly, this Court in City of Tshwane remarked at the end of paragraph 21 as follows: ‘. . . It cannot plausibly be so that the City proceeded to arrange its affairs in the confident expectation that ratepayers would not challenge its conduct. Indeed, the City does not even attempt to suggest what other remedy might be preferable from the standpoint of justice and equity other that the court should decline to set aside the 2012 valuation roll.’ (Own emphasis.) The duty to correct the invalidation and setting aside of the unlawful conduct and its consequences, rests with the City and not with the Lombardy Estate ratepayers. Where necessary, it is the City that must approach courts for appropriate relief, in order to self-correct,14 and not wait to be challenged. [25] Tuchten J’s reasons to exclude all affected property owners in paragraph 4 of his order in Lombardy, were based on the absence of the factual circumstances of Wecanwin members before him, and not on a point of law. The City is in possession of the records of accounts and information as to the circumstances of all property owners in Lombardy Estate. As such, it is in a position to adjust the accounts and give effect to the high court’s order in relation to all affected properties. Wecanwin members are, for reason of equity, entitled to the same relief as the applicants in Lombardy. Section 3(1) of the Rates Act provides that ‘(T)he council of a municipality must adopt a policy consistent with this Act on the levying of rates on rateable property in the municipality.’ Sub-section (3)(a) thereof provides that ‘A rates policy must treat persons liable for rates equitably.’ This section invokes the right to equality and equal treatment before the law, as provided for in s 9 of the Constitution of the Republic of South Africa, 199615. Therefore, the City has a legal duty in terms 14 State Information Technology Agency Soc Ltd v Gijima Holdings (Pty) Ltd [2017] ZACC 40 (CC); 2018 (2) SA 23 (CC). 15 The Constitution of the Republic of South Africa, Act 108 of 1996. 13 of its policy on the levying of rates on rateable properties, to treat persons liable for rates equitably. [26] To conclude, first the City has misconstrued the thrust of the Lombardy judgments and orders in the high court and this Court. The Lombardy case was about the categorisation of the properties from residential to vacant, based on the impugned valuation rolls. Second, the declaration of invalidity and setting aside of the valuation rolls and their categorisation of the properties as vacant, had the consequence that the rates imposed on vacant properties were also invalid and set aside. There was thus no need for Wecanwin or any property owner in Lombardy Estate to institute review proceedings to have any valuation, categorisation, or the imposed property rates declared invalid and set aside. Third, where it is found to have acted unlawfully, the City has the duty to correct that unlawful act and its deleterious consequences. The City’s conduct in declining to do so is deprecated. Therefore, for reasons stated in this judgment, I ineluctably conclude that the City’s appeal must fail. [27] In view of the City’s failure in their duty, to proactively take measures to correct their unlawful conduct, and in particular the consequences thereof as far as the rates are concerned, Wecanwin had to unnecessarily incur the costs of litigation. The costs in this appeal should therefore follow the result. [28] The following order shall issue: The appeal is dismissed with costs, including costs of two counsel. _________________ S P MOTHLE JUDGE OF APPEAL 14 Appearances For the appellant: T Strydom SC with L Kotze Instructed by: Mothle Jooma Sabdia Inc., Pretoria Symington De Kok Attorneys, Bloemfontein For the respondent: N Ferreira with A Molver Instructed by: Adams & Adams Attorneys, Pretoria Phatshoane Henny 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: 16 May 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 City of Tshwane Metropolitan Municipality v Malvigenix NPC t/a Wecanwin and Others (90/2023) [2024] ZASCA 76 (16 May 2024) Today the Supreme Court of Appeal (SCA) dismissed an appeal with costs including costs of two counsel. The appeal emanated from the Gauteng Division of the High Court, Pretoria (the high court) where that court granted a judgment and orders against the City of Tshwane Metropolitan Municipality (the City) from an application lodged by an entity known as Malvigenix NPC t/a Wecanwin and 17 other applicants (Wecanwin), who are the current and former property owners (ratepayers) of Lombardy Estate and Health Spa (the Lombardy Estate) which is a privately owned housing development, situated within the jurisdiction of the City. The genesis of the dispute between the City and Wecanwin has to be traced back to an application instituted in 2016 by the Lombardy Development (Pty) Ltd and 13 of the property owners, in the high court, resulting in the matter of Lombardy Development (Pty) Ltd and 13 Others v The City of Tshwane Metropolitan Municipality (Lombardy). The 13 applicants in Lombardy and the 17 members of Wecanwin in the present appeal, were and some still are, property owners and ratepayers in Lombardy Estate. Both cases deal with the declaration of invalidity and setting aside of the impugned valuation rolls, with the consequence that the categorization of the property for purposes of imposition of rates had been reversed in Lombardy, a decision confirmed by the SCA on appeal, in the City of Tshwane Metropolitan Municipality v Lombardy Development (Pty) Ltd and Others (City of Tshwane). The present appeal by the City, had its foundation in, and was a sequel to Lombardy and City of Tshwane. In 2012, the City, acting in terms of the Rates Act 6 of 2004 (the Rates Act), published a supplementary valuation roll, which was followed by a general valuation roll in 2013 (the valuation rolls). The valuation rolls were promulgated for the City’s newly incorporated geographic area, which previously fell under the disestablished Kungwini Local Municipality (Kungwini). In terms of the valuation rolls, the City categorised the properties in Lombardy Estate as vacant. These properties were previously categorised by Kungwini as ‘residential’. The rate charged on vacant properties attracted far much greater revenue for the City than those categorised as residential. Consequently, the ratepayers received invoices from the City, reflecting massive increases in their liability for imposed rates, to as much as 700% of what they originally paid under Kungwini. The Lombardy Development (Pty) Ltd and 13 property owners in Lombardy Estate, instituted review proceedings in the high court, wherein they sought a declaration of invalidity and the setting aside of 2 the City’s valuation rolls in terms of which the City had unlawfully categorised their properties as vacant. The unlawfulness of the categorisation was as a result of the City failing to comply with the public consultation process provided for in s 49 of the Rates Act, when setting up the valuation rolls. On 31 May 2016, the high court declared invalid and set aside the impugned valuation rolls, in terms of which the properties were categorised as vacant. Following the success in Lombardy, Wecanwin and its members demanded from the City that they be placed in the same position as the applicants in Lombardy concerning the relief granted in paragraph four of the orders which implied a claim for a refund of the overcharged amounts of the rates paid. The City declined to do so, on the grounds that paragraph four read with paragraphs seven and nine of Lombardy, in the City’s view, concerned only the applicants that were before the high court in that application. In 2017, Wecanwin approached the high court, seeking a declaratory order that the City’s refusal to comply with the high court’s judgment and orders, read with the City of Tshwane judgment, was unlawful. In support of this relief, Wecanwin contended that since the judgment by Tuchten J in Lombardy, was accepted by the SCA as one in rem, it applied to all affected properties in Lombardy Estate. Consequently, the declaration of the valuation rolls as invalid, reverses the categorisation of the properties from ‘vacant’ to ‘residential’. The invalidation of the valuation rolls implies that the categorisation of the properties by Kungwini as residential is revived. The City, in response, contended, in essence, that it is bound by the Oudekraal principle that an unlawful act can produce legally effective consequences, is constitutionally sustainable, and indeed necessary. The issue before the SCA thus turned on whether it was necessary for Wecanwin to institute review proceedings for the relief they sought. In addressing the issue, the SCA reasoned that the City’s contentions to be unmeritorious and misplaced because: (a) The City, in the present appeal, inexplicably misconstrued or ignored paragraphs 28 and 29 of the SCA judgment, where this Court stated unequivocally that the Lombardy judgment was one in rem. Lombardy, therefore, adjudicated a complaint against the categorisation of the properties in Lombardy Estate as vacant. The high court in Lombardy had, in paragraphs two and three of its orders, declared invalid and had set aside the categorisation in the valuation rolls of the properties as vacant. Those orders concerned all affected properties in Lombardy Estate, including those of Wecanwin members; (b) By contending that Wecanwin needed to institute review proceedings to declare invalid and set aside the imposed rates, the City advanced an untenable contention as it would be impractical to institute review proceedings to have the valuation rolls declared invalid and set aside again; and (c) The City has a misconceived notion of its duty and role as a sphere of local government. Despite being a constitutional structure, the City supinely assumed that the duty to correct its unlawful conduct lay with those adversely affected by that conduct. The duty to correct the invalidation of the unlawful conduct and its consequence rested with the City and not with the Lombardy Estate ratepayers; and (d) The Property Rates Act requires a municipality in its rates policy to ensure that all rate payers are treated equitably. In the result, the SCA dismissed the appeal with costs including those of two counsel. --------oOo--------

4282

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1199/2023 In the matter between: MINISTER OF MINERAL RESOURCES AND ENERGY Appellant and PETER BECKER First Respondent NATIONAL NUCLEAR REGULATOR Second Respondent CHAIRPERSON OF THE BOARD OF DIRECTORS OF THE NATIONAL NUCLEAR REGULATOR Third Respondent Case no: 966/2023 And in the matter between: NATIONAL NUCLEAR REGULATOR First Appellant CHAIRPERSON OF THE BOARD OF DIRECTORS OF THE NATIONAL NUCLEAR REGULATOR Second Appellant and PETER BECKER First Respondent MINISTER OF MINERAL RESOURCES AND ENERGY Second Respondent Case no: 1013/2023 And in the matter between: PETER BECKER Appellant and MINISTER OF MINERAL RESOURCES AND ENERGY First Respondent 2 NATIONAL NUCLEAR REGULATOR Second Respondent CHAIRPERSON OF THE BOARD OF DIRECTORS OF THE NATIONAL NUCLEAR REGULATOR Third Respondent Neutral citation: Minister of Mineral Resources and Energy v Becker and Others (Case no 1199/23); National Nuclear Regulator and Another v Becker and Another (Case no 966/2023); Becker v Minister of Mineral Resources and Energy and Others (Case no 1013/2023) [2024] ZASCA 106 (28 June 2024) Coram: MOLEMELA P, SCHIPPERS and MEYER JJA and TLALETSI and KOEN AJJA Heard: 17 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The time and date for hand-down is deemed to be 11h00 on 28 June 2024. Summary: National Nuclear Regulator Act 47 of 1999 – Board of Directors of Regulator appointed by the Minister of Mineral Resources and Energy in terms of s 8(4) – Minister’s power in terms of s 9(1) to discharge a director of the Board from office inter alia for misconduct. Constitutional and Administrative Law - principle of legality and review under Promotion of Administrative Justice Act 3 of 2000 – whether Minister’s discharge of Director for misconduct was unlawful, unconstitutional and invalid. 3 ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Mantame J, sitting as court of first instance): 1. The appeal of the Minister of Mineral Resources and Energy (Case no 1199/2023) is dismissed with costs, including those of two counsel where employed. 2. The appeal of the National Nuclear Regulator and the Chairperson of the Board of Directors of the National Nuclear Regulator (Case no 966/2023) is dismissed with costs, including those of two counsel where employed. 3. The cross-appeal of Mr Peter Becker (Case no 1013/2023) is dismissed with each party to pay their own costs. JUDGMENT Meyer JA and Tlaletsi AJA (Molemela P, Schippers JA and Koen AJA concurring): [1] These are two appeals and a cross-appeal, with the leave of this Court, against the judgment of the Western Cape Division of the High Court, Cape Town, per Mantame J (the high court), delivered on 19 January 2023. Mr Peter Becker (Mr Becker), who was a Director of the National Nuclear Regulator, was discharged as a director by the Minister of Mineral Resources and Energy (the Minister) on 25 February 2022 in terms of s 9(1) of the National Nuclear Regulator Act 47 of 1999 (the Act). [2] As a result, Mr Becker initiated review proceedings against the Minister, the National Nuclear Regulator and the Chairperson of the Board of Directors of the National Nuclear Regulator (jointly referred to as the Regulator). He challenged the Minister’s decision on the grounds that it was unconstitutional and unlawful, and sought an order reviewing and setting aside the decision under the Promotion of Administrative Justice Act 3 of 2000 (PAJA) or the principle of legality. 4 [3] The high court made the following order: ‘1. The decision of the Minister taken on 25 February 2022 to discharge Mr Becker with immediate effect is declared unlawful, unconstitutional and invalid in terms of Section 172(1)(a) of the Constitution. 2. The reasons and decision[s] of the Minister taken on 25 February 2022 to discharge Mr Becker from his office as a Director of the Board is reviewed and set aside. 3 The first, second and third respondent[s] are ordered to pay costs of this application including the costs of two (2) Counsel.’ [4] The appellant in the first appeal, the Minister, seeks an order upholding the appeal with costs, including those of two counsel. The Regulator, the appellant in the second appeal, seeks identical relief. In the cross-appeal lodged by Mr Becker, he seeks an order that paragraphs 1 and 2 of the high court’s order ‘operate retrospectively’. [5] The preamble to the Act reads: ‘To provide for the establishment of a National Nuclear Regulator in order to regulate nuclear activities, for its objects and functions, for the manner in which it is to be managed and for its staff matters; to provide for safety standards and regulatory practices for protection of persons, property and the environment against nuclear damage; and to provide for matters connected therewith.’ The Regulator was established as a juristic person in terms of s 3 of the Act.1 [6] The objects of the Regulator are listed in s 5 of the Act. It reads: ‘The objects of the Regulator are to- (a) provide for the protection of persons, property and the environment against nuclear damage through the establishment of safety standards and Regulatory practices; (b) exercise regulatory control related to safety over- (i) the siting, design, construction, operation, manufacture of component parts, and decontamination, decommissioning and closure of nuclear installations; and (ii) vessels propelled by nuclear power or having radioactive material on Board which is capable of causing nuclear damage, through the granting of nuclear authorisations; 1 Section 3 reads: ‘A juristic person to be known as the National Nuclear Regulator, comprising a Board, a chief executive officer and staff, is hereby established.’ 5 (c) exercise regulatory control over other actions, to which this Act applies, through the granting of nuclear authorisations; (d) provide assurance of compliance with the conditions of nuclear authorisations through the implementation of a system of compliance inspections; (e) fulfil national obligations in respect of international legal instruments concerning nuclear safety; and (f) ensure that provisions for nuclear emergency planning are in place.’ [7] The Regulator is governed and controlled, in accordance with the Act, by a Board of Directors. The Board must ensure that the objects of the Regulator referred to in s 5 are carried out; it also exercises general control over the performance of the Regulator’s functions.2 The Board consists of the following directors appointed by the Minister: (a) one representative of organised labour; (b) one representative of organised business; (c) one person representing communities which may be affected by nuclear activities; (d) an official from the Department of Minerals and Energy; (e) an official from the Department of Environmental Affairs and Tourism; (f) not more than seven other directors; and (g) the Chief Executive Officer.3 [8] A director holds office for a period specified in the letter of appointment but not exceeding three years and may be reappointed upon expiry of that term of office.4 The Minister may at any time discharge a director of the Board from office if the director has repeatedly failed to perform his or her functions efficiently, or if, because of any physical or mental illness or disability, the director has become incapable of performing his or her functions, or of performing them efficiently, or for misconduct.5 [9] The Regulator’s role is thus to ensure safety in respect of all nuclear activities when they are undertaken. The stated policy of the government and the Department of Mineral Resources and Energy (the Department) is the extension of Koeberg’s lifecycle and the extension of nuclear energy as a component of the ‘energy mix’ in South Africa. The Board is not involved in determining governmental policy regarding the use of nuclear energy. 2 Subsections 8(1) and (2). 3 Subsection 8(4). 4 Subsection 8(12)(b). 5 Subsection 9(1). 6 [10] On 10 June 2021, the Minister appointed Mr Becker as the non-executive director of the Board of the Regulator in terms of s 8(4)(a)(iii) of the Act as a person representing ‘communities, which may be affected by nuclear activities’. At the time of his appointment and throughout his tenure as a director of the Board, Mr Becker held the position of spokesperson of the Koeberg Alert Alliance (the KAA), an organisation that is opposed to nuclear energy in general, and in particular, to the extension of the life-span of the Koeberg Nuclear Power Station in Cape Town. Mr Becker’s appointment followed his nomination by civil society concerned about nuclear power in South Africa, for and on behalf of the KAA. [11] The Board comprises individual directors, each of whom holds divergent views as to nuclear desirability in South Africa. However, nuclear safety is the statutorily prescribed imperative of the Board and the guiding factor which ought to inform each of the decisions that serves before the Board. [12] On 30 June 2021, an article titled ‘Thyspunt nuclear hearings distract from Koeberg problems’ was published in Energize, an online publication (the Energize article). In essence, the article provided commentary in relation to Eskom’s application to the Board for a license of a site located at Thyspunt, at which it intended to establish a nuclear power station. In the article Mr Becker is identified as the spokesperson for the KAA, and a newly appointed director of the Board. He is quoted as having said: ‘It is disappointing to see money and time being spent on pursuing nuclear power for the Thyspunt site after the government had stated that there was no money to fund a new nuclear build. . . . The existing Koeberg plant is more of a concern, where reactor 1 was down since January due to an increasing leak rate of a steam generator within the containment building. The plant manager, Velaphi Ntuli was then suspended on 4 June 2021 and two weeks later reactor 1 was running again. Was the leak actually fixed in the short period or did the new acting plant manager override Ntuli’s concerns? We call for transparency and that Ntuli be allowed to speak publicly about his decision not to restart the reactor. . . . We should be worrying about the safety of the existing plant at Koeberg, especially as it approaches the end of its design lifetime. 7 . . . There are several issues that need to be addressed before the Koeberg plant can be considered safe by modern standards, and that will come with a significant cost, says Becker. Much like an old car, there comes a time when it is just not worth repairing it to the point where it is as safe as a new car. It was unwise to spend money refurbishing the plant before finding out what would have to be done to obtain a license to extend its life. We are probably going to have load shedding for the next 2 or 3 years. It will only make the situation worse to repeatedly shut down Koeberg for refurbishing work over that time. Eskom has said the refurbishing of Koeberg to allow the life extension would cost R20 billion. Based on other large Eskom projects, this is likely to double or even triple.’ [13] On 19 July 2021, Mr Becker sent an email to Mr Gino Moonsamy of the Regulator, which included this statement: ‘This week I am hosting a meeting of civil society organisations in my capacity as rep on the Board. The goal is to collect the top concerns/questions relating to nuclear safety across organisations…’ The email was then sent to the Board’s CEO, Dr Mzubani Tyobeka. His response queried whether Mr Becker, purportedly representing the Board without its mandate, was entitled to host a meeting with selected stakeholders. Dr Tyobeka also stated: ‘…I have no doubt that Mr Becker is driven by good intentions, but those good intentions may be at odds with the principles of good corporate governance…’ [14] On 27 July 2021, Mr Becker sent an email to the chairperson, Mr Thapelo Motshudi, with the subject heading ‘Request for guidance – incremental decisions’. He queried why Eskom would be spending money on replacing its steam generators at Koeberg in circumstances where it was uncertain whether the Board would approve the extension of the Koeberg plant beyond July 2024. [15] At a Board meeting held on 29 July 2021, members of the Board questioned Mr Becker’s potential conflict evidenced by his statements published in the Energize article and invited him to explain how he would manage situations where he had to take a position in civil society (as KAA spokesperson) which was opposed to the Board’s processes. Mr Becker responded by stating, inter alia, that he had stated that his engagements had been in his capacity as their representative on the Board. Mr 8 Becker assured the Board that his statements to the media were not based on any confidential information which he had acquired by virtue of his status as a director. [16] The Board took the view that Mr Becker’s statements in the Energize article had to be withdrawn as they were an incorrect representation of what it does and of the decisions it makes. Mr Becker indicated that there might be an opportunity to amend the statements to remove the impression that the Board was pursuing a pro-nuclear power stance. It was resolved by the Board that an independent legal opinion should be obtained on the matter. As a result of the advice received, the chairperson addressed a letter to the Minister in which he was asked to act on the recommendations in the opinion. [17] In a statement to the press on 18 August 2022, Mr Becker as spokesperson of the KAA, commented on speculation that Eskom had already concluded a contract to extend the life of the Koeberg nuclear power plant beyond 2024, in the absence of a public participation process having been conducted. The KAA expressed concern over the ‘imbalance of power between Eskom and the Board, stating: ‘The fact that the NNR receives about 75% of its revenue from application and authorisation fees, and the bulk of that is from Eskom, only adds to this concern. Without those fees, the NNR would not even be able to pay staff salaries.’ [18] On 14 October 2022, the Minister received a letter from Mr Becker in which he recorded his disagreement with the Board’s legal opinion and the allegations upon which it is based. He requested that the Minister allow him an opportunity to make representations regarding the legal opinion. [19] On 17 January 2022, the Minister received a legal opinion from Mr Becker’s erstwhile attorneys, countering the legal opinion provided to the Board. On 18 January 2022, the Minister advised Mr Becker’s attorneys that the allegations against Mr Becker were of a serious nature and could affect his continued presence on the Board. As a result, the Minister suspended Mr Becker with immediate effect, pending his final decision. Furthermore, Mr Becker was given the opportunity to provide written representations as to why he should not be discharged. 9 [20] On 16 March 2022, after Mr Becker’s suspension, the Daily Maverick online news service published an article entitled ‘Koeberg nuclear power plant rejuvenation: Protesters say silence is a killer’. In this article, Mr Becker as the spokesperson for the KAA, is quoted inter alia having said: ‘This has a moral component, a society component, an intergenerational ethic component – this is not for a bunch of engineers to decide alone. That is why the community needs to be consulted, and the public needs to have their say.’ [21] On 8 February 2022, Mr Becker brought an urgent court application, challenging the lawfulness of the Minister’s decision to suspend him. The urgent application was settled. On 8 February 2022, the Western Cape Division of the High Court made the settlement an order of court, inter alia providing time frames for the delivery of Mr Becker’s written representations to the Minister regarding his discharge as a director, and for the taking of a decision by the Minister. Additionally, provision was made for the holding of no meetings of and the taking of no decisions by the Board or any of its sub-committees pending the decision of the Minister. [22] Mr Becker made written submissions to the Minister on 10 February 2022. He expressed the view that the Minister had failed to specify the grounds for his discharge as contemplated in s 9(1) of the Act. On 15 February 2022, the Minister wrote to Mr Becker, setting out those grounds and providing him with a further opportunity to make representations. Mr Becker’s representations were furnished to the Minister on 21 February 2022. In a letter dated 25 February 2022, the Minister informed Mr Becker of his decision to discharge him from the Board and provided reasons for his decision. [23] The Minister’s reasons were the following: ‘a. As a director of the NNR, you have placed yourself in a position in which you have a personal interest, which conflicts with your duties to the NNR; b. You have publicly vocalised your opinions on nuclear activity and your opposition to the lifespan extension of Koeberg which is in conflict with the independent or neutral role and function of the NNR. There can be little doubt on how you would vote, were you still to be a member of the NNR Board, when the question of the lifespan extension for the Koeberg station comes before the NNR Board. You are thus not qualified to make a decision on the Board. Your continued involvement, when you are unable to bring an independent mind to bear on 10 decisions in relation to the safe operation and/or extension of Koeberg, because you have already indicated your position, amounts to misconduct, in my view; c. You hosted meetings with civil society organisations either in your capacity as a member “on” or “of” the NNR Board and gave the impression that you are acting on behalf of the NNR Board, with no authority to do so; d. You have acted in conflict with your obligations both in law and in contract; and e. The conflict of interest that exists is material and fundamental as it is impossible for you to avoid or manage the actual conflict as well as the appearance of conflict. It would on the face of it appear that you have no hesitation to make the public aware of your conflict.’ [24] A director can only be removed in the limited circumstances mentioned in s 9(1) of the Act. The three listed grounds for discharging a director – failure to perform, incapacity or misconduct – are jurisdictional facts or preconditions for the lawful exercise of the Minister’s power. [25] Where a statute specifies the existence of a jurisdictional fact for the exercise of the public power, ‘if the jurisdictional fact does not exist, then the power may not be exercised and any purported exercise of the power would be invalid’.6 It follows that if Mr Becker, objectively, was not guilty of misconduct, the Minister’s decision was unlawful. In our constitutional era, all jurisdictional facts are reviewable by the court on an objective basis as an integral part of the principle of legality. The mere say-so of the Minister that Mr Becker committed misconduct does not demonstrate that it is so. The Act does not provide that the Minister may discharge a member of the Board if, ‘in the opinion of the Minister’ the member has committed misconduct. A Board member may only be discharged for actual misconduct. To justify his decision, the Minister must demonstrate that his finding of misconduct was based on reasonable grounds.7 Even if the question of whether Mr Becker committed misconduct to some extent involves a value judgment, that does not immunise the Minister’s decision from judicial review. The Constitutional Court has expressly held that in relevant circumstances- 6 South African Defence and Aid Fund v Minister of Justice 1967 (1) SA 31 (C) at 34H, affirmed by the Constitutional Court in President of the Republic of South Africa and Others v South African Rugby Football Union and Others 2000 (1) SA 1 (CC); 1999 (10) BCLR 1059 at fn 132 as the ‘leading authority on “jurisdictional facts” in our law’. 7 Walele v City of Cape Town and Others [2008] ZACC 11; 2008 (6) SA 129 (CC); 2008 (11) BCLR 1067 (CC) para 60. 11 ‘. . . it does not follow from this that the decision and evaluation lies within the sole and subjective preserve of the President. Value judgments are involved in virtually every decision any member of the Executive might make where objective requirements are stipulated. It is true that there may be differences of opinion in relation to whether or not objective criteria have been established or are present. This does not mean that the decision becomes one of subjective determination, immune from objective scrutiny.’8 [26] For the reasons that follow, we are of the view that on an objective basis it has not been established that Mr Becker committed ‘misconduct’ as contemplated in s 9(1) of the Act. First, the Minister wrongly believed that the Board is supposed to advocate for nuclear activities. His state of mind is illustrated by what he stated at an ANC conference in May 2022. He was quoted as saying: ‘[T]hose who resist nuclear power while serving on the Board of the National Nuclear Regulator will be fired’ and ‘If you resist nuclear and you [are] a Board member, I fire you, simple. You can’t be in a Board of something you’re not advocating for’. The Minister did not make these statements in the abstract or in general; it was his explanation of why he ‘fired’ Mr Becker. However, the Board’s functions are not to advocate either for or against nuclear activities. Its function is to ensure that nuclear activities are undertaken in a safe manner. [27] Second, the Minister wrongly believed any director who opposes nuclear activities can be discharged for misconduct. He plainly believed that he is entitled to discharge a director who ‘resists nuclear’ or who does not ‘advocate for’ nuclear. He was wrong. Resisting or advocating for nuclear energy – even publicly – is not misconduct for purposes of s 9 of the Act. It could never be, since the role of the Board is concerned with the safety of a specific proposed nuclear activity, not the desirability of nuclear activity in general. [28] Third, the Minister wrongly conflated nuclear desirability and nuclear safety. In the reasons for his decision to discharge Mr Becker as a director of the Board, the 8 Democratic Alliance v President of South Africa and Others [2012] ZACC 24; 2012 (12) BCLR 1297 (CC); 2013 (1) SA 248 (CC) para 23. 12 Minister stated that the KAA ‘is opposed to any new nuclear plants being established, as well as the extension of the life of Koeberg’, and Mr Becker ‘hold[s] those same views’. The Minister stated that Mr Becker would be unable to ‘make an objective decision, when presented with objective, scientific evidence in respect of the extension of the life of Koeberg’, and therefore any decision he would make in that regard ‘will be prejudiced as [Mr Becker had] already indicated [his] views’. [29] This statement is unfounded. Mr Becker fully explains in his replying affidavit that he is able to disentangle his views concerning the desirability of nuclear activities from an evaluation of a specific activity’s safety. Mr Becker is well entitled to hold and maintain his views about the desirability of nuclear activities while being a member of the Board. So are the other Board members. For example, the Minister’s representative on the Board, Mr Maphoto, plainly has strong views in favour of the desirability of nuclear power. The Board itself and its chair have also adopted a pro-nuclear stance, which was also included in their annual report presented to Parliament in 2022. The Minister says that Mr Maphoto and the other Board members can distinguish between nuclear desirability and nuclear safety and can advocate for nuclear without a conflict of interest arising. Yet, the Minister is unable to appreciate that the rule is the same for a person who resists nuclear activities, like Mr Becker. This is arbitrary and irrational decision-making. [30] Fourth, the Minister wrongly believed that he could discharge a director in anticipation of misconduct by that director. The Minister contends that he was entitled to reach a conclusion that Mr Becker was guilty of misconduct, on the basis of conduct that Mr Becker would commit in the future. This is no ground for a finding of misconduct. In this case, the Minister speculated that Mr Becker would bring a biased mind to bear on future decisions of the Board. He based this speculation on Mr Becker’s conduct and legitimate opinions – including what he said to the press – pertaining to questions of the desirability of nuclear power. The Minister’s reasoning is thus a non-sequitur. If holding such views is not misconduct, as the Minister accepts in his affidavit, then the fact that they are held cannot be used to draw an inference that misconduct will be committed in the future. 13 [31] As a matter of fact, Mr Becker was suspended and then discharged by the Minister before he even had an opportunity to participate in any decision-making by the Board relating to an application for a license for a nuclear installation or anything related to nuclear power. Mr Becker was never given any opportunity to demonstrate his ability to participate in decisions about the safety of nuclear activities in an unbiased fashion. Furthermore, if the Minister was correct that Mr Becker’s views about nuclear desirability justified discharging him, then the same would necessarily apply to the other directors who have expressed favourable views about nuclear energy. On the Minister’s approach, they too would not be able to exercise a proper judgment about the safety of a proposed nuclear activity, because they favour nuclear power. This demonstrates the fallacy in the Minister’s contentions. [32] Fifth, the Minister wrongly believed that the disclosure of a director’s views on the desirability of nuclear power constitutes misconduct. In his reasons for discharging Mr Becker, the Minister explicitly records his view that Mr Becker had ‘publicly vocalised [his] opinions on nuclear activity . . . conflict with the neutral role and function of the Regulator’ and that ‘because [Mr Becker had] already indicated [his] position’ this ‘amounts to misconduct’. However, the Minister has repeatedly stated that it is permissible for directors to hold personal views opposed to or in favour of nuclear energy. What is prohibited, the Minister now says in his affidavit, is the public expression of those views by directors on the Board. It appears that the Minister believes that a director can hold views on the desirability of nuclear power, as long as those views are not disclosed. But, the Minister again did not apply this standard to members of the Board who publicly advocate for nuclear energy such as Mr Maphoto. [33] Sixth, the Minister erroneously based his decision on the wrong facts. His decision is premised on two fundamental factual errors: First, the Minister said that he decided to discharge Mr Becker because he had met with civil society and had ‘given the impression that [he was] acting on behalf of the NNR Board, with no authority to do so’. However, Mr Becker explains that when he met with representatives of civil society (in discharging his duties as director) he did not do so as a representative of the Board, and he gave no such impression. He explains that he met with civil society as their representative ‘on’ the Board. Mr Becker’s version is corroborated by affidavits of two persons who attended the meeting. Neither Mr Becker’s version, nor its 14 corroboration in the supporting affidavits is denied by the Minister in his affidavit. The Minister could not deny Mr Becker’s version, as he did not attend the meeting and has no personal knowledge of what was discussed. The Minister’s second factual error was his belief, expressed in the Newz Room Africa interview, that Mr Becker ‘led a march’ against a decision of the Board. Mr Becker denies this. His denial is not addressed by the Minister. The Minister produces no evidence to explain his belief. [34] Seventh, the Minister unfairly made up his mind before Mr Becker made representations concerning his discharge. The process, therefore, was procedurally unfair and irrational. On 3 February 2022, before the representations were made or were due, the Minister was interviewed on Newz Room Africa. He said this: ‘But it is simple, if you are an anti-nuclear activist. You can’t sit on the Board of nuclear, and get all the details of the plans and go and plan a program against that entity. It is not allowed.’ Thus, the representations process was a sham. [35] In his answering affidavit, the Minister admits making this comment at the time he did, but denies that he prejudged Mr Becker’s case. He says that he was merely expressing a ‘prima facie view’. He says that he could have been convinced otherwise by Mr Becker’s representations. But those contentions are not borne out by the facts. What the Minister said is not consistent with the expression of a preliminary view. He was expressing a firm view that Mr Becker was disqualified from being a director on the Board: ‘. . . it is simple … It is not allowed’. The irresistible inference is that the Minister ignored Mr Becker’s representations. [36] After Mr Becker had been discharged as a director, the Minister made further public comments, which confirm that he had a fixed view with a predetermined outcome. The Minister said: ‘If you resist nuclear and you [are] a Board member, I fire you, simple. You can’t be in a Board of something you’re not advocating for’. The Minister does not deny making these statements. He attempts to justify them by contending that he ‘did not intend to suggest that members of the Board would be removed for holding personal views on the desirability of nuclear which were different from those of the Government’. But this is clearly not so: his statement is unequivocal that one who is critical about the desirability of nuclear energy will be ‘fire[d]’. 15 [37] The appeals of the Minister and that of the Regulator, therefore, fall to be dismissed with costs, including those of two counsel. This brings us to Mr Becker’s cross-appeal against the failure of the high court to set aside the Minister’s decision prospectively from now. What Mr Becker seeks is for the high court’s declaration that the Minister’s decision to discharge him was unlawful, unconstitutional and invalid to operate from the date of this order so that he could serve the balance of his term for which he had been appointed as a director of the Board. [38] In his letter of appointment, the Minister appointed Mr Becker for a three-year term commencing in June 2021. In terms of s 8(12)(b) ‘[a] director . . . holds office for a period specified in the letter of appointment but not exceeding three years and may be reappointed upon expiry of that term of office’. Mr Becker was nominated by communities which may be affected by nuclear activities, and he was appointed by the Minister as a non-executive director on the Board of the Regulator to represent those communities. [39] The relief sought by Mr Becker in his cross-appeal is, in our view, legally unsustainable. Mr Becker’s three-year term on the Board expired on 5 June 2024. It is not known whether those communities which may be affected by nuclear activities would want Mr Becker to again represent them on the Board, or whether they would prefer to nominate someone else. There was no evidence placed before the high court that the communities which may be affected by nuclear activities would want Mr Becker to represent them on the Board of the Regulator further and that he would be the person who would carry their nomination. Mr Becker’s cross-appeal, therefore, must also fail. The Biowatch rule applies here. Each party should bear its own costs in respect of Mr Becker’s appeal.9 [40] In the result, the following order is made: 1. The appeal of the Minister of Mineral Resources and Energy (Case no 1199/2023) is dismissed with costs, including those of two counsel where employed. 9 Nu Africa Duty Free Shops (Pty) Ltd v Minister of Finance and Others [2023] ZACC 31; 2023 (12) BCLR 1419 (CC); 2024 (1) SA 567 (CC) paras 149 and 279-284. 16 2. The appeal of the National Nuclear Regulator and of the Chairperson of the Board of Directors of the National Nuclear Regulator (Case no 966/2023) is dismissed with costs, including those of two counsel where employed. 3. The cross-appeal of Mr Peter Becker (Case no 1013/2023) is dismissed with each party to pay their own costs. _____________ _ P A MEYER JUDGE OF APPEAL P TLALETSI ACTING JUDGE OF APPEAL 17 Appearances For the Minister of Mineral Resources: D Borgstrom SC with C Cawood Instructed by: State Attorney, Cape Town. State Attorney, Bloemfontein. For the National Nuclear Regulator and the Chairperson of the Board of Directors of the National Nuclear Regulator: I Jamie SC with L Stansfield Instructed by: State Attorney, Cape Town State Attorney, Bloemfontein. For Mr Peter Becker: G.M Budlender SC with M.N de Beer Instructed by: Macroberts Attorneys Inc., Pretoria Claude Reid Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 28 June 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 Minister of Mineral Resources and Energy v Becker & Others (Case no 1199/23); National Nuclear Regulator & Another v Becker & Another (Case no 966/2023); Becker v Minister of Mineral Resources and Energy & Others (Case no 1013/2023) [2024] ZASCA 106 (28 June 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing three appeals against the decision of the Western Cape Division of the High Court, Cape Town. The first and second appeal include costs and those of two counsel, where so employed. And the third appeal each party bears its own costs. Mr Peter Becker (Mr Becker) who was a director of the board of the regulator, was discharged as a director by the Minister of Mineral Resources and Energy (the minister) on 25 February 2022. As a result of the discharge, Mr Becker initiated review proceedings against the minister, the National Nuclear Regulator and the Chairperson of the Board of Directors of the National Nuclear Regulator (jointly referred to as the regulator) in the Western Cape Division of the High Court, Cape Town (the high court). The high court found favour in Mr Becker’s claim and ordered that the decision of the minister was unlawful, unconstitutional and invalid in terms of s 172(1)(a) of the Constitution and that it should be reviewed and set aside. As a result of the high court’s findings, three appeals were brought against its decision before this Court. The first appeal was against Mr Becker, where the minister sought the appeal to be upheld with costs, including those of two counsel. Furthermore, that the order of the high court be set aside and replaced with one dismissing the application with costs, including those of two counsel. The second appeal was against Mr Becker, where the regulator sought identical relief to that sought by the minister. The third appeal was against the minister and the regulator, where Mr Becker sought an order for the high court’s order to be upheld and for a paragraph to be inserted in the order of the high court that its paragraphs 1 and 2 ‘operate retrospectively’. With regard to the first and second appeals, the SCA held that the minister’s appeal and that of the regulator should be dismissed with costs, including those of two counsel based on the following reasons: (a) the minister wrongly believed that the board was supposed to advocate for nuclear activities because he believed that a person could not be part of the board if they resisted nuclear or were advocating against it. According to the SCA, the board’s functions were not to advocate either for or against nuclear activities. Its function was to ensure that nuclear activities were undertaken in a safe manner. (b) the SCA held that resisting or advocating for nuclear energy – even publicly – was not misconduct for purposes of s 9 of the National Nuclear Regulator Act 47 of 1999 (the Act). (c) the minister unfoundedly stated that Mr Becker would be unable to ‘make an objective decision, when presented with objective, scientific evidence in respect of the extension of the life of Koeberg’, and therefore any decision he would make in that regard would be prejudiced as Mr Becker had already indicated his views as a member of the Koeberg Alert Alliance (the KAA). The Court further held that Mr Becker was well entitled to hold and maintain his views about the desirability of nuclear activities while being a member of the board. So was the case with the other board members like the minister’s 2 representative on the board, Mr Maphoto, who plainly had strong views in favour of the desirability of nuclear power. And therefore, according to the SCA, this was arbitrary and irrational decision-making on the part of the minister who failed to treat persons alike in alike situations. (d) the minister wrongly believed that he could discharge a director in anticipation of bias or misconduct by that director. This, held the SCA, was no basis at all for a finding of misconduct. (e) the minister unfairly made up his mind before Mr Becker made representations concerning his discharge. The process, therefore, was procedurally unfair and irrational. The evidence demonstrated that the minister had decided to discharge Mr Becker, before he even received his written representations. Thus, the representations process was a sham. Coming to the third appeal brought by Mr Becker, the SCA held that the relief sought by Mr Becker was legally unsustainable. It held that Mr Becker’s three-year term on the board expired on 5 June 2024. It was not known whether those communities which could be affected by nuclear activities would want Mr Becker to represent them any longer on the board or whether they would prefer to nominate someone else. There was no evidence placed before the high court that the communities which may be affected by nuclear activities would want Mr Becker to represent them on the board of the regulator and that he would be the person who would carry their nomination. As a result, the SCA held that, Mr Becker’s appeal should also fail with each party bearing its own costs in respect of this appeal. ~~~~ends~~~~

4319

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1230/2022 In the matter between: DAVID NEVILLE POLOVIN APPLICANT/APPELLANT and THE DIRECTOR OF PUBLIC PROSECUTIONS, WESTERN CAPE FIRST RESPONDENT LIESEL JANE GREEN SECOND RESPONDENT THE REGIONAL COURT PRESIDENT, CAPE TOWN THIRD RESPONDENT THE CLERK OF THE REGIONAL COURT, CAPE TOWN FOURTH RESPONDENT Neutral Citation: Polovin v The Director of Public Prosecutions and Others (1230/2022) [2024] ZASCA 140 (17 October 2024) Coram: MOTHLE, WEINER and SMITH JJA and COPPIN and NAIDOO AJJA Heard: 21 August 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down of the judgment is deemed to be 17 October 2024 at 11h00. 2 Summary: Criminal law and procedure – private prosecution – review – whether leave to appeal should be granted in terms of s 17(2)(b) read with s 17(1)(a)(i) and (ii) and section 17(6)(a)(i) and (ii) of the Superior Courts Act 10 of 2013 in relation to the merits – whether the jurisdictional requirements for the issue of a certificate of nolle prosequi were met – whether the Acting Director of Public Prosecutions was entitled to reissue the certificate of nolle prosequi – whether the certificate of nolle prosequi may include further charges other than that originally charged by the State prosecutor – whether the second respondent had sufficient standing to pursue the private prosecution and whether that prosecution was in accordance with public policy. 3 __________________________________________________________________ ORDER __________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Baartman J sitting as court of first instance): 1 The application for leave to appeal is granted. 2 The appeal is dismissed with costs. __________________________________________________________________ JUDGMENT __________________________________________________________________ Mothle JA (Weiner and Smith JJA and Coppin and Naidoo AJJA concurring) [1] This is an application for leave to appeal the judgment and order of the Western Cape Division of the High Court, Cape Town (the high court), delivered on 12 July 2022. The high court dismissed with costs, an application for a frontal challenge to the institution of a private prosecution against the applicant and refused to grant the applicant leave to appeal. The applicant turned to this Court on petition for leave to appeal. On 28 March 2023, this Court issued an order in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013 (Act 10 of 2013), that the application for leave to appeal be referred for oral argument. The order further stated that the parties must be prepared, if called upon to do so, to address this Court on the merits. [2] This matter concerns a long history of disputes between two neighbours. Mr David Neville Polovin, a senior admitted attorney (the applicant) and Ms Liesel Jane Green (the second respondent), the protagonists in this application, are next-door neighbours, resident in Kloof Road, Bantry Bay, Cape Town. The second respondent had been residing with her family in a property in Kloof Road, since 2005. In 2010, the applicant’s company, Cottonwood Technologies Inc, purchased the property adjacent to that of the second respondent. According to the second respondent, at the time that the applicant moved into the next-door property, she had commenced with renovations of her house in accordance with building plans, duly 4 approved by the municipality. Her previous neighbour, from whom the applicant’s company had purchased the property, had no objection to the renovations. [3] Disputes concerning the renovations ensued between the second respondent and the applicant, which evolved into an acrimonious relationship between them. I will, however, refrain from pronouncing on the merits of these allegations, as they may be a subject of adjudication in another forum in due course. Suffice to say, where necessary, I will, in some instances, refer briefly to the allegations or counter-allegations, to the extent that they may have a bearing on the issues raised by the parties in this Court. The primary issues that fall to be decided in this Court are the application for leave to appeal, and, if successful, the adjudication of the appeal. [4] The events that triggered this round of litigation occurred in May 2012, when the applicant accessed the second respondent’s confidential credit records, by using a colleague’s login details to the Law Data System of TransUnion. The applicant accessed this information without the consent and knowledge of the second respondent, which is a pre-requisite for obtaining such access. The applicant at first denied accessing the confidential records, but later admitted doing so. The second respondent laid a criminal charge of contravention of s 86(1) of the Electronic Communications and Transactions Act 25 of 2002, (the ECTA) against the applicant. The section provides that ‘a person who intentionally accesses or intercepts any data without authority or permission to do so, is guilty of an offence.’ Following representations by the applicant’s counsel, and after several court appearances by the applicant, on 8 November 2019, the Director of Public Prosecutions, Western Cape (the DPP), cited as the first respondent, declined to prosecute the applicant at the instance of the State. [5] On 4 December 2019, the second respondent, represented by counsel, requested from the DPP copies of correspondence between the applicant and the DPP on the representations made on behalf of the applicant, a copy of the docket in the matter and the certificate of nolle prosequi (the certificate). The certificate is issued in terms of s 7 of the Criminal Procedure Act 55 of 1977 (the CPA). On 20 May 2020, the Acting DPP issued the certificate, which the second respondent’s legal representatives received on 25 June 2020. In terms of s 7(2)(c) of the CPA the 5 certificate was to lapse unless the proceedings contemplated therein were instituted by the issue of the process (including summons) referred to in s 7(2)(a) within three months of the date of its issue. In this certificate, the Acting DPP states that he had declined to prosecute the applicant for the offences of ‘fraud, contravention of ss 86(1) and 86(3) of the ECTA, as well as [for the] contravention of the provisions of s 68 of the National Credit Act 34 of 2005.’ The docket was still not available as requested. It was only on 25 August 2020 that the second respondent’s attorney was able to obtain a copy of the docket from the police. By then, the certificate dated 20 May 2020 had lapsed, because the proceedings had not been instituted by the issue of the required process within the three-month period. [6] On 9 September 2020, the second respondent’s attorney applied for a re-issue of the certificate, with the inclusion of an additional charge of defeating or obstructing the administration of justice, which certificate the Acting DPP re-issued on 14 October 2020. The summons commencing the private prosecution proceedings was issued on 27 November 2020, and the applicant was served with it on 30 November 2020. The applicant made his first appearance in court in respect of the private prosecution on 27 January 2021. [7] The applicant launched a frontal challenge to the private prosecution in the high court. The application in the high court is in two parts. In Part A, the applicant challenged the second respondent’s locus standi, the jurisdictional requirements of s 7(1)(a) of the CPA, the re-issue of the certificate dated 14 October 2020, and the inclusion of additional charges. In Part B, the applicant sought relief that the summons commencing the private prosecution should be declared unfounded and vexatious, as it constituted an abuse of court processes. He further sought an order against the second respondent interdicting her from proceeding with the private prosecution, alleging that it offends public policy. The high court dismissed both Parts A and B of the application, with costs, and further dismissed an application for leave to appeal those orders. The consequence, thereof, being the petition for leave to appeal to this Court. [8] The issues that fall to be decided by this Court, as the applicant submits, are narrowed from those raised in the high court, to the following: 6 (a) Whether leave to appeal should be granted in terms of s 17(2)(b) read with s 17(1)(a)(i) and (ii) and s 17(6)(a)(i) and (ii) of Act 10 of 2013; and (b) In relation to the merits, whether an appeal should succeed against the findings of the high court and its orders concerning: Part A (i) whether the jurisdictional requirements for the issue of the certificate in terms of s 7(1)(a) of the CPA, were met. (ii) whether the private prosecutor (i.e. the second respondent) had locus standi arising from the requirements of s 7(1)(a) of the CPA and whether she had ‘a substantial and peculiar interest arising from an actual injury individually suffered’; (iii) whether the Acting DPP was entitled to re-issue the certificate and include additional charges; and Part B (v) declaratory relief that the private prosecution is unfounded and vexatious, and that the second respondent be interdicted from further proceeding with the private prosecution of the applicant as it is against public policy. Whether leave to appeal should be granted [9] The application before this Court is grounded on s 17(1)(a)(i) and (ii) and s 17(6)(a)(i) and (ii) of Act 10 of 2013. The relevant parts of s 17 of Act 10 of 2013 provide as follows: ‘(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; . . . . (6)(a) If leave is granted under subsection (2) (a) or (b) to appeal against a decision of a Division as a court of first instance consisting of a single judge, the judge or judges granting leave must direct that the appeal be heard by a full court of that Division, unless they consider- (i) that the decision to be appealed involves a question of law of importance, whether because of its general application or otherwise, or in respect of which a 7 decision of the Supreme Court of Appeal is required to resolve the differences of opinion; or (ii) that the administration of justice, either generally or in the particular case, requires consideration by the Supreme Court of Appeal of the decision, in which case they must direct that the appeal be heard by the Supreme Court of Appeal.’ [10] In so far as there is reliance on s 17(1)(a)(i) of Act 10 of 2013, this Court in Ramakatsa and Others v African National Congress and Another,1 stated the applicable test to be the following: ‘The test of reasonable prospects of success postulates a dispassionate decision based on the facts and the law that a court of appeal could reasonably arrive at a conclusion different to that of the trial court . . .A sound rational basis for the conclusion that there are prospects of success must be shown to exist’.2 For reasons that appear from this judgment, I am of the view that the applicant has not met the threshold of this test. As will be demonstrated in this judgment, the envisaged appeal would not have reasonable prospects of success on the merits. [11] The ground for leave to appeal in terms of s 17(1)(a)(ii) and the alternative ground under s 17(6)(a)(i) read with s 17(2)(b), apply in an instance where there are conflicting judgments or opinions in the Divisions on a matter under consideration. In the course of the debate in the high court and this Court, both parties referred, amongst others, to the decisions in Singh v Minister of Justice and Constitutional Development and Another (Singh)3 and the full court judgment in Nundalal v Director Public Prosecutions KZN (Nundalal).4 Both cases were heard in the KwaZulu-Natal Division, Singh by a single judge and Nundalal by three judges. The two judgments arrived at different conclusions in their interpretation of s 7(1)(a) of the CPA, with Nundalal overruling Singh to some extent. Nundalal was in turn not followed by the 1 Ramakatsa and Others v African National Congress and Another [2021] ZASCA 31. 2 Ibid para 10. See also Smith v S [2011] ZASCA 15; 2012 (1) SACR 567 (SCA) para 7; MEC for Health, Eastern Cape v Mkhitha and Another [2016] ZASCA 176 para 17. 3 Singh v Minister of Justice and Constitutional Development and Another 2009 (1) SARC 87 (N) (Singh). 4 Nundalal v Director of Public Prosecutions KZN [2015] JOL 33232 (KZP); 2015 JDR 0876 (KZP) (Nundalal). 8 full court of the Gauteng Division of the High Court, Johannesburg in President of the Republic of South Africa v Zuma and Others (President v Zuma).5 [12] There are thus conflicting judgments on the jurisdictional requirements of s 7 of the CPA, which is a ground of appeal raised by the applicant in terms of s 17(1)(a)(ii) and s 17(6)(a)(i) read with s 17(2)(b) of Act 10 of 2013. On either of these two grounds alone, I am of the view that the application for leave to appeal should be granted, as the decision to be appealed involves a question of law of importance, in terms of which a decision of the Supreme Court of Appeal is required to resolve differences of opinion. Henceforth, the applicant becomes the appellant, and the merits of the appeal, which were fully argued, are before this Court. I therefore turn to consider the appeal on the merits. [13] Before I deal with the appellant’s specific grounds of attack on s 7 of the CPA, it is necessary to revisit the rationale for allowing the institution of a private prosecution. As far back as 1946, this was set out succinctly by Van den Heever AJP in Attorney-General v Van der Merwe and Bornman,6 as follows: ‘. . . Permission to prosecute in such circumstances was conceived as a kind of safety-valve. An action for damages may be futile against a man of straw and a private prosecution affords a way of vindicating those imponderable interests other than the violent and crude one of shooting the offender. The vindication is real: it consoles the victim of the wrong; it protects the imponderable interests of those involved by the deterrent effect of punishment and it sets at nought the inroad into such inalienable rights by effecting ethical retribution. Finally it effects atonement, which is a social desideratum.’7 With this rationale in mind, I turn to the consideration of s 7 of the CPA. [14] Section 7 of the CPA permits any person, who proves some substantial and peculiar interest in the issue of the trial, to institute and conduct a private prosecution by producing a certificate issued by the DPP. Instituting a private prosecution is the exercise of ‘the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court . . .’ as buttressed by s 34 of the 5 President of the Republic of South Africa v Zuma and Others [2023] ZAGPJHC 783; [2023] 3 All SA 853 (GJ); 2024 (1) SACR 32 (GJ) (President v Zuma). 6 Attorney-General v Van der Merwe and Bornman 1946 OPD 197. 7 Ibid at 201. 9 Constitution’s8 Bill of Rights, the right to access court. The relevant text of s 7 of the CPA provides: ‘(1) In any case in which a Director of Public Prosecutions declines to prosecute for an alleged offence- (a) any private person who proves some substantial and peculiar interest in the issue of the trial arising out of some injury which he individually suffered in consequence of the commission of the said offence; . . . . may, subject to the provisions of section 9 and section 59(2) of the Child Justice Act, 2008, either in person or by a legal representative, institute and conduct a prosecution in respect of such offence in any court competent to try that offence. (2)(a) No private prosecutor under this section shall obtain the process of any court for summoning any person to answer any charge unless such private prosecutor produces to the officer authorised by law to issue such process a certificate signed by the attorney-general that he has seen the statements or affidavits on which the charge is based and that he declines to prosecute at the instance of the state. (b) The attorney-general shall, in any case in which he declines to prosecute, at the request of the person intending to prosecute, grant the certificate referred to in paragraph (a). (c) A certificate issued under this subsection shall lapse unless proceedings in respect of the offence in question are instituted by the issue of the process referred to in paragraph (a) within three months of the date of the certificate. (d) The provisions of paragraph (c) shall apply also with reference to a certificate granted before the commencement of this Act under the provisions of any law repealed by this Act, and the date of such certificate shall, for the purposes of this paragraph, be deemed to be the date of commencement of this Act.’ [15] The certificate issued by the DPP in terms of s 7(2)(b) of the CPA, would generally be worded as follows: ‘I,…certify herewith in terms of section 7(2) of Act 51 of 1977 that I have seen the statements and/or affidavit upon which the charges of: [the specific charges are mentioned], Against [the name of the offender] are based, and that I decline to prosecute at the instance of the State. Given under my hand at [name of the City] on this [date] day of [month and year.] [Hand signature and title of office. ]’ 8 The Constitution of the Republic of South Africa, 1996. 10 [16] The appellant contends that the issuing of the s 7 certificate as provided for in s 7(2)(b) is administrative action, as defined in s1 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). He further contends that the issuing of the certificate as an administrative decision, must adhere to the prescripts of PAJA, which require the decision to be lawful, reasonable and procedurally fair. The appellant finds support for this contention partly in Singh, but mainly in Nundalal, where the court held that ‘[t]he DPP’s decision to issue a certificate is an administrative decision . . . [i]ssuing a nolle involves prosecutorial discretion. Accordingly PAJA applies to the review and setting aside of the certificate.’9 Nundalal thus concluded that the issuing of the certificate is reviewable in terms of PAJA. The full court in President v Zuma, decided in July 2023, refrained from taking a definitive stance on the issue, but accepted, with reference to the facts and dispute in that case, that the issues raised there, straddle the positions in terms of both PAJA and the Constitution, the latter based on the principle of legality or irrationality. [17] In terms of s 1 of PAJA ‘‘‘administrative action” means any decision taken, or any failure to take a decision…by an organ of state10 or a natural or juristic person . . . , 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 legal effect, but does not include11 . . . a decision to institute or continue a prosecution12 . . .’ (Own emphasis) The definition of administrative action in terms of PAJA, therefore, excluded the decision not to prosecute or to discontinue a prosecution. It begs the question whether the decision not to prosecute may be subject to review. [18] This question was considered and answered by this Court in National Director of Public Prosecutions and Others v Freedom Under Law (NDPP v Freedom Under Law).13 There this Court reasoned and concluded as follows: ‘(a) . . . . . . . 9 Nundalal para 8. 10 Section 1(a) of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). 11 Section 1(b) of PAJA. 12 Section 1(1)(b)(ff) of PAJA. 13 National Director of Public Prosecutions and Others v Freedom Under Law [2014] ZASCA 58; 2014 (4) SA 298 (SCA); 2014 (4) SA 298 (SCA) (NDPP v Freedom Under Law) para 27. 11 (d) Against this background I agree with the obiter dictum by Navsa JA in DA and Others v Acting NDPP that decisions to prosecute and not to prosecute are of the same genus, and that, although on a purely textual interpretation the exclusion in s 1(b)(ff) of PAJA is limited to the former, it must be understood to incorporate the latter as well. (e) Although decisions not to prosecute are – in the same way as decisions to prosecute –subject to judicial review, it does not extend in a review on the wider basis of PAJA, but is limited to grounds of legality and rationality.’14 [19] Caution should be exercised in deciding which administrative acts constitute a reviewable decision. Not all administrative acts, functions or clerical duties performed by officials or organs of state, would be an exercise of public power or amount to a public function in terms of any legislation or empowering provision, or would adversely affect the rights of any person, within the ambit of the definition of administrative action in terms of PAJA. All the elements of the definition of an administrative action in terms of s 1 of PAJA must be present, before an act would qualify as a reviewable decision in terms of PAJA. In Plover’s Nest Investments (Pty) Ltd v De Haan,15 this Court held, having examined the content of a letter produced by an official of a municipality, that such letter was neither a decision nor an action as contemplated in s 1 of PAJA.16 Similarly, in Gamevest (Pty) Ltd v Regional Land Claims Commissioner for the Northern Province and Mpumalanga and Others,17 this Court, in explaining the nature of a claim form lodged in terms of the Restitution of Land Rights Act 22 of 1994, held that ‘the receipt of a claim and an acknowledgement of such receipt is a formal act, not amounting to an administrative decision or action.’18 [20] In casu, the certificate is nothing more than a document that certifies that the DPP has seen the statements or affidavits on which the charge is based, and that he/she declines to prosecute at the instance of the State, ‘nothing more nothing less.’19 It does not confer authority on anyone to do anything. Having regard to its 14 Democratic Alliance and Others v Acting National Director of Public Prosecutions and Others [2012] ZASCA 15; 2012 (3) SA 486 (SCA). 15 Plover’s Nest Investments (Pty) Ltd v De Haan [2015] ZASCA 193. 16 Ibid para 27. 17 Gamevest (Pty) Ltd v Regional Land Claims Commissioner for the Northern Province and Mpumalanga [2002] ZASCA 117; 2003 (1) SA 373 (SCA). 18 Ibid para 28. 19 Nundalal para 19. 12 content, the certificate is a document of a formal nature, which may be produced as evidence of a decision that the DPP declines to prosecute. Therefore, a distinction should be drawn between a decision not to prosecute, which is reviewable on the principle of legality or rationality, and a document evidencing that decision, which is not a decision and thus not reviewable. The certificate is the latter and it is neither a decision nor administrative action that is reviewable in terms of PAJA, nor as incorrectly held in Nundalal, an exercise of a discretion. The facts of this case illustrate the difference. The DPP took the decision not to prosecute, on 8 November 2019, which is reviewable on the principle of legality or irrationality. The certificate was initially issued on 20 May 2020, six months after the decision was taken, and is not reviewable. On the lapsing of the period of validity of the initial certificate, which occurred on 19 August 2020, three months after its issue in terms of s 7(2)(c), the second respondent requested its re-issue, which occurred on 14 October 2020. The second respondent instituted private prosecution by serving summons on the appellant on 30 November 2020, which is a decision to prosecute. [21] The acquisition of the certificate may not necessarily result in the institution of a private prosecution. Its bearer may decide not to proceed with a prosecution, in which event it will lapse after three months. As stated in the preceding paragraph of this judgment, since this Court in NDPP v Freedom Under Law held that the review of a decision not to prosecute must be grounded on the principle of legality and/or rationality,20 equally so, the decision by the private prosecutor to institute a prosecution, also falls to be reviewed in terms of the principle of legality or rationality. This is so, because the decision to prosecute is expressly excluded from PAJA in terms of s 1(b)(ff) thereof. The full court in Nundalal was probably not aware of this Court’s judgment in NDPP v Freedom Under Law, which was heard on 1 April 2014, and its judgment delivered on 17 April 2014. Nundalal was heard on 27 March 2015 and its judgment delivered on 8 May 2015, followed by the full court in the President v Zuma, where the judgment was delivered in July 2023. There is thus no merit in the appellant’s contention, based on the decision in Nundalal, that the issuing of the certificate is reviewable in terms of PAJA. 20 NDPP v Freedom Under Law para 27. See also Minister of Health and Another NO v New Clicks South Africa (Pty) Ltd and Others (Treatment Action Campaign and Another as Amici Curiae) [2005] ZACC 14; 2006 (2) SA 311 (CC); (2006) (1) BCLR 1para 614, where the Constitutional Court held that the exercise of all public power must comply with the doctrine of legality. 13 Whether the jurisdictional requirements for the issue of the certificate in terms of s 7 of the CPA, were met [22] The jurisdictional requirements in terms of s 7(1)(a) of the CPA, were listed in Singh as follows: for any person intending to institute a private prosecution, he/she must prove that (a) he/she has an interest in the issue of the trial; (b) the interest is substantial and peculiar to him/her; (c) the interest arises from some injury individually suffered by him/her; and (d) the injury was suffered as a consequence of the commission of the alleged offence.21 In Singh, the court accepted the view that private prosecutions are subjected to limitations22 and rejected the notion that the DPP is obliged to issue the certificate, once he had declined to prosecute.23 The court in Singh held the view that the DPP must study the docket and consider the evidence before deciding to issue the certificate. [23] The view expressed in Singh was rejected by the full court in Nundalal.24 The full court held that the DPP must issue the certificate, regardless of whether the jurisdictional requirements set out in s 7(1)(a) of the CPA have been established. In this regard, the full court’s view is also wide and inaccurate. Not every person is entitled to be issued with the certificate. The extent of the limitation is to restrict the class or category of persons entitled to request the certificate. In issuing the certificate, the DPP only has to form a prima facie view, ex facie the statements and affidavits in the docket, that the person requesting the certificate complies with the jurisdictional requirements of s 7(1) of the CPA. ‘Any person’ contemplated in s 7(1)(a), would include a complainant. A complainant initiates criminal charges with the police against an offender or offenders; who, consequent to their unlawful conduct, inflicted injury on the complainant’s person, personality or property, and has an interest in obtaining justice and/or retribution. It appears that the limitation on the words ‘any person’ in s 7(1)(a), is designed such that it primarily, though not exclusively, refers to complainants in criminal cases. 21 Singh at 91B. 22 Ibid at 92G-H. 23 Ibid at 93E-F. 24 Nundalal para 21. 14 [24] The appellant, under the rubric of jurisdictional requirements of s 7(1)(a) of the CPA, contended that the Acting DPP’s issuing of the certificate stands to be reviewed and set aside, as in appellant’s view, the private prosecutor had no locus standi required in s 7(1)(a), and that she had no substantial and peculiar interest arising from an actual injury individually suffered. The contention stems from the text of s 7(1)(a), which provides that these requirements must be proved by the person seeking to avail him/herself of the exercise of the right to institute private prosecution. The appellant, relying on Singh, contends that the second respondent did not prove the jurisdictional requirements. The court in Singh held that the DPP must consider evidence that proves that the person requesting the certificate had met the prescribed jurisdictional requirements.25 [25] Singh was incorrectly decided on this point. The DPP does not assess and evaluate evidence or hold an inquiry in issuing the certificate. All that is required of the DPP is to peruse the statements and affidavits in the docket, in order to prima facie verify that the jurisdictional requirements of s 7(1)(a) have been met. In reply to a letter from the appellant’s counsel dated 16 February 2021, wherein she requests the DPP to furnish her with reasons for the decision not to prosecute, as stated in the certificate dated 14 October 2020, the DPP wrote: ‘Your letter dated 16 February 2021 refers. My decision to decline to prosecute was based on your representations of 2019, read in conjunction with the contents of the docket. I am therefore of the opinion that under the circumstances there are no reasonable prospects of a successful prosecution. I did not consider any affidavits that you do not already have access to. Yours faithfully DIRECTOR OF PUBLIC PROSECUTIONS: WESTERN CAPE.’ [26] From the DPP’s letter in reply, the affidavits which were in the docket, copies of which the appellant’s counsel had in his possession, which formed the basis of the DPP’s decision to decline to prosecute, is made plain, as stated in the certificate of 14 October 2020. Of importance, the DPP did not consider any additional statements or affidavits, copies of which counsel for the appellant did not 25 Singh at 94C-J and 95A-D. 15 have. Therefore, the contents of the docket were the source of the verification of the information as to the second respondent’s compliance with the prerequisites for the issue of the certificate. [27] On a proper construction of s 7(1)(a) of the CPA, it therefore becomes a factual inquiry, in any given case, whether a complainant meets the threshold of the jurisdictional prerequisites of that statutory provision. In this instance, the question is whether the second respondent had locus standi and had a substantial and peculiar interest arising from an actual injury individually suffered. These facts would be found in the statement of the complainant and those of witnesses. [28] What ‘injury’ did the second respondent suffer? The appellant raised this question in the founding affidavit, to which the second respondent in her answering affidavit, stated as follows: ‘12. The nature of the application [questioning the locus standi] is such that it seeks to challenge my title to prosecute. I am advised that such a challenge ought to be raised by way of a special plea in terms of section 106 (1)(h) of the Criminal Procedure Act 51 of 1977 (the CPA).26(Footnote added.) 13. The attempt by the applicant to raise such a challenge prematurely is an attempt to obstruct the private prosecution proceedings and thus infringes unlawfully upon my constitutional rights under section 34 of the Constitution. . . . . 33. My actions in this matter arise from the wrongful and criminal acts of the applicant, which caused me harm, and my actions are justified, lawful and required to correct a wrong done not only to me but to TransUnion and the State, as I explain below. I am furthermore entitled to [exercise my right to protect my dignity and privacy as the applicant has trampled on those rights…] 34. I instituted a criminal case against the applicant after discovering in 2013 that he had accessed my private and personal information and data held by TransUnion. Attached hereto marked LG1 is a copy of my statement to the police dated 20 June 2024 being A1 in the police docket. . . . . . . 26 Section 106(1)(h) provides that when an accused pleads to a charge, he may plead that the prosecutor has no title to prosecute. 16 [132.] . . . The applicant clearly saw what was held by TransUnion regarding all my information and records regarding financial matters and details of my life that are personal and private. No reasonable person would feel safe if a person displayed the type of enmity that the applicant did in accessing my confidential records in the covert and unauthorised manner in which he did.’ (Own emphasis in italics.) [29] In Phillips v Botha,27 the court stated thus: ‘As can be seen from the judgment in Attorney-General v Van der Merwe and Bomman (supra), the nature of the peculiar interest which may affect a private prosecutor has been given a broad interpretation. The word ‘‘injury’’ can be used in a wide sense as meaning any infraction of right or wrongful act. But its ordinary meaning is injury to property or person (including bodily or physical injury or injury to rights of personality)’. The second respondent in her affidavit accuses the appellant of having trampled on her personality rights to dignity and privacy, by accessing her confidential and personal information without her consent, and that the appellant’s conduct caused her harm. In response to that allegation, the appellant raised a bare denial. Therefore, the answer to the appellant’s objection is fact-based and best addressed at trial. I conclude that there is no merit in the appellant’s attack on the second respondent’s alleged lack of compliance with the jurisdictional requirements in terms of s 7(1)(a) of the CPA. Whether the DPP was entitled to re-issue the certificate [30] At the written request of the second respondent’s legal representative, dated 4 December 2019, the Acting DPP initially issued the certificate on 20 May 2020, which lapsed three months later in terms of s 7(2)(c) of the CPA. Again, at the request of the second respondent’s legal representative, the Acting DPP re-issued the certificate on 14 October 2020. The re-issue of the certificate evoked the appellant’s attack, which is three-fold. First, he contends that the Acting DPP had no authority to re-issue the certificate; second, that in issuing the first and the second certificates, the Acting DPP impermissibly added charges that were not part of the 27 Phillips v Botha 1995 (3) SA 948 (WLD) at 962A-B. 17 State’s case; and third, that the second respondent was wrong in applying for the certificate without first obtaining the police docket. I turn to deal with these points of attack. [31] The appellant’s counsel initially raised an inquiry on the re-issue of the certificate in a letter dated 7 December 2020, addressed to the Acting DPP. In a reply dated 25 January 2021, the Acting DPP wrote as follows: ‘REPRESENTATIONS: THE STATE VERSUS D POLOVIN [CAPE TOWN CAS 1480/06/2014] Your letter dated 7 December 2020 refers. A second certificate nolle prosequi was issued on request of the complainant as the validity of the first certificate was to expire before the matter could be enrolled. The additional charge of Defeating the Administration of Justice was added on request of the complainant, who was of the view that the evidence contained in the docket justified such a charge. The same is applicable to the charge of fraud. No additional statements have been obtained in the matter. The charge sheet in this matter is drafted by the private prosecutor and this office is therefore not involved in the contents, nor the validity thereof. I am proceeding to close my file. Kindly pursue any further issues with the private prosecutor. Yours faithfully DIRECTOR OF PUBLIC PROSECUTIONS: WESTERN CAPE’ [32] In her answering affidavit, the second respondent sets out in detail, the chronology of the events leading to the re-issue of the certificate, the inclusion of additional charges and the delay in obtaining the docket, as evidenced by reference to the correspondence exchanged with the Acting DPP and the appellant. Briefly, the correspondence reflects that: (a) Through her counsel, she requested both the docket and the issue of the certificate on 4 December 2019; (b) On 20 and 21 January 2020 the Acting DPP advised that he had requested the docket and invited counsel for the second respondent to stipulate for which offences the certificate was sought; 18 (c) On 3 February 2020, the second respondent’s attorney wrote in response to the Acting DPP, wherein he requested the following offences to be included in the certificate: contravention of s 86(1) and 86(3) of ECTA, contravention of s 68 of the National Credit Act 34 of 2005 and fraud; (d) The Acting DPP issued the certificate on 20 May 2020, six months after it had been requested, and the second respondent’s attorney received a copy of the certificate on 25 June 2020, about five weeks after it was issued, with no docket; and (e) The Acting DPP referred the attorney to the police to obtain the docket, a certified copy of which the second respondent’s attorney received on 25 August 2020, from one Captain Kotze of the South African Police Service. [33] The second respondent further alleged in her answering affidavit, that it was after receipt of the docket that she and her legal representatives were able to secure a re-issue of the certificate to prepare the summons. She states, in her affidavit, that the delay in receiving the docket and the certificate was caused by the fact that the country was under restrictions imposed by government, as part of regulating the containment of the spread of the COVID-19 pandemic. ‘Both Captain Kotze and the DPP’s office staff were still working irregular hours and alternate days or weeks.’ The appellant could not provide any evidence to gainsay or rebut this version. [34] The appellant contends that having issued the certificate on 20 May 2020, the Acting DPP was functus officio and thus had no authority to re-issue the certificate on 14 October 2020. But the appellant conflates the right to institute private prosecution and the lapse of the certificate. The certificate lapses three months from the date of its issue. The right to institute private prosecution in respect of an offence, except for the offences referred to in s 18 of the CPA, or unless some other period is expressly provided by law, only lapses, or prescribes 20 years from the time the offence was committed. The DPP may thus re-issue the certificate even in instances where the private prosecutor requests to include additional charges from the same statements and affidavits in the docket, which the State had initially not contemplated. There is an important caveat: Section 13 of the CPA empowers the DPP or a local prosecutor acting on his instructions, with leave of the court, to intervene in a pending or continuing private prosecution proceedings, to take over and continue the prosecution in the name of the State. In addition, s 22(2)(c) read 19 with s 23 of the National Prosecution Authority Act 32 of 1998 (NPA Act), empowers the DPP to review a decision to prosecute, or not to prosecute. Therefore, the DPP, even during a private prosecution, remains seized with the power or authority to intervene. Therefore, at no stage during the private prosecution can he/she be considered functus officio, as contended by the appellant. [35] The appellant contends that it was impermissible for the Acting DPP to include additional charges in the re-issued certificate. The appellant could not refer this Court to any authority on which this submission is founded. The second respondent, in the answering affidavit, states that additional charges of fraud and defeating the administration of justice, are based on the appellant’s conduct during the investigation of the offence he is charged with. The appellant gave different responses as to why he accessed the confidential credit records of the second respondent. First, he denied having accessed the data. Second, he completed an electronic field confirming that he had the second respondent’s consent to initiate the credit search. On 16 September 2013, TransUnion requested him to supply proof that he had the second respondent’s consent. He promised to do so but failed to supply such proof. Third, he revised his version and told TransUnion that the second respondent was his client, which was not true. When pushed for proof, he relied on attorney and client privilege, which did not exist, as the second respondent was not his client. [36] Fourth, the appellant again changed his version and claimed that he was ‘just trying out the system’ and the second respondent’s name was the first which came to mind. Fifth, thereafter he commented to the press that he had merely performed a credit check. He went further to make a conditional apology, admitting the unlawful conduct in the following terms: ‘1. I admit that on 28 May 2012 I accessed your personal information without your consent. 2. I understand and accept that my conduct was distressing, offensive and wrongful to you, though I hasten to assure you that was not my intention, and I am truly and sincerely contrite and apologise unreservedly. . . . . . . 20 6. For the sake of clarity and avoidance of doubt, I should state that I am not guilty of contravening Section 86(1) read with Sections 1, 3 and 89 of Act 25 of 2002 and nothing contained in this apology should be construed as an admission of guilt. . .’ The second respondent rejected this unsigned letter of apology. [37] The appellant was initially charged by the State with one count of contravention of s 86(1) read with ss 1, 3 and 89 of Act 25 of 2002, unauthorised access to, interception of or interference with data. As a result of the appellant’s conduct stated in the preceding paragraphs of this judgment, the second respondent requested the DPP to include the following additional charges: (a) One count of fraud, for the act of accessing the information on TransUnion, on the basis of misrepresentations; (b) One count of defeating or obstructing the administration of justice, due to the appellant’s responses to the TransUnion investigators; (c) Three counts of contravening the ECTA for accessing private information without permission, unlawfully overcoming security measures and unauthorised use of data. There is no merit in the appellant’s contention that it was impermissible for the Acting DPP to include additional charges in the certificate. [38] The submission made by appellant’s counsel that the second respondent should have first applied for and received the docket before obtaining the certificate has no merit. There is no prescribed procedure regulating the order of dealing with the request and issue of the certificate. Therefore, nothing further need be said on this submission. Declaratory relief that the private prosecution is inspired by malice and is vexatious, and that the second respondent be interdicted from further proceeding with the private prosecution of the applicant as it is against public policy [39] The relief sought by the appellant in Part B, a declarator and an interdict, is a rehash of the grounds of appeal already dealt with in Part A. In support of the relief sought in Part B, the appellant repeats the attack on the alleged non-compliance by 21 the second respondent, with the jurisdictional requirements of s 7(1)(a) of the CPA. The appellant repeats the allegations that the second respondent is unsuited, because she does not have locus standi, lacks substantial and peculiar interest arising from an actual injury that she individually suffered, to institute private prosecution. For reasons stated in Part A, these contentions have no merit. [40] In addition, the appellant submits, with reference to the Acting DPP’s decision in declining to prosecute, that the private prosecution has no prospects of success. That is the Acting DPP’s opinion, which, clearly, the legal representatives of the second respondent do not agree with. This Court will refrain from speculating on the prospects of success, concerning a matter that may be the subject of adjudication by a trial court. The appellant’s argument that the private prosecution amounts to ‘an indulgence of a vindictive, affluent individual’ and is ‘against public policy,’ ignores the history of the acrimonious relationship he had with the second respondent. If anything, this private prosecution presents an opportunity to bring the disputes between them to finality. It would also be in the public interest that this ongoing spectacle be finally resolved. I conclude, therefore, that the appellant did not present to this Court any right that falls to be declared and therefore this is not a case where relief in the form of a declarator is warranted. [41] The further relief sought by the appellant in the form of an interdict, is grounded on the notion that the second respondent’s private prosecution is vexatious. It is trite that for a party to succeed in obtaining an order for a final interdict, it must prove (a) a clear right; (b) an imminent injury to that right and (c) absence of an alternative remedy. The appellant’s case comes nowhere close to establishing these requirements. When the DPP declined to prosecute, following the appellant’s representation, the appellant wrote to the second respondent’s legal representative as follows: ‘Nick, The Director of Public Prosecutions declines to prosecute me. He announced his decision to my counsel, Advocate A Du Toit, in a letter dated 8 November, which I attach. I expect you to consider it if your sad client instructs you to make statements about me in public again. 22 Regards, David N Polovin’ When informed that the DPP’s decision had been referred to the second respondent for her further instructions, the appellant wrote again the same day thus: ‘Good. Now that her abuse of the public resource has been ended, we’ll find out whether she’s willing to waste her own money on her nasty vendetta’. [42] By conducting himself in this manner, the appellant issued a provocative challenge, which, it appears the second respondent accepted. Having done that, the appellant now calls on the courts’ protection by way of a declarator and an interdict, intending to stop the private prosecution. The appellant as an attorney, should have known better than to conduct himself in this manner. He has failed, on the evidence, to demonstrate that his rights are in anyway facing imminent threat or are being assailed. [43] On the other hand, the second respondent assumes enormous financial risk by instituting the private prosecution. Section 16 of the CPA, which in addition to any civil claim the appellant may choose to institute, provides: ‘(1) Where in a private prosecution, other than a prosecution contemplated in section 8, the charge against the accused is dismissed or the accused is acquitted or a decision in favour of the accused is given on appeal, the court dismissing the charge or acquitting the accused or deciding in favour of the accused on appeal, may order the private prosecutor to pay to such accused the whole or any part of the costs and expenses incurred in connection with the prosecution or, as the case may be, the appeal. (2) Where the court is of the opinion that a private prosecution was unfounded and vexatious, it shall award to the accused at his request such costs and expenses incurred in connection with the prosecution, as it may deem fit.’ [44] The appellant thus has alternative remedies at his disposal, that he can employ, should it be necessary. Apart from the opportunity to vindicate his professed innocence at trial, the appellant is adequately protected by the risk entailed in instituting a private prosecution. In instituting the private prosecution, the second respondent assumed the risk of being mulcted with punitive costs and compensatory 23 orders, in the event her private prosecution is found by the trial court to be unfounded and vexatious. In weighing up the scale of balance between the two rights, i.e. the appellant’s right not to be subjected to unfounded and vexatious private prosecution, against the right of the second respondent, to have her dispute resolved by application of the law and decided in a fair public hearing before a court, as provided for in s 34 of the Constitution, the scale tilts in her favour. [45] I therefore conclude that this appeal has no merit and falls to be dismissed, with costs following the result. It is undoubtedly a frontal challenge intended to delay the instituted private prosecution. The full court in the President v Zuma, relying on the Constitutional Court’s decisions in Thint (Pty) v National Director of Public Prosecution and Others; Zuma and Another v National Director of Public Prosecution and Others28 and Moyo and Another v Minister of Police and Others,29 summarised the approach thus: ‘There is no absolute rule against a frontal challenge to a prosecutor’s title to prosecute. A frontal challenge ought to be discouraged and pertinent issues left to the trial court, where it lacks merit and only mainly serves to delay the commencement of the criminal trial. It ought to be allowed where a litigant wishes to challenge a clearly unlawful process in order to enforce his or her fundamental rights.’30 (Own emphasis.) [46] The following order shall issue: 1 The application for leave to appeal is granted. 2 The appeal is dismissed with costs. _____________________ S P MOTHLE JUDGE OF APPEAL 28 Thint (Pty) Ltd v National Director of Public Prosecutions and Others; Zuma and Another v National Director of Public Prosecutions and Others [2008] ZACC 13; 2009 (1) SA 1 (CC); 2008 (2) SACR 421 (CC); 2008 (12) BCLR 1197 (CC) para 65. 29 Moyo and Another v Minister of Police and Others; Sonti and Another v Minister of Police and Others [2019] ZACC 40; 2020 BCLR 91 (CC); 2020 (1) SACR 373 (CC). 30 President v Zuma para 82. 24 Appearances For the appellant: A du Toit Instructed by: BBP Law Attorneys, Cape Town Webbers Attorneys, Bloemfontein For the 2nd respondent: S P Rosenberg SC with B Prinsloo Instructed by: Nicholas Smith Attorneys, Cape Town Honey Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 17 October 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 Polovin v The Director of Public Prosecutions and Others (1230/2022) [2024] ZASCA 140 (17 October 2024) Today the Supreme Court of Appeal (SCA) handed down judgment in which it dismissed, with costs, Mr Polovin’s appeal against an order of the Western Cape Division of the High Court, Cape Town (the high court). In May 2012, Mr Polovin accessed Ms Green’s confidential credit records, by using a colleague’s login details to the Law Data System of TransUnion, without Ms Green’s consent and knowledge. Mr Polovin initially denied accessing the records, but later admitted doing so. Ms Green laid a criminal charge of the contravention of s 86(1) of the Electronic Communications and Transactions Act 25 of 2002, which prohibits the access or interception of any data without authority or permission to do so. The Director of Public Prosecutions, Western Cape (the DPP) declined to prosecute Mr Polovin at the instance of the State. Ms Green subsequently elected to pursue a private prosecution against Mr Polovin. Ms Green’s counsel requested copies of correspondence, the docket, and a certificate of nolle prosequi from the DPP. The certificate was issued on 20 May 2020, but it lapsed due to proceedings not being instituted within three months. The docket was not available until 25 August 2020, which docket was needed to institute proceedings. On 9 September 2020, Ms Green’s counsel applied for a re-issue of the certificate with an additional charge of defeating or obstructing the administration of justice. The certificate was re-issued on 14 October 2020, adding the additional charges and the summons for the private prosecution was issued on 27 November 2020. Mr Polovin launched a frontal challenge to the private prosecution in the high court in two parts. In Part A, Mr Polovin challenged Ms Green’s locus standi, the jurisdictional requirements of s 7(1)(a) of the Criminal Procedure Act 51 of 1977 (the CPA), the re-issue of the certificate dated 14 October 2020, and the inclusion of additional charges. In Part B, Mr Polovin sought relief that the summons commencing the private prosecution should be declared unfounded and vexatious, as it constituted an abuse of court processes. He further sought an order against Ms Green interdicting her from proceeding with the private prosecution, as it offends public policy. The high court dismissed both Parts A and B of the application, with costs, and further dismissed an application for leave to appeal those orders. Mr Polovin subsequently petitioned the SCA for leave to appeal, which petition was granted and the SCA granted an order referring the application for leave to appeal for oral argument. The order further stated that the parties must be prepared, if called upon to do so, to address the SCA on the merits. The issues that fell to be decided by the SCA were first whether leave to appeal should have been granted in terms of s 17(2)(b) read with s 17(1)(a)(i) and (ii) and s 17(6)(a)(i) and (ii) of the Superior Courts Act 10 of 2013. 2 Second, in relation to Part A, whether the jurisdictional requirements for the issue of the certificate in terms of s 7(1)(a) of the CPA were met; whether in terms of s 7(1)(a) Ms Green had locus standi had a substantial and peculiar interest in the actual injury individually suffered; and whether the Acting DPP was entitled to re-issue the certificate and include additional charges. Third, and in relation to Part B, whether the private prosecution should be declared unfounded and vexatious, and Ms Green be interdicted from further proceeding with the private prosecution of Mr Polovin on the grounds of public policy. The SCA found that the application for leave to appeal should be granted as the decision being appealed involved a question that was of importance in law where a decision of the SCA was required to resolve differences in jurisprudence. The SCA found that the question of Ms Green’s locus standi and whether she had substantial and peculiar interest arising from an actual injury individually suffered arose from the text of s 7(1)(a), which provides that these requirements must be proved by the person seeking to avail him/herself of the exercise of the right to institute private prosecution. The SCA emphasised that the DPP did not assess and evaluate evidence or hold an inquiry in issuing the certificate. All that was required of the DPP was to peruse the statements and affidavits in the docket, in order to prima facie verify that the jurisdictional requirements of s 7(1)(a) had been met. Therefore, the contents of the docket were the source of the verification of the information as to Ms Green’s compliance with the prerequisites for the issue of the certificate. The SCA held that there was no merit in Mr Polovin’s attack of Ms Green’s alleged non-compliance with the jurisdictional requirements of s 7(1)(a). The SCA found that Mr Polovin conflated the right to institute private prosecution and the lapse of the certificate. The certificate lapses three months from the date of its issue. The right to institute private prosecution in respect of an offence, except for the offences referred to in s 18 of the CPA, only lapses, or prescribes 20 years from the time the offence was committed. Therefore, the DPP may re-issue the certificate even in instances where the private prosecutor requests to include additional charges, which the State had initially not contemplated. The SCA found that the relief sought by Mr Polovin in Part B, a declarator and an interdict, was a rehash of the grounds of appeal already dealt with in Part A. As a result, the SCA found that those contentions had no merit for the reasons already pronounced. The SCA further found that Mr Polovin did not present to the SCA any right that fell to be declared and therefore held that this was not a case where relief in the form of a declarator was warranted. The SCA further held that this was undoubtedly a frontal challenge intended to delay the instituted private prosecution. As a result, the SCA concluded that that the appeal had no merit and fell to be dismissed, with costs following the result. --------oOo--------

4226

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case nos: 137/2023 156/2023 148/2023 In the matter between: ESKOM HOLDINGS SOC LIMITED FIRST APPELLANT ACTOM (PTY) LTD SECOND APPELLANT STEINMÜLLER AFRICA (PTY) LTD THIRD APPELLANT and BABCOCK NTUTHUKO ENGINEERING (PTY) LTD RESPONDENT Neutral citation: Eskom Holdings SOC Limited v Babcock Ntuthuko Engineering (137/2023, 156/2023 and 148/2023) [2024] ZASCA 63 (29 April 2024) Coram: MBATHA, MABINDLA-BOQWANA and WEINER JJA, SMITH and MBHELE AJJA Heard: 25 March 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 29 April 2024. Summary: Constitutional Law – s 217 of the Constitution – Preferential Procurement Framework Act 3 of 2000 – procurement of goods and services ─ 2 compliance with mandatory tender conditions ─ organ of state’s discretion to condone non-compliance where the condition is not material ─ whether actual or substantial compliance is applicable – whether splitting of tenders between various bidders lawful. 3 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: North Gauteng Division of the High Court, Pretoria (Millar J sitting as court of first instance): 1. The appeal is upheld with costs, including the costs of two counsel, where so employed. 2. The order of the high court is set aside and substituted with the following: ‘(a) The application is dismissed. (b) The applicant is ordered to pay the respondents’ costs of the application including the costs of two counsel, where so employed.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Smith AJA (Mbatha, Mabindla-Boqwana and Weiner JJA and Mbhele AJA concurring): Introduction [1] On 6 August 2018, the first appellant, Eskom Holdings Soc Limited (Eskom), published a Request for Proposals (RFP) inviting tenders for maintenance and outage repair services for boiler pressure parts and high outage repair services for pressure pipework, at fifteen of its coal-fired power stations. [2] The respondent, Babcock Ntuthuko Engineering (Pty) Ltd (Babcock), submitted its proposal by the extended deadline, namely 24 October 2018, but was disqualified because it failed to submit a current ISO 3834 certificate (the ISO certificate). That certificate is issued by the relevant agency for a specified period and verifies that a company has the requisite resources, systems, and personnel to weld to a required quality and standard. Item 3.2 of the RFP listed ‘Certification to ISO 3834’ as a ‘mandatory returnable for evaluation’ and specified that failure to comply with that condition would result in disqualification at the tender evaluation stage. 4 [3] On 7 October 2021, Eskom awarded the tender jointly to the second and third appellants, Actom (Pty) Ltd (Actom) and Steinmüller Africa (Pty) Ltd) (Steinmüller), respectively. Actom was appointed to render maintenance and outage services at seven of the fifteen power stations and Steinmüller at eight. [4] Aggrieved by its disqualification, Babcock launched an application in the North Gauteng High Court, Pretoria, seeking to review and set aside the tender awards. Babcock contended that the decisions to disqualify it at the evaluation stage and to split the tender award between Actom and Steinmüller were irrational, unlawful, and invalid. [5] On 17 November 2022, the high court (per Millar J) delivered its judgment upholding Babcock’s contentions in respect of its disqualification. It found that Babcock’s interpretation of the tender condition was to be preferred, namely that, the condition did not require the submission of an ISO certificate but merely a statement by a bidder that it had been certified. The high court found, additionally, that the requirement regarding the ISO ‘certification’ was ambiguous and Eskom was thus obligated to allow disqualified bidders to comply by submitting the certificate after the deadline. Its failure to do so rendered Babcock’s disqualification procedurally unfair in terms of s 6(2)(e) of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). [6] The court consequently reviewed and set aside the tender awards. It further declared the contracts concluded pursuant thereto unlawful and ordered Eskom to conduct a fresh tender process within stipulated time frames. The court, however, suspended the order declaring the contracts entered into between Eskom, Actom and Steinmüller, invalid, subject to compliance with its directives regarding the finalisation of the fresh tender process. [7] The appellants appeal against that judgment with the leave of the high court. Although they filed separate notices of appeal, Eskom and Steinmuller rely substantially on the same grounds of appeal, while Actom only assailed the basis on which the high court made the costs orders against it. 5 The facts [8] The following material facts are common cause. At the time of the publication of the RFP, Actom, Steinmüller, Babcock and other service providers had been servicing boilers at Eskom’s power stations for extended periods, in some cases for more than 20 years. Those contracts expired on 31 September 2017. [9] Eskom consequently undertook an open tender process (on National Treasury’s instructions), resulting in the publication of the RFP in August 2018. It also drew up a strategy in terms of which it decided to award contracts to a minimum of three service providers in order to mitigate the risk of entrusting the maintenance of all its coal-fired power stations to one bidder. Those power stations generate the bulk of the country’s electricity and Eskom could accordingly not risk having ‘all its eggs in one basket’. It therefore had to ensure that it had alternative options in the event of a service provider becoming incapacitated. [10] The RFP and related documents contained various stipulations regarding Eskom’s intention to award contracts to more than one bidder. These were: (a) item 1.6 of the RFP which stipulates that ‘[t]he tender shall be for the whole/parts of the contract’; (b) item 1.6 of the Standard Tender Conditions which states that Eskom ‘may accept or reject any variation, deviation or alternative tender and reserves the right to accept the whole or any part of the tender’; (c) the RFP provides that Eskom ‘reserves the right to negotiate with preferred bidders after a competitive bidding process or price quotations; should the tendered prices not be deemed market-related’; (d) in the addendum to the RFP, issued prior to the closing date, Eskom stated that it would allow ‘offers limited to few sites’, allowing bidders with limited capacity to submit tenders in respect of selected sites only; and, in addition, (e) Eskom’s Supply Chain Management Policy also makes provision for a tender to be awarded to multiple suppliers. [11] It is also common cause that prospective bidders, including Babcock, were aware of Eskom’s intention to divide the contract between several bidders. Apart from the fact that the power stations had historically always been serviced by at least three contractors, Babcock, in its founding affidavit acknowledged that it was ‘always anticipated, because of the sheer volume of the work, that the scope of services would 6 be divided amongst at least three bidders’. It contended, however, that Eskom had failed to stipulate and apply objective criteria as it was required to do in terms of s 2(1)(f) of the Preferential Procurement Policy Framework Act 5 of 2000 (PPPFA). That section provides that ‘the contract must be awarded to the tenderer who scores the highest points, unless objective criteria in addition to those contemplated in paragraphs (d) and (e) justify the award to another tenderer’. [12] The RFP was equally unambiguous regarding the requirements in respect of mandatory documents or ‘mandatory returnables’ and the portended fate of tenders that did not include them. The RFP specified that the ISO Certification was a ‘mandatory returnable for evaluation’ and repeatedly cautioned bidders that they would be disqualified ‘if mandatory returnables are not submitted on or before the stipulated deadlines’. The Standard Conditions of Tender also specified that mandatory returnables must be submitted by the stipulated deadline and that failure to do so would render the tender ‘non-responsive’. And while allowing bidders to seek clarification regarding compulsory requirements, the tender conditions explicitly stated that the ‘mandatory tender returnables will not be requested and may not be submitted after tender submission deadline.’ [13] The RFP also stated that a ‘clarification meeting’ with Eskom representatives would take place on 20 August 2018. At that meeting, clarification was provided regarding what exactly was meant by the term ‘Certification to ISO 3834’ mentioned in item 3.2 of the RFP, particularly whether bidders were required to submit a certificate or merely confirm that they had been duly certified. The minutes of the meeting show that bidders were told that they were required to submit an ISO 3834 certificate and were reminded that ‘[t]enderers who do not submit mandatory tender returnables as at stipulated deadlines will be disqualified’. A presentation regarding mandatory requirements stated the following: ‘For mandatory requirements, the supplier needs to show: No.2 – Valid certificate of ISO 3834 If not submitted by the tender submission deadline, the tenderer will be disqualified.’ It is common cause that Babcock was present at the meeting. 7 [14] Eskom’s Supply Chain Management Policy similarly requires strict compliance with mandatory requirements. It provides for the disqualification of bids which do not include mandatory documents and does not permit Eskom to condone failure to comply with mandatory requirements. [15] Babcock did not submit the ISO certificate by the stipulated closing date for submissions of tenders. It simply mentioned in its submission that it had ISO certification. However, in its founding affidavit, Babcock contended that Eskom’s decision to disqualify it constituted unfair administrative action because at the material time Eskom had known that it was in possession of a valid ISO 3834 certificate and it had made the certificate available to Eskom after having lodged its bid after the deadline had passed. After receipt of the rule 53 record, Babcock filed a supplementary affidavit wherein it, inter alia, alleged that the RFP did not require bidders to submit a certificate but merely to ‘address certification to ISO 3834, in the same way as the previous item in the list’. The latter was a reference to item 3.1 which required bidders to show a certain level of experience. [16] Having disqualified Babcock for failure to submit the ISO certificate, Eskom proceeded to evaluate the qualifying bids in accordance with the stipulated specifications, in particular relating to technical, financial and BEE requirements. Three bidders passed a physical assessment of their technical capabilities, namely Steinmüller, Actom and Alstom Power Services (Pty) Ltd (Alstom). They were thereafter evaluated for price, and Steinmüller scored the highest, namely 99 points, Alstom was second with 58.18 points, and Actom scored 28.61. [17] In August 2019, Eskom’s Cross Functional Team (CFT) responsible for tender evaluations sought a mandate from the Eskom board to negotiate with the preferred bidders. The CFT proposed that the contracts be split proportionally between them in the following ratios: eight power stations to Steinmüller; four to Actom and two to Alstom. [18] The various Eskom committees involved in the tender process, including the Investment Finance Committee (IFC) were, however, not satisfied that the criteria for the proposed allocations had been clearly set out in the RFP. They were also 8 concerned about the significant price differences between the various bids and the financial soundness of some of the bids. The IFC therefore recommended to the board that the tender be cancelled. [19] The Eskom board, however, did not adopt the IFC’s recommendations and instructed management to proceed with the tender process. It requested Eskom’s Assurance and Forensic Department to review the process and submit a report to it. It also requested the legal department to submit an opinion and recommendations for its consideration. Those entities in turn procured opinions from independent firms of attorneys and chartered accountants, which recommended cancellation of the tender. The Eskom board considered those recommendations at its meeting on 24 February 2021. It expressed its concern about the long delay in finalising the tender and the failure of management to implement the board resolution to bring the tender process to conclusion. [20] The CFT thereafter negotiated with the two remaining bidders (Alstom had by that time withdrawn its bid), hoping to persuade them to reduce prices that were not market related. Since Steinmüller’s pricing was already accepted as being market related, that process only yielded a reduction of Actom’s prices to within 2.2% of Steinmüller’s pricing. The CFT thereafter recommended that eight power stations be awarded to Steinmüller and seven to Actom. [21] The board approved those recommendations on 7 November 2021. However, in what appears to have been a ‘belt and braces approach’, the board commissioned further probity reports. The first, aimed at identifying possible conflict of interests between Eskom officials and the two recommended companies, confirmed that there were none. The second report, prepared by a firm of attorneys, advised against cancellation of the tender and found no irregularities in the way the contracts had been split. The Eskom board, accordingly, on 12 November 2021, instructed management to award the contracts to Steinmüller and Actom in the stated proportions. Proceedings in the high court [22] It seems that Babcock’s initial reaction upon realising that it had failed to submit the certificate was one of bewilderment. In its founding affidavit it asserted that it had 9 not been established for certain that it had failed to submit the certificate and that the omission could only be confirmed once the rule 53 record came to hand. It also asserted that Eskom could easily have established through an internet search or from the regulatory agency which issues such certificates whether it held such a certificate. [23] Babcock asserted, in the alternative, that Eskom was in any event in possession of the ISO certificates that it had previously submitted and thus knew that Babcock had been duly certified. It contended that despite its failure to comply with that mandatory requirement, Eskom was required to consider whether it had complied with the RFP requirements ‘viewed in the light of their purpose’. According to Babcock, that purpose was ‘to ensure that a bidder has the necessary qualifications to perform welding services of the sort required by Eskom’. [24] The high court found that the argument by Eskom that the terms ‘certificate’ and ‘certification’ are to be read as synonyms and interchangeably was without merit. The court reasoned that to do so would be ‘redundant, irrational and out of place with the formulation of the RFP and its purpose’, because other mandatory returnables refer specifically to the submission of a certificate. The high court thus upheld Babcock’s interpretation of item 3.2, namely, that bidders were not required to submit a certificate but merely to state that they have ISO 3834 certification. [25] Babcock also contended that Eskom committed an irregularity by awarding the tender to more than one bidder without applying objective criteria in terms of s 2(1)(f) of the PPPFA. Although the high court found it unnecessary to decide this review ground, it commented that it was not open to Babcock ‘to engage in a tender process well knowing the tender was going to be split, and to then after its disqualification, for other reasons, attempt to review the award on this basis’. Submissions on appeal [26] Before us, counsel for Eskom submitted that the RFP was unambiguous in its directive that bidders were required to submit an ISO 3834 certificate and that failure to comply would result in disqualification from the evaluation stage of the tender. Apart from the fact that item 3.2 of the RFP, properly construed, required bidders to file a 10 certificate and not merely to state that they had ISO certification, further clarification was provided at the subsequent tender clarification meeting. [27] Counsel for Eskom further argued that the purpose of the condition was to ensure that bidders had the requisite skills and experience to perform the highly specialised services required by Eskom and that they are treated fairly and equally. In the circumstances a mere statement by a bidder that it had ISO certification could not constitute either actual or substantial compliance with the conditions. The tender conditions did not allow Eskom any discretion to condone non-compliance. [28] Regarding the splitting of the tenders, counsel argued that Eskom had stated upfront that it intended to award contracts to more than one bidder. All the bidders, including Babcock, understood and accepted that the contract would be split between ‘at least three bidders’ and that there were compelling reasons for that strategy. The contracts were awarded to Steinmüller and Actom on a rational basis that accorded with the tender conditions and the provisions of the PPPFA. [29] Counsel for Steinmüller supported Eskom’s submissions and argued that Babcock was aware that the submission of an ISO 3834 certificate was a mandatory requirement. Babcock had only disputed the need to submit the certificate after receipt of the rule 53 record, which confirmed that it did not submit the certificate. According to Steinmuller, the certificate was manifestly crucial to enable Eskom to assess the disparate bidders’ welding qualifications. Counsel also argued that the splitting of the tender was done properly in terms of s 2(1)(f) of the PPPFA since Eskom had stipulated the applicable objective criteria upfront and had duly applied them to the splitting of the tender. [30] Counsel for Babcock, although defending the high court’s finding in respect of its disqualification, understandably did not support the finding that item 3.2 of the RFP was ambiguous. He submitted that the RFP, properly construed, did not require Babcock to submit a certificate but merely to confirm that it had ‘[c]ertification to ISO 3834’. Babcock’s statement in its tender documents that it is ‘certified in terms of ISO 3834 since 2013/2014’ therefore constituted proper compliance with the mandatory requirements of the RFP. 11 [31] He argued that the drafters of the RFP used the terms ‘certificate’ and ‘certification’ in different contexts, and where bidders were required to submit a certificate, it stated so in those terms. In this regard, he pointed to the fact that item 3 of the RFP refers to two mandatory returnables for evaluation, namely, item 3.1, which requires a tenderer to have relevant experience and item 3.2, which refers to the ISO certification. In his submission, item 3.1 manifestly does not envisage the submission of a document but merely requires confirmation that the tenderer has the relevant experience. Thus, read as a whole, item 3 requires tenderers to demonstrate that they have a particular level of experience, skills, or qualifications, rather than the provision of a particular document. In addition, under the title ‘mandatory returnables for quality’, tenderers were required to submit ‘a valid ISO Certificate of Quality Management System (QMS), by a recognised national and/or international accreditation certification company’. This provision, counsel argued, constitutes further proof that the RFP meant different things when referring to a ‘certificate’ as opposed to ‘certification’. [32] Moreover, so he submitted, the purpose of item 3 of the RFP was to ensure that tenderers had the necessary level of skills and qualification to perform the highly specialised services required by Eskom. According to him, Babcock had demonstrated that it had complied with both requirements by submitting a letter stating that it had the requisite experience and that it had been certified in terms of ISO 3834 since 2013/2014. In any event, Eskom could also have called on Babcock to provide further proof of certification, even though it had known that Babcock was in possession of the ISO certificate since it had provided Eskom with such certificates in the past, when it previously tendered for work. [33] Counsel for Babcock further argued that statements in Babcock’s founding affidavit to the effect that it had omitted the certificate in error and references to attempts to cure the defect, do not take the matter any further. He argued that those statements do not constitute admissible evidence of how the parties had construed the term ‘certification’ since they were made by ‘a non-lawyer’ and, at best for Eskom, constituted a non-binding legal concession. And regarding the clarification provided at the ‘tender clarification meeting’, he argued that the argument was misplaced because 12 that meeting was not a compulsory tender briefing meeting and Eskom was therefore not entitled to amend the written requirements stipulated in the RFP. [34] The appeal thus raises the following issues: (a) Whether Babcock was properly disqualified at the evaluation stage of the tender; and (b) Whether the decision to split the award between Actom and Steinmüller was lawful. These issues must be considered in the context of s 217 of the Constitution, which enjoins organs of state to procure goods and services in a transparent, fair, equitable, competitive, and cost-effective manner, and in terms of the principles underpinning the PPPFA. Was Babcock properly disqualified? [35] In my view, the high court’s finding that item 3.2 of the RFP was ambiguous is unsustainable. At the tender clarification meeting, bidders were informed in no uncertain terms that: (a) the mandatory returnable mentioned in item 3.2 of the RFP referred to an ‘ISO 3834 certificate’, (b) they were required to submit the certificate before the deadline; and (c) failure to do so would result in disqualification from the evaluation phase. Whatever misconceptions bidders may have had regarding the meaning of the phrase ‘Certification to ISO 3834’, had therefore been firmly dispelled at that meeting. Babcock attended the meeting and could therefore not reasonably have been under the impression that a mere statement that it had ISO 3834 certification would constitute compliance with that mandatory requirement. [36] To authenticate or corroborate that Babcock also understood that only submission of the certificate would suffice is evident from its reaction to the letter from Eskom advising it about its failure to include the certificate in its tender documents. It stated in its founding affidavit that ‘copies of its current ISO 3834 certificates may have been excluded in error from the bid documents to Eskom’ and repeatedly attempted to submit the certificate after the tender closing date. This reaction was hardly surprising since it would have been difficult for Babcock to contend that item 3.2 of the RFP was ambiguous in the light of the clarification provided at the tender clarification meeting. 13 [37] There can therefore be little doubt that item 3.2 required bidders to submit an ISO 3834 certificate and that a mere statement that they had ‘ISO 3834 certification’ did not constitute compliance with that condition. The RFP and related documents clearly stated that failure to comply with that condition would result in disqualification from the evaluation stage and that Eskom did not have any discretion to condone non-compliance. [38] However, Babcock’s counsel had another string to his bow. He raised an alternative argument that, in deciding whether Babcock had complied with the requirements of item 3.2, Eskom was obliged to have regard to the purpose of the requirement. For that submission, he relied on the following dictum in Allpay Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer of the South African Social Security Agency and Others (Allpay):1 ‘Assessing the materiality of compliance with legal requirements in our administrative law is, fortunately, an exercise unencumbered by excessive formality. It was not always so. Formal distinctions were drawn between “mandatory” or “peremptory” provisions on the one hand and “directory” ones on the other, the former needing strict compliance on pain of non-validity, and the latter only substantial compliance or even non-compliance. That strict mechanical approach has been discarded. Although a number of factors need to be considered in this kind of enquiry, the central element is to link the question of compliance to the purpose of the provision. In this Court O’Regan J succinctly put the question in ACDP v Electoral Commission as being “whether what the applicant did constituted compliance with the statutory provisions viewed in the light of their purpose”. This is not the same as asking whether compliance with the provisions will lead to a different result.’2 [39] Counsel for Babcock submitted that if Eskom had adopted this approach, as it was by law required to do, it would have concluded that Babcock had complied with the mandatory requirement since: (a) the purpose of the requirement was to ensure that bidders have the necessary qualifications and skills to perform the complex welding required by Eskom; (b) Babcock in fact had those qualifications; (c) Babcock had been performing services for Eskom under a previous contract since 2018 and 1 Allpay Consolidated Investment Holdings (Pty) Ltd v Chief Executive Officer of the South African Social Security Agency and Others [2013] ZACC 42; 2014 (1) SA 604 (CC); 2014 (1) BCLR 1 (CC). 2 Ibid para 30. 14 Eskom had known that Babcock had been issued with an ISO 3834 certificate; and (e) Babcock’s failure to submit the certificate did not cause Eskom any prejudice. [40] In Allpay, the RFP stipulated that bidders could submit proposals in respect of one or more provinces, but that the bids for each province had to be submitted separately. The South African Social Security Agency had reserved the right to disqualify any bidder who failed to submit all mandatory documents specified in the RFP. One of the bidders, Cash Paymaster Services, submitted bids for all nine provinces but did not submit separate sets of documents in respect of each province. In that regard the Constitutional Court was required to consider whether the non-compliance was material since the review ground was based on s 6(2)(b) of PAJA, namely ‘that a mandatory and material procedure or condition prescribed by an empowering condition was not complied with’. In considering whether the irregularity was material, the Court found that: ‘What one is left with is non-compliance with what the Request for Proposals regarded as mandatory. This means that a mandatory condition prescribed by an empowering provision was not complied with, which is a ground for review under section 6(2)(b) of PAJA. But the sub-section also requires that the non-compliance must be of a material nature. The purpose of separate bids for the provinces was surely to enable SASSA to assess whether the bidder would be able to provide the necessary services in each of the provinces for which it bid. This purpose was attained. The irregularity was not material. No ground for review under PAJA exists.’3 [41] In considering the contentions advanced on behalf of Babcock it will be instructive at this stage to reflect on the approach adopted by this Court regarding the condonation of non-compliance with peremptory tender requirements. In Millennium Waste Management (Pty) Ltd. v Chairperson of the Tender Board: Limpopo Province and Others4, the applicant’s bid was disqualified because it had failed to sign a compulsory declaration of interest form. Having found that the applicable regulation empowered the tender board to accept tenders even if they fail to comply with tender requirements, this Court held that condonation of the applicant’s failure to sign ‘would 3 Ibid para 62. 4 Millennium Waste Management (Pty) Ltd. v Chairperson of the Tender Board: Limpopo Province and Others (31/2007) [2007] ZASCA 165; [2007] SCA 165 (RSA); [2008] 2 All SA 145; 2008 (2) SA 481; 2008 (5) BCLR 508; 2008 (2) SA 481 (SCA). 15 have served the public interest as it would have facilitated competition among the tenderers.’ The Court found further that by condoning the failure ‘the tender committee would have promoted the values of fairness, competitiveness and cost-effectiveness which are listed in s 217 of the Constitution’ because the applicant’s price was significantly cheaper than that of the successful tenderer. A factor that also appears to have weighed heavily with the court was the fact that the applicant had duly completed the declaration form and had initialled both pages but had ‘innocently’ omitted to sign the document. The non-compliance was therefore not material, and having regard to the purpose of the document, the Court found that the tender committee acted unreasonably in disqualifying the applicant. [42] In WDR Earthmoving Enterprises and Another v Joe Gqabi District Municipality and Others5 this Court was required to consider whether failure to furnish the requisite audited annual financial statements constituted a material deviation from the requirements of the Tender Data and Standard Conditions of Tender. Tenderers were required to submit annual financial statements for the last three years and the applicant had filed only two sets of financial statements and an interim account. The court found that in terms of a peremptory tender provision, a failure by the tenderer to submit any one of the compulsory documents would result in the tender offer being regarded as non-responsive. The Court distinguished Allpay on the following basis: ‘In addition, the dictum in Allpay at para 28, that in determining whether a ground of review exists under the PAJA, the materiality of any deviance from legal requirements must be assessed by linking the question of compliance to the purpose of the provision, is distinguishable on the facts of this case, where a peremptory provision is in issue. In any event the purpose of the provision is to provide independent audited verification for three years, in order to provide assurance as to the financial viability and ability to perform the contract.’6 [43] Similarly, in Overstrand Municipality v Water and Sanitation Services South Africa (Pty) Ltd7 (Overstrand Municipality) this Court, in considering the issue of substantial compliance with a mandatory tender requirement, cautioned that: 5 WDR Earthmoving Enterprises and Another v Joe Gqabi District Municipality and Others (392/2017) [2018] ZASCA 72 (30 May 2018). 6 Ibid para 40. 7 Overstrand Municipality v Water and Sanitation Services South Africa (Pty) Ltd [2018] ZASCA 50; [2018] 2 All SA 644 (SCA). 16 ‘One should also guard against invalidating a tender that contains minor deviations that do not materially alter or depart from the characteristics, terms, conditions and other requirements set out in tender documents. In the present case the non-compliance is not of a trivial or minor nature. The tender by Veolia was not an ‘acceptable’ one in terms of the Procurement Act, in that it did not ‘in all respects’ comply with the specifications and conditions set out in the RFP. Thus, the challenge in terms of s 6(2)(b) of PAJA, namely that a “mandatory and material procedure or condition prescribed by an empowering provision, was not complied with”.’8 [44] The materiality of Babcock’s non-compliance with the compulsory tender requirements thus ‘depends on the extent to which the purpose of the requirements is attained.’9 It is necessary, however, to stress that this dictum should not be construed as in any manner detracting from the fundamental importance of holding bidders to peremptory and material tender conditions in order to achieve the constitutionally enjoined ideal of fair, equitable, transparent, competitive and cost-effective public procurement. On the contrary, the Constitutional Court cautioned that ‘deviations from fair process may themselves all too often be symptoms of corruption or malfeasance in the process’ and said that the purpose of insistence on compliance with prescribed formalities is threefold, namely: ‘(a) it ensures fairness to participants in the bid process; enhances the likelihood efficiency and optimality in the outcome; and serves as a guardian against a process skewed by corrupt influences.’10 [45] In my view, the facts of this matter are distinguishable from those in Allpay and Millenium Waste. In Allpay, the disqualified bidder had submitted tenders in respect of all the provinces but had merely omitted to file them separately, as was required in terms of the compulsory tender conditions. And in Millenium Waste the aggrieved tenderer had duly completed and initialled the compulsory declaration of interest form but had inadvertently omitted to sign it. Those instances of non-compliance were thus manifestly of the ‘trivial or minor’ kind referred to in Overstrand Municipality and they were understandably declared to be so. In contradistinction, the mandatory returnables specified in item 3 of the RFP, namely, proof of the relevant experience and submission of an ISO 3834 certificate, were manifestly material and probably two 8 Ibid para 50. 9 Allpay fn 4 supra para 22. 10 Ibid para 27. 17 of the most important tender conditions. As mentioned, the ISO certificate was required to satisfy Eskom that a bidder had the necessary resources and skills to provide welding services to the required standard. It is also common cause that an ISO certificate is only valid for a specified period. It was thus crucial that Eskom had to be furnished with a valid and current certificate, instead of a mere statement by a bidder that it had ISO 3834 certification. This requirement was pertinently and repeatedly stated to be mandatory and bidders were warned that non-compliance would result in disqualification. The condition was also intended to ensure consistency and fairness in the evaluation and award of tenders. Compliance with the tender conditions was legally required and could not simply be disregarded at whim.11 [46] In addition, it is common cause that at least two other bidders were disqualified because they also failed to submit ISO 3834 certificates. Babcock contends that it should have been treated differently because it was an incumbent contractor and had previously submitted ISO 3834 certificates to Eskom. Such an approach would have resulted in unfair treatment of bidders and there can be little doubt that it would not withstand judicial scrutiny. [47] In conclusion then, I find that: (a) the RFP required bidders to submit an ISO 3834 certificate instead of merely stating that they had ISO 3834 certification; (b) this was a compulsory and material term of the tender conditions; (c) Eskom did not have a discretion to condone non-compliance with the condition; and (e) having regard to the purpose of the condition, the mere statement by a bidder that it had ISO 3834 certification did not constitute either actual or substantial compliance with the condition. It follows that Babcock’s disqualification was lawful. [48] Then what remains for consideration is the issue relating to the lawfulness of Eskom’s decision to split the award between Actom and Steinmüller. Counsel for the appellants correctly conceded that the finding in their favour regarding the lawfulness 11 See Allpay para 40, where the Constitutional Court said that: ‘Compliance with the requirements for a valid tender process, issued in accordance with the constitutional and legislative procurement framework, is thus legally required. These requirements are not merely internal prescripts that SASSA may disregard at whim. To hold otherwise would undermine the demands of equal treatment, transparency and efficiency under the Constitution.’ 18 of Babcock’s disqualification, did not preclude the latter from raising the aforementioned issue. The decision to split the tender award [49] Babcock contended that Eskom’s decision to split the tender was irregular and inimical to the provisions of s 2(1)(f) of the PPPFA. According to Babcock, Eskom has made no attempt to show that it had regard to objective criteria in deciding to split the award and had in fact not applied any objective criteria because, on its interpretation, the section did not require it to have regard to such criteria. [50] Babcock argued further that Eskom’s assertion that it had split the award ‘to mitigate the risk of over-reliance on a single tenderer’ means that it had regard to criteria which were not stipulated in the RFP. It was contended by Babcock that Eskom’s concession in its answering affidavit that the RFP did not set out principles applicable to the allocation of contracts between preferred bidders is thus fatal to its case. [51] Counsel for Eskom argued that, properly construed, s 2(1)(f) of the PPPFA permits an organ of state to depart from the ordinary rule that a tender should be awarded to the highest scoring bidder, and, in exceptional cases where objective criteria so dictate, award the tender to another lower scoring bidder. In this case Eskom’s upfront strategy was to award the tender to more than one bidder in order to mitigate the risk of entrusting all its power stations to one bidder. Eskom was thus entitled to award contracts to both Actom and Steinmüller without invoking objective criteria within the meaning of s 2(1)(f). He submitted, in the alternative, that even if Eskom’s strategy qualified as objective criteria, there was no need to ‘brand’ it as such since it had been made clear to bidders that the tender would be awarded to more than one bidder and the criteria on which that would be done were also stipulated upfront. [52] Counsel for Steinmüller supported Eskom’s alternative argument and submitted that the rule 53 record clearly shows that Eskom had stipulated objective criteria upfront and that the awards to Actom and Steinmüller were made in accordance with those criteria. He submitted further that it is therefore unnecessary for the Court to 19 pronounce on the disparate contentions regarding the proper interpretation of s 2(1)(f) of the PPPFA because Eskom’s decision to split the tender manifestly passes muster on either construction. [53] In considering the soundness of Steinmüller’s submission, I shall assume on behalf of Babcock that s 2(1)(f) was applicable in this instance. However, for reasons which I explain below, Babcock does not come home on this score either. As I have demonstrated above, the RFP clearly stated that Eskom intended to split the award between bidders. It is common cause that all the bidders, including Babcock, were aware of this strategy. It is also not in dispute that there were compelling considerations which caused Eskom to adopt that strategy. Eskom was understandably concerned about the dangers of limiting the award to one service provider, with the attendant risk if that service provider becomes incapacitated for some reason. The fifteen power stations that formed the subject of the bidding process generate the bulk of the country’s electricity and the justified objective was therefore that Eskom should be able to rely on an alternative service provider in such an event. [54] The tender conditions provided the regulatory framework for the achievement of that objective in unambiguous terms. In this regard item 3.19 of the RFP stipulated the following objective criteria: ‘The following objective criteria apply:  SHEQ [Safety, Health, Environment and Quality] requirements  SD & L [Supplier Development and Localisation]  Financial Analysis  Please note:-  “Eskom reserves the right to award the tender to a supplier who may not be the highest scoring/highest ranked tenderer, in line with Section (2)(1)(f) of the PPPFA; subject to the right to negotiate on the objective criteria with the three highest ranked tenderers respectively before award is made.  Tenders will not be disqualified if they do not comply with the objective criteria  Functionality and any element of the B-BBEE scorecard may not be used as objective criteria.’ 20 [55] The document prepared by Eskom’s Chief Procurement Officer and titled ‘NEGOTIATION STATEGY’, reflects that the tenders were evaluated in accordance with the stated objective criteria. Under the heading: ‘Stage 5: Objective Criteria’, the following is stated: ‘The objective criteria applied consisted of (a) SHEQ, (b) Supplier Development and Localisation (SD&L) and (c) Financial Analysis.’ [56] The evaluation of the bids based on SHEQ, SD&L and financial considerations, resulted in the following findings: (a) Actom was the only bidder who did not meet the SHEQ criteria and Eskom allowed it an opportunity to address the shortcomings; (b) a target of 240 candidates for skills development would be negotiated with both Steinmüller and Actom; and (c) both Steinmüller and Actom were found to be financially sound for awards in the stated amounts (actual amounts were redacted). [57] Following that exercise, Eskom negotiated with Steinmüller and Actom to ensure that their prices were market-related. There was nothing irregular about that process since the RFP clearly stated that Eskom reserved the right to negotiate with preferred bidders. They were thereafter awarded contracts in the mentioned proportions. [58] Thus, even on Babcock’s construction of s 2(1)(f) of the PPPFA, the decision to split the tender between Actom and Steinmüller was rational, lawful, and based on objective criteria stated in the RFP, namely SHEQ, SD&L and financial considerations. The contracts were therefore properly awarded in compliance with the provisions of s 217 of the Constitution and the principles underpinning the PPPFA. This review ground must therefore also fail. In my view there is no reason why costs, both in the high court and on appeal, should not follow the result. Order [59] In the result I make the following order: 1. The appeal is upheld with costs, including the costs of two counsel, where so employed. 2. The order of the high court is set aside and substituted with the following: ‘(a) The application is dismissed. 21 (b) The applicant is ordered to pay the respondents’ costs of the application including the costs of two counsel, where so employed.’ J E SMITH ACTING JUDGE OF APPEAL 22 Appearances: For the First Appellant AE Franklin SC with P Smith Instructed by Cheadle Thompson & Haysom Inc, Johannesburg McIntyre Van der Post, Bloemfontein For the Second Appellant J Babamia SC with KD Iles Instructed by Pinsent Masons South Africa Inc, Johannesburg Lovius Block, Bloemfontein For the Third Appellant AC Botha SC with H Martin Instructed by Werksmans Attorneys, Johannesburg Webbers Attorneys, Bloemfontein. For the Respondent A Cockrell SC with A Friedman Instructed by Bowman Gilfillan, Pretoria Honey Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 29 April 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 Eskom Holdings SOC Limited v Babcock Ntuthuko Engineering (137/2023, 156/2023 and 148/2023) [2024] ZASCA 63 (29 April 2024) _________________________________________________________________________________ Today, the Supreme Court of Appeal (SCA) upheld an appeal against a judgment of the Gauteng Division of the High Court, Pretoria (the high court), which amongst others, reviewed and set aside the decision taken by Eskom Holdings Soc Limited (Eskom) to award contracts for outage maintenance at 15 of its coal-fired power stations to Actom (Pty) Ltd (Actom) and Steinmüller Africa (Pty) Ltd (Steinmüller). On 6 August 2018, Eskom published a Request for Proposals (RFP) inviting tenders for maintenance and outage repair services at 15 of its coal-fired power stations. The respondent, Babcock Ntuthuko Engineering (Pty) Ltd (Babcock), submitted its proposal by the extended deadline, namely 24 October 2018, but was disqualified because it failed to submit a current ISO 3834 certificate (the ISO certificate). That certificate verified that a company had the requisite resources, systems, and personnel to weld to a required quality and standard. The RFP listed ‘Certification to ISO 3834’ as a ‘mandatory returnable for evaluation’ and specified that failure to comply with that condition would result in disqualification at the tender evaluation stage. On 7 October 2021, Eskom awarded the tender jointly to Actom and Steinmüller. Actom was appointed to render maintenance and outage services at seven of the 15 power stations and Steinmüller at eight. Babcock challenged those awards in the high court, contending that the decisions to disqualify it at the evaluation stage and to split the tender award between Actom and Steinmüller were irrational, unlawful, and invalid. On 17 November 2022, the high court (per Millar J) delivered its judgment upholding Babcock’s contentions in respect of its disqualification. It found that Babcock’s interpretation of the tender condition was to be preferred, namely that the condition did not require the submission of an ISO 3834 certificate but merely a statement by bidders that they had one. The high court found, additionally, that the requirement regarding the ISO ‘Certification’ was ambiguous and Eskom was thus obligated to allow disqualified bidders to comply by submitting the certificate after the deadline. Its failure to do so rendered Babcock’s disqualification procedurally unfair in terms of s 6(2)(e) of the Promotion of 2 Administrative Justice Act 3 of 2000. The high court consequently reviewed and set aside the tender awards. It further declared the contracts concluded pursuant thereto unlawful and ordered Eskom to conduct a fresh tender process within stipulated time frames. The high court, however, suspended the order declaring the contracts entered into between Eskom, Actom and Steinmüller, invalid, subject to compliance with its directives regarding the finalisation of the fresh tender process. Eskom, Actom and Steinmüller appealed against the high court’s judgment with the leave of that court. The appeal before the SCA raised the following issues: (a) whether Babcock was properly disqualified from the evaluation stage of the tender; and (b) whether the decision to split the award between Actom and Steinmüller was lawful. The SCA found that item 3.2 of the RFP was unambiguous and required bidders to submit an ISO 3834 certificate since at the tender clarification meeting bidders were informed that they were required to submit ISO 3834 certificates before the deadline and that failure to do so would result in disqualification from the evaluation phase. The Court further found that a mere statement that they had ‘ISO 3834 Certification’ did not constitute compliance with that condition. Babcock attended the meeting and could therefore not reasonably have been under the impression that a mere statement that it had ISO 3834 certification would constitute compliance with that mandatory requirement. The SCA also dismissed Babcock’s alternative argument, namely that having regard to the purpose of the requirement, Babcock’s non-compliance was not material and Eskom should therefore have allowed it to submit the certificate after the tender closure date. The Court found that the purpose of the condition was to satisfy Eskom that a bidder had the necessary resources and skills to provide welding services to the required standard. The condition was thus crucial and material in the context of the services sought to be procured. The SCA also found that Babcock’s second review ground, namely that Eskom’s decision to split the tender was irregular and inimical to the provisions of section 2(1)(f) of the Preferential Procurement Policy Framework Act 5 of 2000 (PPPFA), was without merit. That section provided that a tender must be awarded to the highest scoring tenderer unless objective criteria justify the award to another tenderer. The Court found that Eskom had stated upfront that it intended to split the tender in order to minimise the risk of a service provider becoming incapacitated for some reason. Eskom had also stipulated objective criteria relating to safety, health and financial considerations and had evaluated and awarded the contracts to Actom and Steinmüller in terms of those criteria. The SCA found that the contracts were therefore properly awarded in compliance with the provisions of section 217 of the Constitution and the principles underpinning the PPPFA. The SCA accordingly upheld the appeal with costs, including the costs of two counsel. It also set aside the order of the high court and substituted it with an order dismissing the application with costs. ~~~~ends~~~~

4316

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 547/2022 In the matter between: MINISTER OF POLICE APPELLANT and MABHASO NONTSELE RESPONDENT Neutral citation: Minister of Police v Nontsele (547/2022) [2024] ZASCA 137 (11 October 2024) Coram: DAMBUZA, MAKGOKA and MABINDLA-BOQWANA JJA and TOLMAY and SMITH AJJA Heard: 24 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 11 Octobert2024. 2 Summary: Appeals – whether the court may consider a cross-appeal in the absence of an application for leave to cross-appeal. Delict – damages for malicious detention – onus on the plaintiff to prove that deprivation of liberty was without probable cause and was amino iniuriandi – no evidence led to prove absence of reasonable and probable cause and intention to injure. Unlawful detention – police withholding report of negative DNA results in bail application proceedings – withholding of negative DNA test result would not, on its own, justify release of rape accused on bail in this case. 3 ORDER On special leave to appeal from: Eastern Cape Division of the High Court, Mthatha (Majiki J, sitting as court of first instance): 1 The cross-appeal is struck from the roll with costs. 2 The appeal is upheld with costs. 3 The order of the high court is set aside and replaced with the following: ‘The plaintiff’s claim is dismissed with costs.’ JUDGMENT Tolmay AJA (Smith AJA concurring): Introduction [1] The respondent, Mr Mabhaso Nontsele (Mr Nontsele) instituted action against the appellant, the Minister of Police, (the Minister) and the National Director of Public Prosecutions (the NDPP) for wrongful arrest, detention and malicious prosecution in the Eastern Cape Division of the High Court, Mthatha (the high court). Mr Nontsele was arrested on 8 December 2013 and detained until 19 May 2015, a period of 527 days. He was arrested by Sergeant Portia Badikazi Njotini (Sgt Njotini), who at the time was a constable in the South African Police Service and the investigating officer. He was arrested with a certain Mr Kanono Jackson Mdike (Mr Mdike) and Mr Kwanda Kaba (Mr Kaba) for the rape of Ms Khanyisa Sogiba (the complainant) at a traditional ceremony that took place on 6 December 2013. At the trial, held on 15 July 2015 he was acquitted in terms of s 174 of the Criminal Procedure Act 51 of 1977 (the CPA). The State conceded that there was no prima facie evidence against him, after the evidence of the State witnesses was led. 4 [2] Mr Nontsele then sued the Minister and the NDPP for damages due to his alleged unlawful arrest, detention and malicious prosecution. He was partially successful in the high court. The court found that he had failed to prove both claims of unlawful arrest or malicious prosecution. The high court however found his detention to have been unlawful from the date of refusal of bail to date of his release. It awarded damages in the amount of R1.6 million.1 [3] The Minister applied for leave to appeal which was refused by the high court but granted by this Court on petition to it. Mr Nontsele did not seek leave to cross-appeal, either from the high court or this Court. He, however, filed a Notice of Cross-Appeal on 27 August 2022. The purported cross-appeal is against the high court’s findings that neither unlawful arrest nor malicious prosecution had been proven by the respondent. [4] It is convenient to first dispose of the issue whether a cross-appeal can be entertained in the absence of leave to appeal having been granted. Second, whether the high court was correct in finding that Mr Nontsele was wrongfully detained from the date of the refusal of bail to the date of his release, i e from 6 February 2014 to 19 May 2015. The purported cross-appeal [5] Section 16(1) of the Superior Courts Act 10 of 2013 (the Superior Courts Act) reads as follows: ‘16 Appeals generally (1) Subject to section 15(1), the Constitution and any other law- 1 Nontsele v Minister of Police and Another [2021] ZAECMHC 29 paras 56 and 76. 5 (a) an appeal against any decision of a Division as a court of first instance lies, upon leave having been granted – (i) if the court consisted of a single judge, either to the Supreme Court of Appeal or to a full court of that Division, depending on the direction issued in terms of section 17(6); or (ii) if the court consisted of more than one judge, to the Supreme Court of Appeal; (b) an appeal against any decision of a Division on appeal to it, lies to the Supreme Court of Appeal upon special leave having been granted by the Supreme Court of Appeal; and (c) an appeal against any decision of a court of a status similar to the High Court, lies to the Supreme Court of Appeal upon leave having been granted by that court or the Supreme Court of Appeal, and the provisions of section 17 apply with the changes required by the context.’ Section 17(2)(a) of the Superior Courts Act reads as follows: ‘(2) (a) Leave to appeal may be granted by the judge or judges against whose decision an appeal is to be made or, if not readily available, by any other judge or judges of the same court or Division.’ [6] It is clear from these provisions that an application for leave to appeal is anticipated prior to an appeal. Mr Nontsele relied on s 19(d) of the Superior Courts Act and argued that this Court may condone the failure to first seek leave to appeal. This section provides that this Court or a Division exercising appeal jurisdiction may, in addition to any other power, inter alia, amend or set aside the decision which is the subject of the appeal and ‘render any decision which the circumstances may require’. Condonation was sought on behalf of Mr Nontsele for the failure to seek leave to appeal. The reason given was that it was done to avoid incurring further costs. [7] Counsel for Mr Nontsele in support of the argument that this Court could entertain the cross-appeal, relied on Octagon Chartered Accountants v The 6 Additional Magistrate, Johannesburg, and Others (Octagon).2 In that matter the plaintiff brought actions against five defendants in the magistrates’ court for the recovery of accounting and auditing fees, each amount fell within the monetary jurisdiction of the magistrates’ court. The defendants however each instituted a counterclaim for an amount of more than the monetary jurisdiction of the magistrates’ court. The magistrate, on application by the defendants, moved the claims and counterclaims to the high court. The plaintiff challenged the removal of the proceedings to the high court in review proceedings. The high court found that the magistrate was not empowered to remove the actions, inter alia, because the claims did not exceed the jurisdiction of the magistrates’ court. The high court there ordered a stay of the action and removed the counterclaim to the Gauteng Division of the High Court, Johannesburg. [8] The plaintiff appealed to the full court, only against the decision of the high court to allow the removal of the counterclaims to the Gauteng Division of the High Court, Johannesburg. The full court found that, even though the plaintiff had only appealed a part of the order, the failure to cross-appeal the whole order left the parties in an untenable situation.3 It found that it was empowered to vary the order of the high court and moved both claims and counterclaims to the high court. The full court relied on s 19(d) of the Superior Courts Act to justify its order. [9] Octagon was clearly distinguishable from the matter before us. Although the high court, in the present matter, may theoretically have been wrong in finding that 2 Octagon Chartered Accountants v The Additional Magistrate, Johannesburg, and Others 2018 (4) SA 498 (GJ). 3 Ibid para 19 reads as follows: ‘The dismissal of the appeal leaves the parties in a wholly impractical and untenable position. The actions (claims and counterclaims) in the magistrates’ court have been stayed. The counterclaims have been removed to this court, where they are counterclaims in a vacuum, without claims to which they are counterclaims. That position is as a result of the defendants having elected not to cross-appeal.’ 7 no case was made out for wrongful arrest or malicious prosecution, the order did not leave Mr Nontsele in an untenable situation. The remedy of an application for leave to appeal was available. [10] In Newlands Surgical Clinic (Pty) Ltd v Peninsula Eye Clinic (Pty) Ltd,4 it was expressed as follows: ‘Since the decision in Moch, the statutory basis for this court’s jurisdiction has been superseded by the Superior Courts Act 10 of 2013. It is now to be found in s 16(1)(a) of that Act, which provides that an appeal against a decision of the high court as a court of first instance lies “upon leave having been granted . . . either to the Supreme Court of Appeal or to a full court of that Division. . .”. Leave to appeal therefore constitutes what has become known, particularly in administrative law parlance, as a jurisdictional fact. Without the required leave, this court simply has no jurisdiction to entertain the dispute. Section 17 of the Superior Courts Act then proceeds to govern the ways in which the required leave can be obtained. In essence, s 17(2) provides that it may be granted by the court of first instance and, if refused, it may be granted on application to this court.’5 [11] An application for leave to appeal is required. Although not a determining factor, seeking leave to cross-appeal, could not have led to a significant increase in costs, considering that it would have been heard simultaneously with the Minister’s application for leave to appeal. Without such an application, this Court does not have the jurisdiction to entertain the cross-appeal. [12] Reliance was placed on Ex Parte Gaone Jack Siamisang Montshiwa,6 which was an application by Mr Montshiwa to be admitted as a legal practitioner, the 4 Newlands Surgical Clinic (Pty) Ltd v Peninsula Eye Clinic (Pty) Ltd [2015] ZASCA 25; 2015 (4) SA 34 (SCA); [2015] 2 All SA 322 (SCA) (Newlands Surgical Clinic). See also DRD Gold Limited and Another v Nkala and Others [2023] ZASCA 9; 2023 (3) SA 461 (SCA) para 18. 5 Newlands Surgical Clinic para 13. 6 Ex Parte Gaone Jack Siamisang Montshiwa [2023] ZASCA 19; 2023 JDR 0647 (SCA). 8 application was refused by two judges sitting as the court of first instance. Mr Monsthiwa applied for leave to appeal and this was heard by a single judge and dismissed. The dismissal of the application for leave to appeal led to a petition to this Court. The application for leave to appeal was referred for oral argument in terms of s 17(2)(d) of the Superior Courts Act. The majority found that the applicant need not be sent back to the high court to bring a fresh application for leave to appeal and heard the application for leave to appeal and dismissed it. That matter is distinguishable from the matter before us. In this instance there is no application for leave to appeal before us. [13] The approach to the Court’s power and the applicable limitations of such power was explained as: ‘. . . [T]he court’s reservoir of power to regulate its process and procedure in the interest of proper administration [of justice] may not be used . . . to appropriate to itself jurisdiction that is not conferred to it by statute or where a statute grants exclusive jurisdiction to another court’.7 The result simply is that the condonation sought cannot be granted and the cross-appeal cannot be considered in the absence of an application for leave to appeal. The detention [14] The only remaining issue to be determined is whether Mr Nontsele’s detention was unlawful and, if it was, from which date. Since the amount of damages awarded was not disputed, nothing needs to be said about the quantum. [15] Mr Nontsele was arrested on 8 December 2013 and remained in custody in the police cells from that date until 19 May 2015. He was re-arrested by Sgt Njotini the following day and brought to court where he appeared and was warned to appear 7 Ibid para 27. 9 on 15 July 2015. He was released on the same day and the trial ultimately took place on 15 July 2015 when he was discharged in terms of s 174 of the CPA. [16] Mr Nontsele appeared in court for the first time on 3 February 2014, following his arrest on 8 December 2013, when a bail application was brought by his legal representative. Sgt Njotini, as the investigating officer was not present at court. The magistrate inquired about her absence. The matter was rolled over to the next day to ensure her presence at court. On 4 February 2014 the prosecutor, Ms Siphokazi Maarman (Ms Maarman) informed the magistrate that the ‘investigating officer’ was present and swore in a police officer, Mr Badboy Xolani, who testified but turned out to have absolutely no knowledge of the case before court. The court then insisted that a subpoena for the Commander of the Family and Domestic Violence Unit needs to be prepared. Only at this stage did it transpire that Sgt Njotini was not available as she was attending a course. The matter was again adjourned to 6 February 2014. The record contains no transcript as to what occurred on 6 February 2014. The transcript of the proceedings in the magistrates’ court resumes when the trial in the criminal proceedings was concluded on 15 July 2015. [17] During the trial of the present matter before the high court, (the civil trial) it was confirmed that the bail proceedings were concluded on 6 February 2014. Seeing that the evidence led during the civil trial was available we were able to proceed with the appeal and the parties did not take issue with this defect in the record before us. The evidence led during the civil trial dealt with the bail proceedings and therefore the missing part of the record of the bail proceedings was not fatal to a proper determination of the appeal.8 8 Schoombee and Another v S [2016] ZACC 50; 2017 (5) BCLR 572 (CC); 2017 SACR 1 (CC); S v Chabedi 2005 (1) SACR 415 (SCA). 10 [18] To determine whether the detention was lawful, the evidence available during the bail proceedings needs consideration. There was a statement allegedly made by Mr Nontsele to Sgt Njotini on 9 December 2013. This statement stated that he and the complainant had met earlier during the day, on 6 December 2013, and agreed to have sexual intercourse and proceeded to have consensual sexual intercourse the next morning. This statement, importantly, also indicates that Mr Nontsele said that he did not understand the charges against him. The statement furthermore reads that he did not want to make a statement and wanted an attorney to represent him. At the civil trial, Mr Nontsele denied having made the statement and said that he had signed it because he was scared, and Sgt Njotini had told him to do so. The statement is exculpatory and even if Mr Nontsele’s version is rejected, this statement cannot on its own justify detention. [19] In her statement made on 8 December 2013, Sgt Njotini stated that although the case was weak, she had evidence of an eyewitness Ms S Mbuqe (Ms Mbuqe). However, the high-water mark of the evidence against Mr Nontsele was that Ms Mbuqe saw him on the veranda of the house where the rape occurred, without a shirt. During the civil trial, it transpired that the house consisted of several rooms and the veranda led into the kitchen. The evidence indicated that there were many people at the ceremony, and they were dancing and drinking traditional beer. [20] The complainant, at the criminal trial, testified that she was drunk and went to sleep in the bedroom and was woken up by Ms Sindiswa Mbuqe (Ms Mbuqe) who told her that she had been raped. She then noticed that her panty was torn and wet. Ms Mbuqe said she saw Mr Mdike on top of the complainant. In a statement by the complainant’s grandmother, made on 27 December 2013, she said she saw Mr Mdike raping the complainant and tried to stop him. It is noteworthy that Ms 11 Mbuqe said nothing about the presence of the grandmother. The grandmother’s statement also did not place Mr Nontsele on the scene. [21] Captain Patrick Tembekile Silwana, a colleague of Sgt Njotini, stated in his statement made on 6 February 2014 that there were three reasons why Sgt Njotini opposed bail and those were that the community was angry; the eyewitnesses threatened the accused; and the victim was mentally challenged. The anger of the community was repeatedly confirmed by Sgt Njotini also during her testimony at the civil trial as a justification for Mr Nontsele’s detention. [22] Ms Maarman, the prosecutor, merely stated during the bail proceedings that, seeing that rape is a Schedule 6 offence, in terms of the CPA,9 it was not in the interests of justice to release Mr Nontsele. She did not point out the weaknesses in the State’s case to the magistrate. During her evidence at the civil trial Ms Maarman repeatedly confirmed her view that a Schedule 6 crime justified an opposition to bail. When her evidence is evaluated, it would seem that she regarded the strength of the evidence against an accused as of no consequence at all, when eligibility for bail is considered. [23] The statement prepared on Mr Nontsele’s behalf, for purposes of the bail proceedings, stated that he would plead not guilty and that he had no previous convictions or pending cases against him. He provided an address and said that he has been living there for the last thirty years. He also provided an alternative address in another area where his grandmother resided. 9 Schedule 6 of the Criminal Procedure Act 51 of 1977. 12 [24] Sgt Njotini, in her evidence during the civil trial, persisted with her view that it was appropriate to oppose bail. She again emphasised the fact that rape is a Schedule 6 offence, and the onus was accordingly on Mr Nontsele to show exceptional circumstances why he should be released on bail. She stated that Ms Mbuqe saw Mr Nontsele without a shirt and that the J88 medico legal report (J88) indicated rape, although no injuries were observed. She further stated that if she was present at the bail hearing and was aware that Mr Nontsele had an alternative address that would have taken him out of the area where the victim lived, she would not have opposed bail. The failure of both Sgt Njotini and Ms Maarman to consider all the available evidence and the failure to reveal it to the magistrate led to the refusal of bail. Neither of them seemed to have considered the possibility of setting conditions for bail. [25] Sgt Njotini stated that the DNA evidence was obtained and sent for analysis, and she was made aware that it was available electronically on 14 March 2014. She testified that she telephonically followed up and was told that no semen was detected. She officially received a hard copy of the results on 7 August 2014 and took those to court. She did not go into detail as to what she did exactly to bring the information she obtained telephonically to Ms Maarman’s attention. One thing is abundantly clear: she did nothing to ensure that Mr Nontsele and his legal representative were made aware of the information obtained on the phone about the results, prior to officially obtaining them on 7 August 2014. Mr Nontsele’s uncontested evidence is that he was taken monthly to court, sometimes even twice a month. In all that time, no one deemed it necessary to reveal to the court that the DNA did not link him to the rape. 13 [26] Ms Maarman’s testimony during the civil trial shows that her main reason for opposing bail was that rape is a Schedule 6 offence. She did not have the docket in her possession, initially, when the bail application was heard. The senior prosecutor, Mr Buso testified that he brought the docket to Ms Maarman. It is not clear from the record whether she perused it at all during the bail proceedings Mr Buso surprisingly did not deem it appropriate to draw her attention to the fact that he had brought the police docket. After receiving the docket, Ms Maarman did not alert the court to the weaknesses in the State’s case. When asked about why she failed to do so, she testified that she did not have a duty to do so. Ms Maarman testified that she was of the view that the State had a prima facie case, because of Mr Nontsele’s statement and the witness statements previously referred to. She also emphasised the importance of the anger of the community and seemed to believe that this justified the decision to oppose bail. Unlawful Detention [27] In order to succeed in an action based on unlawful detention, a plaintiff must show that a defendant, or someone acting as his or her agent or employee, deprived him or her unlawfully of his or her liberty. Mr Nontsele was charged with a Schedule 6 offence. Section 60(11)(a) of the CPA provides as follows: ‘Notwithstanding any provision of this Act, where an accused is charged with an offence – (a) referred to in Schedule 6, the court shall order that the accused be detained in custody until he or she is dealt with in accordance with the law, unless the accused, having been given a reasonable opportunity to do so, adduces evidence which satisfies the court that exceptional circumstances exist which in the interests of justice permit his or her release’. 14 [28] The result is that the onus is on an accused to adduce evidence that exceptional circumstances exist which permit his release in the interests of justice.10 In this case, however, the magistrate should have been advised that the evidence against Mr Nontsele was circumstantial; that the statement made by him was exculpatory and suffered from procedural defects; and that he could provide both a permanent and an alternative address. Sgt Njotini testified that she would have confirmed the alternative address, if she was aware of it, and would not have opposed bail. After the police docket had been given to Ms Maarman, she failed to bring this evidence to the attention of the magistrate. In Carmichele v Minister of Safety and Security,11 the following was said in relation to the duty of prosecutors: ‘. . . We can do no better in this regard than refer to the following passage which appears in the United Nations Guidelines on the Role of Prosecutors: “In the performance of their duties, prosecutors shall: (a) . . . (b) Protect the public interest, act with objectivity, take proper account of the position of the suspect and the victim and pay attention to all relevant circumstances, irrespective of whether they are to the advantage or disadvantage of the suspect; . . ..”’12 [29] This public law duty was confirmed in Woji v Minister of Police (Woji),13 where it was reiterated that a police officer also has a duty to place ‘all relevant and readily available facts before the magistrate’.14 Although an unlawful arrest will as a matter of course lead to the detention being unlawful, the fact that the high court found that the arrest was lawful will not automatically lead to the conclusion that the 10 S v Botha and Another 2002 (2) SA 680 (SCA) para 20; S v Dlamini; S v Dladla and Others; S v Joubert; S v Schietekat [1999] ZACC 8; 1999 (4) SA 623 (CC); 1999 (7) BCLR 771 paras 78-79; Knoop N O and Another v Gupta (Execution) [2020] ZASCA 149; [2021] 1 All SA 17 (SCA); 2021 (3) SA 135 (SCA) paras 45-46. 11 Carmichele v Minister of Safety and Security (Centre for Applied Legal Studies Intervening) [2001] ZACC 22; 2001 (4) SA 938 (CC); 2001 (10) BCLR 995 (CC). 12 Ibid para 73. 13 Woji v Minister of Police 2015 (1) SACR 409 (SCA) (Woji), as confirmed in Mahlangu and Another v Minister of Police [2021] ZACC 10; 2021 (7) BCLR 698 (CC); 2021 (2) SACR 595 (CC) para 38. 14 Woji para 28. 15 detention was lawful. The particular facts of the case will determine whether the detention was lawful. The importance and sanctity of personal freedom in our constitutional dispensation cannot be over emphasised. In Mahlangu and Another v Minister of Police,15 the Constitutional Court stressed the importance of a person’s right to freedom as part of the foundational rights in our constitutional dispensation.16 The Constitutional Court expressed itself as follows: ‘The unlawful deprivation of liberty, with its accompanying infringement of the right to human dignity, has always been regarded as a particularly grave wrong and a serious inroad into the freedom and rights of a person. In Thandani, [it was held that] “the liberty of the individual. . . in a free society should be jealously guarded . . . Unlawful arrest and detention constitutes a serious inroad into the freedom and the rights of an individual”.’17 (Footnote omitted.) Quoting what was held in Coetzee, the Constitutional Court continued: ‘[There are] two different aspects of freedom: the first is concerned particularly with the reasons for which the state may deprive someone of freedom [the substantive component]; and the second is concerned with the manner whereby a person is deprived of freedom [the procedural component] . . . [O]ur Constitution recognises that both aspects are important in a democracy: the state may not deprive its citizens of liberty for reasons that are not acceptable, nor, when it deprives citizens of freedom for acceptable reasons, may it do so in a manner which is procedurally unfair.’18 (Footnote omitted.) [30] In this matter, the magistrate was not made aware of crucial weaknesses in the State’s case during the bail proceedings. Mr Buso was the prosecutor at the criminal trial. During that trial, he conceded that there was no prima facie case against Mr Nontsele and expressed his surprise that the matter was even enrolled. To make it worse, the court was not made aware of the fact that the DNA evidence also did not link Mr Nontsele to the crime. There was a duty on the police officer to make 15 Mahlangu and Others v Minister of Police [2021] ZACC 10; 2021 (7) BCLR 698 (CC);2021 (2) SACR 595 (CC). 16 Ibid paras 25-26. 17 Ibid para 27. 18 Ibid para 28. 16 the prosecutor aware of that fact, but neither the prosecutors nor the police officer deemed it necessary to bring this to the attention of the court. There is nothing in the record that clarifies whether either Sgt Njotini or the prosecutor, at any point, considered the evidence or acted thereon. [31] An analysis of the evidence led by the Minister’s witnesses, during the civil trial, reveals that the attitude of the police and the prosecutors was simply that, as this was a Schedule 6 offence, the police officers had no duty to draw the court’s attention to the glaring weaknesses in the State’s case. This is not the position established by this Court and the Constitutional Court, as explained in the referenced authorities. Another argument raised on behalf of the Minister was that it was Mr Nontsele’s duty to bring a further bail application when the DNA results became available. Unless Mr Nontsele and his legal representative were made aware of this fact, they could hardly be expected to have had the necessary facts available to consider such an option. The simple answer is that they were never made aware of the DNA evidence. In any event, such an approach loses sight of the public duty on the police and prosecutors to protect the legitimate interests and rights of the public, which finds its foundation in the rule of law. [32] I have considered whether the detention might only have become unlawful from the date that the forensic evidence became available. However, after analysing all the evidence, I am of the view that the whole period of detention was unlawful. The case against Mr Nontsele was insufficient to warrant detention. The only evidence available was firsty, none of the statements made by witnesses implicated Mr Nontsele directly. Secondly, this statement was exculpatory and suffered procedural defects. Thirdly, that a young man was seen, without a shirt, on the veranda of a house where the complainant was allegedly raped. This rape occurred 17 at a traditional ceremony where, on all accounts, many people were gathered, and traditional beer was consumed. So much so that even the victim herself had no knowledge that she had been raped due to her state of intoxication. [33] Considering all the facts, any potential prejudice to the victim or the community could and should have been addressed by setting appropriate bail conditions. The rule of law requires of the police and prosecuting authority to act with honesty and integrity and to place all relevant evidence before a court of law to enable it to make an informed decision. As heinous a crime as rape is, the principle remains that one is innocent until proven guilty. The deprivation of one’s freedom must be carried out with due regard of the importance our Constitution places on personal freedom. The fact that Mr Nontsele remained in custody for 527 days, based on the available evidence, points to a cavalier attitude by the Minister’s officers towards the importance of personal freedom. The harm done to any unlawfully detained person’s mental and physical well-being is detrimental and the high court cannot be faulted for finding that the detention was unlawful and awarding damages. Considering all the above, I would have struck the cross-appeal from the roll with costs and would have dismissed the appeal with costs. ___________________________ R G TOLMAY ACTING JUDGE OF APPEAL 18 Dambuza JA (with Makgoka and Mabindla-Boqwana JJA): [34] I have read the judgment prepared by my sister Tolmay AJA (the first judgment) in this appeal. Regrettably, I am unable to agree with the conclusion she reaches and some of the reasoning leading to the result. I agree that this Court has no jurisdiction to consider an appeal against the dismissal of the claims for unlawful arrest and malicious prosecution which Mr Nontsele’s counsel urged us to consider. I also agree with the discussion of the principles relating to wrongful and unlawful detention. My view, however, is that those principles are not applicable in this instance. Even if they applied they would not support Mr Nontsele’s claim for damages. [35] In paragraph 12 of the particulars of claim, Mr Nontsele’s claim arising from the extended detention was formulated as follows: ‘On the 3rd of February 2014, and at the Lady Frere Magistrate’s Court, the members of the South African Police Services, whose names are presently unknown to the Plaintiff, together with the Prosecutor, Ms S MAARMAN, who dealt with the case on that day, opposed the granting of bail to the Plaintiff, and did so maliciously and in concert, well knowing that that no prima facie case existed against the Plaintiff at that time or at all.’ (Emphasis supplied.) [36] In essence, Mr Nontsele’s case was not that the extended detention was unlawful for breach of a legal duty owed to him. He asserted, specifically, that the opposition to the granting of bail (which resulted in the extended detention, subsequent to 4 February 2014) was malicious. In other words, it was driven by improper motive and/or was without reasonable and probable cause, and resulted from a conspiracy between the police and Ms Maarman. 19 [37] Malicious deprivation of liberty occurs when lawful restraint is inflicted upon a person’s liberty by means of an act of law, unjustifiably, with an intention to injure, and with improper motive.19 Neethling and Potgieter20 describe it as follows: ‘Unlike wrongful deprivation of liberty, where the result complained of must have been caused without justification by the defendant himself or some person acting as his agent or servant, the conduct in the case of malicious deprivation of liberty takes place under the guise of a valid judicial process. The defendant makes improper use of the legal machinery of the state, either through a policeman acting on his own discretion or through a valid warrant, in depriving the plaintiff of his liberty. The actual deprivation of liberty is consequently not carried out by the defendant himself or by his servant or agent, but by the machinery of the state through a valid judicial process. As a result, the plaintiff will have to prove the following in order to succeed in an action based on malicious deprivation of liberty: that the defendant instigated the deprivation of liberty; that the instigation was without reasonable and probable cause; and that the defendant acted animo iniuriandi. These requirements are similar to those of malicious prosecution.’21 (Emphasis in the original text.) [38] Consequently, the test of breach of a legal duty, or wrongful conduct, on the part of the police (and the Minister) plays no part in the inquiry into allegations of malicious and collusion driven detention. Mr Nontsele had to prove that Sgt Njotini and Ms Maarman colluded when opposing his application for bail, that they opposed bail without a reasonable and probable cause, and they did so animo iniuriandi. 19 Moaki v Reckitt and Colman (Africa) Ltd and Another 1968 (3) SA 98 (A). 20 J Neethling and J Potgieter Law of Delict 8th ed (2020) at 398-399. 21 ‘Malice’ in the context of the actio iniuriarum, being animus iniuriandi. See Relyant Trading (Pty) Ltd v Shongwe and Another [2006] ZASCA 162; [2007] 1 All SA 375 (SCA) para 5. In Oletsise N.O. v Minister of Police [2023] ZACC 35; 2024 (2) BCLR 238 (CC) para 60, the Constitutional Court, when drawing a distinction between unlawful arrest and malicious prosecution, said the following: ‘. . . [M]alicious prosecution is constituted by: (a) setting the law in motion against a claimant; (b) lack of reasonable and probable cause on the part of the defendant; (c) malice or animus iniuriandi; and (d) termination of criminal proceedings in the claimant’s favour. As far as the onus is concerned, here, unlike a claim based on unlawful arrest and detention, it rests on the claimant in respect of all the elements of the delict, including that of malice or animus iniuriandi.’ 20 [39] Mr Nontsele never tendered evidence to prove the collusion allegation. There was no evidence that any of the police officers involved in this case held discussions with Ms Maarman, aimed at achieving refusal of bail or to secure Mr Nontsele’s further detention after 3 or 4 February 2014. Neither did Mr Nontsele show absence of reasonable and improbable cause – that the police never had an honest belief, founded on reasonable grounds, that his further detention was warranted after 4 February 2013 or at any other time. He also never tendered evidence, and no inquiry was made by the high court into whether Mr Nontsele had proved any animus iniuriandi on the part of the police [40] The basis for the claim for damages for the extended detention in this case is a crucial distinguishing factor from Woji, Zealand v Minister for Justice and Constitutional Development and Another (Zealand),22 and many other cases in which the claims for damages were based on wrongful and/or unlawful detention. In this case, the opposition to bail (and the withholding of information as submitted at the appeal hearing)23 was alleged to have been done maliciously, and in concert with the prosecution. The correct test was not applied and there is no evidence in the record on which it can be satisfied. On this basis, only the claim for extended detention should have failed. [41] Furthermore, even if Mr Nontsele’s case could be decided on the basis of breach of a legal duty, it seems to me that no proper case was made out against the Minister. Mr Nontsele pleaded that it was the conduct of both Ms Maarman and Sgt Njotini that led to his continued detention beyond 3 February 2014. It is not clear 22 Zealand v Minister for Justice and Constitutional Development and Another [2008] ZACC 3; 2008 (6) BCLR 601 (CC); 2008 (2) SACR 1 (CC); 2008 (4) SA 458 (CC). 23 Or as the high court found. 21 from both the particulars of claim and the evidence, whose conduct was material, in relation to the decision of the magistrate. The high court found that Ms Maarman had failed to advise the magistrate about the weaknesses of the case together with the fact that it was built on ‘circumstantial hearsay evidence’. The wrongful conduct by the police, more specifically Sgt Njotini, was found to be the failure to inform the court of the results of the DNA test. [42] In Woji, this Court found that the Mr Woji’s detention was unjustifiable as a result of a police officer’s erroneous identification of Mr Woji, in a video footage, as one of the robbers that invaded had a bank. On the same principle, Mr Zealand’s detention was found by the Constitutional Court to have been unlawful for the purpose of his delictual damages claim, which arose from the failure by the court registrar to communicate to prison officials that Mr Zealand had successfully appealed his conviction for murder. The failure resulted in the unlawful extension of Mr Zealand’s detention. [43] I do not think that the conclusions reached by the courts in these cases establish a principle that all instances of failure to communicate information to a court will necessarily support a claim for delictual damages. In principle, in such claims, damages will follow only if the harm was causally linked to the wrongful and negligent act or omission. In Woji and Zealand, causation was readily established. In this case, the result of DNA testing neither absolved nor implicated Mr Nontsele. It was neutral. A positive DNA result is not a pre-requisite for a rape conviction. A conviction of rape may well ensue in the absence of a positive DNA result, where the facts and circumstances of a particular case support such a conviction. Consequently, a negative or neutral DNA result will not necessarily persuade a judicial officer to release a rape accused on warning or bail. This is 22 particularly so in a case such as the one before us, where the police are in possession of information (other than the neutral DNA result) implicating the accused. [44] The information that was in Sgt Njotini’s possession on 3 February 2014 included Mr Nontsele’s statement, the J88, and statements made by various people including the complainant. According to the J88, the complainant had sustained injuries which were consistent with sexual assault. By all accounts, the fact that the complainant had been sexually assaulted was not in dispute. In addition, the complainant had told Sgt Njotini that her mother had received a call made by Mr Nontsele from her (the complainant’s) phone which was stolen on the night of the incident. According to Sgt Njotini however, Mr Nontsele had denied having been in possession of the complainant’s phone when he confronted him about the allegation. [45] Furthermore, in her statement to the police, the witness, Ms Mbuqe, had made the following allegations, that: ‘I went inside the room on my arrival I saw Kono doing sex with [the complainant] then I asked Konono what he was doing and Konono stand up and he was dressed naked and he put his penis inside the trouser. . . . Before I enter the room I met Mabhaso Nontsele on the way out of room he was naked on top but I did not ask Mabhaso why he was like that.’ It also relevant that according to Sgt Njotini, on the day of the arrest Mr Nontsele told her (Sgt Njotini) that the complainant had consented to having sexual intercourse with him. [46] The extent and weight of the information that was in Sgt Njotini’s possession must be determined as at the time of the application for bail, and when he instructed his colleague for bail application. A shown above that time, there was substantially 23 more information that implicated Mr Nontsele, that the magistrate would have had to consider, in addition to the neutral DNA results. Courts have, in appropriate circumstances, considered the results of DNA analysis to be superseded by other evidence. [47] In Thwala v S24 the Constitutional Court considered, for the third time, an application by Mr Thwala for leave to appeal against a judgment of the Supreme Court of Appeal, in terms of which his conviction for several offences, including rape was confirmed. He also sought to lead evidence of reports from DNA tests, contending that the high court had convicted him without considering the DNA evidence that was being processed, even though it was notified that such evidence would be available in 15 weeks. The Court refused leave and, amongst other things referred to its decision on the previous occasion that Mr Thwala had brought an application for leave to appeal, citing the failure to consider the DNA results. It held that on that occasion it had ‘evaluated the impact of the DNA evidence and concluded that, in the circumstances of gang rape the fact that ‘the spermatozoa matched a co-accused and not Mr Thwala [was] not significant’.25 The Constitutional Court considered the other evidence on record and held that Supreme Court of Appeal had correctly dismissed the application for leave to appeal on the basis of lack of prospects of appeal. [48] In the case before us, even if Mr Nontsele had brought a claim for damages on the basis of unlawful extended detention, it would fail on the same reasoning as in Thwala. For each of the reasons set out above, the appeal must be upheld. 24 Thwala v S [2018] ZACCC 34; 2019 (1) BCLR 156 (CC). 25 Para 17. 24 [49] The following order is granted: 1 The cross-appeal is struck from the roll with costs. 2 The appeal is upheld with costs. 3 The order of the high court is set aside and replaced with the following: ‘The plaintiff’s claim is dismissed with costs.’ ___________________________ N DAMBUZA JUDGE OF APPEAL 25 Appearances For the appellant: P M Dukada Instructed by: The State Attorney, Mthatha The State Attorney, Bloemfontein For the respondent: S H Cole SC Instructed by: Magqabi Seth Zitha Attorneys, East London Mlozana Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 11 October 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 Minister of Police v Nontsele (547/2022) [2024] ZASCA 137 (11 October 2024) Today the Supreme Court of Appeal (SCA) handed down a judgment in which it upheld an appeal by the Minister of police against an order of the Mthatha high court. That court upheld a claim by Mabhaso Nontsele (Mr Nonstele) against the Minister of Police (the Minister) for his arrest and detention on a charge of rape. Mr Nontsele was arrested and detained for a period of 527 days, from 8 December 2013 to 19 May 2015, for allegedly raping the complainant at a traditional ceremony. At the trial held on 15 July 2015, he was acquitted in terms of s 174 of the Criminal Procedure Act 51 of 1977 (the CPA), after the evidence of the State witnesses was led and the State conceded that there was no prima facie evidence against him. Mr Nontsele then instituted an action for damages against the Minister and the National Director of Public Prosecutions (the NDPP) for wrongful arrest and detention, malicious detention and malicious prosecution in the high court. The high court found that he had failed to prove the claims of unlawful arrest and malicious prosecution but found his detention to have been unlawful from the date of refusal of bail to date of his release. It awarded damages in the amount of R1.6 million. The Minister applied for leave to appeal which was refused by the high court but granted by the SCA on petition to it. The respondent did not seek leave to cross-appeal, either from the high court or the SCA, but filed a notice to cross-appeal in the SCA against the high court’s findings that neither unlawful arrest nor malicious prosecution had been proven by the respondent. The core issues for determination by the SCA were whether a cross-appeal could be entertained in the absence of leave to appeal having been granted, and whether the high court was correct in finding that Mr Nontsele was wrongfully detained from the date of the refusal of bail to the date of his release. The SCA was unanimous in its finding that it did not have jurisdiction to consider the cross-appeal in the absence of leave to cross-appeal. The majority of the SCA (the majority), per Dambuza JA (with Makgoga and Mabindla-Boqwana JJA concurring), further found that Mr Nontsele’s damages claim in respect of the extended detention, from the date of refusal of bail, centred on his allegation, in the summons, that, in opposing bail the police acted maliciously and in collusion with the prosecution. According to the majority, Mr Nontsele’s damages claim for the extended detention, was not founded on wrongful detention. Mr Nontsele had failed to provide evidence of this collusion and/or demonstrate that the opposition to bail was without reasonable cause or driven by improper 2 motive. As a result, the SCA struck from the court roll Mr Nontsele’s attempt to cross-appeal and upheld the Minister’s appeal. The minority of the SCA, per Tolmay AJA (with Smith JA concurring), would have dismissed the Minister’s appeal on the basis that the strength of the case against Mr Nontsele did not justify the opposition to bail as the evidence against him was circumstantial. --------oOo--------

4229

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 574/2022 & 194/2022 In the matter between: NATIONAL STUDENT FINANCIAL AID SCHEME FIRST APPLICANT THE MINISTER OF THE DEPARTMENT OF HIGHER EDUCATION AND TRAINING SECOND APPLICANT and SAMANTHA LETTIE MOLOI FIRST RESPONDENT LINDA MAKHAZA SECOND RESPONDENT KEABETSWE MOTAUNG THIRD RESPONDENT THE UNIVERSITY OF THE WITWATERSRAND FOURTH RESPONDENT Neutral citation: National Student Financial Aid Scheme v Moloi and Others (574/2022 &194/2022) [2024] ZASCA 66 (03 May 2024) Coram: DAMBUZA ADP and HUGHES, MABINDLA-BOQWANA, GOOSEN and MOLEFE JJA Heard: 9 May 2023 Delivered: 3 May 2024 2 Summary: Administrative Law – determination of eligibility criteria for a university bursary scheme by the National Student Financial Aid Scheme (NSFAS) in consultation with the Minister of the Department of Higher Education in terms of s 4(b) of the National Financial Aid Scheme Act No 56 of 1999 – exclusion of second qualification (postgraduate) Bachelor of Laws (LLB) degree – decision to exclude the degree constituted policy formulation and therefore executive action – decision rationally connected to the purpose for which power was given – consultation with Universities South Africa and the South African Union of Students satisfied the procedural fairness requirement – legitimate expectation for funding under the NSFAS guidelines not established. 3 ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Kollapen J, sitting as court of first instance): 1 Leave to appeal is granted with no order as to costs. 2 The appeal is upheld with no order as to costs. 3 The order of the high court is set aside and replaced with the following: ‘The application is dismissed with no order as to costs’. JUDGMENT Dambuza ADP (Hughes, Mabindla-Boqwana, Goosen and Molefe JJA concurring) Introduction [1] This is an application for leave to appeal against an order of the Gauteng Division of the High Court, Pretoria (high court) in terms of which its decision to discontinue the funding of the Bachelor of Laws (LLB) degree, as a second university qualification, was reviewed and set aside. The application was referred for oral argument in terms of s 17(2)(d) of the Superior Courts Act, 10 of 2013. The order required the applicants to submit arguments upon the merits of the appeal if required. [2] The first applicant is the National Student Financial Aid Scheme (NSFAS). The second applicant is the Minister of the Department of Higher Education and 4 Training (the Minister). The application proceeded on the basis that all issues would be argued. [3] As will be apparent from the judgment below, the applicants plainly meet the requirement of establishing in relation to the merits, a reasonable prospect of success on appeal. There are also compelling reasons given the importance of the issue under consideration, why leave to appeal ought to be granted. The facts [4] NSFAS is the principal body charged with the function of management of a bursary scheme established in terms of the National Student Financial Aid Scheme Act 56 of 1999 (the NSFAS Act or the Act). It is a juristic person established in terms of s 2 of the Act. Its objective is ‘to provide financial aid to eligible students who meet the criteria for admission to a higher education programme’. It manages the financial aid scheme in terms of guidelines issued by it, in consultation with the Minister in terms of s 4(b) of the Act. The guidelines are updated and published annually. They are approved by the national Cabinet after inputs from the national government departments which are vested with policy formulation and budget allocation for students. [5] The first edition of the guidelines was implemented in 2019. Although prior to 2019 NSFAS facilitated student funding, the bursary scheme under consideration was only introduced in 2018. The Minister supervises the administration of the scheme. [6] On 11 March 2021, the Minister released a media statement in which he announced changes to the 2020 guidelines for the bursary scheme. The changes were driven by a shortfall in the budget allocated to the bursary scheme for the 2021 academic year. The result was that NSFAS was not able to commit to 5 funding students in the same manner as before. It did not have a budget to support all its commitments. The Minister explained in the media statement that NSFAS could only commit to funding all returning beneficiaries of the scheme. It was unable to confirm funding for new university students. He advised that the guidelines for the 2021 university funding criteria would be published accordingly. [7] The Minister gave a number of reasons for the budget shortfall. Most significant was the COVID-19 pandemic. During the lockdown period, the scheme had to continue paying student allowances even when universities were closed. The academic year had to be extended without allocation of additional funds for the extended academic period. There was also an increase in the number of students qualifying for funding as a result of job losses by their previous funders because of the COVID-19 pandemic. On the other hand, prior to the onset of the pandemic, National Treasury had started to implement budget cuts across government departments as a result of relentless deterioration in the economy. [8] On 11 March 2021, the Minister released a further media statement in which he advised that Cabinet had approved reprioritisation of the Department of Higher Education and Training (DHET) budget to ensure that ‘all deserving – NSFAS qualifying students’ would receive funding. The good news was that, in addition to funding continuing students who met the qualifying criteria, NSFAS would also be funding new students who qualified for the bursary scheme. The Minister emphasised that NSFAS funding was primarily provided for students registered for a first undergraduate qualification, although in the past the scheme had been extended to ‘some limited second qualifications in key areas’. In 2021 there would be no funding for new entrants in second or postgraduate qualifications, as these qualifications were the responsibility of the National Research Foundation. However, students that were already registered 6 (continuing) for postgraduate degrees would still be funded if they met the qualifying criteria. [9] The 2021 guidelines were published on 28 March 2021. They were effective from 26 March 2021. They amended the 2020 guidelines in certain respects, particularly with regard to criteria for eligibility for funding under the scheme. The effect of the amendments was that for 2021 no funding would be allowed for second or postgraduate university qualifications. [10] The first to third respondents, who were studying at the University of the Witwatersrand (Wits University or Wits) at the time, brought an application before the high court, challenging the defunding of the postgraduate LLB (pursued as a second qualification) under the 2021 guidelines. There were two pathways by which to attain an LLB degree at Wits University at the time of institution of the proceedings. The first was a two-year postgraduate stream, which was available on completion of a BA (Law) Degree. The second was a three-year postgraduate stream, which was available on completion of any other undergraduate degree. Wits University did not offer the third stream LLB which was available at other universities, namely, the four-year LLB which was on offer to matriculants as an undergraduate programme.1 [11] The first to third respondents were all enrolled for postgraduate LLB at Wits University. Prior to registering for the two-year LLB programme, the first respondent, Ms Samantha Moloi, had been studying for a BA (Law) degree at the same University, from 2018. After completing the BA (Law) degree, in 2020, she proceeded to register for the two-year LLB degree at the start of the 2021 academic year. She did so without applying to NSFAS for funding for the LLB 1 It appears that the availability of the four year LLB Degree changed annually. 7 degree. She believed, as she stated in her founding affidavit, that she would be automatically funded by the scheme, given that, that was the only avenue through which to attain LLB at Wits University at the time. Her belief stemmed from the 2020 guidelines in terms of which the LLB degree was one of the exceptions from the rule excluding postgraduate qualifications from NSFAS funding. She only learnt in March 2021 that the postgraduate LLB had been defunded. [12] The third respondent Mr Keabetswe Motaung was in the same position as Ms Moloi, except that he was in the first year of the three-year programme when the 2021 guidelines were published. The second respondent Ms Linda Makhaza was in the second year of the three-year LLB studies in 2021. Despite having been approved for NSFAS funding with effect from 2020 she was advised by the University that NSFAS was not funding her for 2021, and that she would have to refund all the fees that had been paid by the scheme on her behalf, from 2020. [13] The three respondents contended that they had a legitimate expectation that NSFAS would fund their LLB studies, as the degree was a ‘professional requirement’ for employment as lawyers. They argued that, if it were not for the 2021 guidelines, they would all be eligible for NSFAS funding as they were under the 2020 guidelines; they had registered for the LLB degree on the basis of the guidelines that were in place at the start of the 2021 academic year. They sought an order that the decisions by the Minister and NSFAS, reflected in the media statements and the 2021 guidelines, be reviewed and set aside, in as far as they provided for the defunding of postgraduate qualifications. [14] The legal basis for the respondents’ challenge was two pronged. The application was brought under s 6 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) and under the principle of legality. Under PAJA they contended that the approval of the revised eligibility criteria by the NSFAS Board on 8 11 March 2021, and the Minister’s concurrence in those criteria on 26 March 2021, in terms of s 4(b) of the NSFAS Act, were administrative actions. They maintained that the Minister and the NSFAS Board: (a) failed to act in a procedurally fair manner in that they never afforded the affected students an opportunity to make representations prior to the decision being made; (b) made the decision for an ulterior motive; (c) failed to consider relevant factors; (d) made decisions which were not rationally connected to the purpose for which power was given under s 4(b) of the Act; and (e) made decisions which were so unreasonable that no reasonable person could have made them. The contested guidelines (criteria for eligibility for funding under the NSFAS bursary scheme) [15] The structure and content of the annual guidelines was more or less the same every year. In each year, changes were made to a limited number of clauses. In terms of the general provisions, the scheme afforded financial support to academically deserving students from poor and working-class backgrounds, to obtain their first undergraduate qualification. A student who was a recipient of a social grant from the South African Social Security Agency (SASSA) automatically met the financial criteria and was eligible for a bursary. Once a student applied for funding to NSFAS, they automatically accepted the terms and conditions of the NSFAS Bursary Agreement (NBA). A student would only receive funding once they met all the criteria. Approved funded programmes at universities were all undergraduate ‘whole qualifications’2. Postgraduate qualifications were generally not funded. 2 In terms of s 1 (definitions section) of the National Qualifications Framework Act, 2008, a “part qualification” means an assessed unit of learning that is registered as part of a qualification. A “qualification” means a registered national qualification. Other than these definitions Clause 6.1.1 of the 2020 guidelines (see para 15 below) defines ‘whole qualifications’ as degrees, diplomas, and higher certificate programmes offered by public universities. 9 [16] In addition to the general rule excluding postgraduate studies from funding, each edition of the guidelines contained exceptions to the exclusion. The 2020 edition excluded from the general rule, the postgraduate Certificate in Education (PGCE), the Postgraduate Diploma in Accounting, and the LLB degree. Certain Bachelor of Technology (BTech) programmes that are required for registration with a professional body as a chartered accountant also formed part of the exceptions. In 2021, other than students completing postgraduate qualifications, the only other exception was students who had obtained a Higher Certificate and were to register for a Diploma or Degree’. [17] To illustrate the amendments made to the 2020 guidelines, I first set out the relevant clauses in those guidelines. Clauses 5 and 6 of the 2020 guidelines regulated the ‘[q]ualifying criteria for the DHET bursary scheme’. In the relevant parts they provided that: ‘5.7 A student can only be funded for one qualification at one institution at any one time. 5.11 Students who have already studied at a university or obtained a prior university qualification do not qualify as FTEN [First Time Entry] students even if they are entering the first year of a new programme. Students starting a university qualification for the first time, but who have already achieved a TVET qualification may qualify as university FTEN students.3 5.12 In general a university student is eligible for funding for only one undergraduate qualification. There are a few exceptions where a second undergraduate qualification would be supported, such as those students who have obtained a Higher Certificate and go on to a Diploma or a Degree. 6. Scope of the DHET Bursary for university students 6.1 Approved funded programmes for university students 6.1.1 Approved funded programmes at universities are all undergraduate whole qualifications, ie degree, diploma or higher certificate programmes, offered by a public university. 3 Clauses 5 and 6 of the 2020 guidelines. 10 6.1.2 Additional courses that are not core requirements of a whole qualification are not funded. Occasional programmes are not funded. 6.1.3 The only cases where a second qualification is funded are where it is a professional requirement for employment. The Postgraduate Certificate in Education (PGCE) is funded. In addition certain Bachelor of Technology (BTech) programmes are funded where there is a professional requirement for completion – a separate list of funded BTech programmes is provided. 6.1.4 In general postgraduate qualifications, including Postgraduate diplomas, honours degrees, masters and PhD degrees are not funded. The only postgraduate qualifications funded are Postgraduate Diploma in Accounting [(certain PGDA)] and LLB as indicated in the NSFAS funded qualifications list.’ [18] In the 2021 guidelines the respective clauses read as follows: ‘5.7 NSFAS may re-assess the financial eligibility of any students at any point whilst funded by NSFAS and reserves the right to withdraw funding if the student no longer meets the financial eligibility criteria. . . . 5.13 Students who have already studied at a university or obtained a prior university qualification do not qualify as FTEN (first time entry) students even if they are entering the first year of a new programme. Students starting a university qualification for the first time, but who have already achieved a TVET qualification may qualify as a university FTEN student. 5.14 A university student is eligible for funding for only one undergraduate qualification. There is one exception which is those students who have obtained a Higher Certificate and go on to a Diploma or Degree’. . . . 6. Scope of the DHET Bursary for university students 6.1 Approved funded programmes for university students Clauses 6.1 and 6.2 read the same as in the 2020 guidelines. Clause 6.1.3 provided that: ‘Postgraduate qualifications, including postgraduate certificates, postgraduate diplomas, honours degrees, Masters and PhD degrees are not funded, except in the case of continuing academically eligible students from 2010 completing their qualifications’. (Emphasis added) There was no clause 6.1.4 in the 2021 guidelines’. 11 [19] The effect of clause 6.1.3 of the 2021 guidelines was to defund all postgraduate qualifications, including those that had been exceptions to the disqualifying rule under 6.1.3 and 6.1.4 of the 2020 guidelines. This affected the three student respondents. In addition, Ms Makhaza was also disqualified under the provision for re-assessment of financial eligibility, clause 5.7 of the 2021 guidelines. The high court judgment [20] The high court traversed the historical context of the two, three and four year LLB programmes, as set out in the 2014 Higher Education Qualifications Sub-Framework Policy (HEQSF) 4 and the 2018 Report on the National Review of LLB Programmes in South Africa (2018 report). It highlighted the importance of locating the LLB programme ‘in its proper context’, and found that to consider it as a postgraduate qualification, as NSFAS and the Minister did in clause 6.1.3 of the 2021 guidelines, ignored the historical imbalances in our education system. The reasoning ignored the need to ensure that those who leave university do so with a professional or career qualification, the court found. Furthermore, the use of ‘qualification’ was an irrational ‘narrowing of focus’ which detracted from the status of the LLB ‘programme’ in terms of the grading of the HEQSF. [21] The high court, also found that the eligibility criteria (and guidelines) constituted implementation of policy because they were ‘the nuts and bolts of the funding framework’, which the Act contemplated. The decision to approve them was an administrative decision. The Minister had an obligation to consult 4 A ‘single qualifications framework’ policy document issued by the Council on Higher Education (CHE) in terms of the National Qualifications Act 2008 (NQF) ‘for the establishment of a single qualifications framework for higher education to facilitate the development of a single national co-ordinated higher education system . . . to enable the articulation of programmes and the transfer of students between programmes and higher education institutions as envisaged in White Paper 3, A programme for the transformation of Higher Education (1997)’. See Government Notice No 36116 published dated 17 October 2014. 12 prospective LLB students as a group of persons who were likely to be affected by the amendments to the 2020 guidelines. Consultation with Universities South Africa5 (USAF) and South African Union of Students (SAUS) organisations fell short of compliance with the requirement of procedural fairness under s 6 of PAJA. Consequently, the decision to exclude the postgraduate LLB programme from funding was irrational and inconsistent with the objectives of NSFAS, to support deserving students. On appeal [22] NSFAS contended, as a starting point, that the high court misdirected itself in relation to the factual basis of its decision. None of the student respondents met the eligibility criteria for further financial aid from it, NSFAS contended. Furthermore, the high court misconstrued the premise for the development of the eligibility criteria and guidelines, which was statutory policy-formulation of the same character as the input and acquiescence to the guidelines by National Treasury, the Minister of Finance and the National Cabinet. All of them were exercising their executive powers when approving the budget reprioritisation and the eligibility criteria. Consequently, the provisions of PAJA were not applicable to their decisions, because the determination of the eligibility criteria and funding allocation was a polycentric exercise of executive power. The Minister also contended that the order of the high court was an encroachment on the executive powers and functions of the national cabinet, and on the NSFAS and Treasury policy formulation and budget allocation powers. [23] The applicants highlighted that Ms Moloi was not registered for LLB when the 2021 exclusion came into effect. Neither had she applied for NSFAS funding 5 An umbrella body of the 26 public universities in South Africa. Each institution pays an annual membership fee. The cumulative fees fund operations of the institution. The Vice-Chancellors, as accounting officers of the respective individual institutions constitute the institution’s Board of Directors. https://usaf.ac.za as at 27 April 2024. 13 for her 2021 studies. Her allegation about automatic funding was placed in dispute.6 Similarly, Mr Motaung did not meet the criteria for funding under the 2021 guidelines. [24] They argued that Ms Makhaza, already a holder of a National Diploma in Public Administration and an Honours degree in that discipline, also did not qualify for NSFAS funding under the 2021 guidelines. She was not a first-time entry student. Her household income was higher than the threshold required for eligibility under the scheme. Consequently, she did not meet the NSFAS financial eligibility and approved study programme criteria. Further, she had applied to register for a Master of Arts in development studies at the University of Zululand and had submitted her dissertation proposal for that degree. She had not been funded by NSFAS when she studied for the first two qualifications. There was therefore no basis for legitimate expectation for funding for an LLB degree. Discussion Mootness [25] At the hearing of the appeal, submissions were made on whether an order granted by this Court would have a practical effect because the 2022 and 2023 guidelines had since been issued. Although all the parties agreed that further guidelines had since been issued, there was disagreement on whether an order of this Court on this appeal would be of any practical effect. The order granted by the high court was in the following terms: ‘1 NSFAS decision and the Minister’s concurrent decision, taken in terms of section 4(b) of the NSFAS Act, to discontinue NSFAS funding of the second undergraduate and certain postgraduate qualifications are reviewed and set aside only to the extent that they relate to the LLB programmes and 6 It is not necessary to make a determination of the nature envisaged under the Plascon-Evans rule or determined the correctness of the factual premise on which the high court made its findings in this case because, the main issue is the constitutional validity of the eligibility criteria and the relevant portions in the 2021 guidelines. 14 2 NSFAS and DHET’s subsequent decision to discontinue the funding of second undergraduate degrees and certain postgraduate qualifications are reviewed and set aside only to the extent that they relate to the LLB programmes reflected in the amendment in the 2021 guidelines.’7 [26] Paragraph 1 of the order appears to be a self-standing order of general application. It is not necessarily limited to the eligibility criteria decision as it appears in the 2021 guidelines. In this sense, that part of the order is not time bound. It may impact on guidelines that the Minister and NSFAS might determine in the future. I do not, however, make a firm finding in this regard, but recognise the uncertainty that might arise. In the circumstances, I agree with the submission on behalf of the Minister that the interests of justice would best be served by determination of the appeal. An exercise of executive power or an administrative action? [27] Given that our courts have affirmed the requirement of procedural fairness in respect of the exercise of public power (with a few exceptions) it seems to me that it may not be strictly necessary to determine whether the decision complained of in this case is an executive or administrative action. This is so because the main basis for the challenge to the eligibility criteria was failure to afford the respondents opportunity to make representations prior to determining the criteria. Moreover, the reasoning of the high court seemed to straddle both the legality and PAJA review grounds. Nevertheless, for clarity and completeness, I explain why, in my view, the determination of the 2021 eligibility criteria was an executive action. In doing so I refer to the determination of the eligibility criteria by NSFAS and the Minister’s acquiescence thereto, including their incorporation in the guidelines as one decision, in alignment with the provisions of s 4(b) the Act – the source of the power exercised. 7 There was also an order of costs in favour of the respondents. 15 [28] The courts have cautioned that the distinction between an executive and administrative action can be elusive.8 In Grey’s Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others 9 this Court explained the challenge as follows: ‘What constitutes administrative action – the exercise of the administrative powers of the state – has always eluded complete definition. The cumbersome10 definition of that term in PAJA serves not so much to attribute meaning to the term as to limit its meaning by surrounding it within a palisade of qualifications’. [29] This Court then suggested the following approach to determining whether a particular act is an administrative action: ‘[24] Whether particular conduct constitutes administrative action depends primarily on the nature of the power that is being exercised rather than upon the identity of the person who does so. Features of administrative action (conduct of ‘an administrative nature’) that have emerged from the construction that has been placed on s 33 of the Constitution are that it does not extend to the exercise of legislative powers by deliberative elected legislative bodies, nor to the ordinary exercise of judicial powers, nor to the formulation of policy or the initiation of legislation by the executive, nor to the exercise of original powers conferred upon the President as head of state. Administrative action is rather, in general terms, the conduct of the bureaucracy (whoever the bureaucratic functionary might be) in carrying out the daily functions of the state which necessarily involves the application of policy, usually after its translation into law, with direct and immediate consequences for individuals or groups of individuals. [25] The law reports are replete with examples of conduct of that kind. But the exercise of public power generally occurs as a continuum with no bright line marking the transition from one form to another and it is in that transitional area in particular that 8 Minister of Defence and Military Veterans v Motau and Others 2014 ZACC 18; 2014 (5) SA (CC); 2014 (8) BCLR 930 (CC). 9 Grey’s Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others [2005] ZASCA 43; [2005] 3 All SA 33 (SCA); 2005 (6) SA 313 (SCA); 2005 (10) BCLR 93 (SCA) (13 May 2005). 10 The definition of ‘administrative action’ in s 1 of PAJA is made particularly cumbersome by its incorporation of a number of terms that are themselves defined and often overlap. 16 ‘‘[d]ifficult boundaries may have to be drawn in deciding what should and what should not be characterised as administrative action for the purposes of s 33’’. In making that determination ‘[a] series of considerations may be relevant to deciding on which side of the line a particular action falls. The source of the power, though not necessarily decisive, is a relevant factor. So, too, is the nature of the power, its subject matter, whether it involves the exercise of a public duty and how closely it is related on the one hand to policy matters, which are not administrative, and on the other to the implementation of legislation, which is. While the subject-matter of a power is not relevant to determine whether constitutional review is appropriate, it is relevant to determine whether the exercise of the power constitutes administrative action for the purposes of s 33.’11 (footnotes omitted) [30] Section 1 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) defines an administrative action as: ‘(i) . . . any decision taken, or 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; (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 functioning terms of an empowering provision, (c) Which adversely affects the rights of any person and which has a direct, external legal effect, but does not include- (d) (aa) the executive powers or functions of the National Executive, including the powers or functions referred to in sections 79 (1) and (4), 84 (2)(a), (b), (c), (d), (f), (g), (h), (i) and (k), 85 (2) (b), (c), (d) and (e), 91 (2), (3), (4) and (5), 92(3), 93, 97, 98, 99 and 100 of the Constitution . . .’ . (Emphasis added) The exclusion of executive powers and functions of the National Executive under ss (1)(d) is of particular significance in this instance. It immediately becomes apparent that the decision under consideration was an exercise of executive powers and therefore did not fall under PAJA. 11 Greys Marine fn 7 paras 24 and 25. 17 [31] The submission on behalf of NSFAS and the Minister, that the impugned decision was an exercise of executive authority, finds additional support in the provisions of s 4(b) of the Act and in the objectives of the guidelines. The objectives of the guidelines were: (1) to provide a framework for the implementation of the bursary scheme for 2021, and to delineate the roles and responsibilities of all implementing partners and bursary recipients; (2) to outline the scope and detail of the scheme, and the processes necessary to give effect to the student funding provided by NSFAS to deserving students in university education; and (3) to outline high-level rules applicable to the bursary programme. [32] In providing the framework for implementation of the bursary scheme, the guidelines were regulatory in nature. They constituted the organisational structure, a protocol or a set of rules that would guide and control the implementation and administration of the bursary scheme. The determination of the guidelines, including the eligibility criteria, was not a day-to-day, bureaucratic implementation of policy or legislation. [33] It was submitted on behalf of the student respondents that the determination of the eligibility criteria constituted a separate decision from the determination of the guidelines. The proper approach, however, is to consider the eligibility criteria within the scheme of the guidelines, comprehensively. An examination of the eligibility criteria in isolation is inconsistent with the established approach to interpretation, analysis and comprehension of legal documents in this country.12 For example, in determining the qualifying criteria for eligibility for funding, in clause 5 the guidelines set the parameters with 12 See for example, Airports Company South Africa v Big Five Duty Free (Pty) Limits and Others [2018] ZACC 33; 2019 (2) BCLR 165 (CC); 2019 (5) SA 1 (CC). 18 respect to citizenship of potential beneficiaries; financial thresholds to be met (financial qualification criteria); allowances to be given to different categories of students, the scope of university qualifications to be funded; and the role and responsibilities of universities in the administration of the scheme. The determination of the criteria is a specified function of NSFAS (in consultation with the Minister), under s 4(b) of the Act. Under s 4, NSFAS performs the following functions: ‘Functions of NSFAS. - The functions of NSFAS are- (a) to allocate funds for loans and bursaries to eligible students; (b) to develop criteria and conditions for the granting of loans and bursaries to eligible students in consultation with the Minister; (c) to raise funds as contemplated in section 14 (1); (d) to recover loans; (e) to maintain and analyse a database and undertake research for the better utilisation of financial resources; (f) to advise the Minister on matters relating to student financial aid; and (g) to perform other functions assigned to it by this Act or by the Minister.’ [34] Indeed, under s 4 some of the functions performed by the NSFAS entail what may be regarded as bureaucratic day-to-day administration of the bursary scheme. These include allocation of funds for loans and bursaries to eligible students, recovery of loans, and maintenance of a database. These functions are allocated to NSFAS alone. However, the function that is allocated under s 4(b) is executed together with the Minister. The exercise of the power conferred under s 4(b) requires a wide discretion. It entails consultations with other government departments, more particularly, the Minister of Finance who controls the government budget. Together with National Treasury, NSFAS considers and weighs the state of government financial circumstances at a particular time against the objective of assisting students from poor and working class families to attain a university qualification. A policy determination is then made on the 19 range of beneficiaries to whom the bursary will be offered in given circumstances. In this instance, following adverse economic developments, the budget allocation to the Department had to be re-prioritised, and Cabinet had to consider and approve these changes. These steps are not mere administration of legislation. [35] The respondents’ contention that the exercise of power only entailed limited implementation of developed criteria and conditions for the granting of loans and bursaries is untenable. The balancing process undertaken in determining the regulatory structure and content of the guidelines demonstrates that the exercise of power was not mere administrative implementation of legislation. [36] Similarly untenable is the argument that consideration of budgetary constraints must be excluded from the determination of the nature of the power exercised in this instance, because it falls under s 14(2)(c) of the Act and thus outside the realm of s 4(b). Determination of use of allocated budget was a crucial aspect of the impugned decision. In fact, budget consideration is always a component of policy determination. And, as the Constitutional Court put it in National Treasury and Others v Urban Tolling Alliance and Others (Road Freight Association as applicant for leave to intervene)(OUTA): 13 ‘[67] . . . the duty to determine how public resources are to be drawn upon and re-ordered lies in the heartland of Executive Government function and domain. What is more, absent any proof of unlawfulness or fraud or corruption, the power and prerogative to formulate and implement policy on how to finance public projects resides in the exclusive domain of the National Executive subject to budgetary appropriations by Parliament. [68] Another consideration is that the collection and ordering of public resources inevitably calls for policy-laden poly-centric decision making. Courts are not always well suited to make decisions of that order’. 13 National Treasury and Others v Urban Tolling Alliance and Others (Road Freight Association as applicant for leave to intervene) 2012 (11) BCLR 1148 (CC). 20 [37] Consequently, on a comprehensive consideration of the nature of the power conferred in terms of s 4(b) of the NSFAS Act, the impugned decision was an exercise of executive power. Rationality [38] It is a trite principle of Administrative Law that public power must be sourced in the law and the Constitution.14 Courts must review the exercise of public power to ensure compliance with this principle. The principle of legality requires that exercise of executive power must be rationally related to the purpose for which it is conferred. [39] Much of the respondents’ case, in contending that the decision of NSFAS and the Minister was irrational, revolved around the use of the word ‘qualification’ with reference to the LLB programme in the impugned guidelines, as opposed to a study ‘programme’. In terms of the HEQSF ‘qualification’ means, ‘the formal recognition and certification of learning achievement awarded by a credited institution’. ‘[P]rogramme’ means ‘the purposeful and structured set of learning experiences that lead to a qualification’. In terms of s 1 of the National Qualifications Framework Act, 2008, ‘qualification’ means a registered national qualification’. [40] As stated, the high court found that the ‘narrowing of focus’ and reference, in the 2021 guidelines, to LLB as a ‘qualification’ was procedurally and ‘substantively’ irrational. Furthermore, there was no rational justification for permitting financial support for the undergraduate LLB study programme and none for postgraduate degrees. The high court also considered irrational the 14 Masethla v The President of the Republic of South Africa 2008 (1) BCLR 1 (CC); (2008) (1) SA 566 (CC) para 77-81. 21 defunding of LLB in the context of disadvantaged students who did not meet the four-year (mainstream LLB) admission requirements, especially when Wits University did not offer the four-year undergraduate LLB. The court was of the view that the failure to fund the second qualification LLB, undermined the objective of bridging the socio-economic gap which underpinned the decision to promote attainment of an LLB degree by previously disadvantaged students. [41] First, it is not only in the impugned guidelines that the LLB degree was referred to as a qualification. It was similarly referred to in the 2020 guidelines. Furthermore the reference to postgraduate ‘qualifications’ in the 2021 guidelines, was not only in respect of the LLB degree. In clause 6.1.3, the term was used in respect of ‘postgraduate certificates, postgraduate diplomas, honours degrees, masters, and PhD degrees . . .’. In my view, the term was chosen for its inclusive quality, to refer, collectively, to different types of postgraduate qualifications. [42] There was no dispute about the increased need for funding which NSFAS and the Minister had to provide for in 2021. The distinction between the two and three-year LLB programmes, on one hand, and the four-year LLB, on the other, was obviously based on the fact that the former were second qualifications whereas the latter was a first undergraduate higher education qualification. In this context, the 2021 guidelines were adopted for a legitimate government purpose, which was the funding of the first undergraduate degree for each student, given the prevailing financial constraints, to enable NSFAS to fund as many beneficiaries as possible. The fact that this Court or a different member of the executive might have dealt differently with the challenge of decreased budget is not a valid basis to interfere with the revised eligibility criteria. In Albutt v Centre for the Study of Violence and Reconciliation15 the Constitutional Court held that: 15 Ibid para 51. 22 ‘Courts may not interfere with means selected simply because they do not like them, or because there are other more appropriate means that could have been selected. But where the decision is challenged on the grounds of rationality, courts are obliged to examine the means selected to determine whether they are rationally related to the objective sought to be achieved. What must be stressed is that the purpose of the enquiry is to determine not whether there are other means that could have been used, but whether the means selected are rationally related to the objective sought to be achieved. And if objectively speaking they are not, they fall short of the standard demanded by the Constitution’. Was the exclusion of the second degree LLB unreasonable? [43] Reasonableness is a proportionality assessment as envisaged in s 36 of the Constitution that provides for limitation of rights in terms of a law of general application, to the extent that the limitation is reasonable. Our courts have preferred the rationality test over reasonableness, as a measure for legality of executive action. In Soobramoney v Minister of Health (Kwazulu-Natal)16 the Constitutional Court rejected Mr Soobramoney’s claim for an order that the state render to him life-saving dialysis on the basis that the right to emergency medical treatment was not available in respect of chronic medical conditions, even if they were life threatening. Within the context of the right of access to healthcare services guaranteed in s 27 of the Constitution, and the challenge of an under-resourced healthcare system, the Court found that the requirements set by the State for eligibility free renal dialysis medical treatment had not been shown to be unreasonable.17 [44] Two years later, in New National Party v Government of the Republic of South Africa18 the Constitutional Court clarified its approach as follows: 16 Soobramoney v Minister of Health (KwaZulu-Natal) [1997] ZACC 17; 1998 (1) SA 765 (CC); 1997 (12) BCLR1696. 17 The requirements were that a patient be curable within a short period of time and that s/he be eligible for a kidney transplant. Mr Soobramoney’s kidneys had failed and his condition had been diagnosed as irreversible 18 New National Party v Government of the Republic of South Africa and Others 1999 (3) SA 191 (CC); 1999 (5) BCLR 489 (CC) at para 24. 23 ‘Decisions as to reasonableness of statutory provision are ordinarily matters within the exclusive competence of Parliament. This is a fundamental doctrine of separation of powers and to the role of Courts in a democratic society. Courts do not review provisions of Acts of Parliament on the grounds that they are reasonable. They will do so only if they are satisfied that the legislation is not rationally connected to a legitimate government purpose. In such circumstances the review is competent because the legislation is arbitrary . . . Reasonableness will only become relevant if it is established that the scheme, though rational, has the effect of infringing the right of citizens to vote. The question would then arise whether limitation is justifiable under the provisions of s 36 of the Constitution and it is only as part of this s 36 inquiry that reasonableness becomes relevant. It follows that it is only at that stage that the question of reasonableness has to be considered.’ [45] However, in The Government of the Republic of South Africa v Grootboom19 the Constitutional Court was more forthright in its application of reasonableness as a test for rationality of executive action. The Court held that in determining whether the State’s housing programme was reasonable, a court had to consider whether the programme was capable of facilitating the right of access to adequate housing, and whether it was reasonably implemented. The Court held that reasonableness had to be understood within the context of the Bill of Rights, and the requirement that everyone be treated with care, concern and dignity. The Court found that because the State’s housing programme made no provision for people in Mrs Grootboom’s position of homelessness and extreme desperation, it was unreasonable and unconstitutional. [46] In this case, the language of s 29(1)(b) of the Constitution incorporates reasonableness as a measure for adequacy of the action taken by the State to make further education accessible. The section provides that ‘everyone has the right to further education, which the State, through reasonable measures, must make progressively available and accessible’. (Emphasis added). 19 The Government of the Republic of South Africa v Grootboom; [2000] ZACC 19; 2001 (1) SA 46 (CC); 2000 (11) 1169 (CC). 24 [47] Accordingly, in this case, an assessment of the reasonableness of the impugned executive action is required for two independent reasons. First, because of the limitation of the constitutionally guaranteed right to further education, and secondly, because of the express reasonableness standard set in s 29 of the Constitution. The reasonableness inquiry is determined in the context described in the evidence. I have already referred to it. In addition, as directed in clause 1.1 of the 2021 guidelines NSFAS considered that the aim of providing the bursary funding was to assist poor and working-class students across the board. Within that context the amendments to the eligibility criteria had to maintain the general approach that funding was for first-time entry students. Funding had to be maintained despite the challenges resulting from the ongoing effects of the COVID-19 pandemic, the pre-existing decline in the state of the country’s economy, and the increased number of impecunious students. Within this context, it seems to me that the extent of the limitation of the s 29(1) (b) constitutional right, although seemingly harsh on those affected, was reasonable. The prioritisation of first time entry students at the expense of those who required a second qualification was not a disproportionate measure. Legitimate expectation [48] The respondents argue that the 2020 LLB exception was not the first one. Before the introduction of the 2019 guidelines, LLB was funded by NSFAS. They refer to responses given by NSFAS to frequently asked questions (FAQ) which were published in 2018. The published document indicated that ‘NSFAS only accepts postgraduate applications for the following postgraduate qualifications . . . LLB’. (Emphasis supplied). The contention is that when the respondents commenced their BA degrees NSFAS was funding LLB postgraduate degrees, hence the legitimate expectation on their part. 25 [49] The doctrine of legitimate expectation usually arises in relation to procedural fairness. The principle gained recognition in our law in Administrator, Transvaal and Others v Traub and Others20 where Corbett CJ held that a legitimate expectation may arise where an express promise had been made by a relevant authority or a where regular (well-established) practice had arisen which a claimant reasonably expected to continue. The test is objective and determination of whether an expectation, in the legal sense, exists, is made on a case-by-case basis. [50] Although limited instances of substantive expectation have been recognised in this country,21 generally the courts are reluctant to afford such relief, being wary of fettering discretion of state authorities.22 This case is a good example of why caution is required. In circumstances where NSFAS and the Minister had to ensure that the promise of a higher education qualification remains a sustained reality to an increased number of students, despite depleted financial resources, substantive expectation would be an improper consideration. Undue interference with powers assigned to the executive as an incident of legitimate government business must be avoided. As much as financial hardships which confront students pursuing second qualifications was real and the negative effects had to be understood, the courts could not tamper with the discretion of the executive to prioritise first time entry to higher education institutions, unless such discretion was exercises in a manner that offended the law and the Constitution. 20 Administrator of Transvaal and Others v Traub and Others (4/88) [1989] ZASCA 90; [1989] 4 All SA 924 (A). 21 See for example Quinella Trading (Pty) Ltd v Minister of Rural Development 2020 (4) SA 215 (T); Ampofo v MEC for Education, Arts Culture Sports and Recreation, Northern Province 2002 (2) SA 215 (T). 22 Hoexter, Administrative Law, 3rd ed, at 427. 26 [51] In any event, I am not satisfied that the respondents demonstrated that there was a well-established practice of funding of the second degree LLB programme. Given that the response to the FAQs was omitted from the 2019 guidelines it cannot be said that NSFAS made an unambiguous representation that the respondents could rely on, or that a well-established practice of funding the postgraduate LLB was established. The response to the FAQs only went as far as to indicate that applications for LLB funding are accepted. There was no specification as to whether this was in reference to the undergraduate or postgraduate LLB. Indeed it could be argued that the language of clause 6.1.4 in the 2020 guidelines did not stipulate that the funding of the postgraduate LLB was a special, once–off allowance. However, the clause had to be considered together with the repeated principle in the guidelines, that generally, the bursary scheme was aimed at assisting first time entry students. Procedural fairness [52] Section 33 of the Constitution guarantees to everyone a right of administrative action that is lawful, reasonable, and procedurally fair. Executive decisions are excluded from review under PAJA. Nevertheless, our courts recognise that exercise of executive authority must comply with the law and the Constitution. Consequently, although in Masethla23 the Constitutional Court held that procedural fairness is not a requirement for the exercise of executive power. the Court has now refined its articulation of the principle. In Albutt the Constitutional Court recognised the right of victims of criminal conduct to be heard in Presidential pardon proceedings held under s 84 (2) (j) of the Constitution. 23 See fn 14 above. 27 [53] In essence, the Constitutional Court in Albutt considered that when the President announced the special dispensation process he had outlined its objectives, the criteria, and the principles that would guide the decision making process.24 It considered that the process outlined by the President to Parliament recognised that victim participation in line with the principles and the values of the Truth and Reconciliation Commission was the only rational means to contribute towards national reconciliation and unity. Consequently, the subsequent disregard of such principle without any explanation was irrational. However, the Constitutional Court emphasised that its findings in Albutt were confined to the circumstances of that case; particularly the fact that the crimes in question were committed with a political motive and the purpose of the pardons was to promote national reconciliation and unity. It emphasised that its judgment in that case did not decide the question whether victims of other categories of applications for pardon are entitled to be heard. [54] The case-by-case approach to determination of compliance with the procedural fairness requirement in executive action, and the nature and extent of procedures adopted by public administrators has continued in recent judgments of both this Court and the Constitutional Court. In Motau,25 the Constitutional Court found that the Minister had been obliged to follow due process in terminating the respondents’ positions on the Board of Armscor, as required by the Companies Act 71 of 2008. The Court added that procedural fairness obligations might attach independently of a statutory obligation, by virtue of the principle of legality. Other instances in which the Constitutional Court affirmed the requirement of procedural fairness include Democratic Alliance v President of the Republic of South Africa (also known as Simelane).26 In this case, the 24 At 55. The objectives in that case included nation-building and national reconciliation. 25 See fn 7 supra. 26 Democratic Alliance v President of the Republic of South Africa and Others [2012] ZACC 24; 2012 (12) BCLR 1297 (CC); 20133 (1) SA 248. 28 President had ignored the evidence of Mr Simelane’s dishonesty when he appointed him as the National Director of Public Prosecutions. Based on the principle of procedural irrationality the Constitutional Court held that the appointment was irrational and unconstitutional. [55] The requirement of procedural fairness in exercise of executive authority bears broadly similar features to the parameters set out in PAJA for procedural fairness. Section 4 of PAJA prescribes that administrative action must be procedurally fair and that consideration must be given to whether a public inquiry, a notice and comment process, or both processes should be held, or whether a different procedure should be followed, to give effect to the right to a just administrative action.27 In terms of s 4 (4) an administrator may depart from the stipulated requirements of procedural fairness if it is reasonable and justifiable to do so. [56] The factors relevant for the determination of whether such departure is justifiable include the objectives of the empowering provision, the nature and purpose of, and the need to take the administrative action, the likely effect of the administrative action, the urgency of taking the administrative action, and the need to promote efficient administration and good governance.28 The similarities in the regulation of procedural fairness in administrative and the Courts’ recognition of the procedural fairness imperative in executive decisions, all stem from the constitutional ground rule that procedural or process fairness is a requirement in all exercise of public power. Reasonable and justifiable departure from the fundamental rule is acceptable. Whether or not departure from the rule is reasonable and justifiable is determined on a case-by-case basis. 27 Section 4(1)(a)-(e) of PAJA. 28 Section 4 (4) (b). 29 [57] Despite these similarities in approach to determination of legality in the exercise of public power, the distinction between procedural fairness under PAJA and procedural irrationality remains part of our law. In Law Society South Africa v President of the Republic of South Africa and Others.29 The Constitutional Court explained the difference as follows: ‘Procedural fairness has to do with affording a party likely to be disadvantaged by the outcome the opportunity to be properly represented and fairly heard before an adverse decision is rendered. Not so with procedural irrationality. The latter is about testing whether, or ensuring that, there is a rational connection between the exercise of power in relation to both process and the decision itself and the purpose sought to be achieved through the exercise of that power. I do not think that distinction is of relevance in this instance. [58] In this case, the Minister consulted with the representatives of USAF and SAUS. No notification was sent out to the general student community inviting representations on the anticipated changes to the 2020 guidelines. [59] The procedure adopted must be evaluated against the circumstances which precipitated the changes to the eligibility criteria. By all accounts, alarm bells started ringing during July 2020, when NSFAS wrote to the Department advising that there was a likelihood of increase in the number of funded NSFAS students in the 2021 academic year. On 22 September, NSFAS again wrote to the CEO of the Department advising of capacity and budgetary constraints. At that time, NSFAS was under administration. The Administrator described the entity as being in a state of ‘dysfunction and maladministration’. [60] At a meeting held on 14 October 2020 between officials the Department and the NSFAS executive committee the funding requirement policy impacts 29 Law Society South Africa v President of the Republic of South Africa and Others [2018] ZACC 51; 2019 (3) BCLR 329 (CC); 2019 (3) SA 30 (CC). 30 were presented, and possible cost cutting measures were explored. It is not clear what exact measures were investigated at that stage. It was only in January 2021 that a version of the NSFAS eligibility Criteria Policy Statement (dated 21 January 2021) was finalised. The intention was that the policy statement was to be the blueprint for assessment of financial and academic eligibility criteria for funding of first-time entry students and continuing students. [61] From the Minister’s first media statement, dated 8 March 2021, there was likelihood that even the first-time entry students were at risk of not being funded. It was only on 10 March 2021 that reprioritisation of the Department’s budget was approved by National Cabinet. The second media statement, published on 11 March 2021, gives the impression that it was only on the previous day that the details on how, exactly, the scope of 2021 funding scheme would be structured. It would have been impractical, in those circumstances, to afford the general student body opportunity to make representations, given that it was already past the usual start of the academic year and the determination of beneficiaries that still had to be done. [62] There is no evidence from the SAUS or USAF as to how the information was shared with the rest of the students. However, in circumstances where the ultimate policy impact of the budgetary constraints was only established in early March 2021, timeous invitation for representations from potentially affected students was unattainable. Consultation with SAUS and USAF constituted reasonable and justifiable form of compliance with the requirement of procedural fairness. Consultation with student representative bodies is an acceptable form of communicating with students, although this is usually combined with notices published on University notice boards and websites. In my view, considering all those factors, the high court erred in setting aside the decision by the Minister and NSFAS to redirect the funding in the manner explained above. It must also be 31 emphasised that, even without change in policy, the current respondents had not met the criteria as indicated. [63] In the result, the appeal must succeed. Given that the respondents were asserting their constitutional rights to further education as provided in s 29 of the Constitution, there will be no costs order against them. I make the following order: 1 Leave to appeal is granted with no order as to costs. 2 The appeal is upheld with no order as to costs. 3 The order of the high court is set aside and replaced with the following: ‘The application is dismissed with no order as to costs’. ___________________ N DAMBUZA ACTING DEPUTY PRESIDENT 32 Appearances: For the first applicant: FJ Nalane SC with L Makapela Instructed by: Werksmans Attorneys, Johannesburg Symington & De Kok Attorneys, Bloemfontein. For the second applicant: M I Thabede with N Seme Instructed by: State Attorney, Pretoria State Attorney, Bloemfontein. For the first to third respondents: H Rajah with N Chesi-Buthelezi and N Khooe Instructed by: Webber Wentzel, Johannesburg Webbers, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 03 May 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 National Student Fund Aid Scheme v Moloi and Others (574/2022 & 194/2022) [2024] ZASCA 66 (03 May 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal against an order granted by the Gauteng Division of the High Court, Pretoria (high court), Pretoria, which had set aside eligibility criteria applicable to students for a bursary administered by the National Student Financial Aid Scheme (NSFAS) in consultation with the Minister of Higher Education and Training for the 2021 university academic year. At the start of the 2021 university academic year NSFAS revised and amended the guidelines that were in place at the end of the 2020 academic year. In terms of those guidelines, postgraduate LLB was a funded degree under the bursary scheme. In revising the eligibility criteria NSFAS excluded the LLB and other postgraduate degrees from the bursary scheme funding. In determining the new eligibility criteria NSFAS acted in consultation with the Minister as mandated and empowered to do so in terms of section 4(b) of the National Student Financial Aid Scheme Act 56 of 1999. Although NSFAS had managed student funding for some time prior to 2018, the bursary scheme administered terms of the guidelines was only introduced in 2018 and the first version of the guidelines was published and became effective at the start of the 2019 academic year. The guidelines consisted of general regulatory terms governing eligibility for funding under the scheme. The structure and content was more or less the same every year. However limited changes were made every year. In terms of the general provisions, the scheme afforded financial support to students from poor and working class backgrounds. A student received funding once they met all the qualifying criteria. Qualifications approved for funding were generally undergraduate qualifications. Postgraduate qualifications were excluded from funding. At the start of the 2021 academic year the Minister issued two media statements pertaining to NSFAS funding. In the first media statement, released on 8 March 2021, he warned of changes that would be effected to the 2021 guidelines as a result of a shortfall in the budget allocated to the bursary scheme for the 2021 academic year. In the main, the shortfall was a result of the COVID pandemic. During the lockdown period the scheme had to continue paying student allowances even when universities were closed. In addition the preceding academic years had to be extended without allocation of additional funds for the extended academic periods. There was also an increase in the number of students qualifying for funding as a result of job losses by their previous funders because of the COVID 19 pandemic.- Furthermore, prior to the onset of the pandemic National Treasury had started to implement budget cuts as a result of relentless deterioration of the economy. 2 In the second media statement the Minister advised that the National Cabinet had approved reprioritisation of the budget for the Department of Higher Education and Training. As a result all qualifying first time entry students, together with qualifying continuing students would be funded. However all postgraduate qualifications would not be funded under the scheme. The three respondents in the appeal were registered for postgraduate LLB at the University of the Witwatersrand in 2021. They brought the application for review of the revised criteria, particularly the exclusion of postgraduate LLB from funding under the scheme. In upholding the appeal by NSFAS and the Minister, the Supreme Court of Appeal found that the revision of the eligibility criteria was an exercise of executive powers. The court found that the Minister and NSAFAS had exercised their powers under section 4(b) of the NSFAS Act rationally, for the purpose for which the powers were conferred under the Act and reasonably given the economic constraints prevailing at the time. Furthermore, the consultations that the Minister had held with Universities South Africa and South African Union of Students prior to revision of the eligibility criteria, satisfied the requirement of procedural fairness. Because of urgency, individual potentially affected students could not be invited to make representations. The court also held that the three students did not, in any event qualify for funding. The first respondent had not applied for funding. The second respondent did not meet the financial eligibility criteria. And the third respondent also did not meet the funding criteria. The court found that the respondents had not made out a proper case for their claim to legitimate expectation of funding under the scheme. The order of the high court was substituted with an order dismissing the respondent review application. ~~~~ends~~~~

4184

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 376/2022 In the matter between: SAP SE APPELLANT and SYSTEMS APPLICATIONS CONSULTANTS (PTY) LTD t/a SECURINFO FIRST RESPONDENT UNGANI INVESTMENTS (PTY) LTD SECOND RESPONDENT Neutral citation: SAP SE v Systems Applications Consultants (Pty) Ltd t/a Securinfo and Another (Case no 376/2022) [2024] ZASCA 26 (20 March 2024) Coram: PONNAN, GORVEN and MEYER JJA and KOEN and BAARTMAN AJJA Heard: 20 & 21 February 2024 Delivered: 20 March 2024 Summary: Application for recusal – reasonable apprehension of bias – trial judge – misconceiving the issue in the evidence – preventing counsel from properly developing a line of cross-examination – irritatedly abstracting himself from the hearing and directing that the cross-examination continue in his absence – test satisfied. 2 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Tsoka J, sitting as court of first instance): 1 The application for leave to appeal succeeds. 2 The appeal is upheld. 3 The first and second respondents are directed, jointly and severally, to pay the costs of the application for leave to appeal and of the appeal, such costs to include the costs of two counsel. 4 The orders of the court a quo dated 13 November 2020 and 7 December 2021 under case number 20378/2008 are set aside and replaced with the following: ‘a. The application for recusal is granted and the first and second respondents in the recusal application are directed, jointly and severally, to pay the costs of the application, including the costs of two counsel; b. The plaintiff and the second defendant are directed, jointly and severally, to pay the costs of the trial, including the costs reserved by Satchwell J on 25 May 2011, such costs to include the costs of two counsel and the qualifying costs of the first defendant’s experts, Professors Wagner and Wainer and Messrs Burke and O’Neill.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Ponnan JA (Gorven and Meyer JJA and Koen and Baartman AJJA concurring): [1] In 2008, the first respondent, Systems Applications Consultants (Pty) Limited, trading as Securinfo (SAC), a local software development company, caused summons to be issued out of the Gauteng Division of the High Court, Johannesburg (the high court) for damages in the amount of €609 803 145 against the appellant, Systems Applications Products AG (since renamed SAP SE) (SAP), a German global software company involved in the development and sale of software systems application products. SAC’s assertion, denied in general terms by SAP, is that it had concluded a Software Distribution Agreement (the SDA) with a German IT consulting company, 3 SAP Systems Integration (SAPSI), in respect of a software security product (Securinfo) that had been developed by it. The broad thrust of SAC’s case is that, subsequent thereto, SAP acquired a controlling share in SAPSI and an interest in a competing security product known as VIRSA and thereafter unlawfully interfered in the SDA. [2] In the particulars of claim (as amended) annexed to the summons, it was alleged on behalf of SAC that: ‘12. In terms of the SDA: 12.1. SAPSI was obligated to use all reasonable efforts to promote and extend the market for the Plaintiff’s product to all potential licensees and to work diligently to obtain orders for the Plaintiff’s product; 12.2. SAPSI undertook that it would not during the currency of the SDA market or distribute, either directly or through intermediaries, any products directly or indirectly competing with the Plaintiff’s product; 12.3. The SDA would endure for a period of 3 years. 12A The Plaintiff had an established and operating business in exploiting its Securinfo products . . . including in particular with SAPSI . . . (“the Plaintiff’s business”). 13. From August 2004 alternatively from after August 2004 but by March 2005 at the latest, the Defendant had knowledge of the conclusion of the SDA between the Plaintiff and SAPSI and of the Plaintiff’s business. 14. The Defendant was at all material times under a legal duty: 14.1. not to intentionally and unlawfully interfere with the contractual relationship between SAPSI and the Plaintiff with the intention of causing the Plaintiff a loss in terms of section 826 of the German Civil Code (“the BGB”); and 14.2. not to intentionally alternatively negligently and unlawfully injure the Plaintiff’s business in terms of section 823(1) of the BGB. 15. Between February 2005 and the expiry date of the SDA and in breach of the aforesaid legal duties, the Defendant acting directly and/or through its wholly owned subsidiaries: 15.1. ceased its support and promotion of the SAPSI-Securinfo partnership based on the SDA (or at all) and the sale of the Plaintiff’s product to SAP customers globally; 4 15.2. promoted the marketing and sale of the IT security product and/or products produced by Virsa Systems Inc, a company then incorporated in accordance with the laws of the United States of America (such product and/or products hereafter referred to as “VIRSA”) by all its subsidiaries, including SAPSI, and discouraged the sale of the Plaintiff’s product and other similar or competing products. . . . 16. But for the actions of the Defendant, SAPSI would not have breached the SDA and would have continued implementing the business relationship with the Plaintiff as set out . . . above. 17. The Defendant foresaw and intended that its said conduct in interfering with and/or causing SAPSI to breach the SDA would cause a loss to the Plaintiff, alternatively, the Defendant with reckless regard for the consequence of causing Plaintiff a loss, nonetheless interfered with and/or caused SAPSI to breach the SDA as aforesaid and the Defendant is accordingly liable to compensate the Plaintiff for such loss in terms of section 826 of the BGB above alternatively the Defendant’s conduct described in paragraph 15 above constituted the unlawful and intentional alternatively negligent injuring of the Plaintiff’s business and the Defendant is accordingly liable to compensate the Plaintiff for the loss sustained in consequence of such injury in terms of section 823(1) of the BGB above. 18. By reason of the aforesaid breaches of its legal duties by the Defendant, the Plaintiff suffered a direct loss of sales of its security software, which, but for the intentional and unlawful conduct of the Defendant, it would otherwise have made.’ [3] SAP filed several special pleas and a plea over, inter alia, putting in issue the conclusion of the alleged SDA. It also denied having unlawfully interfered with the SDA and disputed liability for the damages claimed. The issues of the merits and quantum having been separated, the matter proceeded to trial in respect of the former before Tsoka J. The trial commenced in October 2020 and ran in total for some 74 days, generating a record in excess of 60 volumes comprising some 12 000 pages. In the course of the trial, SAC ran out of funds and had to turn to the second respondent, Ungani Investments (Pty) Limited (Ungani), for funding to enable it to continue to prosecute the claims. Ungani came to be joined by consent as the second defendant to the proceedings in its admitted capacity as the funder of SAC’s litigation against SAP to meet any order for costs that may issue against SAC. 5 [4] The hearing was conducted virtually on the Zoom platform in accordance with the then prevailing practice in the high court as a result of the COVID 19 pandemic. Throughout the proceedings, all of the participants were connected to the same virtual meeting, which was designed, as closely as possible, to resemble proceedings in open court. The trial was recorded (both audio and video) and transcribed on a daily basis by RealTime Transcriptions. It was envisaged that all the usual formalities and decorum of the court would be observed, such as the judge and counsel were robed; the witnesses testified under oath and, whilst the court was in session, the proceedings were at all times to be presided over by the presiding judge, who could be observed on a video link and heard on an audio link. [5] On Friday, 6 November 2020, when the trial was into its 20th day and whilst one of SAC’s witnesses, Mr Mario Linkies, was being cross-examined by counsel for SAP, the following occurred: ‘MR BADENHORST SC: So is your evidence, and let me just get clarity on this once and for all, you are saying at the beginning Mr Tattersall asked for the signed agreement, and that means July/August 2004, correct? MR LINKIES: This could be, yes, yes. MR BADENHORST SC: And then he asked you once, at a later time, but only once he did not ask frequently, is that what you said? MR LINKIES: He may have asked me again but I am not sure (inaudible). . . . MR LINKIES: Yes, he may have asked me, I do not recall it, but he may have asked me once or twice or thrice, I am not sure, but it was not a big issue, but he certainly talked about the contract and the final signature, ja, especially at the beginning; later on, I do not think we talked about that, but at the beginning I am sure we talked about this, because for me it was also an issue to get this done. MR BADENHORST SC: . . . We have found several indicators in the months from August to February 2005, in every month there is an indication of some issue being raised concerning the signed agreement, it is either by Mr Tattersall to you, or yourself raising the issue with your colleagues, and I will put to you that it is very likely that all these instances are related back to your and Mr Tattersall discussing this problem of not having the signed contract . . . . . . Then on the 21 September 2004 you wrote that email to your colleagues about “Tattersall is ‘breathing down my neck’”, remember that? MR LINKIES: Ja, ja, I saw this email. 6 MR BADENHORST SC: And I put to you that if one reads all the emails exchanged on that day about that particular subject, it is obvious that it was Mr Tattersall who was indeed “breathing down your neck”. Do you agree with me? MR LINKIES: No, he was not; again, I expressed and I used certain German wording to push my own organisation, and I do this all the time, but we informed Mr Tattersall on the fact that he should not be worried. This we told him all the time, and we informed him that we are working based on the SDA, but I was not a lawyer and I was not in charge of making sure, or have a good understanding if the contract had been legally bound or not; for me it was clear that once Mr Ahrens told us it is done and we got approval from him, that we can work based on the SDA, but what you are asking maybe about my understand of Mr Tattersall’s understanding, and I cannot comment on that, I can only tell you what I have told Mr Tattersall, and maybe if Mr Tattersall was asking me often, but he did not ask me often, it was not an issue for him, but it was an issue for me to make sure I get internally all the signatures, and that is why I was following up every few months, every month even, this was just my way of doing it – MR BADENHORST SC: Yes, Mr Linkies, you have said this before, I just do not know why you keep on going on about an issue that I did not ask you about. My question to you, what I am putting to you is simply that this email . . . that is on the screen, of 21 September 2004 speaks for itself. The email you wrote is in its terms saying, “I regret to have to follow up again, but urgently request the approval of the contract with Securinfo, as we have had the details scrutinised by various colleagues”, no doubt you are referring to the internal approval process, “There should be no further problems. Peter Tattersall is ‘breathing down my neck’, and I can quite understand that Securinfo wants a definite statement on whether the partnership with SAPSI is now put on an official basis or whether we do not have legal certainty. That of course has implications for our collaboration.” . . . And then the crucial statement, I am therefore at present refraining from a further conversation with Peter until the matter is clarified on our side . . . So, Mr Linkies, you have a very clear choice here before His Lordship. You either have to own up and say, yes, of course what I wrote there is correctly recording the facts. Mr Tattersall was breathing down my neck. He was asking for the contract. As I said numerous times later on the proceedings I showed you how you told Mr Hoffman that Mr Tattersall was asking at regular intervals for the contract. Isn’t that what you said in December 2006? MR LINKIES: I don’t know what I said there, but certainly this text here is part of my following up that the internal list has been done. This is what I’m also – what I always do. This was part of my job. And my understanding at that time and maybe even now is that a contract has to be signed. This is my understanding 7 MR BADENHORST SC: Mr Linkies, I’m sorry. You can go round and round my question. I can assure you that – . . . . . . Now you’ve seen the email. The question is, is your email correct or not? MR LINKIES: My email at that point is very, very clear. I wanted to push my own organisation to make sure we have the in – we are doing our internal tasks but I used – of course I used some people. In that case I used Peter Tattersall of Securinfo to push my own people and this is something I’m doing also with my kids you know. I do this – those things. Maybe it’s right, maybe wrong but this is what I do. MR BADENHORST SC: So is what you’re saying is you were lying to your colleagues? MR LINKIES: Why are you saying I am lying? I don’t – I didn’t lie. . . . MR BADENHORST SC: But then you must agree if you’re not – you will only not be lying if in fact Mr Tattersall was sitting on your neck because . . . You’re saying to your colleagues, Manfred and Frank, that is Manfred Wittmer and Frank Off, you’re saying Peter Tattersall is breathing down my neck. Now did – was he breathing down your neck or not? If you’re saying to His Lordship he was not breathing down my neck then what you wrote there is a lie. MR LINKIES: I pushed my organisation – COURT: Mr Badenhorst may we proceed please and then you can argue that point. The question has been answered repeatedly. MR BADENHORST SC: M’Lord, I am putting to the witness that he was lying in his email and he has to – COURT: He said the answer is no. I was pushing my own organisation. MR BADENHORST SC: But, M’Lord, with great respect if he’s pushing his own organisation by using – COURT: Yes. MR BADENHORST SC: A false statement, I’m entitled to force him to answer it. It’s not a matter of argument. It’s a matter – COURT: When you’ve finished you’ll let me know. I’m taking a break. MR BADENHORST SC: That is now interesting. It is now 11:11. [COURT ADJOURNS COURT RESUMES] [11:14] COURT: I’m back. MR BADENHORST SC: M’Lord, I just want to place on record that Your Lordship walked out of court now, at about 11 minutes past 11, when Your Lordship simply announced that you are simply taking a break and that we must let you know, when I have finished. COURT: You keep repeating one question after the other, and you want a different answer. 8 MR BADENHORST SC: M’Lord, with great respect, I would like to record that Your Lordship was asking me about the questions that I had been putting. I responded to Your Lordship to say why I was putting the question and why it was important for me to get an answer from the witness and that I have and am obliged in terms of high authority, namely the SARFU case to put to the witness when I will ultimately be arguing that he is a lying witness and that – COURT: That’s the point, I say, I said that’s a point. May I do that. MR BADENHORST SC: Yes, but I have a more serious issue, M’Lord, that I have to raise because it concerns the conduct of the bench. Your Lordship was so upset with me that is consistently with Your Lordship’s constant attitude towards my side to take a clearly one sided approach to this matter. Your Lordship stormed out of Court and you were so upset with me that you said I must call you back when I have finished and I wish to put, place that on record because it’s a deeply concerning attitude from the bench. COURT: Please do so. MR BADENHORST SC: I have done so, M’Lord and the record will read for itself. COURT: Yes. MR BADENHORST SC: I really hope, M’Lord, that we are engaged here in a very complex and long matter and I am urging Your Lordship to take a balanced view and to treat both sides even handed. Your Lordship – COURT: (Inaudible). MR BADENHORST SC: M’Lord, Your Lordship has taken a very clear sympathetic approach to Mr Tattersall. You’d constantly, constantly taken a very hostile attitude to my questioning and to my approach to the matter and I cannot understand it because I’ve noted M’Lord for a very long – COURT: That is new to me. . . . MR BADENHORST SC: M’Lord, I have noted my position and I would ask Your Lordship to take the tea adjournment. COURT: Yes, we will take the tea adjournment. He said I’ve constantly been hostile. MR BADENHORST SC: M’Lord, I do not wish to say anything more, the record will speak for itself and I am simply urging Your Lordship to please adopt an even handed approach to the parties in this matter. I do respectfully request Your Lordship to patiently await the case that we will present for the defendant, the first defendant, and to give the first defendant confidence that it will have a hearing on equal terms before this Court and that it will receive the attention that it deserves without bias, fear or favour. COURT: Yes, (inaudible) but I’ve said to you, you said, I took a – constantly been hostile to your client’s case. MR BADENHORST SC: That is what I have said, M’Lord. 9 COURT: Yes. Is that correct? MR BADENHORST SC: M’Lord, I’m afraid that is the impression that I have. COURT: Sorry, no, no I asked a different question. I’m not asking you about your impression. Is that correct that I was hostile? MR BADENHORST SC: M’Lord, I have said what I have wanted to say and I’m not going to be forced by Your Lordship to say anything else. I have said what I wanted to say and that is where I end. COURT: And which is (inaudible). MR BADENHORST SC: Which is what I said, M’Lord. Must I repeat it? COURT: Yes. MR BADENHORST SC: I have the impression that Your Lordship has taken a very sympathetic view towards the plaintiff’s case and a very hostile approach towards the defendant’s case. Your Lordship at one stage I may remind you made the laconic remark that, who are these defendants, do they believe in the supernatural and that was at a stage as early as the opening address. That kind of remark M’Lord does not go unnoticed, it has a deeply disturbing effect on a – COURT: – it was during argument where the defendant (inaudible). MR BADENHORST SC: Why, with the greatest respect, does the Court say those things to belittle a very serious defence that the defendant is pursuing in a very large and complex case. COURT: So, do you want me to recuse myself, is that the indication? MR BADENHORST SC: I have no instructions M’Lord, as far as that is concerned. COURT: You must take instructions during the tea break? MR BADENHORST SC: I shall, M’Lord. COURT: Thank you. [COURT ADJOURNS COURT RESUMES] [11:33] MR BADENHORST SC: My Lord – . . . MR BADENHORST SC: My Lord, may I report back. I’ve had an opportunity to only have a very brief discussion with my instructing attorney, and I will . . . need to ask Your Lordship to allow me further time to take instructions on Your Lordship’s question to me and I would propose M’Lord that we take the adjournment for the – long adjournment now, until Monday morning, and then I will have an opportunity. My instructing client is in Germany. We obviously have to explain the situation fully to the people who have to make the decisions, and I will need time for that, M’Lord. So I ask that Your Lordship adjourns the proceedings now until Monday morning at 09:30?’ 10 [6] On 9 November 2020, SAP brought an application, which was opposed by SAC, for the recusal of Tsoka J. In support of the application, it was stated by Mr Alexander Leyh, SAP’s senior legal counsel: ’27. Upon reading the transcript, listening to and watching the relevant part of the audio visual recording of the proceedings on 6 November 2020 and receiving confirmation from Dr Levenstein that it fairly reflects what occurred and on the basis of Dr Levenstein’s affidavit attached, I state the following: 27.1. SAP has not, prior to the events recounted in Dr Levenstein’s affidavit, ever experienced a judicial officer conducting himself or herself in the manner revealed from the transcript and Dr Levenstein’s observations. 27.2. Hitherto, judicial officers always permitted SAP to present its case – as plaintiff or as defendant – while (in addition and especially) always remaining in attendance and presiding over the proceedings at all times. This is not to say that there have not been frank (or indeed vigorous) exchanges between SAP’s lawyers and the Court on occasion; I say only that the conduct displayed by the presiding Judge in the present instance, namely a unilateral and intemperate exit from the trial proceedings and a refusal to listen to what counsel for SAP wanted to ask of SAC’s principal witnesses, and suggesting that the proceedings should continue in the absence of the Judge, has never occurred. . . . 27.5. SAP considers the Court’s conduct on 6 November 2020 to be alarming and intolerable. 27.6. SAP apprehends on the basis of the events described herein and in the affidavit of Dr Levenstein, that the Presiding Judge, for whatever reasons, will not be impartial. 27.7. SAP has lost confidence in the ability of the Presiding Judge to fairly and impartially arrive at the balanced and reasoned decisions required for the numerous important questions of fact, German law and credibility arising in this matter. 27.8. SAP reasonably perceives, on the basis of the Court’s conduct on 6 November 2020, that it has closed its mind to persuasion to a case contrary to that put forward by the SAC’s witness, Mr Mario Linkies, on a key issue in the trial, namely whether the plaintiff had knowledge at all times that the agreement relied on by the plaintiff for its claim would only be valid when it was signed for SAPSI (which never happened). This is a fundamental point in the case; SAC’s case pivots on it. 27.9. The Court’s apparent closure of its mind to persuasion contrary to SAC’s case on that key issue in the trial, causes SAP reasonably to perceive that the Court’s mind is (or most likely will be at the appropriate time) similarly closed to persuasion against SAC’s case on other issues in the trial. 11 27.10. The Court’s perceived bias is manifested by the following conduct of the Presiding Judge on 6 November 2020: 27.10.1. The Presiding Judge’s refusal to permit counsel for SAP to put SAP’s case on a key issue (and conclusion, based upon that case) to the witness; 27.10.2. And thereafter, when counsel for SAP sought to resist and then to persist, the Presiding Judge instructing counsel for SAP to let the Court know “when he (had) finished”, declaring “I’m taking a break” and then ‘storming out of Court’ (by abruptly and in a visibly angry state abandoning his seat in front of the Zoom monitor and walking away so that he was no longer visible to those attending the proceedings and only returning after several minutes). 27.11. The Court’s conduct is clearly visible on the external camera which was set up to record and project to all attendees the movements of the Presiding Judge. 27.12. SAP, Mr Hamel and I agree with Dr Levenstein that it is clear that the Presiding Judge became visibly upset and acted in rage when counsel for SAP explained to him that it was his (counsel’s) duty to put to the witness that he had lied in the email to his colleagues dated 21 September 2004 at 1:25:59 PM (referred to as SI_0729 in the trial bundle); 27.12.1. By his conduct and words – which were clearly intended and also appeared to be unambiguously conveying a refusal to listen to (let alone consider) SAP’s case being put to the witness Mr Linkies – the Presiding Judge then in fact refused to listen to or observe the proceedings and evidence on a central issue in the case, extraordinarily suggesting that counsel for SAP should carry on with his questions in the absence of the Presiding Judge. 27.12.2. The latter suggestion (communicated by the Presiding Judge’s statement shortly before his abrupt exit that, “When you’ve finished you’ll let me know. I’m taking a break”) clearly conveys the impression to any informed and objective observer that his mind is closed to SAP’s version being put to the witness and to any evidence that SAP might elicit from the witness Mr Linkies affecting his credibility; 27.12.3. The submissions made by counsel for SAP at the relevant time based on universally accepted authority – not only fell on deaf ears but were actively proscribed by the Court, and this to such a degree that when counsel for SAP sought to persist, the presiding Judge simply exited the proceedings in a rage and advised counsel for SAP to continue in the Court’s absence and to let the Court know “when (counsel had) finished”. 27.12.4. The meaning and implication being that the Presiding Judge was content for the proceedings to continue in his absence and without the Presiding Judge listening to or taking any interest in the further cross-examination of SAC’s witness by counsel for SAP. 27.12.5. The Court’s attitude thus displayed founds a reasonable perception of bias on the part of the Presiding Judge who should accordingly recuse himself. 12 27.13. SAP reasonably perceives – on the basis of the behaviour and utterances of the Presiding Judge on 6 November 2020 – that the Presiding Judge is biased and will not be impartial. 27.14. Accordingly, SAP verily believes that it will not receive a fair trial before the Presiding Judge. 28. In the circumstances, it is with deep regret that SAP requests the recusal of the Presiding Judge.’ [7] Dr Eric Levenstein, a director of Werksmans Incorporated, SAP’s attorney of record, who deposed to a confirmatory affidavit in the recusal application, had this to say: ‘5. The immediately relevant events appear from pages . . . of the transcript. 6. I confirm that it fairly reflects and records what was said, subject to correction of the following errors (which are established on the basis of me personally listening to and viewing the original zoom audio visual recording): 6.1. At page 95 the transcript contains the following inaccurate entry in brackets: “[COURT ADJOURNS COURT RESUMES]” Which is inaccurate – there was no adjournment of the Court proceedings at that time. . . . 6.6. It was obvious to all the observers that the presiding Judge had not taken an adjournment for any of the usual reasons, such as a tea or lunch or comfort break. These breaks are always clearly announced by the presiding Judge at the appropriate time before the Court rises and before he leaves his post. . . . 10. I confirm the following, with reference to the transcript and audio/video tape of the proceedings on 6 November 2020: 10.1. One of the key issues in the case before the presiding Judge is whether or not a software distribution agreement (or SDA) was concluded between SAC and a subsidiary of SAP, called SAPSI. SAC’s claim against SAP turn on the proposition that the SDA was concluded. SAP disputes this central plank of SAC’s case. 10.2. SAC’s case on this issue, briefly summarised, is that the representative of SAC (Mr Tattersall) prepared a draft SDA (which contains a “term” clause of 3 years from date of signature, together with a “no prior representations” clause) for consideration and discussion by representatives of SAPSI including, among others, the witness in question, Mr Mario Linkies (who was formerly – in 2004 – a consultant employed by SAPSI) 13 10.3. SAC’s case is, further, that SAC’s representative (Mr Tattersall) signed the SDA on behalf of SAC on 6 August 2004 at a meeting held in Bensheim in the presence of Mr Linkies and two other SAPSI employees namely Mr Wittmer and Mr Ahrens. 10.4. SAC’s case goes on to allege, having abandoned its pleaded case that SAPSI also signed the SDA on an unknown date by an unknown person, that SAC and SAPSI thereafter concluded the SDA in various ways, in terms of principles of German law, without a signature by SAPSI. 10.5. In support of that case, SAC’s two main witnesses, Messers Tattersall and Linkies, testified that Mr Tattersall did not inquire after 6 August 2004 whether SAPSI had signed the SDA because (so Mr Tattersall’s testimony went) Mr Tattersall considered the SDA to have been concluded (in one of the ways allegedly permitted by German law, namely by conduct). 10.6. In terms of the relevant provisions of German law, the so-called “good faith contractor”, that is, one who contracts with another in good faith, is entitled in certain circumstances to assume for his benefit that the other contracting party’s representative is authorised to represent that party in concluding a contract – it is a form of ostensible authority. 10.7. The critical issue, however, is that these provisions of German law – referred to as Duldungsvollmacht and Ansheinsvollmacht – protect only the good faith contractor, that is, the contractor who does not have knowledge of any defect in authority of the other party’s representative to conclude the contract on that party’s behalf. 10.8. These issues were submitted and explained to the presiding Judge by counsel for SAP earlier in the proceedings on 6 November 2020, as appears in the transcript from page 72 line 20 to page 2802 line 19. 10.9. In doing so, counsel for SAP was referring (and referred the Court) to the agreed legal propositions recorded in the joint expert minute dated 17 September 2020 (signed by three professors of German Law, two of whom SAC intends calling and one who SAP intends calling) notably paragraphs 2, 3 and 4, as follows: 2. “Under German law, the formation of a contract requires the consent of both parties which may be expressed tacitly or by conduct including implementation. In the case of corporations, consent of a duly authorised agent is necessary. German company law provides that the power to bind the corporation is vested in the members of the management board. In addition, other corporate officers, such as a “Prokurist”, may be granted authority to bind the corporation individually or together with others. 3. The contractual assent of corporate employees other than duly authorized agents is not sufficient to bind the corporation to an agreement. The German-law doctrines of “tolerated power of representation (Duldungsvollmacht)” and “apparent power of representation (Anscheinsvollmacht)” have as their common purpose to protect the good faith contractor. They require that the represented legal juristic person knows the actions of the person 14 representing it and does not impede such actions. They also both require that the other party to the contract acted in good faith, i.e. that it relied and had reason to rely on the perceived authority of the would-be agent. 4 Section 154 para 2 BGB does not stipulate a form requirement. Rather, it stipulates a rule of interpretation: where the parties have privately agreed to reduce their agreement to writing, when in doubt, no agreement is formed until the relevant document was signed.” 10.10. In this legal context, it was essential for SAP, in meeting SAC’s case that Mr Tattersall had not inquired after the meeting of 6 August 2004 whether the SDA had indeed been signed by SAPSI, to put to Mr Linkies that the contemporaneous documentary evidence indicated that Mr Tattersall had indeed made such inquiries after 6 August 2004. Mr Linkies, too, had testified for SAC that Mr Tattersall had not made such inquiries, therefore it became necessary to put SAP’s version to him on that issue. 10.11. Accordingly, counsel put it to Mr Linkies (who agreed) that he was Mr Tattersall’s main contact person at SAPSI at the relevant time and counsel for SAP also put a variety [of] contemporaneous documents to Mr Linkies in support of its case that Mr Tattersall had indeed made inquiries with Mr Linkies about obtaining a signed SDA from SAPSI. 10.12. Four such documents – all dated 21 September 2004 – were critical to this issue, and ultimately provoked the events which form the subject matter of this application, namely . . . 10.14. The critical one proved to be “EL 3A”, an agreed English translation of which reads as follows: “From: Linkies, Mario To: Wittmer, Manfred; Off, Frank Cc: Hoefer, Dirk Subject: Securinfo: Vertrag/Contract Date: Tuesday, September 21, 2004 1:25:59 PM Importance: High Sensitivity: Confidential Hello Manfred, Frank: I regret to have to follow up again, but I urgently request the approval of the contract with Securinfo. As we have had the details scrutinised by various colleagues, there should be no further problems. Peter Tattersall is breathing do(w)n my neck, and I can quite understand that Securinfo wants a definite statement on whether the partnership with SAP SI is now put on an official basis, or whether we do not have legal certainty. That of course has implications for our collaboration. I am therefore at present refraining from a further conversation with Peter until the matter is clarified on our side. Thank you and kind regards . . . 15 Mario Linkies” 10.15. During his evidence in chief, and in cross-examination, the witness (Mr Linkies) testified that where his email speaks of Mr Tattersall “breathing down my neck” to obtain the signature, this was in fact not true: in essence, he had written that simply to put pressure on his colleagues to approve and sign (or have approved and signed) the SDA . . .’ [8] On 13 November 2020, Tsoka J, in dismissing the recusal application, recorded: ‘[8] SAP SE’s alleged bias is based on what transpired on 6 November 2020. Although the recordings of the proceedings of that day are attached to the application, the readings, bar few typographical errors and few inaudibles, appear to be correct. However, the application is based on selective, subjective and contrived interpretation as to what happened on that day without taking into account the correct facts and the context that led me to leave the court, with the camera and microphone unmuted as I urgently had to go to the bathroom. . . . [16] Counsel’s so-called right to force Mr Linkies to answer the already answered question just before tea break, which question was asked on more than one occasion and the same answer was given by the witness, irritated me with the result that I took my face mask and left the court for the bathroom. Although irritated, at no stage did I storm out of court in a rage as alleged. Neither did I raise my voice hence I informed counsel that I am taking a break and when he got the answer he wanted, he will let me know. This is the reason why both the camera and the microphone were left unmuted. Hopefully, counsel in my absence would indeed force Mr Linkies to give the answer he required, which answer would, undoubtedly, in the short break I took, would appear on the record.’ [9] The matter thereafter proceeded on the separated issue to finality before Tsoka J, who, on 7 December 2021, delivered a written judgment, in which he concluded: ‘[214] In the result, the following order is made – 214.1 It is declared that the first defendant, SAP SE, is in breach of its legal duties to the plaintiff, SAC, as provided for in section 826 alternatively section 823 of the BGB; 214.2 In consequence of paragraph 1 above, the first defendant, SAP SE, is liable to the plaintiff, SAC, for such damages as may be shown to have been suffered by the plaintiff as a consequence of such breaches; 214.3 The first defendant, SAP SE, is liable to pay the plaintiff’s costs of suit, including the costs of three counsel where three counsel were so employed; 16 214.4 The first defendant, SAP SE, is liable to pay the plaintiff’s qualifying costs of the plaintiff’s expert, Professor Dauner-Lieb; 214.5 The first defendant, SAP SE, is liable to pay the costs reserved by Satchwell J on 25 May 2011.’ [10] On 28 December 2021, SAP applied to the learned judge for leave to appeal to this Court in respect of both his judgment on the recusal application as well as his judgment on the merits. Both applications were dismissed in an all too brief judgment consisting of four paragraphs spanning less than two pages in the record. This despite the learned judge having earlier recorded in his judgment on the merits: ‘[213] The issues raised in the determination of the merits is not only complex but difficult as well. The determination of the merits involved foreign law, in the present matter codified German Law. Most of the issues raised at this stage are contained in voluminous emails written by Germans and in the German language. Utilization of three counsel, one or some of whom speak German, was not only reasonable but necessary and warranted as well. In my view, the employment of three counsel, where such counsel were so employed, cannot, in the circumstances of this matter, be regarded as unreasonable.’ [11] On 5 May 2022, SAP petitioned this Court for leave to appeal. On 13 July 2022, the two judges, who considered the petition, referred the applications for leave to appeal in respect of both the merits and the recusal for oral argument in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013 and directed the parties to be prepared, if called upon to do so, to address the court on the merits. As observed in Body Corporate of Marine Sands v Extra Dimensions 121 (Pty) Ltd: ‘. . . Different considerations come into play when considering an application for leave to appeal as compared to adjudicating the appeal itself. As to the former, it is for the applicant to convince the court that it has a reasonable prospect of success on appeal. Success in an application for leave to appeal does not necessarily lead to success in the appeal. Because the success of the application for leave to appeal depends, inter alia, on the prospects of eventual success of the appeal itself, the argument on the application would, to a large extent, have to address the merits of the appeal.’ 1 1 Body Corporate of Marine Sands v Extra Dimensions 121 (Pty) Ltd [2019] ZASCA 161; 2020 (2) SA 61 (SCA) para 1. 17 [12] It would be appropriate to begin with the recusal appeal, which brought to the fore the question whether the learned judge’s conduct bore the appearance of bias. The law will not lightly suppose the possibility of bias in a judge. But, there is also the simple fact that bias is such an insidious thing that even though a person may in good faith believe that he was acting impartially, his mind may unconsciously be affected by it.2 It is settled law that not only actual bias but also the appearance of bias disqualifies a judicial officer from presiding (or continuing to preside) over judicial proceedings. ‘A judge who sits in a case in which she or he is disqualified from sitting because, seen objectively, there exists a reasonable apprehension that the judge may be biased, acts in a manner inconsistent with s 34 of the Constitution and in breach of the requirements of s 165(2) and the prescribed oath of office’.3 The disqualification is so complete that continuing to preside after recusal should have occurred renders the further proceedings a nullity.4 Where the offending conduct sustains the inference that in fact the presiding judge was not open-minded, impartial or fair during the trial, this Court will intervene and grant appropriate relief.5 In such a case the Court will declare the proceedings invalid without considering the merits. [13] The key issue for consideration and determination is whether the conduct complained of by SAP created a reasonable apprehension of bias on the application of the test laid down by the Constitutional Court in President of the Republic of South Africa and Others v South African Rugby Football Union and Others (the SARFU test), namely: ‘. . . [t]he question is whether a reasonable, objective and informed person would on the correct facts reasonably apprehend that the Judge has not or will not bring an impartial mind to bear on the adjudication of the case, that is a mind open to persuasion by the evidence and the submissions of counsel.’6 2 R v Gough [1993] UKHL 1; [1993] 2 All ER 724 at 728. 3 S v Basson [2005] ZACC 10; 2005 (12) BCLR 1192 (CC); 2007 (3) SA 582 (CC) para 25; South African Human Rights Commission obo South African Jewish Board of Deputies v Masuku and Another 2022 (4) SA 1 (CC) (South African Human Rights Commission) para 65. 4 Take and Save Trading CC and Others v Standard Bank of SA Ltd [2004] ZASCA 1; 2004 (4) SA 1 (SCA) para 5. 5 S v Rall 1982 (1) SA 828 (A) at 833B; S v Meyer 1972 (3) SA 480 (A) at 484D. 6 President of the Republic of South Africa and Others v South African Rugby Football Union and Others [1999] ZACC 9; 1999 (4) SA 147 (CC) para 48. Recently affirmed by the Constitutional Court in South African Human Rights Commission fn 3 above para 63. 18 [14] As I see it, Tsoka J appears to have erred in several fundamental respects. First, the judge appears to have misconceived the evidence. The learned judge observed that he had become ‘irritated’ by SAP’s counsel seeking ‘to force Mr Linkies to answer the already answered question’, which was formulated in less than clear language as ‘the repetitive asking of Mr Linkies that Mr Tattersall was breathing down his neck was continued even though the witness had already answered the question’. But, on the evidence, properly construed, the question had not been repeatedly asked and repeatedly answered. This misunderstanding on the part of the learned judge provoked the irritation and not just his summarily abandoning the hearing, but also directing that the proceedings should continue in his absence. The line of cross-examination was undoubtedly material to SAC’s claim. [15] That Mr Tattersall was indeed breathing down Mr Linkies’ neck to obtain a duly signed copy of the SDA (as stated in Mr Linkies’ email), would certainly be supportive of SAP’s defence that he (Mr Tattersall) knew that the signature of the other party (SAP SI) was required for a validly concluded agreement. In those circumstances, so the contention advanced by SAP goes, an essential element of the German substantive law for SAC’s case would be absent; namely, for SAC to succeed on the strength of so-called apparent authority (Anscheinsvollmacht) or tolerated authority (Dulldungsvollmacht). Both doctrines, so the contention proceeds, require that SAC in the form of Mr Tattersall acted in good faith, i.e. that SAC relied on and had reason to rely on the perceived (apparent or tolerated) authority of its would-be agent. This is an essential requirement under German Law that would not have been fulfilled if Mr Tattersall knew at all times that an official signature by SAP SI was required and remained outstanding. In this context, it was necessary for SAC to prove that Mr Tattersall acted in good faith in relying on the assurance that the SDA had indeed been concluded and that it was not necessary for an authorised person from SAP SI to sign it. Whether or not he continued asking if it had been signed after receiving an assurance that it was operative was central to this issue. If he persisted in requiring a signed copy – that had to bear on the issue of good faith alluded to above. [16] Mr Linkies testified that contrary to what he had expressly stated in his email, Mr Tattersall was in fact not ‘breathing down his neck’. Rather, so testified Mr Linkies, he had expressed himself in that fashion to try to pressurise his colleagues to obtain 19 the necessary (SAP SI) signature on the SDA. SAP’s counsel accordingly put to Mr Linkies that he was therefore lying (to his colleagues) in his email addressed to them. The response elicited from Mr Linkies was: ‘why are you saying I am lying? I don’t – I didn’t lie’. SAP’s counsel then sought to probe that response by asking: ‘If you’re saying to His Lordship he (Mr Tattersall) was not breathing down my neck then what you wrote there is a lie?’ Before that question (a perfectly legitimate line of enquiry on the face of it) could be answered, the learned judge interrupted the cross-examination, stating ‘the question has been answered repeatedly’. The question, however, had not been answered – repeatedly or at all. The continuing enquiry was not, as the judge incorrectly found, directed at whether Mr Tattersall was breathing down Mr Linkies’ neck. That exchange had passed. It had, by that stage, come to be unavoidably accepted by Mr Linkies that the email had indeed stated in terms that Mr Tattersall was breathing down his neck. Mr Linkies had moved on to testifying that he had simply written this to pressure his colleagues and that in truth it would be wrong to attribute to Mr Tattersall what had been stated by him in his email. Mr Linkies denied that he had lied to his colleagues and challenged SAP’s counsel to explain to him why he was accused of untruthfulness. Counsel sought to rise to the challenge, but was both incorrectly and prematurely cut off by the judge. In order for it to be argued later that Mr Linkies had lied, when it was expedient for him to do so, it was necessary for counsel to put to him why it would be submitted in due course that the judge should be slow to believe his evidence. [17] Properly understood, the cross-examination that prompted the abrupt departure of the judge had nothing to do with ‘the repetition of a question which had already been put and answered multiple times’. The judge had prevented counsel from properly developing the line of questioning by interjecting: ‘. . . may we proceed please and then you can argue that point. The question has been answered repeatedly’. However, absent a proper factual foundation, it may likely not have been open to counsel to call Mr Linkies’ mendacity into question. In fairness to Mr Linkies, counsel had to afford him an opportunity of dealing with the issue, so that counsel could in due course submit that the evidence left no room for an honest mistake and that Mr Linkies was content to resort to a deliberate falsehood, when it was expedient for him to do so. 20 [18] Second, when counsel attempted to justify his line of questioning, the judge became irritated and summarily abandoned the proceedings with the parting words, ‘when you’ve finished you’ll let me know. I am taking a break’. How long, it was anticipated, the break was to last, no one was to know. What is more, the judge expected the cross-examination to continue in his absence. In the judgment, the judge is at pains to emphasise this by stating: ‘I inform counsel that I am taking a break and when he got the answer he wanted, he will let me know. This is the reason why both the camera and the microphone were left unmuted. Hopefully, counsel in my absence would indeed force Mr Linkies to give the answer he required, which answer would, undoubtedly, in the short break I took, would appear on the record.’ In that, the judge appeared to operate on the fallacious supposition that the cross-examination could indeed proceed in his absence. It plainly could not. Absent the judge, there was no properly or duly constituted court. Such proceedings, as the judge envisaged would continue in his absence, would have been fatally flawed and not in accordance with law. [19] Third, the extraordinary circumstances thus created by the judge were compounded by the explanation offered in the judgment on the recusal. The application was not about an abandonment of the hearing because the judge ‘urgently had to go to the bathroom’. The first time that mention was made of a bathroom break was in the recusal judgment. It is common cause that the bathroom explanation was not mentioned at any of the following appropriate times: (a) immediately upon the hearing resuming (when the judge returned to the virtual hearing hosted on the Zoom platform); (b) in the extensive discussions with counsel immediately thereafter; (c) when the judge was informed that a recusal application would be brought; or (d) during the hearing of the recusal application. It follows that the bathroom explanation did not form part of the factual substratum on which the recusal application fell to be determined because it was not disclosed and thus not known to the reasonable, objective and informed person at the relevant time. It is also inconsistent with the direction moments earlier ‘may we proceed please and then you can argue that point’. Thus, the bathroom explanation, having not been disclosed at the appropriate time was not only irrelevant for the purposes of applying the SARFU test, but there is also much to be said for the suggestion that it is improbable and thus tends to exacerbate 21 the apprehension of bias. If that was indeed the reason, the judge would have adjourned the court, as he had done on every other occasion, instead of simply leaving in the expectation that the matter would proceed in his absence. [20] Fourth, the judge’s ex post facto explanation that ‘both the camera and the microphone were left unmuted’ to ensure that ‘the answer . . . would appear on the record’, finds no purchase. An independent service provider, Realtime Transcriptions, was responsible for recording and transcribing the trial proceedings and had access to the virtual hearing at all times for that purpose. The fact that the judge left ‘both the camera [sic] and the microphone. . . unmuted’ was irrelevant to the recording of the evidence, which continued independently of any action on the part of the judge. The relevance of the observation is that it confirms the intention of the learned judge that the hearing should continue in his absence. However, had the proceedings continued, the judge would not have been in position to observe the witness and assess his evidence in real time. It would have been well-nigh impossible for the judge, who had abstracted himself from the proceedings, to make a proper assessment of the credibility of the witness, with reference, inter alia, to demeanour, candour and the calibre and cogency of such witness’ performance relative to other witnesses. [21] Fifth, the correct facts demonstrate to the reasonable, objective and informed person that the judge had closed his mind to – and was not in the least interested in – appreciating the extent to which or why Mr Linkies had demonstrated himself to be a liar. This was material evidence relevant to the success or failure of a critical element of SAC’s cause of action in respect of which Mr Linkies was one of SAC’s key witnesses of fact. Tellingly, as the judgment on the merits demonstrates, the judge was far too receptive to Mr Linkies’ evidence. On that score, the learned judge held: ‘[41] Mr Linkies’ unchallenged evidence, despite SAP’s attempt to put his evidence in doubt, is that he himself pressurized Mr Tattersall to push his own company to regularize the relationship between SAC and SAP SI. In fact, Mr Linkies denied that Mr Tattersall “sat on his neck” by pressurizing him to produce the signed SDA. . .. [42] . . . Mr Linkies’ testimony that Mr Tattersall never pressurized him to produce the signed SDA, and that pressure on SAP SI to sign the SDA came from him, remains unchallenged. The pressure, if any, exerted on Mr Linkies by Mr Tattersall is therefore not a concession on 22 Mr Tattersall’s part that he knew that the SDA had not yet been approved, authorized and signed. [43] In fact, Mr Linkies explained to the court that he, himself, was put under pressure in order to make the concession that Mr Tattersall pressurized him to produce the signed SDA. He explained to the court that he made the concession as his life and that of his family was put at risk. He testified that he received threatening telephone calls with the result that, to save his and his family’s lives, he admitted that Mr Tattersall indeed did pressurize him. To save his life and that of his family, he left SAP. The result is that there is therefore no basis to second-guess Mr Linkies’s evidence that he pressurized SAP SI for his own purposes for the signature of the SDA. And that it was not in fact Mr Tattersall but himself who pressurized his employers, through Mr Tattersall, for the production of the signed SDA. The pressure, if any, does not in any way suggest that there was not valid SDA. The pressure, if any, and from whatever source it came from, in all probabilities, was to regularized the formal relationship between the two contracting parties. Nothing else.’ [22] With respect to the learned judge, those findings, on the face of it, appear to be confusing and contradictory. Moreover, as a careful perusal of the record shows, scant regard was paid to important concessions made by Mr Linkies whilst under cross-examination. The rather perfunctory and superficial analysis of Mr Linkies as a witness does little justice to the range of aspects on which SAP took issue with Mr Linkies’ evidence and largely ignores both internal and external contradictions, any latent or patent bias – such as there may have been, as also the probabilities. It also largely ignored the evidence adduced on behalf of SAP to gainsay Mr Linkies evidence. Had counsel not been interrupted in his pursuit of a perfectly legitimate line of cross-examination, perhaps the judge would have been less charitable in his assessment of Mr Linkies as a witness. The upshot is that it cannot with any confidence be said that the conduct complained of did not impact substantively and materially on the merits of the claim asserted by SAC and did not conduce to a reasonable apprehension of bias. [23] Sixth, even were it to be accepted that the question had indeed been repeatedly asked and answered, in instructing that the hearing continue until SAP’s counsel had ‘finished’ before leaving the platform, the inescapable impression is that the judge no longer took any interest in the further evidence on that issue, that counsel was engaged in a fool’s errand and that the judge had not only closed his mind to any such 23 answer as counsel may elicit in cross examination, but also that his mind was no longer open to conviction. As it was put in S v Le Grange: ‘It must never be forgotten that an impartial judge is a fundamental prerequisite for a fair trial. The integrity of the justice system is anchored in the impartiality of the judiciary. As a matter of policy it is important that the public should have confidence in the courts. Upon this social order and security depend. Fairness and impartiality must be both subjectively present and objectively demonstrated to the informed and reasonable observer. Impartiality can be described – perhaps somewhat inexactly – as a state of mind in which the adjudicator is disinterested in the outcome, and is open to persuasion by the evidence and submissions. In contrast, bias denotes a state of mind that is in some way predisposed to a particular result, or that is closed with regard to particular issues. Bias in the sense of judicial bias has been said to mean ‘a departure from the standard of even-handed justice which the law requires from those who occupy judicial office’. In common usage bias describes ‘a leaning, inclination, bent or predisposition towards one side or another or a particular result. In its application to legal proceedings, it represents a predisposition to decide an issue or cause in a certain way that does not leave the judicial mind perfectly open to conviction. Bias is a condition or state of mind which sways judgment and renders a judicial officer unable to exercise his or her functions impartially in a particular case. Partiality has both an attitudinal and behavioural component.’7 (Footnotes omitted.) [24] I recognise that presiding over a matter such as this can be a difficult task. And, in a trial of this length and complexity, the burden on the presiding judge would have been all the greater. One also knows all too well how cross-examination can sometimes appear protracted and seemingly irrelevant. ‘Impatience, though, is something which a judicial officer must, where possible, avoid and in any event always strictly control. For, it can impede his perception, blunt his judgment and create an impression of enmity or prejudice in the person against whom it is directed . . . It may serve to undermine the proper course of justice and could lead to a complete miscarriage of justice. A judicial officer can only perform his demanding and socially important duty properly if he also stands guard over himself, mindful of his own weaknesses (such as impatience) and personal views and whims and controls them.’8 7 S v Le Grange and Others [2008] ZASCA 102; 2009 (1) SACR 125 (SCA) 2009 (2) SA 434 (SCA); [2010] 1 All SA 238 (SCA); 2010 (6) BCLR 547 (SCA) paras 21 and 22. 8 Ibid para 18. 24 [25] Whilst, no doubt, judicial officers can and do form provisional views, including perhaps even in respect of the credibility of a witness, it remains the fundamental duty of every presiding officer not to close their mind to changing those provisional impressions, until the last word has been spoken. After all, a cornerstone of any legal system is the impartial adjudication of disputes that come before the courts. What is required is not only that the trial be conducted open-mindedly, impartially and fairly, but that such conduct be manifest to all those who are concerned in the trial and its outcome. In this regard, language is important and in this case the language employed is in some respects rather unfortunate. Even if unintended, the spectre that it raises is certainly suggestive of one who has certain preconceived notions and who allows those notions to affect his judgement. [26] In this matter, both parties were represented by very senior counsel. A perusal of the record reveals that the issues of fact that required determination were of a rather involved and complicated nature. It is therefore a matter that occasions some surprise that the learned judge should have found it necessary to intervene as he did. He, no doubt with good intentions, appears to have been anxious to ensure that the matter should not drag on unnecessarily and sought, it would seem, to expedite the hearing. In doing so, it appears that he may have overlooked the judge’s usual role in a trial, thereby denying himself the full advantage enjoyed by a trial judge who, ‘as the person holding the scale between the contending parties, is able to determine objectively and dispassionately, from his position of relative detachment, the way the balance tilts’.9 [27] There was some suggestion that as we are concerned with an isolated occurrence, the threshold set by the authorities - and consequently the test for recusal - has not been met. It was stated on behalf of SAC in answer to the recusal application: ‘. . . fundamentally, no reasonable, objective and informed person could reasonably conclude from this single interaction that the Court was biased or would not be impartial in deciding the matter. It is the most remarkable feature of this recusal application that it is entirely founded on a single interaction . . .’ Although SAP relies on an isolated incident; it is likely unprecedented. And, as I have been at pains to demonstrate, not only is the enquiry not a hermetically sealed one, 9 Ibid para 28. 25 but also, in conducting himself as he did, the learned judge breached several cannons of good judicial behaviour. Thus, the curtailment of a legitimate avenue of cross examination and the failure to keep an open mind on that issue undoubtedly infected the substantive merits of the matter, thereby resulting in a manifest failure of justice. It is, after all, a fundamental principle of our law and, indeed, of any civilised society that a litigant is entitled to a fair trial. The requirement that justice must not only be done, but also to be seen to be done has been recognised as lying at the heart of the right to a fair trial. This necessarily presupposes that the judicial officer is fair and unbiased and conducts the trial in accordance with those rules and principles or procedure which the law requires.10 The fairness of a trial would clearly be under threat if a court does not (as happened here) apply the law and assess the facts of the case properly and impartially. [28] ‘Because advocacy is an art and not a science, and because the adversary system requires deference to counsel’s informed decisions, strategic choices must be respected in these circumstances if they are based on professional judgment’.11 Judicial scrutiny of counsel’s performance must thus be highly deferential.12 In dealing more generally with the role and attitude expected of a presiding judge, Lord Denning MR had this to say in Jones v National Coal Board: ‘Now, it cannot, of course, be doubted that a judge is not only entitled but is, indeed, bound to intervene at any stage of a witness’s evidence if he feels that, by reason of the technical nature of the evidence or otherwise, it is only by putting questions of his own that he can properly follow and appreciate what the witness is saying. Nevertheless, it is obvious for more than one reason that such interventions should be as infrequent as possible when the witness is under cross-examination. It is only by cross-examination that a witness’s evidence can be properly tested, and it loses much of its effectiveness in counsel’s hands if the witness is given time to think out the answer to awkward questions; the very gist of cross-examination lies in the unbroken sequence of question and answer. Further than this, cross-examining counsel is at a grave disadvantage if he is prevented from following a preconceived line of inquiry which is, in his view, most likely to elicit admissions from the witness or qualifications of the evidence which he had given in chief. Excessive judicial interruption inevitably weakens the 10 S v Tyebela 1989 (2) SA 22 (A) at 29G. 11 Strickland, Superintendent, Florida State Prison et al v Washington [1984] USSC 146; 466 US 668 at 681. 12 Ibid at 689. 26 effectiveness of cross-examination in relation to both the aspects which we have mentioned, for at one and the same time it gives a witness valuable time for thought before answering a difficult question, and diverts cross-examining counsel from the course which he had intended to pursue, and to which it is by no means easy sometimes to return.’13 [29] Although mindful of the presumption of judicial impartiality, as the Constitutional Court has recognised, ‘there are of course instances where a judicial officer may not be able to demonstrate impartiality or there may exist some apprehension of bias’ and in such instances the presumption can be displaced by ‘cogent evidence’.14 In such instances, ‘a judicial officer should not be unduly sensitive and ought not to regard an application for his recusal as a personal affront’.15 As Ngcobo CJ put it in Bernert v ABSA Bank Ltd: ‘a judicial officer should not hesitate to recuse himself or herself if there are reasonable grounds on the part of a litigant for apprehending that the judicial officer, for whatever reason, was not or will not be impartial. In a case of doubt, it will ordinarily be prudent for a judicial officer to recuse himself or herself in order to avoid the inconvenience that could result if, on appeal, the appeal court takes a different view on the issue of recusal’.16 [30] In the circumstances, the reasonable, objective and informed person in SAP’s position would apprehend that a presiding judge, who: (a) prevents its counsel from cross-examining a witness in response to a challenge from such witness to be shown why his credibility is being impugned; (b) then irritatedly abstracts himself from the hearing, without first adjourning; and, (c) whilst at the same time directing that the hearing continue in his absence until counsel has ‘finished’, has shown himself to have closed his mind to the evidence and the submissions of counsel. The belated improbable explanation by the judge for his abrupt departure serves simply to exacerbate the apprehension. It follows, as a consequence of the cumulative factors alluded to, that the question: whether a reasonable apprehension of bias can be said to exist, must accordingly be answered in the affirmative. What results from this is that the further judgment of Tsoka J on the merits is vitiated by the nullity of the proceedings, which occurred as a result of him continuing to sit in a trial where recusal 13 Jones v National Coal Board [1957] EWCA Civ 3. 14 South African Human Rights Commission fn 3 above para 60. 15 Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service [1996] ZASCA 2; 1996 (3) SA 1 (A) at 13H-14C. 16 Bernert v ABSA Bank Ltd [2010] ZACC 28; 2011 (3) SA 92 (CC) para 36. 27 was required.17 The only question is whether there is a reasonable apprehension of bias: ‘if there is, cadit quaestio (the question falls away/the case is closed), no matter what effect this might have on the particular proceedings’.18 [31] In the result: 1. The application for leave to appeal succeeds. 2. The appeal is upheld. 3. The first and second respondents are directed, jointly and severally, to pay the costs of the application for leave to appeal and of the appeal, such costs to include the costs of two counsel. 4. The orders of the court a quo dated 13 November 2020 and 7 December 2021 under case number 20378/2008 are set aside and replaced with the following: ‘a. The application for recusal is granted and the first and second respondents in the recusal application are directed, jointly and severally, to pay the costs of the application, including the costs of two counsel; b. The plaintiff and the second defendant are directed, jointly and severally, to pay the costs of the trial, including the costs reserved by Satchwell J on 25 May 2011, such costs to include the costs of two counsel and the qualifying costs of the first defendant’s experts, Professors Wagner and Wainer and Messrs Burke and O’Neill.’ ______________________ V M PONNAN JUDGE OF APPEAL 17 R v Milne and Erleigh (6) 1951 (1) SA 1 (A) at 6H; Council of Review, South African Defence Force, and Others v C Monning and Others 1992 (3) SA 482 (A) at 495A-D. 18 South African Human Rights Commission fn 3 above para 74. 28 Appearances For the appellant: CHJ Badenhorst SC and K Spottiswoode Instructed by: Werkmans Inc., Johannesburg Symington De Kok Inc., Bloemfontein. For the respondent: CDA Loxton SC, AJ D’Oliveira and N Siboza- Ruhinda Instructed by: Bosch Marais & Associates Inc., Johannesburg Honey Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 20 March 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 SAP SE v Systems Applications Consultants (Pty) Ltd t/a Securinfo and Another (Case no 376/2022) [2024] ZASCA 26 (20 March 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal with costs against a judgment of the Gauteng Division of the High Court of South Africa, Johannesburg (the high court). In 2008, the first respondent, Systems Applications Consultants (Pty) Limited, trading as Securinfo (SAC), a local software development company, caused summons to be issued out of the high court for damages in the amount of €609 803 145 against the appellant, Systems Applications Products AG (since renamed SAP SE) (SAP), a German global software company involved in the development and sale of software systems application products. SAC’s assertion, was that it had concluded a Software Distribution Agreement (the SDA) with a German IT consulting company, SAP Systems Integration (SAPSI), in respect of a software security product (Securinfo) that had been developed by it. The broad thrust of SAC’s case was that subsequent thereto, SAP acquired a controlling share in SAPSI and an interest in a competing security product known as VIRSA and thereafter unlawfully interfered in the SDA. SAP denied having unlawfully interfered with the SDA and disputed liability for the damages claimed. The issues of the merits and quantum having been separated, the matter proceeded to trial in respect of the former before Tsoka J. The trial commenced in October 2020 and ran in total for some 74 days. The hearing was conducted virtually on the Zoom platform in accordance with the then prevailing practice in the high court as a result of the COVID 19 pandemic. All the usual formalities and decorum of the court was observed, i.e. the judge and counsel were robed; the witnesses testified under oath and, whilst the court was in session, the proceedings were at all times to be presided over by the presiding judge, who could be observed on a video link and heard on an audio link. On Friday, 6 November 2020, when the trial was into its 20th day and whilst one of SAC’s witnesses, Mr Mario Linkies, was being cross-examined by counsel for SAP, the presiding judge, Tsoka J, irritatedly abstracted himself from the proceedings and informed counsel ‘when you’ve finished you’ll let me know. I’m taking a break’. On 9 November 2020, SAP brought an application, which was opposed by SAC, for the recusal of Tsoka J. On 13 November 2020, Tsoka J dismissed the application on the basis that the application was based on a selective, subjective and contrived interpretation as to what had occurred. The matter thereafter proceeded on the separated issue to finality before Tsoka J, who, on 7 December 2021, delivered a written judgment and ruled in favour of SAC. On 28 December 2021, SAP applied to the learned judge for leave to appeal to this Court in respect of both his judgment on the recusal application as well as his judgment on the merits. Both applications were dismissed. On 5 May 2022, SAP petitioned this Court for leave to appeal, which was referred to oral argument on 13 July 2022. Before this Court, the primary issue for consideration and determination was whether a reasonable, objective and informed person, on the correct facts, would have reasonably apprehended that the Judge 2 had not or would not bring an impartial mind to bear on the adjudication of the dispute between the parties. The SCA held that: In the circumstances, the reasonable, objective and informed person in SAP’s position would have apprehended that a presiding judge, who: (a) prevented its counsel from cross-examining a witness in response to a challenge from such witness to be shown why his credibility was being impugned; (b) then irritatedly abstracted himself from the hearing, without first adjourning; and, (c) whilst at the same time directing that the hearing continue in his absence until counsel had ‘finished’, had shown himself to have closed his mind to the evidence and the submissions of counsel. The SCA further held that, the belated improbable explanation by the judge for his abrupt departure, namely that he had to urgently go to the toilet, served simply to exacerbate the apprehension. It followed, as a consequence of the cumulative factors alluded to by the SCA that the question: whether a reasonable apprehension of bias could have been said to exist, had to accordingly be answered in the affirmative. What resulted from this, held the Court, was that the further judgment of Tsoka J on the merits was vitiated by him continuing to sit in a trial where recusal was required. The only question was whether there was a reasonable apprehension of bias: if there was, cadit quaestio (the question falls away/the case is closed), no matter what effect that might have had on the particular proceedings. As a result, the application for leave to appeal had to succeed and consequently the appeal upheld, with the result that the order of Tsoka J dismissing the application for his recusal was set aside and substituted with and an order allowing the recusal application with costs. ~~~~ends~~~~

4268

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 711/2023 In the matter between: UBISI, MK FIRST APPELLANT NEL, VAN DER MERWE & SMALMAN INC SECOND APPELLANT and ROAD ACCIDENT FUND RESPONDENT Neutral citation: Ubisi and Another v Road Accident Fund (711/2023) [2024] ZASCA 93 (11 June 2024) Coram: MABINDLA-BOQWANA and MOLEFE JJA and BAARTMAN AJA Heard: 13 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by email publication on the Supreme Court of Appeal website and by release to SAFLII. The date and time for hand-down is deemed to be 11h00 on 11 June 2024 Summary: Practice and procedure – settlement agreement of claim against the Road Accident Fund – irregular and improper setting aside of settlement agreement by the high court – court improperly making adverse findings against legal practitioners. 2 ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Mbongwe J, sitting as court of first instance): 1 The appeal is upheld. 2 The order of the high court is set aside and is replaced with the following: ‘The draft order marked “X” is made an order of court.’ 3 There is no order as to costs. JUDGMENT Molefe JA (Mabindla-Boqwana JA and Baartman AJA concurring): [1] This appeal deals with the powers of a court when parties have settled their dispute, without proceeding to litigation. It is against the order granted by the Gauteng Division of the High Court, Pretoria, (the high court) in respect of an action brought by the first appellant, Mr Matedewuja Kenneth Ubisi, against the respondent, the Road Accident Fund (the RAF).1 [2] The high court set aside a settlement agreement concluded between the parties. It further ordered Mr Ubisi’s attorneys, Nel, van der Merwe and Smalman Incorporated (Smalman Inc), to pay the costs of the action, including costs of Mr Ubisi’s experts, de bonis propiis. Mr Ubisi applied for leave to appeal against the order, which the high court refused. The appellants were granted leave to appeal by this Court. Smalman Inc are the second appellant 1 The Road Accident Fund is an organ of state created in terms of s 2(1) of the Road Accident Fund Act 56 of 1996. 3 because of parts of the order granted against them by the high court. The RAF does not oppose the present appeal and filed a notice to abide on 10 May 2024. [3] On 15 September 2017, Mr Ubisi issued summons against the RAF in the high court for a claim of R9 500 000. He alleged that he had sustained injuries in a motor vehicle accident, which entitled him to compensation for past and future medical expenses, past and future loss of earnings and general damages. The RAF filed a plea and disputed liability and the quantum of the claim. Liability was subsequently settled between the parties on 5 June 2019 and the RAF agreed to compensate Mr Ubisi for 100% of his proven or agreed damages. [4] The matter was set down for hearing in respect of quantum on 25 November 2021 before Mbongwe J. On the day of the hearing, the RAF sent an offer of settlement in respect of quantum to Smalman Inc. The offer was made in respect of general damages, loss of earnings and an undertaking in respect of future medical expenses and costs. The determination of quantum for past hospital and medical expenses was to be postponed sine die. On 16 February 2022, Smalman Inc accepted the offer on Mr Ubisi’s behalf by way of notice of acceptance and prepared a draft order dated 6 May 2022, containing the settlement agreement. On 6 May 2022, the RAF consented to the draft order being made an order of court. [5] The relevant terms of the agreement were as follows: ‘Merits: 100% in favour of the Plaintiff. General damages: R500 000.00 Add: Loss of earnings: R 2 049 830,20 Future medical expenses: Undertaking sec 17(4)(a) 0% limitation Cost Contribution: Taxed – High Court TOTAL: R2 549 830.20’. 4 The matter was placed on the settlement roll and heard by the high court on 5 June 2022. Mr Ubisi’s counsel requested the court to make the settlement agreement an order of court as agreed by the parties. [6] The high court indicated that it was not a rubber stamp of settlement agreements; it had to interrogate such offers. It further stated that it had to have oversight on these matters and was not prepared to simply grant an order because the parties had concluded a settlement agreement. The court also indicated to the parties that it was not satisfied with the amount agreed in respect of general damages, loss of earnings and the terms of the draft order. It reserved judgment to consider the proposed settlement. The court was in possession of the court file which contained pleadings, Mr Ubisi’s expert reports from an industrial psychologist, occupational therapist, orthopaedic surgeon, ophthalmologist and actuary. [7] On 1 August 2022, the high court handed down a written judgment with the following order: ‘1. The settlement agreement between the parties for the payment to the plaintiff’s attorneys of the amount of R2 549 830.20 by the defendant is hereby set aside, save in respect of the section 17(4) undertaking. 2. The defendant is ordered to issue and furnish the plaintiff with an undertaking in terms of section 17(4)(a) of the Act. 3. All costs including the costs for the services rendered by the plaintiff’s experts, are to be paid by the plaintiff’s attorneys de bonis propriis. 4. The registrar is to cause a copy of this judgment to be served on the Chief Executive Officer of the RAF for the investigation of the impugned part of the settlement of the claim and taking of appropriate action as he may deem fit. 5. A further copy of this judgment and a transcript of the record of the proceedings is to be served on the Legal Practice Council for the investigations of the conduct of counsel at the hearing and of the plaintiff’s attorney regarding pursuance of the impugned parts of the plaintiff’s claim.’ (Emphasis added.) 5 [8] In its judgment, the high court found that some of the terms of the settlement agreement were at odds with the report made by Mr Ubisi’s industrial psychologist. According to the court, the industrial psychologist had stated in her report, that Mr Ubisi had progressed in 2017 from his pre-accident position of underground mine supervisor to section manager. The report also referred to the information obtained from Mr Ubisi’s senior and mine manager that, after the accident, he noticed that ‘the claimant struggled a bit, however it seem[ed] that he has recovered and it d[id] not seem that he ha[d] any negative effects from the injuries sustained from the accident’. The high court found that the industrial psychologist’s report confined Mr Ubisi to his pre-accident position at work and improperly qualified him for past and future loss of earnings. The court refused to award the agreed quantum of damages in respect of loss of earnings of R2 049 830.20, on the basis that the RAF tender was not justified. [9] The high court also refused to award the R500 000 tendered for general damages on the basis that Mr Ubisi’s general practitioner, Dr J Schuttle, confirmed in his report that his whole person impairment (WPI) was 12% and below the 30% threshold, which was a clear indication that he did not qualify for general damages. The high court found that the tendered amount was not justified and was to the prejudice of the RAF and the public purse. The claim for payment of past hospital and medical expenses, although the parties had agreed that the determination of the quantum of this claim should be postponed, was effectively dismissed. [10] Counsel for Mr Ubisi submitted that, firstly, the high court was not justified, on the material before it, to make a finding that Mr Ubisi was not entitled to payment of any general damages, loss of income, past hospital and medical expenses and costs. It is only in circumstances where the agreement contains terms which are unconscionable, illegal and immoral, that the court can 6 refuse to make the settlement agreement an order of court. It was argued that all the requirements set out in Eke v Parson (Eke), 2 namely, that: (a) the agreement was related directly or indirectly to the dispute or lis between the parties; (b) it was not objectionable in that it must accord with the Constitution and the law and not be offensive to public policy; and (c) it held some practical and legitimate advantage, had been met. The appropriate relief was, therefore, to make the draft order agreed to by the parties an order of court. [11] Secondly, by entering into a settlement agreement, the parties had brought the lis before the court to an end. Neither party challenged the validity of the settlement agreement, which rendered the settled issues res judicata. The high court, accordingly, lacked jurisdiction to set aside the settlement agreement. Whether the settlement was valid was not an issue before the high court. Thirdly, the high court set aside the settlement agreement on the grounds of fraud, without any evidence to support such a finding. It made adverse findings of dishonesty and fraud against Mr Ubisi’s attorney and counsel without affording them an opportunity to be heard on the matter. [12] I now consider the circumstances in this case to determine whether the judge was entitled to set aside the settlement agreement. The legal position on how a court should deal with a settlement agreement brought by the parties to be made an order of court, was recently settled by the Constitutional Court in Mafisa v Road Accident Fund (Mafisa),3 where it was stated that ‘[c]ontractual agreements concluded freely and voluntarily by the parties ought to be respected and enforced. This is in accordance with the established principle pacta sunt servanda (agreements must be honoured)’. 2 Eke v Parsons [2015] ZACC 30; 2015 (11) BCLR 1319 (CC); 2016 (3) SA 37 (CC) (Eke) paras 25-26. 3 Mafisa v Road Accident Fund and Another [2024] ZACC 4; 2024 (6) BCLR 805 (CC) (Mafisa) para 36. 7 [13] The Constitutional Court, in Mafisa, further held that as a general rule, a judge should not interfere with the terms of the settlement agreement.4 A judge may, however, raise concerns in certain circumstances as contemplated in Eke.5 The Court gave examples of circumstances in which a settlement agreement may offend public policy. These include, when the amount in the settlement agreement differs significantly with amounts in similar cases so as to give rise to a reasonable suspicion and when an amount in the settlement agreement exceeds the pleaded claim. [14] The Constitutional Court emphasised that a judge is not entitled to demand the parties to address his or her concerns. Once he or she has informed the parties of the concerns, it is upon the parties to elect whether to address the concerns or indicate to the judge that they regard the matter as settled between them. In this regard, the Constitutional Court stated the following in Mafisa: ‘In such a case, the Judge will note on the court file that the matter has been settled between the parties and that the settlement agreement will not be an order of court. If the parties elect to address the issues raised and the Judge is satisfied, the settlement agreement will be made an order of court. If the Judge is not satisfied, she will refuse to do so. However, the fact that the Judge refused to make the settlement agreement an order of court does not mean that the settlement agreement is invalid. Whether the settlement agreement is valid depends on its terms and the law.’6 [15] Mafisa approved an earlier decision of this Court in Road Accident Fund v Taylor (Taylor),7 which concerned two actions against the RAF, which were settled between the parties without proceeding to trial. This Court, there, reiterated the principles outlined in Eke. It further found that a compromise puts an end to the lis between the parties and has the effect of res judicata.8 Courts 4 Ibid para 50. 5 Op cit fn 2. 6 Mafisa para 51. 7 Road Accident Fund v Taylor [2023] ZASCA 64; 2023 (5) SA 147 (SCA). 8 Ibid paras 37-42 and 51. 8 must, therefore, exercise restraint to ensure that there is no undue imposition on the parties’ contractual freedom. [16] There was no live dispute between the parties in this matter. They had settled their litigious dispute thereby terminating the court’s jurisdiction to pronounce on it. Although the high court was not obliged to make the settlement agreement an order of court, it had no power to set it aside when its validity was not placed in issue before it. It was entitled to raise its concerns and leave it to the parties to decide whether they wanted to address the issues on or not. If parties chose not to address the issues, then the court could note in the court file that the settlement agreement is not made an order of court as stated in Mafisa. [17] The high court’s adverse finding of fraud and dishonesty against Mr Ubisi’s legal representatives was inappropriate. As in Taylor, the legal practitioners were not given notice or afforded an opportunity of a fair hearing before findings of dishonesty and impropriety were made against them. In that regard the findings and referrals to the Legal Practice Council ‘are manifestly unjust’ and cannot stand.9 Furthermore, a court is not entitled to make a finding of fraud without clear evidence. There was no evidence to sustain or justify the court’s finding of fraud and dishonesty.10 [18] This Court, in Motswai v RAF,11 was severely critical of the manner in which the judge in the court of first instance (in that matter) had made findings of fraud against an appellant’s attorney. The Court stated that: ‘Through the authority vested in the courts by section 165(1) of the Constitution, judges wield tremendous power. Their findings often have serious repercussions for the persons affected 9 Ibid paras 33-34. 10 Prinsloo NO v Goldex 15 (Pty) Ltd and Another [2012] ZASCA 28; 2014 (5) SA 297 (SCA) para 17-19. 11 Motswai v Road Accident Fund [2014] ZASCA 104; 2014 (6) SA 360 (SCA); [2014] 4 All SA 286 (SCA) (Motswai). 9 by them. They may vindicate those who have been wronged but they may condemn others. Their judgments may destroy the livelihoods and reputations of those against whom they are directed. It is therefore a power that must be exercised judicially and within the parameters prescribed by law. In this case, it requires a judge to hold a public hearing so that interested parties are given an opportunity to deal with the issues fully, including allowing them to make all the relevant facts available to the court before the impugned findings were made against them. The judge failed to do so, and in the process, did serious harm to several parties’.12 [19] Counsel for the appellants correctly submitted that the findings made by the high court and the consequent order had the potential to tarnish the reputation of Smalman Inc and counsel on brief and the order made will set the law in motion to have them both investigated professionally, unduly so. [20] In light of the above, the order of the high court must be set aside and be replaced with the one making the settlement agreed to by the parties an order of court as there is no evidence of impropriety warranting a remittal. The agreement which was presented to Mbongwe J, is attached to this judgment and marked ‘X’. [21] Regarding costs, counsel for the appellants submitted that the RAF’s failure to abandon the judgment granted by the high court, compelled the appellants to proceed with the appeal, incurring costs. He therefore contended that the RAF should pay the costs of the appeal. I do not agree with this submission. Not only was the RAF not responsible for the order made by the high court, the appellants would have had to approach this Court on appeal, given the adverse order made against Mr Ubisi’s legal representatives. Moreover, the RAF did not oppose the appeal. It served a notice to abide. There should therefore be no order as to costs for the appeal. 12 Ibid para 59. 10 [22] In the result, the following order is made: 1 The appeal is upheld. 2 The order of the high court is set aside and replaced with the following: ‘The draft order marked “X” is made an order of court. 3 There is no order as to costs. ________________________ D S MOLEFE JUDGE OF APPEAL 11 Appearances For the appellants: N G D Maritz SC with J Van der Merwe Instructed by: Nel van der Merwe Smalman Inc., Pretoria Honey Attorneys, Bloemfontein. 12 “x” IN THE HIGH COURT OF SOUTH AFRICA GAUTENG DIVISION, PRETORIA CASE NUMBER: 64167/2017 –Y Before the Honourable Justice Mbongwe J. On this the 6th day of May 2022. This Order is made an Order of Court by the Judge whose name is reflected hereon, duly stamped by the Registrar of the Court and is submitted electronically to the parties or their legal representative via e-mail. This Order is further uploaded to the electronic file of this matter on CaseLines by the Judge or his Secretary. The date of this Order is deemed to be 6 May 2022. In the matter between: M K UBISI Plaintiff And ROAD ACCIDENT FUND Defendant RAF LINK NO: 4091338 RAF REF NO: 560/12443938/1084/2 _______________________________________________________________ DRAFT ORDER _______________________________________________________________ By Agreement between the parties, it is hereby ordered that: 1. The Defendant is liable to compensate the Plaintiff for 100% of his proven or agreed damages; 13 2. The Defendant is ordered to pay to the Plaintiff the amount of R2 549 830.20 (Two million five hundred and forty nine thousand eight hundred and thirty rand, twenty cents) in delictual damages which amount is payable by Defendant to Plaintiff within one hundred and eighty days (180) days from date of this order, by depositing same into Plaintiffs’ attorneys of record's trust account, the details of which are as follows: ACCOUNT HOLDER : NEL VAN DER MERWE SMALMAN INC BANK : FIRST NATIONAL BANK TYPE OF ACCOUNT : TRUST ACCOUNT NUMBER : 6227 451 9001 BRANCH : THE GROVE BRANCH CODE : 250 655 REFERENCE NUMBER : WN3161 / R STEENKAMP 3. The Defendant will be liable for interest on the capital amount due to the Plaintiff at the prescribed interest rate applicable on the date of the Order as from the date of this order to date of payment should they fail to make payment of the capital amount timeously. 4. The Defendant must furnish the Plaintiff with an undertaking in terms of Section 17(4)(a) of Act 56 of 1996, for 100% of the costs of the future accommodation of him in a hospital or nursing home or treating of or rendering of a service to him or supplying goods to him, unlimited to the expenses incurred thereunder, arising out of the injuries sustained by him in the motor vehicle collision on 5 September 2015 after such costs have been incurred and upon proof thereof. 14 5. The Defendant is ordered to pay the Plaintiffs' taxed or agreed party and party costs on a High Court Scale, within the discretion of the Taxing Master, which costs will include, but will not be limited to, the following: 5.1. The reasonable taxable fees for consultation and preparation for trial, as well as the costs of the reports, addendum reports, joint minutes of all of the Plaintiff’s experts, as well as all expert affidavits; 5.2. The costs of Plaintiff’s senior- junior counsel, including but not limited to preparation and day fee/ attendance for trial for 17 August 2021 as well as 25 November 2021 respectively, as well as the costs of the Heads of argument/ amended heads of argument as well as the joint memorandum of settlement, as well as the costs of making this settlement an order of Court (if any); 5.3. The costs for the preparation, travelling, and attendance of all the respective pre-trial conferences by the plaintiff's representatives, including any scheduled Judicial Management meetings or Case Management meetings at Court; 5.4. The costs in respect of the preparation, drafting and copying of all the bundles of documents, expert reports, pleadings and notices and all indexes thereto; 5.5. The costs attendant upon the obtaining of payment of the amounts referred to in this Order; 15 5.6. The reasonable taxable travelling, subsistence, accommodation and transportation costs, if any, of the Plaintiff to the medico-legal examination(s) arranged by Plaintiff and Defendant; 5.7. The costs for the preparation, inspections, consultations, and attendance of the respective trial/s by the plaintiff's representatives on 17 August 2021 and 25 November 2021 respectively. 6. Payment of the above costs by the Defendant is subject to the following conditions: 6.1. Plaintiff is ordered to serve the notice of taxation of plaintiff's party and party bill of costs on defendant's attorneys of record; 6.2. The Defendant is ordered to pay the Plaintiffs' taxed and/or agreed party and party costs within 14 (fourteen) days from the date upon which the accounts are taxed by the Taxing Master and/or agreed between the parties; 6.3. The Defendant will be liable to pay interest at the prescribed interest rate applicable at the time, per annum on the amount referred to above under 6.2 if payment is not effected timeously. 7. Past medical and hospital expenses are separated in terms of Rule 33(4) and postponed sine die. 8. The Plaintiff entered into a contingency fee agreement with his legal representatives. 16 BY ORDER ________________ REGISTRAR obo PLAINTIFF: ADV H DE KOCK TEL: 082 415 8229 EMAIL: hmdekock29@gmail.com obo DEFENDANT: THABISO SEOPELA EMAIL: thabisoS@raf.co.za RAF Ref: 560/12443938/1084/2

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 11 June 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 Ubisi and Another v The Road Accident Fund (711/2023) [2024] ZASCA 93 (11 June 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal, further setting aside and replacing the order of the Gauteng Division of the High Court, Pretoria (the high court). The SCA made no order as to costs. On 15 September 2017, the first respondent, Mr Matedewuja Kenneth Ubisi (Mr Ubisi), who was represented by the second respondent, Nel, van der Merwe and Smalman Incorporated (Smalman Inc), issued summons against the Road Accident Fund (the RAF) in the high court for a claim of R9 500 000. He alleged that he had sustained injuries in a motor vehicle accident, which entitled him to compensation for past and future medical expenses, past and future loss of earnings and general damages. The RAF filed a plea and disputed liability and the quantum of the claim. Liability was subsequently settled between the parties on 5 June 2019 and the RAF agreed to compensate Mr Ubisi for 100% of his proven or agreed damages. The matter was set down for hearing in respect of quantum on 25 November 2021 before Mbongwe J. On the day of the hearing, the RAF sent an offer of settlement in respect of quantum to Smalman Inc. The offer was made in respect of general damages, loss of earnings and an undertaking in respect of future medical expenses and costs. The determination of quantum for past hospital and medical expenses was to be postponed sine die. On 16 February 2022, Smalman Inc accepted the offer on Mr Ubisi’s behalf by way of notice of acceptance and prepared a draft order dated 6 May 2022, containing the settlement agreement. On 6 May 2022, the RAF consented to the draft order being made an order of court. The matter was placed on the settlement roll and heard by the high court on 5 June 2022. Mr Ubisi’s counsel requested the court to make the settlement agreement an order of court as agreed by the parties. The high court indicated that it was not a rubber stamp of settlement agreements and had to interrogate such offers and have oversight on such matters. The court also indicated to the parties that it was not satisfied with the amount agreed in respect of general damages, loss of earnings and the terms of the draft order. It reserved judgment to consider the proposed settlement. On 1 August 2022, the high court set aside a settlement agreement concluded between the parties. It further ordered Smalman Inc to pay the costs of the action, including costs of Mr Ubisi’s experts, de bonis propiis. The high court handed down a written judgment where it found that some of the terms of the settlement agreement were at odds with the report made by Mr Ubisi’s industrial psychologist. The 2 high court found that the industrial psychologist’s report confined Mr Ubisi to his pre-accident position at work and improperly qualified him for past and future loss of earnings. The court refused to award the agreed quantum of damages in respect of loss of earnings of R2 049 830.20, on the basis that the RAF tender was not justified. The high court also refused to award the R500 000 tendered for general damages on the basis that Mr Ubisi’s general practitioner confirmed in his report that his whole person impairment (WPI) was 12% and below the 30% threshold, which was a clear indication that he did not qualify for general damages. The claim for payment of past hospital and medical expenses, although the parties had agreed that the determination of the quantum of this claim should be postponed, was effectively dismissed. The issue before the SCA related to the powers of a court when parties have settled their dispute, without proceeding to litigation. In addressing the issue, the SCA held that there was no longer a live dispute between the parties as they had settled their litigious dispute, thereby terminating the court’s jurisdiction to pronounce on it. Although the high court was not obliged to make the settlement agreement an order of court, it had no power to set it aside when its validity was not placed in issue before it. The SCA further held that the high court was entitled to raise its concerns and leave it to the parties to decide whether they wanted to address the issues or not. If the parties chose not to address the issues, then the court could note in the court file that the settlement agreement is not made an order of court. In addition to this, the SCA found that the high court’s adverse finding of fraud and dishonesty against Mr Ubisi’s legal representatives was inappropriate as the legal practitioners were not given notice or afforded an opportunity of a fair hearing before findings of dishonesty and impropriety were made against them and there was no evidence to sustain or justify the court’s finding of fraud and dishonesty. In the result, the SCA made an order upholding the appeal and further setting aside and replacing the high court’s order. --------oOo--------

4295

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 259/2023 In the matter between: MARELIZE BOTHA APPELLANT and RUARK BOTHA RESPONDENT Neutral citation: Botha v Botha (259/2023) [2024] ZASCA 116 (24 July 2024) Coram: NICHOLLS, MOTHLE and MOLEFE JJA and DAWOOD and MBHELE AJJA Heard: 10 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 24 July 2024 Summary: Leave to appeal – referred for oral argument – special leave granted – divorce – variation of a settlement agreement made a court order – whether there was a mistake common to the parties when they signed the settlement agreement. 2 ORDER On appeal from: North West Division of the High Court, Mahikeng (Djaje DJP and Malowa AJ sitting as a court of appeal): 1 The application for special leave to appeal succeeds. 2 The appeal is upheld with costs. 3 The order of the high court is set aside and replaced with the following: ‘3.1 The appeal is upheld with costs. 3.2 The application for variation is dismissed with costs.’ JUDGMENT Mbhele AJA (Nicholls, Mothle and Molefe JJA and Dawood AJA concurring): [1] This is an application for special leave to appeal in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 (the Act), against the judgment and order of the North West Division of the High Court, Mahikeng (Djaje DJP and Malowa AJ) (the high court) delivered on 11 November 2022. On 17 May 2023 this Court referred the application for oral argument in terms of s 17(2)(d)1 of the Act. [2] The central issue in this appeal is whether certain clauses in a settlement agreement were concluded as a result of a common mistake between the parties. The appellant and the respondent were married on 4 November 2000, out of community of property, with the inclusion of the accrual system. Subsequently divorce proceedings were launched in the Regional Court of Northwest held at Klerksdorp. A final decree 1 Section 17(2)(d) reads: ‘The judges considering an application referred to in paragraph (b) may dispose of the application without the hearing of oral argument, but may, if they are of the opinion that the circumstances so require, order that it be argued before them at a time and place appointed, and may, whether or not they have so ordered, grant or refuse the application or refer it to the court for consideration.’ 3 of divorce, incorporating an agreement of settlement signed by the parties, was made an order of court on 9 March 2021. [3] Several months later, on 1 July 2021, the respondent launched an application in the same court, seeking a variation of the settlement agreement, more particularly those clauses dealing with the patrimonial claims arising out of the accrual. The two clauses singled out by the respondent were 3.2 and 3.5 of the settlement agreement. In clause 3.2 the respondent agreed to make payment of R2 650 000 to the appellant in settlement of the accrual claim.2 Clause 3.5 provided that each party retain as their sole property any policies, investments and pension fund interests in their respective names. The basis of the application was that the accrual amount had been incorrectly calculated and that this was a mistake common to the parties. The effect of the amendment was to reduce the amount payable to the appellant. [4] The regional court granted the variation order without the hearing of oral argument and granted an order that: ‘Paragraph 3.2 is varied by removing the words “the amount of R2 650 000,00” and replacing it with the words “to be determined by a liquidator to be appointed by the parties within 2 weeks, or if the parties cannot agree, by the court”.’ The appointment of a liquidator was not an order that either party sought. [5] The appellant approached the high court seeking the setting aside of the regional court order. A full bench of the high court dismissed the appeal on the grounds that the order of the regional court was interlocutory and therefore not appealable. It held that the appeal had been launched ‘prematurely’ because there was ‘no final order on the pronouncement of issues between the parties’. This was because the process of appointing a liquidator had not yet been finalised at the time of the appeal 2 Clause 3.2 of the settlement agreement provides: ‘That Defendant will pay to the Plaintiff in settlement of the accrual claim the amount of R2 650 000.00, payable as follows: 3.2.1 R500 000.00 within 30 days from date of Divorce; 3.2.2 The balance is payable in 65 equal monthly instalments from 1 May 2021. 3.2.3 The amount set out in paragraph 3.2.2 above is subject to simple interest calculated monthly at 7% per annum from 1 May 2021 until the full outstanding amount is paid in full, and shall be paid simultaneously with the capital instalments. 3.2.4 In the event that Defendant fails or neglects to make one or more payments as set out in paragraph 3.2.1 to 3.2.3 the total outstanding amount plus interest will become immediately due and payable after 7 days written prior notice to Defendant to rectify the arrears.’ 4 and therefore the order sought to be appealed against was not final in effect and was not definitive of the rights of the parties. The finding by the high court gave rise to the appeal in this Court. [6] The basis of the respondent’s claim for variation is that the calculations that were used to determine his liability to the appellant in terms of the difference in accrual, as well as the allocation of assets and liabilities, were overstated by R1 244 237.77. He attributes the incorrect calculations to a document prepared by the appellant’s attorneys and the input made by his former attorneys. He contends that the calculations by the appellant’s attorneys failed to properly differentiate between calculating the difference in the accrual of the parties’ respective estates and the incorrect allocation of assets and liabilities between the parties including the payment of the difference in accrual. He blames his erstwhile attorneys for giving him incorrect legal advice. [7] The appellant denies the existence of a common mistake known to the parties. She contends that the settlement agreement was reached after lengthy negotiations between the parties and was less than the amount originally calculated by her attorneys. The settlement amount included various aspects that formed the basis of their dispute, including her maintenance claim, the accrual, withdrawals made by the respondent from the bond registered over the property, the transfer and sale of the appellant’s half share in the property as well as the shares in their business. [8] Both parties are medical professionals. The respondent is a urologist and the appellant is an occupational therapist. Both were represented by attorneys and counsel during the negotiations. The appellant’s legal representatives prepared a document which formed the basis of the negotiations on the accrual payable. At some stage the respondent absented himself to obtain information required by his legal representatives. Significantly, the view of the respondent’s erstwhile attorneys who represented him during the negotiations is that there was no error in the calculation and the division of the accrual, as alleged by their former client. They further stated that the settlement amount did not overstate the amount due to the appellant and that ‘the settlement agreement, as concluded, was in line with legal principles, fair and equitable’. The contents of this letter are not denied by the respondent whose only 5 comment is that there is litigation pending against his former attorneys where he intends to raise their negligence. [9] As a general rule, a settlement agreement is concluded as a form of compromise between parties who want to avoid protracted and expensive litigation. The essence of a compromise (transactio) is the final settlement of disputed or uncertain rights or obligations by agreement. Save to the extent that the compromise provides otherwise, it extinguishes the disputed rights or obligations. The purpose of a compromise is to prevent or put an end to litigation. A compromise has the effect of res iudicata.3 Here, the settlement agreement signed by the parties was a final agreement between the parties, putting all disputed issues to rest, including the appellant’s maintenance claim as well as shares in their company.4 [10] There are very limited grounds on which a party can rely on a mistake to resile from a contract. A settlement agreement can be set aside if it was fraudulently obtained. It can also be set aside on the ground of justus error, provided that such error vitiated true consent and did not merely relate to the merits of the dispute which was the very purpose of the parties to reach a settlement.5 [11] It was explained in the following manner by this Court in George v Fairmead (Pty) Ltd:6 ‘When can an error be said to be justus for the purpose of entitling a man to repudiate his apparent assent to a contractual term? As I read the decisions, our Courts, in applying the test, have taken into account the fact that there is another party involved and have considered his position. They have, in effect, said: Has the first party - the one who is trying to resile - been to blame in the sense that by his conduct he has led the other party, as a reasonable man, to believe that he was binding himself? ... If his mistake is due to a misrepresentation, 3 Road Accident Fund v Taylor and other matters [2023] ZASCA 64; 2023 (5) SA 147 (SCA) para 36 (Taylor). See also Mafisa v Road Accident Fund and Another [2024] ZACC 4; 2024 (6) BCLR 805 (CC) para 48. 4 ‘The parties hereto agree that this Deed of Settlement settles all the disputes between them and that they will have no further claims relating to this cause of action against each other, saving those contained in this Deed of Settlement. No Variation of this agreement will be in force unless done so in writing and singed by both parties hereto and furthermore the parties pledge their respective estates and executors to the fulfilment of the duties of the parties as set out in this agreement.’ 5 Gollach and Gomperts(1967) (Pty) Ltd v Universal Mills and Produce Company (Pty) Ltd 1978(1) SA 914 (A) at 922C-G. 6 George v Fairmead (Pty) Ltd 1958 (2) SA 465 (A). 6 whether innocent or fraudulent, by the other party, then, of course, it is the second party who is to blame and the first party is not bound.’7 (Own Emphasis.) [12] In Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis,8 Harms AJA defined mistake as implying a ‘misunderstanding, misrepresentation, and resultant poor judgment’. The Court further set out the test for whether a party relying on a mistake may withdraw from a resultant contract as follows: ‘. . . did the party whose actual intention did not conform to the common intention expressed, lead the other party, as a reasonable man, to believe that his declared intention represented his actual intention? . . . To answer this question, a three-fold enquiry is usually necessary, namely, firstly, was there a misrepresentation as to one party’s intention; secondly, who made that representation; and thirdly, was the other party misled thereby? . . . The last question postulates two possibilities: Was he actually misled and would a reasonable man have been misled?’9 [13] On the facts of this case, there was no misrepresentation by the appellant. There were protracted negotiations between the parties which led to a settlement agreement. In consultation with his legal representatives, the respondent signed the settlement agreement which was made an order of court. The fact that several months later he had a change of heart and believed that he had overpaid his former wife does not translate into a mistake common to the parties. Even if he genuinely believed that the calculations were incorrect and that he should not have accepted the advice of his legal representatives, this does not qualify as a justus error. If the mistake is due to that party’s own fault, the error cannot be said to be justus and the mistaken party cannot escape liability for the agreement that he signed. At best for the respondent, this is a unilateral error. It does not lay the basis for a claim for the variation of the settlement agreement on the grounds of a common mistake. 7 Ibid at 471B-D. 8 Sonap Petroleum (SA) (Pty) Ltd (formerly known as Sonarep (SA) (Pty) Ltd) v Pappadogianis 1992 (3) SA 234 (A) at 238H. (Sonap) 9 Ibid at 239I-240A. 7 [14] The next issue to consider is whether the regional court’s order is appealable. In Zweni v Minister of Law and Order,10 this Court while distinguishing a judgment or order from a ruling set out the characteristics of an appealable order or judgment. Harms AJA, as he then was, held: ‘“A ‘judgment or order’ is a decision which as a general principle, has three attributes, first the decision must be final in effect and not susceptible of alteration by the Court of first instance; second, it must be definitive of the rights of the parties; and, third, it must have the effect of disposing of at least substantial portion of the relief claimed in the main proceedings….”’ [15] The relief sought by the respondent in the regional court was final in effect. There was no justification for that court to appoint a liquidator. Once this is so, the judgment of the high court falls to be set aside and special leave should be granted to the appellant. [16] In the result the following order is made: 1 The application for special leave to appeal succeeds. 2 The appeal is upheld with costs. 3 The order of the high court is set aside and replaced with the following: ‘3.1 The appeal is upheld with costs. 3.2 The application for variation is dismissed with costs.’ N M MBHELE ACTING JUDGE OF APPEAL 10 Zweni v Minister of Law and Order [1993] 1 All SA 365 (A); 1993 (1) SA 523 at 532I-533A. 8 Appearances For appellant: J Lubbe SC Instructed by: Honey Attorneys, Bloemfontein For respondent: S Hefer SC and C R du Plessis Instructed by: Diederik Oudegeest 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: 24 July 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 Botha v Botha (259/2023) [2024] ZASCA 116 (24 July 2024) Today the Supreme Court of Appeal (SCA) handed down judgment upholding, with costs including costs of counsel, an appeal against the decision of the North West Division of the High Court, Mahikeng. The appellant and the respondent were married, out of community of property, with the inclusion of the accrual system, on 4 November 2000. Subsequently divorce proceedings were launched in the Regional Court of North West held at Klerksdorp. A final decree of divorce, incorporating an agreement of settlement signed by the parties, was made an order of court on 9 March 2021. Several months later, on 1 July 2021, the respondent launched an application in the same court, seeking a variation of the settlement agreement, more particularly those clauses dealing with the patrimonial claims arising out of the accrual. The two clauses singled out by the respondent were 3.2 and 3.5 of the settlement agreement. In clause 3.2 the respondent agreed to make payment of R2 650 000 to the appellant in settlement of the accrual claim. Clause 3.5 provided that each party retain as their sole property any policies, investments and pension fund interests in their respective names. The basis of the application was that the accrual amount had been incorrectly calculated and that this was a mistake common to the parties. The effect of the amendment was to reduce the amount payable to the appellant. The Magistrate granted the variation order without the hearing of oral argument and granted an order on behalf of the respondent. The appellant approached the high court seeking the setting aside of the regional court order. A full bench of the high court dismissed the appeal on the grounds that the order of the regional court was interlocutory and therefore not appealable. The finding by the high court gave rise to an application for special leave to appeal to this Court in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 (the Act), against the judgment and order of the high court. The central issue in this appeal was whether certain clauses in a settlement agreement were concluded as a result of a common mistake between the parties. The respondent contended that the calculations that were used to determine his liability to the appellant in terms of the difference in accrual, as well as the allocation of assets and liabilities, were overstated by R1 244 237.77. He attributed the incorrect calculations to a document prepared by the appellant’s attorneys as well as the input made by his former attorneys. The appellant on the other hand, denied the existence of a common mistake known to the parties. In its findings the SCA held that as a general rule, a settlement agreement was concluded as a form of compromise by parties who wanted to avoid protracted and expensive litigation. The purpose of a compromise was to prevent or put an end to litigation. A compromise had the effect of res iudicata. Here the settlement agreement signed by the parties was a final agreement between the parties, putting all disputed issues to rest. The SCA further held that, there were very limited grounds on which a party could rely on a mistake to resile from a contract. A settlement agreement can be set aside if it was fraudulently obtained. It can also be set aside on the ground of justus error, provided that such error vitiated true consent and did not merely relate to the merits of the dispute which was the very purpose of the parties to reach a settlement. On the facts of this case, the SCA found that there was no misrepresentation by the appellant. There were protracted negotiations between the parties which led 2 to a settlement agreement. In consultation with his legal representatives, the respondent signed the settlement agreement which was made an order of court. The fact that several months later he had a change of heart and believed that he had overpaid his former wife did not translate into a mistake common to the parties. Even if he genuinely believed that the calculations were incorrect and that he should not have accepted the advice of his legal representatives, this did not qualify as a justus error. If the mistake was due to that party’s own fault, the error could not be said to be justus and the mistaken party cannot escape liability for the agreement that he signed. At best for the respondent, this was a unilateral error. It did not lay the basis for a claim for the variation of the settlement agreement on the grounds of a common mistake. Coming to the issue of whether the regional court’s order was appealable. The SCA held that the relief sought by the respondent in the regional court was final in effect. There was no justification for that court to appoint a liquidator. Once this was so, the judgment of the high court fell to be set aside and special leave should be granted to the appellant. ~~~~ends~~~~

4303

non-electoral

2024

1 THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 704/2023 In the matter between: SAHIL RAMTHAL APPELLANT and THE STATE RESPONDENT Neutral citation: Ramthal v The State (704/2023) 2024 ZASCA 124 (13 September 2024) Coram: MABINDLA-BOQWANA and KGOELE JJA and MANTAME AJA Heard: 19 August 2024 Delivered: 13 September 2024 Summary: Petition procedure – Criminal Procedure Act 51 of 1977 – s 309C – appeal against refusal of petition for leave to appeal by high court against conviction and sentence imposed by the regional court. 2 ORDER On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Bedderson J and Sibisi AJ, sitting as judges considering petition from the regional court) 1 The appeal is upheld. 2 The order of the high court dismissing the appellant’s application for leave to appeal is set aside and substituted with the following: ‘The appellant is granted leave to appeal to the KwaZulu-Natal Division of the High Court, Pietermaritzburg, against his conviction and sentence in the Verulam Regional Court.’ JUDGMENT Mabindla-Boqwana JA (Kgoele JA concurring): [1] The appellant, Mr Sahil Ramthal, stood trial in the Verulam Regional Court, KwaZulu-Natal (the regional court), on one charge of murder. The State alleged that on 27 January 2019, at Phoenix, the appellant unlawfully and intentionally killed Senzo Dlamini (the deceased). The appellant pleaded not guilty to the charge. In amplification of his plea, he stated that he shot the deceased in private defence of his colleague and himself. Pursuant to the trial, he was found guilty and sentenced to eight years’ imprisonment. 3 [2] The appellant applied for leave to appeal against both his conviction and sentence, which was refused by the regional court. He then sought the respective leave to appeal in the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court), which was also refused. Special leave to appeal against the refusal of leave to appeal by the high court was granted by this Court on 26 June 2023. [3] In an appeal of this kind, this Court does not determine the merits of the matter. The ‘issue to be determined is not whether the appeal against conviction and sentence should succeed, but whether the high court should have granted leave, which in turn depends on whether the appellant could be said to have reasonable prospects of success on appeal’.1 [4] The only question is whether the appellant has established a reasonable prospect of success on appeal. In Smith v S,2 the test was formulated as follows: ‘What the test of reasonable prospects of success postulates is a dispassionate decision, based on the facts and the law, that a court of appeal could reasonably arrive at a conclusion different to that of the trial court. In order to succeed, therefore, the appellant must convince this court on proper grounds that he has prospects of success on appeal and that those prospects are not remote but have a realistic chance of succeeding. More is required to be established than that there is a mere possibility of success, that the case is arguable on appeal or that the case cannot be categorised as hopeless. There must, in other words, be a sound, rational basis for the conclusion that there are prospects of success on appeal.’3 1 Tonkin v The State [2013] ZASCA 179; 2014 (1) SACR 583 (SCA) para 3, quoting Leach AJA in S v Matshona [2008] ZASCA 58; [2008] 4 All SA 68 (SCA); 2013 (2) SACR 126 (SCA) para 4. See also S v Kriel [2011] ZASCA 113; 2012 (1) SACR 1 (SCA) paras 11-12, Smith v S [2011] ZASCA 15; 2012 (1) SACR 567 (SCA) paras 2-3, AD v The State [2011] ZASCA 215 paras 3-6. 2 Smith v S [2011] ZASCA 15; 2012 (1) SACR 567 (SCA). 3 Ibid para 7. 4 [5] To determine whether prospects of success on appeal exist, it is important to briefly sketch the relevant evidence. The State led the evidence of two witnesses, Mr Kesaven Atchuden and Dr Lesego Ipeleng Tsikwe. Mr Atchuden testified that he was self-employed as a panel beater and the deceased worked for him. The deceased lived in one of the vehicles outside his house. He had asked to live there because he had a problem with his biological father. [6] On the day of the incident, at approximately 22h30, while coming back home from visiting a friend, Mr Atchuden noticed his nephew talking to the deceased outside the house in the yard. He told the nephew to come inside because it was late. The nephew obliged, locked the gate and informed him that the deceased ‘was not right’. [7] The deceased was making a funny sound, screaming out to himself and running towards Mr Atchuden in slow motion. He shook the gate wanting to get inside the house. Mr Atchuden asked him what the problem was, but the deceased did not answer. His eyes were red, and he had a ‘scary’ look. The deceased walked back and forth towards the house, talking to himself in isiZulu saying ‘shiya mina, shiya mina’ (‘[l]eave me alone, leave me alone’, as understood by Mr Atchuden). He urged the deceased to read the Bible and go to sleep. [8] At that point he was scared and asked the friend that he had visited that night to call Reaction Unit South Africa (Reaction), a security company, for help. A security officer, Mr Samuel Malasamy arrived within minutes. The deceased asked Mr Malasamy to pass on to him a cigarette that he was smoking, which he did. Mr Atchuden then requested Mr Malasamy to ask the deceased to leave. Mr Malasamy did so, but the deceased started to fight with him. The deceased picked up 5 Mr Malasamy, who was a big-sized man and threw him on the floor. Mr Atchuden got scared and requested Reaction to send backup. He told them that the deceased was too aggressive and was fighting with Mr Malasamy. Five to ten minutes later, backup arrived. The appellant was a backup officer. [9] Mr Atchuden further testified that the appellant asked the deceased to sit down and to stop assaulting Mr Malasamy. The deceased did not listen, instead, he walked towards the appellant. It was quite dark. Mr Atchuden saw the appellant pointing his firearm at the floor and firing one shot. He was about ten steps from where the appellant was. Mr Atchuden got scared and ran into the house and locked the gate. He left the officers with the deceased and could not see them. He heard two further shots after that. He however did not observe the gunshots. Thereafter, he noticed the deceased walking towards the yard and sitting inside the yard. He then saw blood coming out of the deceased’s shirt just above his stomach. [10] Police officers, who were called by Reaction, arrived and took a statement from Mr Atchuden. As the events unfolded, his nephew was inside the house because he was scared. He only came out of the house when the police arrived, to see what was happening. In the two months that the deceased had worked for Mr Atchuden, he had never behaved in the manner he did that day. [11] Dr Tsikwe conducted a post-mortem on the deceased. She testified that the deceased had a gunshot wound to the chest with associated injuries to the left chest cavity, along the anterior (front) axilla left lung as well as the left-sided haemothorax. This wound resembled the distant entry gunshot wound, there was no firearm discharge residue evident on the skin surrounding the wound. There was also 6 a gunshot wound to the left lower limb. She concluded that the chest wound was the fatal one. [12] The appellant testified in his case and called Mr Malasamy, who was the first officer on the scene, to testify on his behalf. The appellant’s testimony was that on the day of the incident, he was the response officer patrolling the Phoenix Industrial Park area. He heard Mr Malasamy requesting for backup and proceeded out of the area to assist him. At the time, the appellant was armed with a nine-millimetre Taurus firearm with 13 rounds of ammunition, which was used by Reaction. [13] On his arrival at the place of the incident, it was raining and very dark. The road was narrow with lots of trees. He noticed Mr Malasamy’s vehicle parked outside the premises. Mr Malasamy lay on the ground with a man, wrestling on top of him. The man was punching and assaulting him. Mr Malasamy was screaming for help. The man was pulling Mr Malasamy’s firearm out from his holster which was located on his thigh. The appellant was approximately ‘four to five metres’ away as this was taking place. [14] The appellant drew out his firearm to assist Mr Malasamy, as the deceased had managed to overpower and take Mr Malasamy’s firearm from him. That is when the appellant fired his first warning shot on the ground. The deceased tried to come towards the appellant while pointing the firearm at the appellant’s direction. The appellant fired the second warning shot, which was to the deceased’s knee. After the second shot, the deceased still had the firearm pointing towards the appellant’s direction. That is when the appellant fired the third shot. The third shot struck the deceased on his chest. The interval between the shots was quick, it was a few seconds. 7 [15] The deceased then dropped Mr Malasamy’s firearm from his hands, which fell next to Mr Malasamy. The deceased then walked back into the yard of the premises and sat against the wall. That is when the appellant saw Mr Atchuden coming out of the house, when everything had calmed down. Mr Atchuden went towards the deceased and noticed that he was injured. The appellant also noticed that Mr Malasamy was injured. The appellant noticed that the deceased was bleeding and spoke to Reaction’s control room, via the radio, asking them to dispatch the company’s ambulance. Two ambulances arrived. One of the paramedics treated Mr Malasamy and others went to the deceased. [16] A few minutes later the appellant was informed that the deceased had passed away due to his injuries. Shortly thereafter, members of the South African Police Service arrived and instructed the appellant not to leave the scene. The appellant was taken to the police station and charged. [17] Mr Malasamy testified that on the day of the incident, while on duty, he received a call from the control room about a suspect on the property in Eastbury and he responded to the call. When he arrived at the scene, he jumped out of his vehicle and proceeded to the driveway and saw the deceased in the premises of the yard. Mr Atchuden told him that he needed the deceased to be removed because he was causing a disturbance. The deceased sat down on the ground while breathing heavily. As he was speaking to Mr Atchuden’s nephew, the deceased ran towards him and punched him. A fight broke between them. Mr Atchuden and his nephew fled and locked themselves inside the yard. 8 [18] Mr Malasamy got hold of his pepper spray that was on his vest and used it. The spray unfortunately also came unto him, and he started choking. That is when he got into a tussle and the deceased threw him on the floor. He managed to get hold of his radio which was on his vest to communicate with the control room, as well as other members that were on duty for the night, to call for backup. As this was happening, he was lying flat on his back, while the deceased was on top of him punching his face and overpowering him. He did not know when backup arrived. [19] While Mr Malasamy was tussling with the deceased, he felt the deceased’s hand unclipping his firearm from the holster. He tried to hold onto the retainer that was hooked onto the firearm. That is when he heard screams and felt relieved, as backup had arrived. He kept screaming ‘he has my firearm with him, and it is one up in’. He was saying this to whoever was screaming at the time. The firearm was on the left-hand side of the deceased. He did not know what the intention of the deceased was when he pulled off the firearm from him. After he screamed, he heard two to three gunshots, afterwhich he got up and saw the deceased walking towards the white Isuzu bakkie. The deceased sat against the wall and fell. The firearm fell off the deceased’s hand onto the ground. [20] Mr Malasamy’s retainer had bust off his belt. He was injured, with a bust bottom lip. He also had some scratches on the hands, fingers and elbows. Reaction’s medical services attended to him. Mr Atchuden and his nephew were inside the premises. They only came out of the house when they saw the deceased lying on the floor in the driveway. He never got a chance to see the appellant until he got back to work three days after the incident. 9 [21] While acknowledging that Mr Atchuden was a single witness, the regional court was impressed with his evidence and accepted it. It rejected the appellant’s version of private defence as one beset with contradictions. As regards the sentence, it found substantial and compelling circumstances to deviate from the prescribed sentence of 15 years’ imprisonment and imposed a sentence of eight years’ imprisonment. These included the fact that the offence was committed while the appellant was performing his duties as a security officer. It found that the appellant ‘did not set out to kill anybody, and in particular, the fact that the deceased himself behaved in a manner that [was] disgraceful, and appeared to be possessed, as the complainant told us, it is also quite clear that when you shot the deceased, the deceased was approaching you.’ (Emphasis added.) [22] The appellant contends that the high court erred by refusing leave to appeal for several reasons. Firstly, the regional court had erred by drawing an inference on the limited evidence of the State’s single witness, Mr Atchuden and concluding that the appellant unlawfully and intentionally killed the deceased. This misdirection is underscored by the fact that Mr Atchuden clearly stated that he only witnessed the first warning shot, justifiably fired oanto the ground by the appellant. He did not witness either of the shots which thereafter struck the deceased. The regional court was accordingly in no position to find that the appellant did not fire the fatal shot in private defence (of himself and/or his colleague, Mr Malasamy). It misdirected itself when it found that Mr Atchuden’s single evidence negated the evidence of the appellant and Mr Malasamy that the fatal shot was fired legitimately in private defence. [23] Secondly, the regional court misdirected itself when finding that the appellant and Mr Malasamy were poor witnesses who contradicted themselves and each other. 10 According to the appellant, the record proves otherwise and reveals that he and Mr Malasamy gave credible, irreconcilable versions which fully justified a finding of private defence. Above all, there was no basis upon which the regional court could prefer Mr Atchuden’s evidence above that of the appellant and Mr Malasamy, on the very limited issue where their versions differed. [24] Even if the regional court’s acceptance of Mr Atchuden’s evidence above that of the appellant and Mr Malasamy were found to be correct, there is no basis for the finding that the appellant did not act in private defence, so it is contended. According to the appellant, Mr Atchuden’s evidence, was clear to the effect that Mr Malasamy was being attacked by the deceased and the appellant was under threat of attack from the deceased. [25] It is further submitted that the regional court materially misdirected itself when convicting the appellant on the basis that there was no credible evidence indicating that the appellant faced ‘imminent danger to his life’ warranting him to shoot at the deceased. Counsel for the appellant argues that it is not a legal requirement of private defence that there must be imminent danger to life. According to him, this misdirection was exacerbated by the regional court’s further statement that the appellant’s version that he shot the deceased because he was advancing towards him, does not comply with the requirements of private defence. In this regard, so it is contended, it is trite that there need not be imminent danger to life before shooting a person in private defence. The correct standard is a threat of serious bodily injury. It is common cause in this matter that the deceased had already inflicted serious bodily injury on Mr Malasamy and was directing irrational aggression to everyone in his path including the appellant. 11 [26] In the alternative, the appellant contends that the regional court misdirected itself by failing to give any consideration to culpable homicide as a competent verdict to murder. [27] The State contends that the defensive act employed by the appellant was not proportional to the attack, thereby exceeding the bounds of private defence, even if indeed the deceased was armed and advanced towards him. The basis of the State’s contention is the trajectory of the fatal wound, which was downward from the left, under the armpit. According to the State, this indicates that he was on the ground when the shot was fired. [28] As to the question of sentence, the appellant submits that the regional court failed to consider the following important issues. Firstly, that the deceased was acting irrationally and conducting himself as a man ‘possessed’. There were no options open to the appellant other than firing a warning shot followed by a non-fatal shot and thereafter the fatal shot. [29] Secondly, the regional court showed no appreciation of the fact that the appellant used the least invasive means to repel the attack of the deceased in the circumstances. Thirdly, insufficient consideration was given to the appellant’s favourable personal circumstances and his prospects of rehabilitation where he has no previous convictions. Fourthly, insufficient consideration was given to the imposition of correctional supervision under s 276(1)(h) or (i) of the Criminal Procedure Act 51 of 1977. In this regard, counsel for the appellant emphasised that the degree of blameworthiness ought to have been measured, as is the question of what the appellant ought to have done in the circumstances. Moreso that, the latter 12 issue was not put to the appellant by the prosecutor. This question, he contends, impacts on the sentence. Lastly, the sentence of eight years direct imprisonment was so disproportionate to the crime committed by the appellant that it induces a sense of shock. [30] The State’s submission on the sentence is effectively that the sentence imposed by the regional court is not startling, shocking or disproportionate entitling an appeal court to interfere nor was there a misdirection in regard thereto. [31] In my view, the alleged shortcomings in the treatment of the evidence by the regional court, in relation to the alleged ground of justification, ie private defence, could result in a court of appeal reasonably arriving at a different conclusion than that of the regional court. Without wishing to comment on the merits in any detail, given the outcome of this appeal, the alleged errors in the analysis of evidence, can be said to be sufficiently weighty to justify that conclusion. [32] As to the question of sentence, considering the possibility of the appeal court finding that a competent verdict to murder ought to have been found, or that other grounds as alleged by the appellant, exist to consider a different sentence, it is prudent to grant leave also in respect of sentence. [33] In the result, the following order is made: 1 The appeal is upheld. 2 The order of the high court dismissing the appellant’s application for leave to appeal is set aside and substituted with the following: 13 ‘The appellant is granted leave to appeal to the KwaZulu-Natal Division of the High Court, Pietermaritzburg, against his conviction and sentence in the Verulam Regional Court.’ _______________________________ N P MABINDLA-BOQWANA JUDGE OF APPEAL Mantame AJA (dissenting) [34] I have read the judgment of my colleague Mabindla-Boqwana JA and graciously disagree with the conclusion reached and the order issued. The grounds of appeal and evidence giving rise to this application for leave to appeal have been set out. However, I will highlight certain aspects of the evidence that will support the reasons for my conclusion. [35] The deceased, Mr Senzo Dlamini was indeed employed by Mr Kesaven Atchuden (Mr Atchuden) in his panel-beating shop. The deceased resided in one of the customer’s vehicles that was parked outside Mr Atchuden’s neighbour’s house. Mr Atchuden, after arriving home from a friend’s place, received a report from his nephew, Mr Craig Pillay (Mr Pillay) that the deceased was ‘not right’ and had witnessed the deceased making a funny sound, screaming out to himself and running towards him in slow motion. Mr Pillay then ran to the house and locked the burglar gate. The deceased then shook the burglar gate wanting to gain access to the house 14 which scared Mr Atchuden, and in his wisdom proceeded to call the Reaction Security Company for assistance. [36] Despite the alleged unusual behaviour of the deceased, when the Reaction Security Officer Mr Samuel Malasamy (Mr Malasamy) arrived at the house, according to Mr Atchuden’s testimony, the deceased was able to ask Mr Malasamy for a cigarette and proceeded to smoke the cigarette while outside of the house. [37] It appears that all hell broke loose when Mr Atchuden asked Mr Malasamy to request the deceased to leave his premises and come back when he is ‘okay’. At the same time, he instructed his neighbour to give the deceased his clothes and a packet. That is when the deceased started fighting with Mr Malasamy. When it was clear that the deceased was overpowering him, Mr Atchuden called for backup. However, the appellant testified that he responded to Mr Malasamy’s radio call for backup. [38] The appellant arrived with his colleague Mr Honest Matume (Mr Matume). Mr Atchuden stated that on arrival, the appellant asked the deceased to sit down and stop hitting Mr Malasamy. He then saw the appellant pointing the firearm on the floor and he fired one shot. At that moment the deceased was standing about five steps from him. The deceased was between him and the appellant. He then got scared and ran to the house. [39] The appellant’s version was that when he was about four to five metres away, he could observe Mr Malasamy being assaulted by the deceased. He got off the 15 vehicle to assist Mr Malasamy who was screaming for help and stated that the deceased was reaching for his gun and his gun was ‘one up’. At that point the deceased was attempting to pull out Mr Malasamy’s firearm from his holster which was on his thigh. The appellant immediately drew his firearm from his holster as well. As he got closer, the deceased while on top of Mr Malasamy managed to break the firearm free from Mr Malasamy’s holster. After pulling out the firearm, the deceased turned towards the appellant’s direction and pointed the firearm at him. [40] It was the appellant’s evidence that Mr Malasamy’s firearm was in the deceased’s left hand. That is when the appellant decided to fire his first warning shot on the ground. These are the two versions from both Mr Atchuden and the appellant leading to the first warning shot by the appellant. [41] The appellant proceeded to state that, regardless of the warning shot, the deceased proceeded to come towards him, while pointing a firearm at his direction. He then fired the second shot on his knee. Regardless of the second shot, the appellant stated that the deceased still had the firearm in his hand pointing towards his direction. He proceeded to fire a third shot, which was on his upper body in the chest area. According to the appellant, this all happened rapidly and in seconds. After the third shot, the firearm dropped from the deceased’s hand and fell next to Mr Malasamy. [42] Mr Malasamy’s version confirmed that a fight broke out between himself and the deceased. During the tussle, he felt the deceased getting hold of his retainer, which holds the firearm. He then screamed that his firearm was ‘one up’ in chamber. 16 The deceased pulled out his firearm and held it in his left arm. Whilst still screaming, he heard two to three gunshots being fired and nothing more, nothing less. [43] Dr Tsikwe) gave a detailed testimony of how she made conclusions in her post-mortem report. Dr Tsikwe identified the fatal wound as a gunshot wound to the chest with associated injuries to the left chest cavity, left lung as well as the left-sided haemothorax. Another gunshot wound was to the left lower limb on the soft tissues. [44] The doctor highlighted that the fatal wound passed from front to back, top to bottom and left to right in the anatomical position. She went on to state that a person is dynamic, so the movement is associated with the injuries noted on the body. For instance, regarding the shot on the knee, the tract entered through a defect on the anterior media aspect of the left distal thigh, and this involved the soft tissues and exited through a skin defect on the posterior lateral aspect of the left knee. The fatal wound, the bullet went through the tenth rib, perforated the lung and came out in the back area. This was in keeping with him being shot from the left. [45] In bringing this application, the appellant stated that the magistrate misdirected himself by failing to give any consideration to a conviction of culpable homicide as a competent verdict to murder in circumstances where the appellant’s conduct conforms to that of a reasonable man acting in private defence would have done. Regarding sentence, it was stated that the sentence of eight years’ imprisonment is disproportionate and does not fit the crime committed. 17 [46] The respondent opposed the legitimate private defence that was alluded to by the appellant and went on to state that neither the appellant nor his colleague was under attack. Even if they were, the use of deadly force upon the deceased was unwarranted. The Court was drawn to the shots that were fired by the appellant in succession. It was said that the first shot was a warning shot, the second shot was from the left distal thigh and exited on the back and the third and the last shot was in a downward position under the armpit. The tract entered through a defect on the antero-lateral aspect of the left chest along the anterior axilla line, through the left third intercostal muscle and exited through a fracture defect on the left tenth rib on the posterior aspect. These injuries were associated with a left sided haemothorax and a collapsed lung. The wound tract passed from front to back, from top to bottom and from left to right in anatomical position. Most probably, argued the respondent, the deceased’s wound trajectory suggest that he was already on the ground when these shots were fired. [47] The respondent contended that the appellant was correctly convicted for murder as he formed an intention to kill the deceased. The force used was not proportional to the perceived attack. The appellant escaped a mandatory sentence of 15 years. Due to the existence of substantial and compelling circumstances, he was only sentenced to eight years’ imprisonment. [48] The legal position is that ‘[a] person acts in private defence, and her act is therefore lawful if she uses force to repel an unlawful attack which has commenced, or is imminently threatening, upon her or somebody else’s life, bodily integrity, property or other interest which deserves to be protected, provided the defensive act 18 is necessary to protect the interest threatened, is directed against the attacker, and is not more harmful than necessary to ward off the attack’.4 [49] This Court has to determine whether the high court correctly refused the petition, and whether the appellant has reasonable prospects of success on appeal against the conviction and sentence. A reasonable prospect of success is a stringent test which must not be applied carelessly. This requires a balanced exercise based on the facts and the law. As stated in Smith v S, ‘. . . the appellant must convince this court on proper grounds that he has prospects of success on appeal and that these prospects are not remote but have a realistic chance of succeeding. . . There must, in other words, be a sound, rational basis for the conclusion that there are prospects of success on appeal.’5 [50] Be that as it may, when deciding on this matter, much focus should not be on the appellant’s version alone. Due regard should be had on the evidence adduced before the magistrate holistically and the attendant conclusion should be based on the entire facts and applicable law. [51] It appears that the revisitation of this matter on appeal would be a futile exercise if due regard would be had on these facts and the applicable legislation. If, for a moment, one would accept that the deceased was aggressive and ‘possessed’, it would therefore be arguable whether this is an issue that could have been resolved by three gunshots from a security officer in succession. The online Merriam – Webster. Com / dictionary define ‘possessed’ as – 4 S v Engelbrecht 2005 (2) SACR 41 (W) para 228; Steyn v S [2009] ZASCA 152; 2010 (1) SACR 411 (SCA) para 16. See also Botha v S [2018] ZASCA 149; [2019] 1 All SA 42 (SCA); 2019 (1) SACR 127 (SCA) para 34. 5 Smith v S fn 2 above para 7. See also Rohde v S [2019] ZASCA 193; 2020 (1) SACR 329 (SCA) para 23. 19 ‘1 a (1): influenced or controlled by something (such as an evil spirit, a passion, or an idea (2): mad, crazed b: urgently desirous to do or have something.’ [52] In my view, the high court was correct in its refusal of a petition. There are no reasonable prospects of success on both conviction and sentence on appeal. The magistrate bent over backwards to accommodate the appellant despite convicting him of murder. Instead of sentencing him to a mandatory sentence of 15 years in terms of s 51(2) of the Criminal Law Amendment Act 105 of 1997, his sentence was reduced to eight years due to the magistrate’s finding that there were substantial and compelling circumstances justifying the deviation from the prescribed minimum sentence. [53] For these reasons, I would make an order dismissing the appeal. ____________________________ B P MANTAME ACTING JUDGE OF APPEAL 20 Appearances For the appellant: J E Howse SC Instructed by: R. K. Nathalal & Company, Verulam Blair Attorneys, Bloemfontein For the respondent: S I Sokhela Instructed by: National Prosecuting Authority, Pietermaritzburg National Prosecuting Authority, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 13 September 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 Ramthal v The State (704/2023) 2024 ZASCA 124 (13 September 2024) Today the Supreme Court of Appeal (SCA) handed down judgment upholding an appeal against the order of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court) which dismissed the appellant’s petition for leave to appeal. The appellant, an armed response security officer, was tried in the Verulam Regional Court (the regional court) for the murder of Senzo Dlamini (the deceased). The State alleged that he unlawfully and intentionally killed the deceased. The appellant pleaded not guilty to the charge. In amplification of his plea, he stated that he shot the deceased in private defence of himself and his colleague. On the day of the incident, the appellant, responded to a call for backup from his colleague. He arrived at the scene and found the colleague wrestling with the deceased who was on top of him. The colleague was screaming for help, stating that the deceased was reaching for his firearm, which was ‘one up’. The deceased managed to break the firearm free from the holster and took possession of it. The appellant who was armed with a nine-millimetre Taurus firearm fired the first shot to the ground. According to him, the deceased tried to come towards him, while pointing the firearm at him. The appellant fired a second shot which hit the deceased on the knee. The deceased continued to approach still with the firearm pointed at the appellant’s direction. The appellant fired the third shot which struck the deceased on the chest. The two shots were quick in succession (a few seconds apart). The deceased later died from his injuries, and the appellant was taken to the police station and charged. He was convicted and sentenced to eight years’ imprisonment by the regional court. His application for leave to appeal was denied by the regional court. He petitioned the high court, seeking the respective leave to appeal, which was also refused. Special leave to appeal the high court’s refusal was subsequently granted by the SCA. The issue for determination by the SCA was whether the appellant had established reasonable prospects of success on appeal. In the main, his submissions were that the regional court had erred by rejecting his version of private defence. In the alternative, he contended that the regional court misdirected itself by failing to consider culpable homicide as a competent verdict to murder. As to sentence, he submitted, amongst other things, that a sentence of correctional supervision ought to have been considered. In this regard, so he contended, the degree of blameworthiness should have been measured, as is the question of what the appellant ought to have done in the circumstances. The State submitted that the appellant exceeded the bounds of private defence, even if the deceased was armed and had advanced towards him. The basis for this contention was that the trajectory of the fatal chest wound, which was downward from left under the armpit, suggested that the deceased was 2 on the ground when the fatal shot was fired. The State further submitted that the sentence imposed was not shocking, startling or disproportionate, entitling the appeal court to interfere. In the majority judgment, the SCA restated what was said in its previous judgments that, in the appeal of this kind, ‘the issue to be determined is not whether or not the appeal against conviction and sentence should succeed, but whether the high court should have granted leave, which in turn depends on whether the appellant could be said to have reasonable prospects of success on appeal’. Without wishing to comment on the merits in detail, given the outcome of the appeal, the majority held that the alleged errors in the analysis of evidence by the regional court, in relation to the alleged ground of justification, private defence, could result in a court of appeal reasonably arriving at a different conclusion than that of the regional court. The majority further found that it was prudent to grant leave to appeal also in respect of sentence, considering the possibility that an appeal court may find that a competent verdict to murder ought to have been found, or that other grounds as alleged by the appellant, exist to consider a different sentence. As a result, it upheld the appeal, granting the appellant leave to appeal to the high court, against his conviction and sentence in the regional court. The minority judgment, on the other hand, found that it has would have dismissed the appeal, as there would be no reasonable prospects of success on appeal, in respect of both conviction and sentence. The minority judgment was of the view that the revisitation of this matter on appeal would be a futile exercise if due regard would be had to the facts and the applicable legislation. It held that it would be arguable whether this was an issue that could be resolved by three gunshots from a security officer, in succession. It found there to be no reasonable prospects of success on appeal also on the sentence. ~~~~ends~~~~

4255

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1105/2022 In the matter between: AFRIFORUM APPELLANT and ECONOMIC FREEDOM FIGHTERS FIRST RESPONDENT JULIUS SELLO MALEMA SECOND RESPONDENT MBUYISENI NDLOZI THIRD RESPONDENT RULE OF LAW PROJECT (FREE MARKET FOUNDATION) AMICUS CURIAE Neutral citation: AfriForum v Economic Freedom Fighters & Others (1105/2022) [2023] ZASCA 82 (28 May 2024) Coram: SALDULKER, MATOJANE and MOLEFE JJA and NHLANGULELA and KEIGHTLEY AJJA Heard: 4 September 2023, 15 February 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives via e-mail, publication on the Supreme Court 2 of Appeal website and released to SAFLII. The date and time for hand-down are deemed to be delivered on 28 May 2024. Summary: Equality – Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000 – s 10(1) – prohibition of hate speech – res judicata –issue estoppel – recusal – on grounds of bias or apprehension of bias – test for recusal – application of test requiring both that apprehension of bias be that of reasonable person and that it be based on reasonable grounds – test to be applied to the true facts on which application is based – test not satisfied – issue estoppel – not in the interests of justice and equity to apply – hate speech – importance of context in determining whether hate speech established – in full context singing of the song by respondents not prohibited hate speech. 3 _________________________________________________________________ ORDER _________________________________________________________________ On appeal from: Gauteng Division of the Equality Court, Johannesburg (Molahlehi J, sitting as court of first instance): 1. The application for the recusal of Keightley AJA from the adjudication of or further participation in the determination of this appeal is dismissed with costs, such costs to include those of two counsel where so employed. 2. The appeal is dismissed with costs, such costs to include those of two counsel where so employed. _________________________________________________________________ JUDGMENT _________________________________________________________________ THE COURT: Saldulker, Matojane and Molefe JJA and Nhlangulela and Keightley AJJA: Introduction ‘We, the people of South Africa, Recognise the injustices of our past; Honour those who suffered for justice and freedom in our land; Respect those who have worked to build and develop our country; and Believe that South Africa belongs to all who live in it, united in our diversity. We therefore, through our freely elected representatives, adopt this Constitution as the supreme law of the Republic so as to- Heal divisions of the past and establish a society based on democratic values, social justice and fundamental human rights; 4 Lay the foundations for a democratic and open society in which government is based on the will of the people and every citizen is equally protected by law; Improve the quality of life of all citizens and free the potential of each person; and Build a united and democratic South Africa able to take its rightful place as a sovereign state in the family of nations. May God protect our people. Nkosi Sikelel’ iAfrika, Morena boloka setjhaba sa heso. God sëen Suid-Afrika. God bless South Africa. Mudzimu fhatutshedza Afurika. Hosi katekisa Afrika.’ [1] These are the words of the Preamble to the Constitution. Despite the decades that have elapsed since its adoption, it is sometimes necessary to remind ourselves of the commitments we made in this nation’s founding document. In many respects this appeal lays bare the obstacles that may impede the attainment of these constitutional objectives. The two main litigants occupy positions on opposite ends of South Africa’s spectrum of diversity. [2] The appellant is AfriForum. It is a civil rights organisation operating within South Africa with an emphasis on the protection of minority rights. AfriForum claims a membership of 265 000 individual members. It conducts several campaigns. One of these is a campaign against farm murders, another is a campaign against hate speech. [3] These two campaign objectives were drawn together in December 2020 when AfriForum lodged a complaint in the Gauteng Division of the Equality Court, Johannesburg (the equality court) in terms of s 20 of the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000 (the Equality Act). AfriForum averred that the respondents, being the Economic Freedom Fighters (the EFF), the EFF’s President, Mr Julius Sello Malema (Mr Malema), and Dr Mbuyiseni Ndlozi 5 (Dr Ndlozi), who is an EFF Member of Parliament, had committed hate speech in terms of section 10(1) of the Equality Act. [4] The hate speech complaint centred, in the main, on the song which is commonly known as ‘Dubula ibhunu’. AfriForum’s complaint was directed at the words ‘awudubula ibhunu, dubula amabhunu baya raypah’, the literal English translation, relied on by AfriForum, is ‘Kill the Boer – the farmer’. [5] AfriForum pointed to six occasions on which Mr Malema had chanted the song, albeit that on some occasions Mr Malema had substituted the word ‘kiss’ for ‘kill’. In addition, it pointed to a single occasion when Dr Ndlozi chanted a similar song including the words: ‘Shisa lamabhunu, EFF ingen’endaweni’ (Shisa lamabhunu). The literal English translation of that chant is: ‘Burn these Boers, EFF enters in the space, or place’. The alleged utterances occurred between 2016 and 2020. [6] Mr Malema describes his political party, the EFF, as a leftist organisation that subscribes to the struggle for economic emancipation. One of its cardinal pillars, which Mr Malema states is non-negotiable, is the expropriation of land without compensation. The foundation for this objective, according to Mr Malema, is that the colonial settlers took land from indigenous African people by force. For the EFF, the land issue is central to the economic struggle it pursues. [7] The equality court heard the evidence of several witnesses over a period of ten court days. It dismissed AfriForum’s complaint1 but granted leave to appeal to 1 The judgment of the equality court is reported as AfriForum v Economic Freedom Fighters and Others [2022] ZAGPJHC 599; 2022 (6) SA 357 (GJ) (AfriForum v EFF (2022)). 6 this Court. The Rule of Law Project (Free Market Foundation) (the amicus curiae) was admitted as amicus curiae with leave of this Court. [8] Before dealing with the merits of the appeal, we need to address an application instituted by AfriForum for the recusal of Acting Justice of the Supreme Court of Appeal Keightley, which arose under the following circumstances. The appeal against the equality court’s judgment and order was heard on 4 September 2023. The bench consisted of Justices Saldulker, Matojane and Molefe JJA, and Acting Justices of Appeal Nhlangulela and Keightley AJJA. Judgment in the appeal was reserved on 4 September 2023. [9] Four days later, on 8 September 2023, Hurter Spies, attorneys for AfriForum, addressed a letter to the Registrar of this Court. They stated that subsequent to the hearing of the appeal on 4 September 2023 their attention had been drawn to a transcription of remarks made by Acting Justice of Appeal Keightley (Justice Keightley) concerning AfriForum in a previous hearing in the high court in which it was a party. The transcription was attached to the letter. According to Hurter Spies, the comments by Justice Keightley demonstrated bias against their client AfriForum. Alternatively, they showed that Justice Keightley had expressed herself in terms directed at AfriForum such as to establish a reasonable apprehension of bias against it. Their instruction from AfriForum was to request that Justice Keightley recuse herself from any further involvement in the adjudication of the appeal. [10] On 20 September 2023, AfriForum launched a formal application in this Court for the recusal of Justice Keightley from the adjudication of or further participation in the determination of the appeal, together with ancillary relief. The latter included a request that the President of this Court direct the hearing of oral 7 argument in relation to the recusal application, the filing of further affidavits, and the composition of the Court regarding any consequential rehearing of the appeal. The EFF opposed the recusal application. The President issued directives on the filing of further affidavits and heads of argument, and the recusal application was set down for hearing on 15 February 2024. After the hearing, this Court reserved judgment. [11] This judgment deals with both the recusal application and the appeal against the decision of the equality court. We turn first to deal with the recusal application. The application for the recusal of Justice Keightley [12] In its application for the recusal of Justice Keightley, AfriForum claimed that it had learned two days after the judgment was reserved in the hearing of the appeal that Justice Keightley had made certain prior comments on 15 June 2018 about AfriForum (the impugned remarks). They were made to counsel for AfriForum during the hearing of the leave to appeal her ruling in the high court in the matter of AfriForum v Chairman of the Council of the University of South Africa and Others2 (the Unisa matter). The Unisa matter concerned the use of Afrikaans as a language of instruction in higher education. [13] The CEO of AfriForum, Mr Carl Martin Kriel (Mr Kriel) set out the factual circumstances relating to the launching of the recusal application in his affidavit. He explained that it was instituted as soon as AfriForum became aware of the circumstances and that AfriForum had raised it at the earliest stage that this could be done, which was on or around 7 September 2023. 2 Afriforum v Chairman of the Council of the University of South Africa and Others (54450/2016) [2018] ZAGPPHC 295 (26 April 2018). 8 [14] A fellow director of Hurter Spies, Mrs Marjorie Van Schalkwyk (Mrs Van Schalkwyk), had been in court on 15 June 2018 when the impugned remarks were made. Despite her request, the transcribers were unable to provide her with a transcript. It was only when she was watching the live feed of the present appeal that she had heard lead counsel for AfriForum say ‘excuse me, Justice Keightley’. Suddenly and, according to her, for the first time, Mrs Van Schalkwyk realised that Justice Keightley was the same judge as in the Unisa matter. She informed Mr Spies. On 7 September 2023 they were able to obtain a full transcription of the proceedings of 15 June 2018. [15] Correspondence was exchanged with the Registrar of this Court and with the respondents' attorneys. Thereafter, the recusal application was filed on 20 September 2023. This was more than two weeks after the appeal was heard and judgment reserved. [16] The impugned remarks identified by AfriForum are the following: ‘I think your client is barking up a tree that it should you know perhaps there are other ways to use its resources.’ ‘You know when you are dealing with such a small... such a small segment’. ‘[M]aybe I just do not get it. But I think one has to move beyond anachronistic positions which your client seems to be unwilling to do.’ ‘[I]t does not matter I am granting you leave.’ ‘And next time you in front of me with them you might to wish to apply for my recusal.’ ‘[A] tiny minority on the back of we cannot lose this’. 9 ‘I could have said it to you over a dinner table’. ‘I now have no longer any involvement in this matter which is why I can say these things and can I just stress because it is all on record. They are extremely general points that I made simply as a responsible South African and I am not at all commenting on you know on this particular case at all. I as a white South African feel very strongly’. ‘[W]hat you [are] wanting to do is to preserve for the sake of principle’. [17] The gist of AfriForum’s case in its founding affidavit was that the impugned remarks show that Justice Keightley holds very strong personal views based on her perception of AfriForum as ideologically driven and litigating ‘anachronistically’, for the sake of it. She sees AfriForum as ‘going backward’ and litigating only in the interests of a tiny minority of white South Africans. AfriForum contends Justice Keightley’s gratuitous remarks inevitably demonstrate actual bias, or that ‘when it comes to cases involving AfriForum she is unable to bring an impartial mind to bear on their adjudication’. [18] In opposing the substance of the recusal application, the EFF pointed out that the impugned remarks must be read in their fuller context. When this is done, the personal beliefs and dispositions of Justice Keightley, reflected in the remarks relied on by AfriForum, do not meet the test for bias developed in our jurisprudence. The EFF pointed out that the applicant in an application for recusal must clear a high threshold to succeed, and AfriForum has failed to do so. [19] We should record that the EFF also objected to the recusal application on the basis that the delay in instituting the application evidenced that it was instituted mala fides. In short, the EFF argued that AfriForum had known for five years about the impugned remarks. Yet they had taken no steps, either in the Unisa appeal 10 matter or when the current appeal was enrolled in this Court, to seek Justice Keightley’s recusal. The respondents submitted that this demonstrated that the recusal application was being instituted for an ulterior purpose, namely, to collapse the panel that had heard the appeal and secure a new hearing de novo. Considering the decision that we reach on the substance of the recusal application, it is not necessary to adjudicate the mala fides point as a stand-alone ground of opposition. [20] The principles relevant to determining applications for recusal are well settled, finding endorsement by the Constitutional Court in South African Human Rights Commission obo South African Jewish Board of Deputies v Masuku and Another,3 (Masuku) and President of the Republic of South Africa and Others v South African Rugby Football Union and Others (SARFU).4 The impartiality and independence of judicial officers are essential to the requirements of a constitutional democracy, being core components of the constitutional rights of access to courts and a fair trial.5 For this reason, a judicial officer should not hesitate to recuse herself if there are reasonable grounds for apprehending that she was not or will not be impartial.6 [21] On the other hand, it must be assumed that ‘judges are individuals of careful conscience and intellectual discipline, capable of applying their minds to the multiplicity of cases which will seize them . . . without importing their own views or attempting to achieve ends justified in feebleness by their own personal 3 South African Human Rights Commission obo South African Jewish Board of Deputies v Masuku and Another [2022] ZACC 5; 2022 (4) SA 1 (CC); 2022 (7) BCLR 850 (CC). 4 President of the Republic of South Africa and Others v South African Rugby Football Union and Others [1999] ZACC 9; 1999 (4) SA 147 (CC); 19999 (7) BCLR 725 (CC). 5 Masuku fn 3 para 56; SARFU fn 4 para 48. 6 SARFU fn 4 para 48. 11 opinions’. 7 It is assumed that judges can disabuse their minds of any irrelevant personal beliefs or predispositions.8 [22] The effects of this presumption of impartiality are that: a judge will not lightly be presumed to be biased; this presumption is not easily dislodged;9 cogent evidence demonstrating bias or a reasonable apprehension of it is required;10 and a judge has a duty to sit in any case in which they are not obliged to recuse themselves.11 The presumption of impartiality must always be taken into account when conducting the inquiry into bias or a reasonable apprehension of bias.12 [23] The test for recusal is objective, with the applicant bearing the onus of establishing bias or a reasonable apprehension of bias. The question is whether a reasonable, objective and informed person would, on the correct facts, reasonably apprehend that the judge has not, or will not bring, an impartial mind to bear on the adjudication of the case, that is a mind open to persuasion by the evidence and the submissions of counsel.13 A double reasonableness requirement is involved in the application of the test: the apprehension of bias must be that of a reasonable person in the position of the litigant, and it must be based on reasonable grounds.14 The test requires a reasonable apprehension that the judicial officer might be biased, not that they would be biased.15 7 Masuku fn 3 para 58. 8 SARFU fn 4 para 48. 9 Masuku fn 3 para 59. 10 Ibid para 60. 11 SARFU fn 4 para 48. 12 Masuku fn 3 para 62. 13 SARFU fn 4 para 48. 14 Masuku fn 3 para 64. 15 S v Roberts 1999 (4) SA 915 (SCA) paras 32-34. 12 [24] According to AfriForum, the impugned remarks indicate that Justice Keightley has a pejorative view of AfriForum, perceiving it as promoting the archaic ideology of a small minority of primarily Afrikaans-speaking whites. Her view, demonstrated through her remarks, is that AfriForum is motivated to preserve and advance the privileged status of that segment of the population as a matter of ideological purpose and principle. Further, she perceives this to be adverse to what she believes is the South African constitutional project of multicultural inclusivity and equality for all groups and individuals. [25] These, AfriForum contends, are, in her own words, strongly held personal views. Moreover, she did not suggest that they have been prompted by anything AfriForum had done in the case before her. They were far more widely stated and related to what she saw as AfriForum’s activities and aims generally. Additionally, in making the remarks, she contemplated her future recusal in any matter concerning AfriForum. [26] Of course, as the principles recorded earlier make clear, AfriForum’s subjective understanding of the impugned remarks is not the test. The test is objective. AfriForum must first satisfy this Court that the reasonable, objective, and informed person, with knowledge of the correct facts, would understand the impugned statements to reflect the views AfriForum ascribes to Justice Keightley. If this is established, AfriForum must then meet the double reasonableness requirements inherent in the test, considering the strong presumption of impartiality, and the recognition that a judge’s personal views are not in and of themselves evidence of bias. [27] We accept that the exchange between Justice Keightley and counsel for AfriForum could objectively be construed as a perception on her part that she and 13 AfriForum do not share the same ideology. She expresses that she has more progressive views than those she perceives as endorsed by AfriForum. However, this is not enough to establish bias warranting her recusal. [28] As the Constitutional Court explained in Masuku: ‘This test does not mean that any judge who holds certain social, political or religious views will necessarily be biased in respect of certain matters, nor does it naturally follow that, where a judge is known to hold certain views, they will not be capable of applying their minds to a particular matter. The question is whether they can bring their mind to bear on a case with impartiality’.16 (Emphasis added.) [29] The Court went on to emphasise that judges do not exist in a vacuum. They bring their personal and professional experiences to bear in their adjudicative function. Not only is this appropriate, but in our multilingual and multiracial society, it cannot reasonably be expected that judges should share all the views or prejudices of the parties before them.17 Consequently, proving that a judicial officer holds a particular view does not, without more, establish a reasonable apprehension of bias,18 and: ‘It is safe and pragmatic to assume that judges are able to set aside their personal views and be guided by the relevant legal principles when deciding any matter. We must, after all, be reminded of the weight of the presumption of impartiality’.19 (Emphasis added.) [30] We have considered the full transcript of the exchange in which the impugned comments were made. It is clear from it that Justice Keightley was engaging in a robust debate with AfriForum’s counsel on matters pertaining to nation-building. Her expressed view was that white South Africans, in particular, 16 Masuku fn 3 para 66. 17 Ibid para 67, citing SARFU para 42. 18 Ibid para 68. 19 Ibid para 83. 14 have a responsibility to work towards inclusionary efforts to dismantle their historical privileges, rather than seeking to preserve them. AfriForum does not suggest, nor could it, that her views in this regard are perverse. They are consistent with the Constitution. [31] The remarks were made in open court and in good faith as part of a robust exchange with counsel for AfriForum after Justice Keightley had already very clearly indicated to both parties that she would grant leave to appeal. Justice Keightley acknowledged that the remarks were ‘all on record’. She stated more than once that they were her personal views, that they were of a broad and general nature, and that they were not directed specifically at AfriForum. [32] Moreover, the transcript shows that Justice Keightley understood that the responsibility of white South Africans to question their previous privilege and its continued effect were ‘difficult questions . . . (and that) the law and the courts . . . are there to guide us’. She acknowledged that she might be wrong. She expressed that she was happy for the matter to go on appeal because ‘we will get further guidance from the courts about . . . that difficult situation’, leading to a better understanding of ‘what we can hold on to for purposes of nation building and what we cannot’. [33] Viewed objectively, this is not the type of conduct a reasonable person would expect of a judicial officer so fixed in her personal views that she may be unable to act impartially in a matter involving AfriForum. It shows a mind open to persuasion and a willingness to embrace a higher court’s guidance on the ideological issues she had raised. 15 [34] AfriForum relied on the fact that Justice Keightley had said to counsel for AfriForum in the Unisa matter that ‘the next time you (are) in front of me with (AfriForum) you might wish to apply for my recusal’. It submitted that this demonstrated that Justice Keightley was aware, as a judicial officer who understood the test for bias, that she had overstepped the bounds in her earlier impugned remarks. In our view, this takes AfriForum’s case no further. The full transcript shows that this remark was made in response to a statement by counsel for AfriForum that she had an ‘unfortunate perception’ about his client. In fact, he responded to her reference to a possible future recusal application by saying ‘No, no’. Justice Keightley responded, ‘that was not where (she was) going’. Seen in its context, her suggestion to counsel cannot reasonably be understood to have been based on a seriously weighed judicial view that her remarks merited recusal then, or in the future. [35] In view of all of the aforegoing, it cannot be said that the test for recusal as laid down in the Constitutional Court has been met or that there is any reason to apprehend bias from Justice Keightley. Thus, AfriForum's application for recusal must fail. Justice Keightley is not only permitted to adjudicate the appeal but, as SARFU makes clear, she has a duty to do so. Justice Keightley is to remain part of the coram in the appeal before this Court. This is where we now direct our attention. The appeal Point in limine: issue estoppel [36] The EFF raises a point in limine against AfriForum’s hate speech complaint based on res judicata, or more accurately, issue estoppel. They point out that AfriForum previously instituted a hate speech complaint in the equality court against Mr Malema (the first complaint). As in the complaint before us on appeal, the first complaint was also directed at Mr Malema’s singing of Dubula ibhunu. At 16 that time, Mr Malema was a member of the African National Congress (ANC), and he sang the song in public at meetings convened by the ANC Youth League. The ANC was joined as a respondent in the first complaint. [37] The equality court upheld the first complaint. It declared that the singing of the song constituted hate speech and granted an interdict against the ANC and Mr Malema singing the song at any public or private meeting conducted by them.20 The matter came on appeal to this Court and was enrolled for hearing on 1 November 2012. At the suggestion of the President of this Court the parties engaged in a mediation process. This resulted in a mediation agreement entered into and signed by, AfriForum and Mr Malema. An order was made by this Court on 1 November 2012, under case number A815/2011 (the settlement order). [38] The terms of the settlement order recorded that: a. It was in full and final settlement of the dispute between the parties. b. The parties agreed that it was crucial to mutually recognise and respect the right of all communities to celebrate and protect their cultural heritage and freedom. To this end, they committed to deepening dialogue among leaders and supporters of their respective organisations to contribute to developing a future common South African heritage. c. They recognised that certain words in certain struggle songs may be experienced as hurtful by members of minority communities. 20 AfriForum and Another v Malema and Others [2011] ZAEQC 2; 2011 (6) SA 240 (EqC); [2011] 4 All SA 293 (EqC); 011 (12) BCLR 1289 (EqC) (AfriForum v Malema 1). 17 d. The ANC and Mr Malema recognised that ‘the lyrics of certain songs are often inspired by circumstances of a particular historical period of struggle which in certain instances may no longer be applicable’. In the interests of promoting reconciliation and avoiding inter-community friction, they committed to counselling and ‘encouraging their respective leadership and supporters to act with restraint to avoid the experience of such hurt’. e. AfriForum agreed to abandon its equality court order, and the ANC and Mr Malema agreed to abandon their appeal to this Court. [39] The EFF contends that the issue in this appeal was finally disposed of by the first settlement order and that it was impermissible for AfriForum to seek to relitigate the same issue in the equality court, and subsequently on appeal to this Court. They accept that there is not a complete overlap in the identities of the parties in the two hate speech complaints. The ANC is not a party to the complaint on appeal to this Court, and neither the EFF nor Dr Ndlozi were parties to the first complaint. The first requirement of the classic res judicata defence, which requires that the dispute must involve the same parties, is thus not satisfied. However, the EFF submits that the development of the offshoot, issue estoppel defence, in terms of which the requirements of the classic res judicata defence may be relaxed, finds application in this case. They submit that the appeal ought properly to be dismissed on this basis alone. [40] AfriForum disputes that the defence of issue estoppel is available to the EFF. It points to the fact that the EFF was not even in existence at the time the first complaint was litigated and the settlement order made. AfriForum submits that a considerable period has elapsed since the settlement order. Moreover, according to AfriForum, the complaints that form the subject matter of this appeal constitute 18 new acts of hate speech, in blatant disregard of Mr Malema’s undertakings in the settlement order. [41] In its classic formulation, res judicata applies when a dispute arises between the same parties, based on the same issue, and the same relief is sought as in a previously decided matter.21 This Court’s judgment in Prinsloo NO and Others v Goldex 15 (Pty) Ltd22 (Prinsloo NO) is authority for the limited development of the classic res judicata defence in appropriate cases. The Court found that ‘issue estoppel 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’. [42] Prinsloo NO only considered the relaxation of the second and third requirements of res judicata, not the requirement that the disputes must involve the same parties. In Royal Sechaba Holdings (Pty) Ltd v Coote and Another 23 (Royal Sechaba) this Court accepted a further development in respect of the first requirement, finding that: ‘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.’24 [43] However, the Court issued the following caution: 21 South African Human Rights Commission v Khumalo [2018] ZAGPJHC 528; 2019 (1) SA 289 (GJ); [2019] 1 All SA 254 (GJ) para 54 (Khumalo). 22 Prinsloo NO and Others v Goldex 15 (Pty) Ltd and Another [2012] ZASCA 28; 2014 (5) SA 297 (SCA) paras 23-24. 23 Royal Sechaba Holdings (Pty) Ltd v Coote and Another [2014] ZASCA 85; [2014] 3 All SA 431 (SCA); 2014 (5) SA 562 (SCA). 24 Ibid para 19. 19 ‘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.’25 (Emphasis added.). The question is whether there are persuasive reasons in this case for allowing the issue estoppel defence, despite there being an absence of complete identity of parties, issue and relief. [44] We leave aside for the moment the complaint against Dr Ndlozi, which requires separate consideration. Insofar as the singing of Dubula ibhunu is concerned, the EFF is correct that if one looks at the substance of AfriForum’s first complaint and its present one, Mr Malema was, and remains, the central protagonist. He was joined individually as a respondent in both complaints. This is because it was his conduct in singing Dubula ibhunu at political events that formed the basis of that complaint. AfriForum’s complaint before the equality court was about precisely the same kind of conduct by Mr Malema, albeit that his audience in the present complaint was the EFF rather than the ANC Youth League. [45] Mr Roets, who deposed to the affidavit supporting AfriForum’s complaint to the equality court, expressly confirmed that Mr Malema was the central focus of the complaint. He described Mr Malema as ‘the main and single most significant and the single most influential person’ who continues to sing Dubula ibhunu. In other words, in both the first complaint, and that before us on appeal, what AfriForum sought primarily to have declared hate speech, and to interdict, is Mr Malema’s singing, or instigating the singing of, Dubula ibhunu. By extension, the complaint in both matters also sought to interdict the political party in respect of 25 Ibid para 21. 20 which he was a member at the relevant time. Consequently, despite the substitution of the EFF in the present complaint for the ANC in the first complaint, there is an overlap in the identity of the central respondent in both complaints. [46] It follows from this that there is also commonality, in certain respects, with the cause of action and relief sought. The basis for AfriForum’s complaint remains the same as that for its first complaint. Its contention was, and is, that the singing of Dubula ibhunu by Mr Malema is an incitement to hatred or harm on the grounds of race or ethnicity against white, Afrikaans South Africans, and particularly farmers. [47] It is for all these reasons that the EFF submitted that it would be appropriate to apply the issue estoppel defence and to hold AfriForum bound to the settlement order. To do otherwise, the EFF contended, would be to permit AfriForum, under the guise of fresh litigation, to resurrect a complaint it had effectively abandoned under an agreement endorsed by order of this Court. Implicit in the EFF’s argument is the proposition that it would be in the interests of justice to hold AfriForum to the bargain it struck previously, and which was endorsed by this Court. Mr Malema should not be expected to face a repeat of what was essentially the same complaint, nor should this Court be required to interrogate an issue which has been settled between, in essence, the same parties. [48] Are these reasons sufficiently persuasive to justify an application of the issue estoppel defence in this case? Other relevant factors suggest not. It is so that where parties have entered into a bargain, justice and the rule of law bind them to it. However, this applies to both parties. In the settlement order AfriForum agreed to abandon the previous equality court order in its favour, in exchange Mr Malema gave certain personal undertakings. Importantly, and with reference to the 21 continued singing of struggle songs, he undertook to encourage his followers to act with restraint. [49] AfriForum contends that he did not stick to his side of the bargain, as is manifested by his repeated singing of Dubula ibhunu on the occasions identified in AfriForum’s complaint. Mr Malema disputes this. It is not necessary for this Court to make a finding on whether he breached the terms of the settlement order or not. However, it would not be fair or equitable to deprive AfriForum of the opportunity to proceed with their appeal in circumstances where they contend, not without reason, that Mr Malema has failed to comply with the terms of the very order which he now seeks to hold up as a shield. [50] There are additional reasons for reaching this conclusion. The issues in this appeal involve important constitutional rights. The rights to dignity and equality, on the one hand, and those of freedom of expression and the right to engage in political activity on the other. The Equality Act is an important constitutional law. Courts are bound by the Constitution to adjudicate in a manner that advances constitutional rights. The issue estoppel defence would prevent this Court from making a determination on the competing rights of the parties, and of interpreting and applying the relevant provisions of the Equality Act. This would be contrary to this Court’s constitutional obligations. It is also in the public interest that the appeal should be heard, particularly in circumstances where the equality court has delivered two diametrically opposed judgments on the issue. [51] For all these reasons, we conclude that the interests of justice and equity do not support the application of the issue estoppel defence in this case. We turn to consider the merits of the appeal. 22 Merits Legal principles [52] We commence by setting out the legal principles regulating the prohibition of hate speech. As the Constitutional Court observed in Qwelane v South African Human Rights Commission and Another26 (Qwelane), this involves a delicate balance between the fundamental rights to freedom of expression, dignity and equality. Freedom of expression is protected under s 16(1) of the Constitution. However, s 16(2) qualifies this right by excluding from its protection the: ‘(c) advocacy of hatred that is based on race, ethnicity, gender or religion, and that constitutes incitement to cause harm.’ [53] Of relevance too is s 19(1) of the Constitution, which protects the right of every citizen to make free political choices, to form a political party, to participate in the activities of a political party and to campaign for a political party or cause. The combination of s 16 and s 19 are critical to our democracy. It is through support for the free expression of political ideas by political parties that our system of government and its election ultimately operate. [54] Speech that is merely unpopular, offensive or shocking remains protected under s 16(1). As the Constitutional Court explained: ‘Thus, it would appear that hate speech travels beyond mere offensive expressions and can be understood as “extreme detestation and vilification which risks provoking discriminatory activities against that group.” Expression will constitute hate speech when it seeks to violate the rights of another person or group of persons based on group identity. Hate speech does not serve to stifle ideology, belief or views. In a democratic, open and broad-minded society like ours, disturbing or even shocking views are tolerated, as long as they do not infringe the rights of 26 Qwelane v South African Human Rights Commission and Another [2021] ZACC 22; 2021 (6) SA 579 (CC); 2022 (2) BCLR 129 (CC) para 2. 23 persons or groups of persons. As was recently noted, “[s]ociety must be exposed to and be tolerant of different views, and unpopular or controversial views must never be silenced.”’27 [55] The Equality Act is the vehicle through which the right to equality and protection from unfair discrimination, safeguarded under s 9 of the Constitution, are given effect.28 The objects of the Equality Act, which are identified in s 2, include: ‘(a) . . . (b) to give effect to the letter and spirit of the Constitution, in particular- (i) the equal enjoyment of all rights and freedoms by every person; (ii) the promotion of equality; (iii) the values of non-racialism and non-sexism contained in section 1 of the Constitution; (iv) the prevention of unfair discrimination and protection of human dignity as contemplated in sections 9 and 10 of the Constitution; (v) the prohibition of advocacy of hatred, based on race, ethnicity gender or religion, that constitutes incitement to cause harm as contemplated in section 16(2)(c) of the Constitution and section 12 of this Act; (c) to provide for measures to facilitate the eradication of unfair discrimination, hate speech and harassment, particularly on the grounds of race, gender and disability; . . .’ [56] Hate speech is expressly prohibited under s 10. Following the declaration of constitutional invalidity of this section in Qwelane,29 and until the section is amended by the legislature, section 10 is to be read as follows: ‘(1) Subject to the proviso in section 12, no person may publish, propagate, advocate or communicate words based on one or more of the prohibited grounds, against any person, that 27 Ibid para 81, citing, among others, Economic Freedom Fighters and Another v Minister of Justice and Correctional Services and Another [2020] ZACC 25; 2021 (2) BCLR 118 (CC); 2021(2) SA 1 (CC); 2021 (1) SACR 387 (CC) para 155. 28 AfriForum NPC v Nelson Mandela Foundation Trust and Others [2023] ZASCA 58; 2023 (4) SA 1 (SCA); [2023] 3 All SA 1 (SCA) para 31. (AfriForum v NMFT). 29 Ibid fn 26 para 2 of the Order of the Constitutional Court. 24 could reasonably be construed to demonstrate a clear intention to be harmful or to incite harm and to promote or propagate hatred.’ (Emphasis added.) [57] In its original form, s 10(1) also included as hate speech words that could reasonably be construed to demonstrate a clear intention to be ‘hurtful’. The judgment in Qwelane effectively excised this ground from the section on the basis that it constituted an unjustifiable limitation on the freedom of expression guaranteed in s 16.30 [58] The phrases highlighted in s 10(1), above, describe a two-stage hate speech inquiry. The first leg is directed at establishing that the impugned words are ‘based on’ one of the identified prohibited grounds. If this is established by the complainant, the second leg of the inquiry is to determine whether the words ‘could reasonably be construed to demonstrate a clear intention to be harmful or to incite harm and to promote or propagate hatred’. [59] Section 1 of the Equality Act identifies the grounds for the prohibited purposes of the first stage of the inquiry. Of relevance to this case, they include race, ethnic or social origin31 or any other ground where discrimination based on that other ground undermines human dignity.32 [60] As to the second stage of the inquiry, Qwelane has clarified that the phrase ‘could reasonably be construed to demonstrate a clear intention’ involves an objective, reasonable person test. On this test, an intention to incite harm and promote hatred will be deemed if the reasonable reader could construe the words 30 Qwelane fn 26 para 144. 31 Definition of ‘prohibited grounds’ in s 1(a). 32 Definition of ‘prohibited grounds’ in s 1(b)(ii). 25 or speech as reflecting that intention. Critically, it is the effect of the text that is assessed, rather than the subjective intention of the author or speaker,33 or the subjective perception of the targeted group.34 [61] It is accepted that the reasonable reader is one of reasonable intelligence, that she would understand the statement in its context, and would have regard not only to what is expressly stated but also to what is implied.35 Important considerations in applying the test include who is the speaker, the context in which the speech occurs, the impact of the speech, and the likelihood of inflicting harm or propagating hatred.36 [62] No causal link between the impugned speech and actual actions taken against a target group need be established. Nor is the incitement of harm restricted to physical violence. It also includes the incitement to discrimination and hatred.37 Moreover, s 10(1) targets the meaning behind the words, not simply the words.38. Proceedings before the equality court [63] In the affidavit supporting its complaint, Mr Roets identified the following acts of alleged hate speech: a. Mr Malema singing and chanting Dubula ibhunu at a EFF rally at the end of 2016. b. Mr Malema leading the singing of Dubula ibhunu on 30 July 2017 at the EFF’s fourth birthday celebrations in Durban. 33 Qwelane fn 26 para 97. 34 Ibid paras 96 and 99. 35 Ibid para 97. 36 Ibid para 176. 37 Ibid para 107 38 AfriForum v NMFT fn 28 132, cited in Qwelane fn 26 para 115. 26 c. Mr Malema leading the singing of Dubula ibhunu at the EFF’s Africa Day celebration event in May 2018. d. Mr Malema singing Dubula ibhunu and gesturing with a shooting motion at the Vaal University of Technology on 29 October 2018. e. Mr Malema leading and encouraging the singing of Dubula ibhunu at the EFF Manifesto Launch in February 2019 in Soshanguve. f. Mr Malema leading and encouraging the singing of Dubula ibhunu at the kwaTsheka sports ground at eNseleni in April 2019. g. Mr Malema leading members of the EFF singing Dubula ibhunu in Senekal on 16 October 2020 during protests surrounding the death of the farm manager, Brendin Horner, coupled with Dr Ndlozi chanting Shisa lamabhunu on the same occasion. [64] AfriForum sought, among others, the following relief: ‘54.3 A declaratory order that the words uttered by the Respondents and their members and suppor[ter]s constitute hate speech as defined in section 10(1) of the Equality Act. . . . 54.6 An order interdicting and restraining the Respondents from advocating hate speech as defined in section 10(1) of the Equality Act.’ [65] It averred in its written complaint that the identified utterances of Dubula ibhunu constitute hate speech in that they advocate hatred on the grounds of race and ethnicity and constitute an incitement to cause harm. AfriForum did not elaborate in any detail on these averments, relying on the oral evidence led at the trial to spell out the nature of its case. 27 [66] As to Shisa lamabhunu, AfriForum alleged in its written complaint that the singing of this song was an incitement to cause arson and damage to property. AfriForum averred that after Dr Ndlozi had sung the song during protest action in Senekal in October 2020, several farms in the Free State were set alight. This latter averment was subsequently demonstrated to be incorrect. Facts brought to light in Mr Malema’s answering affidavit, and confirmed in the evidence led at the trial, revealed that while there were fires on agricultural land, the land in question was not in or near the Senekal district. There was no link between these fires and what had occurred at the Senekal protests. [67] Mr Roets was the main witness for AfriForum. It described him as an expert witness, although the equality court rejected his status as an expert. AfriForum took issue with this finding in its grounds of appeal, but nothing turns on the point. [68] Mr Roets’ evidence was based on his book ‘Kill the Boer’. He described it as a current affairs book about the phenomenon of farm attacks. Relying on excerpts from the book, Mr Roets opined that there is a political climate in South Africa in which violence towards white people in general and white Afrikaans farmers in particular has been romanticised and encouraged by politicians for several decades. He gave lengthy evidence on the prevalence of farm attacks and their often violent nature. In his view, Dubula ibhunu, with its words and Mr Malema’s accompanying gestures, mimicking the shooting of a firearm, contribute to the phenomenon in which violence of this type is normalised. [69] Mr Human, a pastor who counsels victims of farm attacks, gave evidence about the traumatic effects for victims. Two victims of separate farm attacks, Ms Muller and Mr Prinsloo, also gave evidence of what had happened to them and what they personally had experienced in the aftermath of the attacks. Finally, Mr 28 Crouse, a reporter and employee of the Institute of Race Relations testified. He was present in Senekal when Dr Ndlozi sang Shisa lamabhunu. He testified as to what he had witnessed when members of, among other groups, AfriForum and the EFF were involved in a stand-off during protest action stemming from the murder of a young farm manager, Brendan Horner, in the Senekal district. [70] Mr Malema testified on his own behalf and on behalf of the EFF. According to Mr Malema, he had been taught Dubula ibhunu as a young activist during apartheid. He was taught that struggle songs like this one should not be understood literally. Instead they were directed at the system of oppression and anything that represented it at the time. He emphasised that the EFF is committed to overcoming economic apartheid represented by what he referred to as ‘white monopoly capital’. [71] According to Mr Malema, democracy has not had the effect of getting rid of economic apartheid. Nor has it succeeded in the restoration of land to black South Africans. Thus, the EFF had adopted these as two of its key objectives. Mr Malema explained that when he leads the singing of Dubula ibhunu, it is directed at this system of economic and land apartheid. Similarly, the shooting gesture sometimes accompanying the chant signifies shooting at the system. Under cross-examination Mr Malema confirmed his view that white farmers were part of and had benefited from the prevailing system of inequality in respect of land and the economy. He said that in the song the Dubula ibhunu, the ibhunu, or farmer, is symbolic of the system against which the EFF campaigns. [72] It bears repetition that Mr Malema’s evidence of his subjective intention in singing the song is not the basis on which to assess whether his conduct amounted to hate speech. However, his evidence about the EFF’s political objectives is 29 relevant contextual material. In any event, the EFF’s policies and objectives are public information. [73] The respondents also relied on the expert evidence of Prof Gunner, who is an authority on the role of political song in the public life of the state, particularly African states. She has also written an article on Mr Malema’s use of Dubula ibhunu. Prof Gunner explained the history of the song, which she said goes back many years, and its use in political discourse. In her view, the song should be seen in the context of the contestation for power through the expression of the ideas and policies of the user. Suffice to say that Prof Gunner’s opinion, which is not binding on the court, was that properly understood as a political song with a known history, Dubula ibhunu should not be regarded as hate speech. However, her evidence about the history of the song, and the genre of liberation songs more generally, is useful contextual evidence. [74] The equality court dismissed AfriForum’s complaint. On the first leg of the s 10(1) inquiry, without providing reasons, it was found that AfriForum had failed to show that the lyrics of the impugned songs are based on any of the prohibited grounds.39 [75] As to the second stage of the inquiry, the equality court concluded: ‘As [I] understand the impugned song in its political and cultural context it has traversed time in the history of South African politics and projects the political vision of [the] EFF in a new dimension of a strategy of achieving radical economic transformation of the society. It is in the current political situation a song directed at articulating the failure of the current government in addressing the issues of economic power, land reform and distribution. If anything, this calls for a generous delineation of the bounds of the constitutional guarantee of freedom of expression. 39 AfriForum v EFF (2022) fn 1 para 101. 30 Thus, in my view, declaring the impugned song to be hate speech would significantly alter or curtail freedom of expression. However, it may well be that under a different inquiry, it may be found that the song is offensive, and undermining of the political establishment. It may be heard as a song that fails to celebrate the achievements made by democracy and the need for unity in the country. In that respect, it would be expressing a view different to those who belief (sic) that the image of democracy need not be tainted by what they regard as an offensive song. As matters stand, in my view, the singing of the impugned song and its lyrics should be left to the political contestations and engagement on its message by the political role players. Accordingly, a reasonable listener, would conclude that the song does not constitute hate speech but rather that it deserves to be protected under the rubric of freedom of speech.’40 In this Court [76] Before this Court, AfriForum took the view that the overwhelming bulk of the evidence led in the equality court was irrelevant to the appeal. The only parts of its own evidence that AfriForum maintained were relevant were Mr Roets’ testimony, and that of Mr Prinsloo and Ms Human, and only to the extent that this evidence affirmed the social milieu in which the words were used and their impact. [77] Attached to AfriForum’s heads of argument was a new draft order in the event of its appeal being upheld. In the substituted draft order, AfriForum sought the following relief, in relevant part: ‘1. The words and translations of words, phrases and songs set out below constitute hate speech: awudubula ibhunu dubula ibhunu baya rayapha shoot to kill, Kill/Kiss the Boer – the farmer Shisa lamabhunu EFF Ingen’endaweni 40 Ibid paras 111-112. 31 2. The respondents are interdicted and restrained from any public use, singing or chanting of the words, phrases or songs set out in paragraph 1.’ [78] The relief in the new draft order was wider than the one sought in paragraph 54.3 of AfriForum’s original claim. It did not restrict the declaration of hate speech to ‘words uttered by the Respondents’ as was the case in the original claim. The new draft order expanded AfriForum’s case on appeal. It effectively called for a declaration of the relevant parts of Dubula ibhunu and Shisa lamabunu as hate speech in toto, regardless of who uses them or in what circumstances. This was not the case made out by AfriForum in the equality court. There, the hate speech averment was restricted to the singing of the songs by Mr Malema and Dr Ndlozi on particular occasions. [79] At the hearing of the appeal, counsel for AfriForum accepted that the amended relief was too wide, and that if the appeal was to succeed, any declaration that the songs constituted hate speech would have to be expressly limited. He suggested that the relief sought be amended by the insertion of the phrase ‘on the occasions set out in the complaint’ in prayer 1. He also accepted, correctly, in our view, that the same songs could be sung by a range of persons in different circumstances without this constituting hate speech. [80] In light of the concession, it is important to appreciate that this appeal is not about an outright ban on Dubula ibhunu as hate speech per se. The question is narrower than this. It is whether, when Mr Malema sang or led the singing of the song on the occasions identified by AfriForum in its complaint, this constituted a form of hate speech as framed by AfriForum in its complaint. Similarly, Dr Ndlozi’s singing of Shisa lamabunu in Senekal is the focus of the inquiry. 32 [81] AfriForum submits that the equality court erred in finding that it had failed to establish that the impugned words were based on a prohibited ground. It accepts that the Equality Act does not protect farmers as a group. However, according to AfriForum, the question of what is understood by the term ‘boer’ should be approached grammatically, as had been accepted by the equality court in AfriForum v Malema I. AfriForum contends that it is a truism, reflected in history books and dictionaries, that the term ‘boer’ is a reference to an ethnic group, being South Africans who are Afrikaans-speaking or of Afrikaner descent. They say that the words of the songs are therefore based in material part on a prohibited ground, and fall within the ambit of s 10. [82] As to the question of whether the songs also demonstrate an intent to incite harm or propagate hatred, AfriForum submits that the equality court erred in the application of the objective test to be applied. The court had impermissibly accepted Mr Malema’s evidence of his subjective intention and his understanding of the song. It had also accepted Professor Gunner’s subjective view of what the words mean. [83] AfriForum places reliance again on AfriForum v Malema I, in which it was found sufficient that ‘a variety of members of society who act for large constituencies and . . . say that their constituencies are affected in that they perceive the song to be harmful and/or hurtful towards them’.41 It relies also on the decision of this Court in Hotz v University of Cape Town42 (Hotz). That case involved a person wearing a t-shirt with the words ‘sKILL ALL WHITES’ painted on it. The letter ‘s’ before the first letter ‘K’ was much smaller than the remainder of the 41 AfriForum v Malema I fn 20 para 93. 42 Hotz v University of Cape Town [2016] ZASCA 159; 2017 (2) SA 485 (SCA); [2016] 4 All SA 723 (SCA). 33 message. This Court rejected the submission that the message was ‘skill all whites’ rather than ‘kill all whites’, finding that it would be understood by people who saw the message, with its imperceptible ‘s’ as an incitement to violence against white people.43 [84] Afriforum’s submission is that, as in Hotz, people who hear Mr Malema singing the words of Dubula ibhunu stand to react to it as an incitement to violence against ‘boers’. In other words, it could be understood as a call to kill ethnic white South Africans of Afrikaans descent. According to AfriForum, this is exacerbated by Mr Malema's hand gestures when he was singing. On a broader level, there is also the potential harm that the song causes to wider society in risking inter-racial hostility. [85] AfriForum accepts that Dubula ibhunu has an historical pedigree with an attendant meaning, and that one reasonable person may not understand the song in the same way as another reasonable person. However, AfriForum’s submission is that provided it is capable of being understood by some as intending to demonstrate an intent to incite harm or propagate hate that is sufficient to meet the test. [86] The respondents submit that the equality court was correct in finding that AfriForum had failed to establish that the songs were based on prohibited grounds. When Mr Malema sang Dubula ibhunu he was engaging in a form of political speech in which the song addressed his party’s dissatisfaction with land and economic injustice. In the particular context in which the songs had been sung, the reasonable person would understand the words as being metaphorical and not a literal exhortation to incite harm or violence against farmers or white South 43 Hotz para 68. 34 Africans of Afrikaner descent, as AfriForum had sought to argue. Consequently, the songs were not hate speech, but were a form of political speech protected under s 16 of the Constitution. [87] The respondents dispute that it is open to AfriForum in the appeal to simply eschew reliance on the record of its evidence before the equality court. That evidence is relevant in that it formed the basis of AfriForum’s complaint to the equality court. The complaint was squarely based on farm attacks and the alleged link between that phenomenon and the message AfriForum contended that Mr Malema sent when he sang the song. The respondents submit that it was this case that AfriForum had failed to establish before the equality court, which had correctly rejected its complaint. [88] The amicus curiae supports AfriForum’s appeal. It aligns itself with AfriForum’s contention that the term ‘boer’ has a discernable meaning, being a reference to white Afrikaners. Consequently, according to the amicus curiae, there is a racial element in the songs. [89] The amicus curiae refers to Mr Malema’s leadership position as a politician. It submits that the equality court ought to have directed a high level of scrutiny at his speech, rather than exempting Mr Malema because of his political status. In this regard, the amicus cites Economic Freedom Fighters and Another v Minister of Justice and Correctional Services and Another44 in which the Constitutional Court stated that in securing the enjoyment of rights, ‘a greater sense of responsibility is demanded particularly of those who are thought-leaders whose utterances could be 44 Economic Freedom Fighters and Another v Minister of Justice and Correctional Services and Another [2020] ZACC 25; 2021 (2) BCLR 118 (CC); 2021 (2) SA 1 (CC); 2021 (1) SACR 387 (CC) para 3. 35 acted upon without much reflection, by reason of the esteem in which they are held and the influence they command’. The amicus curiae agrees with AfriForum that the equality court erred in dismissing the hate speech complaint. Discussion [90] As regards the first stage of the s 10 inquiry, both AfriForum and the amicus curiae advance the view that Mr Malema’s singing of Dubula ibhunu is based on a prohibited ground because of the term ‘bhunu’. This word, according to their arguments, has an established meaning. They say that dictionaries and other reference books confirm that it means white South Africans of Afrikaner descent. [91] In our view, this is not the correct approach. The question of whether Dubula ibhunu, and for that matter Shisa lamabunu, is based on a prohibited ground within the meaning of s 10 of the Equality Act is more complicated than AfriForum and the amicus curiae suggest. It is not a question that a simple reference to a dictionary can answer. This is because the word ‘bhunu’ is part of a verse in a song. Its meaning must be determined with reference to that verse as a whole. The meaning of the verse, in turn, must be assessed in its broader context, including, but not limited to, the circumstances in which the verses were sung on the particular occasions identified. [92] Put simply, ‘bhunu’ may have different meanings in different contexts. As the Constitutional Court confirmed in Masuku, ‘words cannot always be taken for their plain meaning’.45 This is not to say that colloquial understandings or dictionary definitions may not be of some assistance, but they are not determinative of whether the impugned songs, sung by Mr Malema and Dr Ndlozi, are based on 45 Masuku fn 3 para 154. 36 a prohibited ground. Nor can this be determined from the single word, ‘ibhunu’, extracted from the remainder of the context. There is thus a necessary overlap in this case between the assessment at the first stage of the s 10 test and that in the second stage. [93] What characterises the inquiry in this case is that the Dubula ibhunu complaints are directed at the singing of a known, pre-existing song, with its own history. It is unlike, for example, Qwelane, Masuku, Hotz and Khumalo, which were all cases in which the respondents were the authors of the impugned words. It is notable that in Hotz, this Court found, on the facts of that case, that: ‘There was no context to ameliorate that message. It was advocacy of hatred based on race alone and it constituted incitement to harm whites. It was not speech protected by s 16(1) of the Constitution.’46 (Emphasis added.) [94] Hotz illustrates the importance of context in the hate speech inquiry. In that case, the words ‘kill all whites’ could be interpreted literally because there was no context to provide a different, or more nuanced meaning. Anyone seeing the t-shirt would understand the plain and very direct message painted on it. In contrast, in a case like the present, context is everything. This requires a consideration of who the singer is, the context in which the songs were sung and their likely impact.47 [95] All but one of the impugned occasions when Mr Malema sang Dubula ibhunu, with accompanying hand gestures, were at EFF events. They were public, celebratory occasions most of which were organised by, and for, the EFF. It was at these events that Mr Malema led the singing. There is no suggestions that the events were closed to all but EFF members, and in all likelihood there would have been 46 Hotz fn 42 para 68. 47 Qwelane fn 26 para 176. 37 some reporting on what occurred. In this context, the reasonably well-informed person could and would understand that Dubula ibhunu was sung on these occasions as an expression of the EFF’s political identity. [96] The reasonably informed person would also know that the EFF is a registered political party that competes for seats at all levels of government. The EFF is a very active political party, and its manifesto and pillars of the EFF’s political ideology are no secret to the general public. The reasonably well-informed person would know that the EFF is a leftist-aligned party, with a particular concern for the struggle to overcome economic and land injustice in South Africa. He or she would know that the party, and its leader, Mr Malema, are very outspoken on these issues. They would know that Mr Malema is often labelled as a populist politician and that he is known not to mince his words. [97] Masuku48 confirms that although the determination of whether the impugned words are likely to be harmful falls within the exclusive aegis of a court, evidence, including expert evidence, may be instrumental in assisting the court in this exercise. As noted earlier, Professor Gunner testified as an expert on song, oratory, and the history of African political forms, such as the political use of songs. She explained that the song fits within the long historical tradition of using public songs to voice opinions and comment on political issues. In this tradition, songs can be used as a call to change. In South Africa, songs have been used in this way for the last century, and even before. Dubula ibhunu itself has a very long history in the canon of South African liberation songs. 48 Ibid fn 3 paras 135 and 144. 38 [98] There is no reason to reject Professor Gunner’s evidence on this score: as South Africans we daily observe members of organisations and ordinary citizens singing and performing in public as a form of protest and a quest for change. Similarly, we can accept Professor Gunner’s further evidence that the performance is part and parcel of the political song within the genre. The mimicking of shooting by a singer is part of the call for change. Neither the words nor the gestures forming part of the performance are meant literally. [99] We accept that the reasonably well-informed person would have some understanding of Dubula ibhuna’s history in South Africa as a protest song linked to the liberation struggle. They would certainly understand that when protest songs are sung, even by politicians, the words are not meant to be understood literally, nor is the gesture of shooting to be understood as a call to arms or violence. It is plain from this that the singing of Dubula ibhunu cannot, in our view, be equated with wearing a t-shirt bearing a painted message to ‘kill all whites’. [100] The complaint by Afriforum as advanced in the case it presented at the trial before the equality court was that Mr Malema’s singing of Dubula ibhunu could be understood by the reasonable person as intending to send the message that the perpetration of violence against white South Africans of Afrikaner descent was acceptable. Moreover, that this was particularly so when the people in question were farmers, because these people historically had stolen the land from black South Africans. [101] We cannot accept this submission. It relies on an interpretation of ‘ibhunu’ excised from its immediate context, and on an interpretation of the remainder of the impugned part of the song abstracted from its broader historical, and current political, context. AfriForum’s complaint relies substantially on a literal 39 interpretation of the words, namely that they are intended to be understood as a direct invocation to exact violence against white South Africans of Afrikaner descent, or at least to regard such violence as normalised. [102] In its full context, this is not what the reasonably well-informed person would understand to be Mr Malema’s intent in singing the song. They would understand it to be serving the purpose of garnering support for the party and for its political objectives. They would know Mr Malema to be a populist leader who expresses controversial views. They would appreciate that this is part of his political persona. [103] The reasonably well-informed person would appreciate that when Mr Malema sang Dubula ibhunu on the first six impugned occasions, he was not actually calling for farmers, or white South Africans of Afrikaans descent to be shot, nor was he romanticising the violence exacted against them in farm attacks. They would understand that he was using an historic struggle song, with the performance gestures that go with it, as a provocative means of advancing his party’s political agenda. [104] His performances of the song follows in the established tradition of Dubula ibhunu as a call to act for change. In the case of the EFF, their public call is for an end to land and economic injustice in South Africa. Whether one agrees with the EFF’s agenda and Mr Malema’s chosen method of conveyance or not, the intent behind the song on the occasions when he sang it is objectively linked to the party’s stated political objectives. It is a form of political speech. Even if Mr Malema’s performance of Dubula ibhunu at the events identified in the complaint may be regarded by some as shocking or even disturbing, Qwelane underlines the importance in our democracy of tolerance for all views. This is particularly so in 40 the context of speech or, in this case, song, by a registered political party, at public events hosted or supported by it. To find that Mr Malema’s singing of Dubula ibhunu on the first six occasions identified in the complaint is hate speech would impermissibly limit the rights protected under s 19 of the Constitution. [105] AfriForum laid much emphasis on the test under s 10(1) being whether the impugned words ‘could’ not ‘would’ be understood as being intended to incite harm or propagate hatred. In our view, this submission takes the matter no further. There may be people who might understand Mr Malema’s singing of Dubula ibhunu as an exhortation to call for, or to support the normalisation of violence and hatred against white Afrikaans-speaking South Africans. Clearly, Mr Roets understands it this way. But we know that the subjective view of the target group is not the test. Seen in its full and proper context, Mr Malema’s singing of the song could not reasonably be understood in the manner advanced by AfriForum. [106] For these reasons, in respect of the first six occasions when Mr Malema sang Dubula ibhunu we find that high court correctly found that AfriForum had failed to establish that this constituted hate speech under s 10(1). Mr Malema was doing no more than exercising his right to freedom of expression, which is protected under s 16 of the Constitution, in the course of participating in the activities of, and campaigning for the political party of which he is leader, which rights are protected under s 19(1)(a) of the Constitution. [107] The last complaint concerns Mr Malema leading the singing of Dubula ibhunu in Senekal and Dr Ndlozi singing Shisa lamabuna on the same occasion. As noted earlier, the original complaint about the latter song was that it was a call to arson. The evidence established that this averment was wrong. Not much further attention was paid to Shisa lamabunu at the trial. In our view, it falls to be treated 41 as another form of protest song sung by Dr Ndlozi along the same lines as Dubula ibhunu. There is no reason why it, too, would not be understood by the reasonable person in this light. [108] Both songs were sung in Senekal during the course of what appears to have been a highly charged gathering of different political groupings following the violent murder of a farm manager. These included, but were not limited to, the EFF and AfriForum. There was even a suggestion that agent provocateurs were involved. In our view, there is no reason to assess the singing of Dubula ibhunu on this occasion any differently to his singing of it on the previous occasions. It would be understood as a means of asserting his party’s identity and agenda within the context of the competing ideological groupings present at the protest. For these reasons, the complaint regarding the Senekal incidents should also be dismissed. [109] In the result, the following order is made: 1. The application for the recusal of Keightley AJA from the adjudication of or further participation in the determination of this appeal is dismissed with costs, such costs to include those of two counsel where so employed. 2. The appeal is dismissed with costs, such costs to include those of two counsel where so employed. _________________________ H K SALDULKER JUDGE OF APPEAL 42 _________________________ K E MATOJANE JUDGE OF APPEAL _________________________ D S MOLEFE JUDGE OF APPEAL _________________________ Z NHLANGULELA ACTING JUDGE OF APPEAL _________________________ R M KEIGHTLEY ACTING JUDGE OF APPEAL 43 Appearances: For appellant: J Gauntlett SC KC M Tsele C Burke Instructed by: Hunter Spies Inc, Centurion Hendre Conradie Inc, Bloemfontein For respondent: T Ngcukaitobi SC M Ka-Siboto Instructed by: Ian Levitt Attorneys, Johannesburg Lovius Block Attorneys, Bloemfontein For amicus curiae: M Oppenheimer Instructed by: Kriek Wassenaar & Venter Inc, Pretoria Rosendorff Reitz Barry Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 28 May 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 AfriForum v Economic Freedom Fighters and Others (1105/2022) [2023] ZASCA 82 (28 May 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal, with costs, against the decision of the Gauteng Division of the Equality Court, Johannesburg. The appellant, AfriForum, is a civil rights organisation with an emphasis on the protection of minority rights. In December 2020, AfriForum lodged a complaint in the Gauteng Division of the Equality Court, Johannesburg (the equality court) in terms of the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000 (the Equality Act). AfriForum averred that the respondents, being the Economic Freedom Fighters (the EFF), the EFF’s President, Mr Julius Sello Malema (Mr Malema), and Dr Mbuyiseni Ndlozi (Dr Ndlozi), an EFF Member of Parliament, had committed hate speech in terms of s 10(1) of the Equality Act. The hate speech complaint centred, in the main, on the song which was commonly known as ‘Dubula ibhunu’. The literal English translation being ‘Kill the Boer- kill the farmer’. AfriForum pointed to six occasions on which Mr Malema had chanted the song, albeit that on some occasions Mr Malema had substituted the word ‘kiss’ for ‘kill’. In addition, it pointed to a single occasion when Dr Ndlozi chanted a similar song including the words: ‘Shisa lamabhunu, EFF ingen’endaweni’ (Shisa lamabhunu). The literal English translation of that chant was: ‘Burn these Boers, EFF enters in the space, or place’. The equality court dismissed AfriForum’s complaint but granted leave to appeal to this Court. The appeal was heard by the Court in September 2023 and judgment was reserved. Subsequently, on 20 September 2023 AfriForum instituted an application for the recusal of Acting Justice of the Supreme Court of Appeal Keightley (Justice Keightley), from the adjudication of, or further participation in, the determination of the appeal. They referred to remarks Justice Keightley had made in 2018 during an application for leave to appeal in a matter in which AfriForum was a party. According to AfriForum, the comments demonstrated bias against it or, at least, they showed that Justice Keightley had expressed herself in terms directed at AfriForum such as to find a reasonable apprehension of bias. The EFF opposed the recusal application. The SCA dismissed the application for Justice Keightley’s recusal, finding that the test for recusal as laid down in several Constitutional Court judgments had not been met. On the merits of the appeal, the Court dealt first with a preliminary point raised by EFF based on res judicata, or issue estoppel. It contended that the issue of whether Mr Malema’s singing of Dubula ibhuna constituted hate speech had been finally disposed of in a settlement agreement Mr Malema and AfriForum had entered into in a previous hate speech complaint. That settlement agreement had been made an order of this Court on 1 November 2012. The SCA held that the interests of justice and equity did not support the application of the issue estoppel defence in this case and thus dismissed the EFF’s preliminary point. On the main issue on appeal, the SCA held that the reasonably well-informed person would appreciate that when Mr Malema sang Dubula ibhunu, he was not actually calling for farmers, or white South 2 Africans of Afrikaans descent to be shot. Nor was he romanticising the violence exacted against them in farm attacks, as contended by AfriForum. The reasonably well informed person would understand that Mr Malema was using an historic struggle song, with the performance gestures that go with it, as a provocative means of advancing his party’s political agenda. Understood in its full context, it was a form of political speech. Even if Mr Malema’s performance of Dubula ibhunu may be regarded by some people to be shocking or even disturbing, the Constitution required a measure of tolerance. The Court held that what Mr Malema was doing was no more than exercising his right to freedom of expression, which was protected under s 16 of the Constitution. He was doing so in the course of participating in the activities of, and campaigning for, the political party of which he was leader, which rights are protected under s 19(1)(a) of the Constitution. The same reasoning applied in respect of Dr Ndlozi regarding Shisa lamabunu. In the result, the SCA appeal was dismissed. ~~~~ends~~~~

4262

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 479/2024 In the matter between: TYTE SECURITY SERVICES CC APPELLANT and WESTERN CAPE PROVINCIAL GOVERNMENT FIRST RESPONDENT MEC FOR THE DEPARTMENT OF INFRASTRUCTURE, WESTERN CAPE PROVINCIAL GOVERNMENT SECOND RESPONDENT THE DEPARTMENT OF INFRASTRUCTURE, WESTERN CAPE PROVINCIAL GOVERNMENT THIRD RESPONDENT ROYAL SECURITY CC FOURTH RESPONDENT SS SOLUTIONS (PTY) LTD t/a SEAL SECURITY FIFTH RESPONDENT Neutral citation: Tyte Security Services CC v Western Cape Provincial Government and Others (Case no 479/2024) [2024] ZASCA 88 (7 June 2024) Coram: PONNAN, MAKGOKA, MABINDLA-BOQWANA and GOOSEN JJA and COPPIN AJA Heard: 27 May 2024 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 7 June 2024 at 11h00. 2 Summary: Section 18 of Superior Courts Act 10 of 2013 – leave to execute pending appeal – requirements of exceptional circumstances and irreparable harm considered. 3 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Gamble and Wille JJ, sitting as court of first instance): The appeal is dismissed with costs, including those of two counsel where so employed. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Ponnan JA (Makgoka, Mabindla-Boqwana and Goosen JJA and Coppin AJA concurring): [1] I observed in Manong v Minister of Public Works that ‘State tenders have become fertile ground for litigation’.1 A decade and a half later, this yet again is one such matter, having occupied the attention of our courts for some four years. A challenge to a previous award for the same services came before the Western Cape High Court, Cape Town (the high court) in 2001. Binns-Ward J commenced his unreported decision in that matter (Red Ant Security Relocation and Eviction Services (Pty) Ltd v The Department of Human Settlements (Western Cape) (Red Ant)) with a reference to Cachalia and Kohn that: ‘Tendering has become a verifiably “messy business” and the courts are increasingly drawn into the quagmire in review proceedings. . .’.2 [2] The first respondent, the Western Cape Provincial Government (the Provincial Government), contracts with security companies for the provision of essential security services in respect of property belonging to it, which is especially vulnerable to unlawful occupation and vandalism. Each contract typically endures for two years. On 1 Manong & Associates (Pty) Ltd v Minister of Public Works and Another [2009] ZASCA 110; 2010 (2) SA 167 (SCA); [2010] 1 All SA 267 (SCA) para 1. 2 R Cachalia and L Kohn ‘The Quest for “Reasonable Certainty”: Refining the Justice and Equity Remedial Framework in Public Procurement Cases’ (2020) 137 SALJ 659 at 696 cited by Binns-Ward J in Red Ant Security Relocation and Eviction Services (Pty) Ltd v The Department of Human Settlements (Western Cape) WCHC Case No 9370/2021 (Red Ant) para 1. 4 25 March 2021, the tender for the services in question was first awarded jointly to the appellant, Tyte Security Services CC (Tyte), and Seal Security (Seal). The award of the contract (the first contract) followed upon a state procurement tender process. [3] Red Ant Security Relocation and Eviction Services (Pty) Ltd, an unsuccessful tenderer, applied to the high court to review and set aside the decision to award the first contract jointly to Seal and Tyte. The application succeeded before Binns-Ward J, who, inter alia: (i) declared the award of the first contract invalid and set it aside; (ii) suspended the declaration of invalidity, pending the conclusion of an expedited process de novo by the Provincial Government to lawfully procure the services, the subject of the tender; and, (iii) directed the Provincial Government to ensure that the process is completed within six months or such further period as may be permitted by the court on application to it. [4] On 21 April 2021, the Provincial Government invited fresh bids for a new 24-month contract. On 31 May 2023, it awarded the tender to – and concluded a contract to commence immediately (the second contract) with – the fourth respondent, Royal Security CC (Royal). On 15 June 2023, Seal brought an urgent application for an order that pending the final determination of a review application (the review application), the Provincial Government be interdicted from implementing or giving effect to its decision to award the tender to Royal. By way of a counter application, Tyte also sought the review and setting aside of the award. On 27 June 2023, Francis J, in issuing directions in respect of the further conduct of the review application, ordered that Seal and Tyte would continue to render services in terms of the first contract, pending the outcome of the review application. [5] The review application was heard by Gamble et Wille JJ from 28 to 30 November 2023. Separate judgments were delivered on 21 February 2024, with Gamble J concurring, for somewhat different reasons, in the order proposed by Wille J. The review application by Tyte and Seal was dismissed and the award of the tender to Royal upheld. The following order issued (the main order): ‘1. The applicant’s [Tyte’s] application and the twenty-second respondent’s [Seal’s] counter application for the judicial review and setting aside the award by the first to ninth respondents of Tender [T002/23] to the tenth respondent [Royal] are dismissed. 5 2. The tenth respondent shall take over and commence the operations required under the tender contract within one calendar month of the date of this order. 3. The applicant and the twenty-second respondent shall hand over such operations to the tenth respondent and do everything necessary to enable the tenth respondent to commence with the required security services within the stipulated timeframe. 4. The applicant shall pay the tenth respondent’s costs of the review application (including the costs of two counsel where retained). 5. The twenty-second respondent shall pay the tenth respondent’s costs of and incidental to the counter application (including the costs of two counsel where retained). 6. The applicant shall pay the tenth respondent’s costs of the interdict application brought under case number 9698/2023. 7. There shall be no further orders regarding costs.’ [6] On 28 February 2024, Tyte applied for leave to appeal the main order. On 7 March 2024, Royal applied urgently in terms of s 18(1), read with s 18(3), of the Superior Courts Act 10 of 2013 (the Act) (the s 18 application), for an order in the following terms: ‘. . . 2. That paragraphs 1 to 3 of the order [the main order] handed down by this Court on 21 February 2024 in the main application brought under the abovementioned case number be implemented immediately pursuant to the provisions of section 18 of the Superior Courts Act, No. 10 of 2013, and not be suspended pending the hearing of any application for leave to appeal and the final determination of any appeal against the order, whether in the High Court, the Supreme Court of Appeal, or the Constitutional Court. 3. That the costs of this application be paid by those Respondents who oppose the relief sought.’ [7] On 8 March 2024, Seal and Tyte gave notice of their intention to oppose the s 18 application. The Provincial Government elected to abide. Seal withdrew its opposition on 12 March 2024 and subsequently complied with the deadline fixed by the main order by handing operations over to Royal on 21 March 2024. The high court heard the s 18 application and Tyte’s application for leave to appeal the main order on 22 April 2024. On 24 April 2024, the high court dismissed Tyte’s application for leave to appeal. Four days later, it delivered judgment in the s 18 application. It ordered that 6 ‘[t]he operation and execution of the orders numbered 1, 2 and 3 . . . granted on 21 February 2024 . . . are to be implemented pending the outcome of any appeal process by [Tyte] or until another court otherwise directs’ (the execution order). [8] On 3 May 2024, Tyte filed an application with this Court for leave to appeal the main order. Exercising an automatic right of appeal under s 18(4)(ii) of the Act, Tyte filed a notice of appeal in respect of the execution order with this Court on 8 May 2024. The matter was thereafter enrolled, in accordance with s 18(4)(iii), as one of urgency for hearing on Monday 27 May 2024. [9] This Court has examined the requirements for the implementation of an execution order pending an appeal in University of the Free State v Afriforum (Afriforum);3 Ntlemeza v Helen Suzman Foundation;4 Premier of Gauteng v Democratic Alliance;5 Knoop v Gupta (Knoop);6 and, most recently, in Zuma v Downer and Another.7 Relying, in part, on some of the statements made in those judgments, in particular Afriforum and Knoop, counsel for Tyte, argued that it was for an applicant for an execution order (in the position of Royal), to establish three separate, distinct and self-standing requirements, namely: first, exceptional circumstances (the first); second, that it will suffer irreparable harm if the order is not made (the second); and, third, the party against whom the order is made (in this case Tyte) will not suffer irreparable harm if the order is made (the third). [10] Whilst there are indeed statements in those judgments that would appear to support counsel’s fundamental hypothesis, they seem to have been made in passing. They thus call for closer examination in this matter. An important point of departure, so it seems to me, is that consideration of each of the so-called three requirements is 3 University of the Free State v Afriforum and Another [2016] ZASCA 165; [2017] All SA 79 (SCA); 2018 (3) SA 428 (SCA) (Afriforum). 4 Ntlemeza v Helen Suzman Foundation and Another [2017] ZASCA 93; [2017] 3 All SA 589 (SCA); 2017 (5) SA 402 (SCA). 5 Premier for the Province of Gauteng and Others v Democratic Alliance and Others [2020] ZASCA 136; [2021] 1 All SA 60 (SCA). 6 Knoop and Another NNO v Gupta (Tayob Intervening) [2020] ZASCA 149; [2021] 1 All SA 17 (SCA); 2021 (3) SA 135 (SCA) (Knoop). 7 Zuma v Downer and Another [2023] ZASCA 132; [2023] 4 All SA 644 (SCA); 2024 (2) SA 356 (SCA); 2024 (1) SACR 589 (SCA). 7 not a hermetically sealed enquiry and can hardly be approached in a compartmentalised fashion. [11] It is important to recognise that the existence of ‘exceptional circumstances’ is a necessary prerequisite for the exercise of the court’s discretion under s 18. If the circumstances are not truly exceptional, that is the end of the matter. The application must fail and falls to be dismissed. If, however, exceptional circumstances are found to be present, it would not follow, without more, that the application must succeed.8 In its consideration of s 17(2)(f) of the Act, the Constitutional Court pointed out in Liesching and Others v S: ‘As with section 18(1), section 17(2)(f) prescribes a departure from the ordinary course of an appeal process. Under section 17, in the ordinary course, the decision of two or more Judges refusing leave to appeal is final. However, section 17(2)(f) allows for a litigant to depart from this normal course, in exceptional circumstances only, and apply to the President for reconsideration of the refusal of leave to appeal. In Ntlemeza, the requirement of exceptional circumstances is viewed as a “controlling measure”. In terms of section 17(2)(f), the President has a discretion to deviate from the normal course of appeal proceedings – such discretion can only be exercised in exceptional circumstances. The requirement of the existence of exceptional circumstances before the President can exercise her discretion is a jurisdictional fact which may operate as a controlling or limiting factor.’9 [12] It has long been accepted that it is ‘undesirable to attempt to lay down any general rule’ in respect of ‘exceptional circumstances’ and that each case must be considered upon its own facts.10 In MV Ais Mamas Seatrans Maritime v Owners, MV Ais Mamas and Another, Thring J summarised the approach to be followed. He said that ‘what is ordinarily contemplated by the words “exceptional circumstances” is 8 See George Hlaudi Motsoeneng v South African Broadcasting Corporation Soc Ltd and Others [2024] ZASCA 80 para 13, where this was said in respect of s 17(2)(f) of the Superior Courts Act, which provides: ‘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.’ 9 Liesching and Others v S [2018] ZACC 25; 2018 (11) BCLR 1349 (CC); 2019 (1) SACR 178 (CC); 2019 (4) SA 219 (CC) paras 136-137. 10 Norwich Union Life Insurance Society v Dobbs 1912 AD 395 at 399. 8 something out of the ordinary and of an unusual nature; something which is excepted in the sense that the general rule does not apply to it; something uncommon, rare or different’.11 [13] What constitutes irreparable harm is always dependent upon the factual situation in which the dispute arises, and upon the legal principles that govern the rights and obligations of the parties in the context of that dispute. It was accepted in Knoop that: ‘the need to establish exceptional circumstances is likely to be closely linked to the applicant establishing that they will suffer irreparable harm if the . . . order is not implemented immediately’.12 The same, I daresay, can be said of its counterpart, the absence of irreparable harm to the respondent. In that sense, the presence or absence of irreparable harm, as the case may be, can hardly be entirely divorced from the exceptional circumstances enquiry. It would perhaps be logically incoherent for a court to conclude, on the one hand, in favour of an applicant that exceptional circumstances subsist, but, on the other, against an applicant on either leg of the irreparable harm enquiry. [14] The argument, as I have it, is that as the language of s 18(3) is clear – it is for an applicant, in addition to exceptional circumstances, to prove on a balance of probabilities that it will suffer irreparable harm and conversely the other party would not. A court is thus required to undertake what would be in the nature of a tick-box exercise by enquiring into and satisfying itself as to the first, then the second and finally the third, in that order. Unless each box is successfully ticked, the applicant must fail. Here, so the argument proceeds, the high court failed to undertake such an exercise; had it done so, it could not permissibly have ticked the third box, consequently, the s 18 application should have failed. Even accepting that the legislature has employed the words ‘in addition [to exceptional circumstances] proves on a balance of probabilities’ in s 18(3), it would be passing strange that if an applicant comes short in respect of either the second or third requirements it would nonetheless still be able to successfully meet the exceptional circumstances threshold. The use of the words ‘in addition proves’ in s 18(3) ought not to be construed as necessarily enjoining a court 11 MV Ais Mamas Seatrans Maritime v Owners, MV Ais Mamas, and Another 2002 (6) SA 150 (C) at 156H-J. 12 Knoop fn 6 above para 47. 9 to undertake a further or additional enquiry. The overarching enquiry is whether or not exceptional circumstances subsist. To that end, the presence or absence of irreparable harm, as the case may be, may well be subsumed under the overarching exceptional circumstances enquiry. As long as a court is alive to the duty cast upon it by the legislature to enquire into, and satisfy itself in respect of exceptional circumstances, as also, irreparable harm, it does not have to do so in a formulaic or hierarchical fashion. [15] Although it has been postulated that the second and third are distinct and discrete enquiries, they are perhaps more accurately to be understood as being two sides of the same coin. The same facts and circumstances, which by that stage ought largely to be either common cause or undisputed, will inform both enquiries. The logical corollary of an applicant suffering irreparable harm, will invariably – but not always – be that the other party has not. The enquiry into each can thus hardly be mutually exclusive, particularly because as far as the third is concerned, unlike the second, the onus cast upon an applicant would be to prove a negative, in accordance with the usual civil standard. This suggests that, as with the exceptional circumstances enquiry, a court considering both the second and third must have regard to all of the facts and circumstances in any particular case. Insofar as the third goes, although s 18(3) casts the onus (which does not shift) upon an applicant, a respondent may well attract something in the nature of an evidentiary burden.13 This would be especially so where the facts relevant to the third are peculiarly within the knowledge of the respondent. In that event, it will perhaps fall to the respondent to raise those facts in an answering affidavit to the s 18 application, which may invite a response from the applicant by way of a replying affidavit. [16] What counsel’s argument boiled down to was that as each of the second and the third so-called requirements had to be approached as discrete, isolated enquiries, there was accordingly to be no weighing-up of the irreparable harm of the one as against the other. In that regard, reliance was placed on Afriforum,14 which, in turn, 13 MV 'TARIK III' Credit Europe Bank N.V. v The Fund Comprising the Proceeds of the Sale of the MV Tarik III and Others [2022] ZASCA 136; [2022] 4 All SA 621 (SCA) para 24–34. 14 Afriforum fn 3 above para 10-11. 10 referred with approval to Incubeta Holdings and Another v Ellis and Another, where Sutherland J is reported to have said: ‘A hierarchy of entitlement has been created . . . Two distinct findings of fact must now be made, rather than a weighing-up to discern a “preponderance of equities”.’15 It is not clear what the learned Judge sought to convey by ‘a hierarchy of entitlement has been created’. Counsel experienced some difficulty in trying to explain – or support – such a characterisation. [17] Counsel fared no better in defence of the contention that s 18(3) leaves no room for a ‘weighing-up’ by the court. As I understood counsel, it was for an applicant, on pain of otherwise failing, to show a complete absence of irreparable harm to the other party. Any irreparable harm (or even the potentiality of irreparable harm) to a respondent, no matter how slight would irredeemably tip the scales against an applicant. It thus would matter not that the irreparable harm of a respondent was relatively slight or inconsequential or that it was significantly outweighed by that of the applicant. The mere fact of irreparable harm in respect of the respondent, irrespective of its nature or extent, would per force non-suit the applicant. In other words, unless there was no (as in ‘zero’, in the words of counsel) irreparable harm to a respondent the s 18 application had to fail. [18] Counsel did not shrink from the logical consequence of the contention, namely that such a mechanistic approach, which rested on the supposition that the second and third had to be approached as isolated enquiries, may well strip a court of any discretion that it may possess or that it could give rise to a manifestly inequitable conclusion, which could serve to undermine the rule of law. This approach, if it is to be favoured, would disregard entirely the rationality, reasonableness and proportionality yardsticks that have become important touchstones in our jurisprudence. It likely would also, to all intents and purposes, set the bar so high as to render the remedy illusory. Counsel was however willing to accept that there must always remain a residual discretion. What exactly was meant by a residual discretion or when precisely it was to be exercised remained opaque. However, on the acceptance of a discretion, even a residual one, the argument against a weighing-up evaporates. If the argument were 15 Incubeta Holdings and Another v Ellis and Another [2013] ZAGPJHC 274; 2014 (3) SA 189 (GSJ) para 24. 11 correct, the court would have no discretion to grant relief under s 18 whatever the consequences or however irreparably disastrous to an applicant. [19] Irreparable harm, it has been said in a somewhat different context, is more than a rationale – it is a critical factor in testing the claim for an interlocutory injunction.16 The nature of irreparable harm is not easy to define. R J Sharpe points out: ‘The rationale for requiring the plaintiff to show irreparable harm is readily understood. If damages will provide adequate compensation, and the defendant is in a position to pay them, then ordinarily there will be no justification in running the risk of an injunction pending the trial. While it is easy to see why this requirement should be imposed, it is difficult to define exactly what is meant by irreparable harm.’17 [20] Over a century ago, Innes JA, after referring to Van der Linden's Institutes, where the essentials for an interdict application had been enumerated, had this to say: ‘That element [the injury feared must be irreparable] is only introduced by him in cases where the right asserted by the applicant, though prima facie established, is open to some doubt. In such cases he says the test must be applied whether the continuance of the thing against which an interdict is sought would cause irreparable injury to the applicant. If so, the better course, is to grant the relief if the discontinuance of the act complained of would not cause irreparable injury to the other party.’18 Interim interdicts (akin to interlocutory injunctions) are regular fare in our courts. They provide a flexible and most useful tool in the aid of justice. Our courts have accordingly come to accept that the remedy should not be granted if there is a danger that it may work an injustice. [21] In Hoffmann-La Roche & Co AG and Others v Secretary of State for Trade and Industry, Lord Wilberforce expressed the view that: ‘The object of [an interim injunction] is to prevent a litigant, who must necessarily suffer the law's delay, from losing by the delay the fruit of his litigation; this is called "irreparable" damage, meaning that money obtained at trial may not compensate him.’19 16 P M Perell ‘The Interlocutory Injunction and Irreparable Harm’ (1989) 68 The Canadian Bar Review 538 at 540. 17 R J Sharpe Injunctions and Specific Performance (1983) at 77. Cited in P M Perell ‘The Interlocutory Injunction and Irreparable Harm’ (1989) 68 The Canadian Bar Review 538 at 540. 18 Setlogelo vs Setlogelo 1914 AD 221 at 227. 19 Hoffmann-La Roche & Co AG and Others v Secretary of State for Trade and Industry [1975] AC 295 at 355; [1974] 12 All ER 1128 at 1146 (HL). 12 Albeit said in the context of the consideration of a wholly discretionary remedy, and thus not perfectly analogous, the sentiment expressed is not entirely without value here, inasmuch as it echoes precisely the position in which Royal finds itself. [22] The judgment of Binns-Ward J essentially only concerned the issue of what would be a just and equitable remedy in the circumstances of the case. His order that a fresh tender process be completed within six months was not met and subsequently had to be extended until 31 May 2023. This meant that Seal and Tyte had the full benefit of the entire period of the first contract, notwithstanding the declaration of invalidity and the contract having been set aside. In addition, the effect of the order of Francis J was that Seal and Tyte simply continued to perform services in terms of the tender awarded to them jointly on 25 March 2021.Despite the award having been set aside by Binns-Ward J, by the time the main order came to be delivered on 21 February 2024, Seal and Tyte had the benefit of the award for a further nine months. Thus, not only has Tyte had the benefit of a two-year contract that was set aside as having been unlawfully awarded to it, but by the time the matter came to be heard in this Court, it would have continued to reap the rewards of that contract for an additional year. Conversely, as things presently stand, Royal has been denied the benefit of at least one year of the second contract, which the high court has found in the review application to have been lawfully awarded to it. [23] Inasmuch as the second contract is due to terminate in June 2025, there is every prospect that by the time the appeal comes to be heard and irrespective of the outcome, Royal will be left remediless. Royal drew attention to the fact that when the review application issued, it had already commenced with the roll-out process, which was well underway. It is not in dispute that, as required by the second contract, it had to provide insurance cover of R5 million per 300 guards, furnish a performance guarantee in an amount equal to 1% of the contract, being R2.8 million and establish sites in six different districts. Royal has also spent in excess of R1 million in respect of uniforms and R7.5 million in respect of an order for tactical response vehicles. As against that, the continued rendering of services in terms of the impugned first contract, has generated in excess of R70 million for Seal and Tyte. 13 [24] Moreover, it is common ground that the price tendered by Royal was the most favourable to the Provincial Government, being lower than all the others by a significant margin. Royal’s bid of R282 million for the 24-month contract was 18.45% below the pre-tender estimate, whereas Seal and Tyte exceeded the estimate by 5.62% and 1.35% respectively. The anticipated windfall to Seal and Tyte of a further turnover of R100 million after the award of the bid to Royal represents 28.16% of the full-term value of the second contract. Apart from illustrating the exceptional nature of this matter, these facts also bear testimony to the extent of the existing and ongoing prejudice to Royal and the public at large. The significance of the public interest was recognised by the high court in the concurring judgment of Gamble J in the review application, in which he said: ‘At the end of it all, the approach adopted by the province was in accordance with the touchstone of public procurement – the promotion of competition and cost-effective tendering. Importantly, the exercise resulted in a significant saving for the public purse – around R83m when compared to Seal’s price.’ [25] In the circumstances, it was unsurprising that in this Court, Tyte was constrained to accept that there are exceptional circumstances and that Royal will suffer irreparable harm. The argument thus centred on the third. However, even were we to approach the matter on the footing posited by counsel, namely that the third had to be considered as an isolated edifice, the high court effectively put paid to that in these terms: ‘Simply put, the tenth respondent has been losing daily revenue on not being permitted to perform under a lawfully awarded tender. On the other side of the coin, the twenty-second respondent has been benefiting from an unlawfully awarded tender for close to three years and will suffer no judicially cognizable harm whatsoever if the tenth respondent were to perform the services provided in its contract for the remaining little more than one year of its intended duration. The twenty-second respondent does not engage with these factual averments, which are common cause.’ [26] In that, the high court cannot be faulted. In arguing that it will suffer irreparable harm, Tyte takes a rather narrow view of the matter. It focuses on the profits that it will lose going forward, but ignores entirely the windfall that it has received from a contract that was unlawfully awarded to it. It seeks to continue to reap that windfall for an indefinite period well into the future. It does so in the face of a new contract that has 14 been held by the high court to have been lawfully awarded to Royal. What is more, for as long as Tyte continues to perform in terms of the first contract that has been held to be unlawful, it does so at an inflated cost to the Provincial Government. The windfall, taken together with the inflated costs, is completely dispositive of Tyte’s argument that the harm to it is irreparable. [27] There will obviously be cases in which a litigant may suffer irreparable harm by being forced to abide a decision of a court that is subsequently held to be wrong on appeal. However, even on a most general impression as to the strength of Tyte’s case and its ultimate prospects of success, this is not such a matter. The argument is that if Tyte is compelled to now hand over operations to Royal, but ultimately succeeds in having the award of the second contract set aside on appeal, then the rendering of the services would, without more, have to revert to it. Tyte asserts such an entitlement by dint of the orders of Binns-Ward J and Francis J. However, those orders were a temporary expedient and in no way sought to (or could for that matter) resolve the respective rights and obligations of the parties. [28] Any success by Tyte in the contemplated appeal, would achieve no more than the setting aside of the award of the second contract to Royal. It would not result in the substitution of Tyte for Royal as the successful tenderer – such relief was advisedly not sought. The consequence of the setting aside of the award to Royal on appeal is that the matter must then be dealt with under s 172(1)(b) of the Constitution (as it was at the outset by Binns-Ward J in Red Ant), pursuant to which courts have the widest possible remedial discretion.20 It is thus not a foregone conclusion that success in the envisaged appeal will inexorably lead to Tyte replacing Royal. The upshot is that such prejudice as Tyte seeks to rely upon is perhaps more ephemeral than real. [29] In the result, the appeal must fail and it is accordingly dismissed with costs, including those of two counsel where so employed. 20 Millennium Waste Management (Pty) Ltd v Chairperson of the Tender Board: Limpopo Province and Others [2007] ZASCA 165; [2007] SCA 165 (RSA); [2008] 2 All SA 145; 2008 (2) SA 481; 2008 (5) BCLR 508; 2008 (2) SA 481 (SCA); Minister of Mineral Resources and Energy and Others v Sustaining the Wild Coast NPC and Others [2024] ZASCA 84. 15 ________________ V M PONNAN JUDGE OF APPEAL Appearances For the appellant: R van Riet SC and P Tredoux Instructed by: De Waal, Grobbelaar, Fisher Inc., Cape Town JL Jordaan Attorneys, Bloemfontein For the first to third respondents: A Nacerodien (heads of argument prepared by J Newdigate SC and A Nacerodien) Instructed by: The State Attorney, Cape Town The State Attorney, Bloemfontein For the fourth respondent: JC Heunis SC and PS van Zyl Instructed by: Ravindra Maniklall & Co., Durban 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: 7 June 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 Tyte Security Services CC v Western Cape Provincial Government and Others (Case no 479/2024) [2024] ZASCA 88 (7 June 2024) Today the Supreme Court of Appeal (SCA) dismissed with costs an appeal by Tyte Security Services CC (Tyte) against a judgment of the Western Cape Division of the High Court, Cape Town (the high court). The first respondent, the Western Cape Provincial Government (the Provincial Government), contracts with security companies for the provision of essential security services in respect of property belonging to it that was especially vulnerable to unlawful occupation and vandalism. Each contract typically endures for two years. On 25 March 2021, the tender for the services in question, following a state procurement tender process, was first awarded jointly to Tyte and Seal Security (Seal) (the first contract). Red Ant Security Relocation and Eviction Services (Pty) Ltd, an unsuccessful tenderer, applied, successfully, to the high court to review and set aside the decision to award the first contract jointly to Seal and Tyte. On 21 April 2021, the Provincial Government invited fresh bids for a new 24-month contract. On 31 May 2023, it awarded the tender to, and concluded a contract to commence immediately (the second contract) with, the fourth respondent, Royal Security CC (Royal). On 15 June 2023, Seal brought an urgent application for an order that, pending the final determination of a review application (the review application), the Provincial Government be interdicted from implementing or giving effect to its decision to award the tender to Royal. By way of a counter application, Tyte also sought the review and setting aside of the award. On 27 June 2023, Francis J, in issuing directions in respect of the further conduct of the review application, ordered that Seal and Tyte would continue to render services in terms of the first contract, pending the outcome of the review application. The review application, heard by Gamble et Wille JJ was dismissed and the award of the tender to Royal upheld (the main order). In essence, the main order directed that Royal shall take over and commence the operations required under the tender contract within one calendar month and that Tyte and Seal shall hand over such operations to Royal and do everything necessary to enable Royal to commence with the required security services within the stipulated timeframe. On 28 February 2024, Tyte applied for leave to appeal the main order. On 7 March 2024, Royal applied urgently in terms of s 18(1), read with s 18(3), of the Superior Courts Act 10 of 2013 (the Act) (the s 18 application), for an order seeking, essentially, that the main order be implemented immediately pursuant 2 to the provisions of s 18 of the Act, and not be suspended pending the hearing of any application for leave to appeal and the final determination of any appeal against the main order. The high court heard the s 18 application and Tyte’s application for leave to appeal the main order on 22 April 2024. On 24 April 2024, the high court dismissed Tyte’s application for leave to appeal and delivered judgment in the s 18 application four days later, holding that the operation and execution of the orders granted in the review application are to be implemented pending the outcome of any appeal process by Tyte or until another court otherwise directs (the execution order). On 3 May 2024, Tyte filed an application with the SCA for leave to appeal the main order. Exercising an automatic right of appeal under s 18(4)(a)(ii) of the Act, Tyte filed a notice of appeal in respect of the execution order with the SCA on 8 May 2024. The matter was thereafter enrolled, in accordance with s 18(4)(a)(iii), as one of urgency for hearing on Monday 27 May 2024. Before the SCA, Tyte, argued that it was for an applicant for an execution order (in the position of Royal), to establish three separate, distinct and self-standing requirements, namely: first, exceptional circumstances (the first); second, that it will suffer irreparable harm if the order is not made (the second) and, third, the party against whom the order is made (in this case Tyte) will not suffer irreparable harm if the order is made (the third). The SCA reasoned that it was important to recognise that the existence of ‘exceptional circumstances’ was a necessary prerequisite for the exercise of the court’s discretion under s 18 of the Act, and that if the circumstances were not truly exceptional, that was the end of the matter and the application should fail and be dismissed. It further stated that the second and third could not be approached as isolated enquiries, as this may well strip a court of any discretion that it may possess or that it could give rise to a manifestly inequitable conclusion, which could serve to undermine the rule of law and disregard entirely the rationality, reasonableness and proportionality yardsticks that have become important jurisprudential touchstones. The SCA held that, not only had Tyte had the benefit of a two-year contract that was set aside as having been unlawfully awarded to it, but by the time the matter came to be heard in the SCA, Tyte would have continued to reap the rewards of that contract for an additional year, thus denying Royal the benefit of at least one year of the second contract, which the high court had found, in the review application, to have been lawfully awarded to it. It further held that, inasmuch the second contract was due to terminate in June 2025, there was every prospect that by the time the appeal came to be heard and irrespective of the outcome, Royal would be left remediless. In the circumstances, the SCA found that there was little room for Tyte to argue before it that exceptional circumstances do not subsist or that Royal will not suffer irreparable harm. The SCA also agreed with the high court that Tyte would not suffer any judicially cognisable harm if the main order were implemented pending the appeal. In the result, the SCA issued an order dismissing the appeal with costs, including those of two counsel where so employed. --------oOo--------

4179

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 272/2022 In the matter between: MEMBER OF THE EXECUTIVE COUNCIL OF HEALTH AND SOCIAL DEVELOPMENT, GAUTENG PROVINCIAL GOVERNMENT APPELLANT and F B M (obo L P M) RESPONDENT Neutral Citation: MEC of Health and Social Development of the Gauteng Provincial Government v M (272/2022) [2024] ZASCA 21 (05 March 2024) Coram: DAMBUZA AP and SALDULKER, NICHOLLS, MABINDLA-BOQWANA and GOOSEN JJA Heard: 07 March 2023 Delivered: 05 March 2024 2 Summary: Delict – claim for medical negligence damages – minor born with brain injury sustained during birth – whether hospital staff were negligent – if so, whether such negligence caused the brain injury – evidence did not establish that the hospital staff were negligent. 3 _______________________________________________________________ ORDER ________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Wilson AJ, with Weiner and Mudau JJ concurring) sitting as a court of appeal: 1. The appeal is upheld with costs, including the costs of two counsel where so employed. 2. The order of the full court is set aside and substituted with the following: ‘The appeal is dismissed with costs, including the costs of two counsel where so employed.’ ________________________________________________________________ JUDGMENT ________________________________________________________________ Dambuza AP and Nicholls JA (Saldulker, Mabindla-Boqwana, and Goosen JJA concurring): [1] This appeal is against an order of the full court of the Gauteng Division of the High Court, Johannesburg (Wilson AJ, with Weiner and Mudau JJ concurring). That court overturned a judgment of the trial court of the same division (Molahlehi J) which held that the appellant, the Member of Executive Council for Health and Social Welfare for the Gauteng Provincial Government (MEC)1, was liable for damages suffered by the respondent, Ms M’s child, L, as a result of a brain injury which it found to have been sustained during L’s birth. 1 In April 2012 this Department was split into - a separate provincial department of health and a department of social development. However, in this judgment we continue to refer to the parties as they were in the pleadings, the trial court, and the full court. 4 [2] The primary questions in this appeal are whether the medical staff at Tshwane District Hospital were negligent in the care and treatment of Ms M, the mother of L, and whether such negligence caused the consequent medical condition from which L presently suffers. This appeal is with the leave of this Court. [3] L was born at Tshwane District Hospital on 18 May 2010. His mother, Ms M arrived at the hospital in the early hours of the morning of that day as an ‘unbooked’ patient, with no ante-natal records. She was admitted at 01h45 in the latent stage of labour, with ruptured membranes. L was born at 15h10, on the same day, by natural delivery, with Apgar scores of 1 at one minute, 7 at five minutes (assisted through resuscitation), and 8 at ten minutes (assisted through resuscitation). At birth he was flaccid, acidotic and had to be placed on a ventilator. [4] On 15 January 2014 Ms M instituted an action in the Gauteng Division of the High Court, claiming damages against the MEC for medical negligence on the part of the hospital’s staff. In the summons she alleged that L suffered a hypoxic-ischaemic encephalopathy (HIE or brain injury)2 during birth as a result of negligence by the hospital staff. This resulted in L suffering cerebral palsy which continues to afflict him, she alleged. [5] She pleaded various acts of negligence on the part of the hospital staff. In the main, her case was that her labour was unduly prolonged and that the hospital medical staff failed to take a decision at 13h10 to deliver the baby by caesarean section. The contention was that L suffered the brain injury due to perinatal 2 A type of brain dysfunction (brain injury) that occurs when the brain experiences a decrease in oxygen or blood flow. It can occur before, during labour and delivery or after birth. https://www.massgeneral.org as of 4 February 2024. 5 asphyxia3 which caused him to sustain severe brain damage, resulting in cerebral palsy (CP), mental retardation and epilepsy. [6] The MEC denied liability, pleading that there was no negligence on the part of the hospital staff. He pleaded that any duty of care owed to Ms M and the baby she was carrying was circumscribed by, and subject to the reasonable financial, human, and other resources available to the Department of Health to equip staff and maintain the hospital. It was asserted that the hospital rendered the best service it could to Ms M. However, in the event of the court finding that the monitoring of the foetus was insufficient, such deficiency was not causally connected to the cerebral palsy suffered by L. [7] It was common ground that on her admission in the early hours of the morning, Ms M was connected to a cardiotocography (CTG) machine.4 At first, the CTG tracings (partogram) were ‘non-reassuring’. This was resolved by application of Ringers Lactate.5 The CTG machine was allowed to run for another 30 minutes and was described as ‘re-assuring with good variability’. Ms M was then monitored with a Doppler at 4h00, 6h00, 8h00 and 10h00. Over this period the foetal heart rate was recorded as being between 142 and 147 beats per minute, 3 ‘Perinatal asphyxia or birth asphyxia, results from an inadequate intake of oxygen by the baby during the birth process – before, during or just after birth. Decreased oxygen intake can result in chemical changes in the baby’s body that include hypoxemia, or low levels of oxygen in the blood, and acidosis, in which too much acid builds up in the blood.’ https://www.hopkinsmedicine.org as of 4 February 2024. 4 The CTG is a machine used to monitor the heartbeat of a foetus and the mother’s contractions during labour. It generates a printout on which traces depicting the baby’s heartbeat over time are recorded. The three indicators to look out for when reading CTG tracings are: first, the rate of the foetal heartbeat, second, the baseline variability, and third decelerations in the heartbeat. A foetal heartbeat of between 110-160 beats per minute (bpm) is considered normal. Baseline variability refers to the extent of variation between one heartbeat and the next. When the heart rate deviates from the normal baseline variability this can be a sign that the foetus has initiated defence mechanisms as a result of decreased levels of oxygen. The presence of variability suggests that the nervous system of the foetus is still undamaged. Deceleration occurs when the heart rate is reduced to less than 15 beats per minute. This may signal that the foetus is becoming hypoxic, or it may indicate something less sinister. 5 This is a ‘type of isotonic, crystalloid fluid further classified as balanced or buffered solution used for fluid replacement. The content of Ringer’s Lactate includes sodium, chloride, potassium, calcium and lactate in the form of sodium mixed into a solution with an osmonality of 273 mOsm/L and pH of about 6.5. See https://ncbi.nlm.nih.gov, (the National Library of Medicine of the United States of America) as of 28 February 2024. 6 thus falling within the normal range of 110 -160 beats per minute. The next CTG assessment was performed at 06h24. The partogram was again described as ‘re-assuring’. A handwritten note by the senior midwife Sister Motshwene recorded that the CTG assessment should be repeated after one hour. This was not done. [8] Ms M went into the first stage of active labour at 7h30. Sometime thereafter she was seen by a doctor6 who referred to a ‘reassuring’ partogram. At 11h30, after a further foetal heart rate assessment, she was transferred to the labour ward. The foetal heart rate was again assessed with a Doppler at 12h00, 12h30 and 13h00. The next CTG assessment commenced at 12h40 and the machine ran continuously until approximately 15h00. A note at 13h30 recorded that the foetal heart rate was 1607 beats per minute with slight decelerations. A further written note was made to ‘report CTG to Sr Motshwene’. Foetal distress was diagnosed at 14h30 and Ms M was prepared for a caesarean section. However, she became fully dilated at 14h45, after being wheeled into theatre, and she delivered L naturally at 15h10. [9] Ms M’s case was, in the main, constructed around two aspects of her baby’s birth. First, she contended that the CTG partogram showed that a decision should have been taken at 13h10 on the day of L’s birth, to have her deliver the baby by caesarean section. Aligned to this, was the contention that L’s foetal heart rate should have been monitored by a CTG machine for the whole period that she was at the hospital, or that Ms M should have been put back on the CTG machine at some stage before 12h40. Had that been done, irregularities in L’s heartbeat would have been observed sooner, and the decision to perform a caesarean section would have been taken prior to brain injury occurring. 6 The evidence was that the clinic did not employ specialist doctors but only general practitioners. 7 The actual note referred to 60 beats per minute but it is accepted that this was an error and it should have been 160 beats per minute. 7 [10] This contention was based on the evidence given by Ms M’s obstetrician, Dr Murray, that if the CTG had been repeated prior to 12h40, an abnormal pattern would have been diagnosed earlier, and a plan made for a caesareansection to be performed before the foetus became acidotic. According to her, from 12h40 the traces depicted a pathological foetus, even though there was normal variability. From that time two atypical decelerations, and a baseline foetal heart rate of 160 bpm were present on the partogram. When these features persisted for the 30 minutes ending at 13h10, the foetus became pathological. The decision to perform an emergency caesarean-section should have been taken at that time, and the failure by the hospital staff to do so was sub-standard medical care, she opined. [11] The second aspect on which Ms M relied was the contents of joint minutes prepared by medical experts, including radiologists Dr A Weinstein and Prof. Savvas Andronikou. The Magnetic Resonance Imaging (MRI) scan on which the radiologists based their opinion was done when L was 4 years and 5 months old. The radiologists agreed that the MRI demonstrated features in keeping with acute profound hypoxic ischemic injury. They also agreed that because the findings were isolated, they required clinical correlation. In their minute they recorded that they had observed a bilateral ‘T2/flair’8 hyperintensity of the child’s putamina,9 these being features of an acute profound hypoxic ischaemic injury. They agreed that the MRI scan demonstrated an ‘acute profound HII [Hypoxic Ischaemic Injury] that occurred in a term brain at 37 weeks or [older] probably in the perinatal time period . . . ’. They also agreed that the involvement of the basal ganglia in a HII, in general, indicates an acute profound event. In addition, they 8 This stands for ‘T2-weighted Fluid-Attenuated Inversion Recovery’, an area of high intensity on types of MRI scans of the brain of a human reflecting lesions produced largely by damaging of the myelin sheath surrounding neurons and axonal loss. 9 A paired structure that is part of the nuclei that form the basal ganglia – which is responsible for motor control and other functions of the brain. 8 agreed that the injury to L’s brain was limited to the putamina and that the other deep grey structures as well as the hippocampi,10 the Peri-Rolandic11 regions and cerebellar vermis had been spared. They stated that the neurological outcome should be assessed clinically, by obstetricians, for determination of a more accurate time and cause of injury. [12] Dr Andronikou, the radiologist who testified for Ms M, was of the opinion that if the baby’s heart had been monitored 24 hours a day by CTG, it might have been possible to pinpoint when the sentinel event occurred by observing the deteriorating foetal heart rate on the CTG. He persisted in the view that the assault on L’s brain was acute profound, and likely to have been caused by hypoxia. The MRI imaging, he said, indicated that something severe had happened to the foetus, although it did not show the period when the injury occurred. [13] Paediatric neurologists Drs D Pearce (for Ms M) and J Rademeyer (for the MEC) also prepared a joint minute intended ‘to assist the court in respect of causation/origin of the timing of [L’s] diagnosis and neurological disability’. They did a neurological examination on L on 13 April 2017 and 8 August 2017 respectively, and also considered the joint minute prepared by the radiologists. They agreed that L suffered from ‘mixed cerebral palsy (predominantly dystonic12) with a superimposed right hemiplegia and gross motor functional classification scale 1V [which were] indicative [of the fact] that L’s physical impairments severely restricted his movements’. [14] The neurologists agreed that a diagnosis of early onset of HIE II (neonatal encephalopathy) could be made based on the history and the limited clinical 10 Complex brain structure embedded deep into the temporal lobe. https://www.ncbi.nim.nih.gov > pmc 11 Central lobe of the brain. . https://www.ncbi.nim.nih.gov > pmc 12 Involuntary muscle twitch. 9 records available. Whilst they agreed that foetal distress was evident in L more than 12 hours prior to delivery, they also resolved to defer to the obstetricians the question of appropriate management of that observation. They could not agree on whether there could be other causes for the cerebral palsy other than the HIE. Dr Pearce opined that because the MRI findings were not consistent with infection, congenital brain abnormalities, genetic and metabolic disorders, or cranial haemorrhage, the most probable cause of the injury to L’s brain was intrapartum or peripartum hypoxia. [15] Dr Rademeyer’s opinion was that the mild involvement of basal ganglia observed was not consistent with a severe hypoxic event. She maintained that there was no evidence that other causes of HIE had been investigated and insisted that the MRI findings were not in keeping with peripartum13 hypoxia. However, she agreed in the joint minute that a diagnosis of HIE could be made from records showing partially compensated metabolic acidosis in L’s blood that was taken more than an hour after delivery. She was also satisfied that there were no other identifiable causes of the injury to Baby L’s brain injury. She still referred back to the MRI findings which, she said, were not in keeping with peripartum hypoxia. [16] Dr Pearce saw L when he was 6 years 11 months. He accepted that the MRI scan showed that the damage to the brain was limited to the putamina only, which meant that the lesion was not extensive. He also admitted that the brain injury could have occurred after birth, but stated that because this was not what Ms M told her, and from all the available records, there was no evidence to suggest this. He agreed that the complete cause of L’s cerebral palsy was uncertain. 13 ‘Peripartum’ means ‘the period shortly before, during, and immediately after giving birth’. https://profiles.umassmed.edu as of 14 February 2024. 10 [17] The obstetricians, Drs Murray (for Ms M) and Archer (for the MEC) agreed in their joint minute that the cerebral palsy from which L was suffering, was likely caused by intrapartum hypoxia which occurred at an undefined time. They also agreed that although at some stage prior to 14h00 the CTG showed a pattern of recurrent decelerations, variability remained normal. Only from about 14h00 did the foetal heart rate rise and variability fall. [18] In addition, the obstetricians agreed that although there were decelerations or signs of distress on the earliest partogram generated by the CTG, the foetus was ‘likely, overall in a good condition at that stage’ as indicated by its positive response to the administration of the Ringer’s Lactate. [19] The trial court dismissed Ms M’s claim, having found that it could not conclude that the injury to L’s brain was sustained intrapartum, or that the hospital staff was negligent. With the leave of this Court the matter was appealed to the full court, which overturned the decision of the trial court and held that the MEC was 100% liable for any proven or agreed damages arising from L’s brain injury. The full court held that the trial court should have found that: ‘Ms M’s foetal condition on admission was good, but that the first CTG gave cause for concern; that continuous CTG – or at least two hourly – monitoring ought to have been implemented, but it was not; that the foetal condition deteriorated further at 13:30, to the extent that the senior midwife on duty would have taken immediate action had she been told about it; that the situation deteriorated rapidly after 14h30; that L was born hypoxic; and that L’s cerebral palsy probably resulted from a brain injury that occurred during labour.’ [20] There are a number reasons why the conclusion reached by the full court that the standard of care afforded to Ms M was sub-standard cannot be sustained. First, it is evident that the conclusion of the full court was based on the understanding that Dr Murray was of the opinion that the foetal condition became pathological at 06h24. Based on this understanding the full court reasoned that 11 there was ‘deterioration’ in the foetal condition between 07h00 and 12h40 in the early hours of the morning, which ‘rendered L’s brain injury foreseeable’. Therefore, CTG monitoring should have been continuous, and when the partogram was not reassuring at 13h10, there should have been prompt intervention to deliver the baby, the court found. It concluded that the failure to monitor with CTG constituted below par medical care. [21] However, it was not Dr Murray’s evidence that the foetus became pathological at 06h40 and that its condition deteriorated thereafter. In fact, Dr Murray accepted that although the partogram had been non-reassuring when Ms M was first put on the CTG, it became reassuring for hours after the Ringer’s Lactate was administered. The conclusion by the full court that at 06h24 the decelerations demonstrated such degree of abnormality as to be regarded as requiring closer than standard care ignores the positive response to the administration of the Ringer’s Lactate. [22] Secondly, the suggestion that CTG monitoring of L’s heart rate would have facilitated the detection and avoidance of a sentinel event is unsubstantiated. The radiologists, having observed the injury to the basal ganglia (albeit confined to the putamina), agreed that L sustained acute profound HII. They were unable to pinpoint when this occurred. Although Dr Rademeyer sought to suggest that that might not be so, she offered no clear or logical basis for such opinion. The evidence to the effect that L suffered an acute profound brain injury intrapartum was overwhelming. The other experts were consistent in their opinion in that regard. [23] The approach adopted by this Court in determining whether there has been a breach of the legal duty to administer reasonable health care and skill in 12 circumstances such as these is to distinguish between an acute profound and a partial prolonged HII. In NSS obo AS v MEC for Health, Eastern Cape Province14 this court set out the distinction as follows: ‘An acute profound hypoxic ischaemic event, such as in the present case, must be distinguished from a partial prolonged hypoxic ischaemic event. An acute profound event means a sudden, not progressive, event. A partial prolonged event causes damage to the white matter, or peripheral structures, of the brain.’ [24] In Member of the Executive Council for Health, Eastern Cape v Z M15 this court said the following: ‘The significance of this conclusion is an important matter. It was explained, in the course of the trial, by the expert obstetrician and gynaecologist, Dr Buchmann, who testified on behalf of the appellant. He testified that there is a distinction between an intrapartum acute profound brain injury (‘an acute profound injury’) and an intrapartum prolonged partial brain injury (‘a prolonged partial injury’). An acute profound injury is severe, with total or near-total asphyxia (deficient supply of oxygen); it is of short duration, and sudden onset, and generally occurs 30 minutes before delivery. A prolonged partial injury is less severe, with partial asphyxia; it develops slowly over several hours; it is often preceded by a deteriorating foetal heart rate that gives a warning of developing hypoxia, that is, lack of oxygen. . . .’ [25] With reference to academic writings, this Court has held that authoritative peer-reviewed literature does not support the view that monitoring of the foetal heart by CTG provides prior warning of a sentinel event. In AN v MEC for Health, Eastern Cape16 this court held that: ‘. . . In a number of studies, monitoring of the foetal heart did not support the case that there would probably have been prior warnings of a sentinel event. Okumura et al conducted a study where, in some cases, the origin of the fetal bradycardia could not be determined. Monitoring actually indicated the well-being of these foetuses until sudden fall of the foetal heart rate. No 14 NSS obo AS v MEC for Health, Eastern Cape Province [2023] ZASCA 41 para 6. See further the authorities cited in that judgment. 15 Member of the Executive Council for Health, Eastern Cape v Z M ZASCA (576/2019) [2020] ZA4SCA 169 (14 December 202) para4. 16 AN v MEC for Health, Eastern Cape [2019] ZASCA 102; [2019] 4 All SA 1 SCA paras 24 and 25. 13 warning was given. In another study, Murray et al17 studied three groups of infants where CTGs were available. The third group, with normal CTGs on admission, suffered acute sentinel events without warning. Pasternak & Gorey18 concluded in their study that in 9 of their 11 patients, ‘fetal monitoring was thought to be reassuring until the onset of the terminal bradycardia, supporting the premise that the hypoxic-ischaemic insult occurred at the end of labor and was acute and severe.’ Finally, a standard text, Williams Obstetrics,19 warns: “‘There are several fallacious assumptions behind expectations of improved perinatal outcome with electronic monitoring. One assumption is that fetal distress is a slowly developing phenomenon and that electronic monitoring permits early detection of the compromised fetus.’” .20 The appellant’s witnesses were unable to point to any contrary literature. They appealed to the court a quo to accept what they said had been their experience. But this cannot be said to prevail in the face of compelling peer-reviewed literature’. [26] In this case there was no evidence of a sentinel event. The contention that a sentinel event would have been detected and avoided if reasonable care had been taken is based on the reverse reasoning that because L suffers from CP there must have been a detectable and avoidable sentinel event during his birth. The courts have cautioned against commencing with an unfavourable outcome and working backwards in search of a cause. Hornbuckle J warned that with the benefit of the knowledge that there has been a neurologically unfavourable birth outcome, a plaintiff’s attorney ‘can take any foetal monitor strip and make a malpractice case out of it’.21 17 D Murray, M N O'Riordan, R Horgan, G Boylan, J R Higgins, C A Ryan ‘Fetal Heart Rate Patterns in Neonatal Hypoxic-Ischemic Encephalopathy: Relationship with Early Cerebral Activity and Neurodevelopmental Outcome’ (2009) American Journal of Perinatology 26:8 605 at 608. 18 J F Pasternak & M T Gorey ‘The Syndrome of Acute Near-Total Intrauterine Asphyxia in the Term Infant’ Pediatric Neurology 18(5) 391 at 396. 19 F G Cunningham, K J Lenovo, S L Bloom, C Y Spong, J S Dashe, B L Hoffman, B M Casey & J S Sheffield Williams Obstetrics 24 ed (2014)496. 20 Article in BJM Electronic Foetal Monitoring and our epidemic of Caesarean births (SEE CB 218-235) 21 Hornbuckle J, Vial A, etc see f/n 21 page 229. 14 [27] Similarly in Goliath v MEC Health, Eastern Cape22 this court cautioned that a doctor should not be held negligent simply because something went wrong. It cited with approval the remarks made by Lord Denning in Hucks v Cole [1968] 118 New LJ 469 (1993) that to hold a doctor negligent simply because something went wrong, would be to impermissibly reason backwards from effect to cause. If we accept, as we must, that the evidence overwhelmingly pointed to L having sustained an acute profound hypoxic ischaemic event which occurred intrapartum, then based on the evidence of Ms M’S own experts the injury sustained by L was not one that might have been reasonably foreseeable. [28] During cross-examination Dr Murray was constrained to acknowledge that the CTG is not a perfect tool with which to monitor the foetal heart during labour because of its ‘low specificity’. The substantial body of evidence that was tendered at the trial on academic writings regarding the value of CTG in averting or reducing HIE, is not conclusive on the issue. At best the evidence showed that on an interpretation of the partogram in terms of both the American College of Obstetricians and Gynaecologists (ACOG) and National Institute for Health and Care (NICE) clinical guidelines,23 acidosis may be deduced in category III (ACOG) or pathological (NICE) partogram. 22 Goliath v MEC Health Eastern Cape 2015 (2) SA 102 (SCA) para 9. 23 Dr Murray preferred the NICE guidelines which are evidence based health and care clinical guidelines recommended in the United Kingdom, while Dr Archer preferred the ACOG guidelines. Each one of them explained how a program is interpreted and managed under their preferred system, with Categories I, II, and III partogram on the ACOG grading comparable to normal, suspicious and pathological under the NICE guidelines. Category 1 traces are characterised by a baseline heartbeat of 110-160 per minute; moderate variability; no variable accelerations or decelerations. These are all strongly predicative of a normal fetal acid base. Category 11 traces are those that don’t meet the criteria of Category 1. According to Dr Archer because they are not characterised by a lack of variability, they are not associated with foetal acidosis, and should not be associated with brain damage. They are non-reassuring and require some intervention such as moving the patient onto her side and administering fluids, but not necessarily delivery. Category III traces are characterised by recurrent late decelerations or recurrent variable decelerations with no variability. They are strongly predicative of acidosis. Dr Archer stated that it is accepted internationally that fetal brain damage will not occur until there is an abnormal acid base of a ph of less than 7b and a base excess of more than 12. Under NICE guidelines Normal is where the fetal heart beat is between110-160; variability is 5-25bpm; no decelerations; and accelerations are present. A trace is characterised as suspicious when there is one non-reassuring feature. It is pathological when there are two or more non-reassuring features present. (CB298-301) 15 [29] Dr Archer insisted that the 06h40 traces were only suspicious and not pathological, because variability was good, and that from 14h00 the traces were merely non-reassuring (category II on the ACOG grading system), because there was no total loss of variability. He explained that under ACOG, brain injury is likely to occur in category III CTG traces, which would be indicated in recurrent late decelerations with no variability. However, he readily accepted that if the baby had been born at 14h20 it was not likely to have been acidotic as variability was normal on the partogram until 14h30. But he was unwilling to speculate as to what happened thereafter. Her evidence suggests that the insult occurred within an hour of the delivery. However, the fact that the injury occurred during that period does not mean that it was necessarily attributable to negligence by the hospital staff. [30] Dr Murray had initially asserted that under the NICE guidelines, at 13h10 the partogram traces signalled a pathological foetus. However, this stance changed once she saw the original partogram. She then sent a text message (SMS) to Dr Archer on 3 September 2017 advising that: ‘. . . based on the fact that we have seen the original ctgs, I need to amend some of my points where I comment on there being no rate. Also I am happy and raise no comment about the fact that they are category 2 traces until the last hour. The management thereof we need to discuss.’ [31] Having found that CTG monitoring would not have made a difference, it is not necessary to consider the contention by Ms M that the hospital staff were negligent in failing to adhere to the guidelines stipulated by the Department of Health when attending to her. In any event it was accepted that the decision to perform a caesarean section (14h30), and L’s delivery happened within one hour of each other as stipulated by the guidelines. Ms M’s case on negligence can This is when the fetal heart is more than 180 beats per minute or less than 100; the variability is less than 5 or more than 25 for less than 90 minutes and that there are variable decelerations present for more than 50% of the contractions for less than 30 minutes or a single prolonged deceleration lasting more than 3 minutes. 16 therefore only be limited to the alleged failure to monitor the foetal heart beat continuously by CTG or to taking the decision to perform a caesarean section later than 13h10, which has been discussed already. Ultimately Ms M failed to demonstrate that the hospital staff acted negligently in attending to her during L’s birth. This also means that she failed to prove that some wrongful conduct on the part of the hospital staff caused the injury to L’s brain. [32] Much was made of the admission into the record, of the evidence of Prof Izelle Smuts, also a paediatric neurologist, on the first day of the trial at the MEC’s instance. The full court found that Prof Smuts’ evidence should not have been admitted because ‘it sought impermissibly to undo agreements previously reached by the parties’ experts’. In addition, the court found that, ‘it was never made clear which of the expert agreements the evidence sought to undo, and because there [was] no indication on the record that there was good cause for the introduction of the evidence in these circumstances’. [33] The circumstances which led to the admission of the expert evidence of a further paediatric neurologist are not apparent from the record. And, as the full court remarked, there is no indication in the judgment of the trial court whether there was consideration, by that court, of the effect of the departure from the previous agreements; particularly on the fact that L suffers from CP as a result of the brain injury. In addition, this Court has discouraged departure from agreements previously reached by experts.24 [34] Prof Smuts’ evidence led to revised joint minutes of the other experts. Her evidence indeed impacted on issues which had been agreed on between the experts, the most significant of which was the condition in which L presented, when he was born. She cast doubt on the previously uncontested evidence that L 24 Bee v Road Accident Fund [2018] ZASCA 52; 2018 (4) SA 366 (SCA) para 65. 17 was born flaccid, that his low Apgar score at birth was indicative of HIE, and that L suffered from CP. She highlighted his large brain size (megalocephaly), a large head (macrocephaly), both of which, according to her, are inconsistent with CP, which generally presents with microcephaly (a small head). She emphasised the unexpected divergence between the MRI imaging and the clinical findings and remarked on the absence of multi-organ failure in L’s case. [35] We agree that the trial court should not have allowed Prof Smuts’ evidence without a substantive application setting out factors on which it could properly exercise its discretion. However, we are satisfied that, even without reference to Prof Smuts’ evidence and the events pursuant thereto, Ms M did not establish negligence on the part of the hospital staff and the MEC. [36] In the result the following order is made: 1. The appeal is upheld with costs, including the costs of two counsel where so employed. 2. The order of the full court is set aside and substituted with the following: ‘The appeal is dismissed with costs, including the costs of two counsel where so employed’. ______________________ N DAMBUZA ACTING PRESIDENT _______________________ C HEATON NICHOLLS JUDGE OF APPEAL 18 Appearances For the appellant: P Pauw with him U R D Mansingh Instructed by: State Attorney, Johannesburg State Attorney, Bloemfontein For the respondents: D T V R du Plessis SC with him P Uys Instructed by: Wim Krynauw Attorneys Inc, Johannesburg Martins Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OFSOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED FROM The Registrar, Supreme Court of Appeal DATE 05 March 2024 STATUS Immediate Please note that the media summary is for the benefit of the media and does not form part of the judgment. MEC of Health and Social Welfare, Gauteng Provincial Government v M (272/2022) [2024] ZASCA 21(5 March 2024)) _________________________________________________________________________________ Today the Supreme Court of Appeal upheld an appeal by the MEC of Health and Social Welfare, Gauteng Provincial Government against a judgment of the full court of the Gauteng Division of the High Court, Pretoria. That court overturned a judgment of a trial court of the same Division which upheld a claim by Ms M for damages against the MEC for medical damages. In that claim Ms M alleged that the medical staff at Tshwane District Hospital failed to treat her with the required care and skill when she was giving birth to her son L at the hospital on 18 May 2010. She alleged that because the medical staff failed to monitor her baby’s heartbeat with a cardiotocography machine (CTG) they did not detect irregularities in his heart beat. This led to an unduly prolonged labour and failure to refer Ms M for caserean section on time. As a result, L suffered from Cerebral Palsy which was caused by asphyxia and brain injury sustained during birth. The trial court dismissed Ms M’s claim, having found that the evidence did not show that the brain injury to L was occasioned during birth. That court also found that negligence was not proved against the hospital staff. The full court reversed the trial court’s decision. It held that on arrival at the hospital Ms M’s condition and that of the baby was good, but when she was first put on the CTG the traces generated by that machine showed a cause for concern. Because of the foetal heartbeat should have been assessed with a CTG machine continuously or at two hour intervals. This was not done and the failure to do so and to follow the guidelines issued by the Department of Health constituted negligent conduct. The SCA upheld the MEC’s appeal against the judgment of the full court. It found that the irregularity which was observed when Ms M was first put on the CTG was corrected with a Ringer’s Lactate solution, and thereafter L’s heartbeat was regular for hours. The obstetricians agreed that the further irregular traces (type 2 decelarations) that were observed at 14h00, an hour and 15minutes before L was born were not of such that the kind that would alert the staff that an emergence caesarean section was required. More importantly, the medical experts were in agreement that the brain injury sustained by L was acute and profound, which occurs suddenly, is of short duration, and distinguishable from a prolonged partial brain injury, which develops slowly over several hours. On this basis the SCA held that the evidence did not support the allegation that the medical staff were negligent in attending to Ms M. In addition, the SCA found that expert opinion and academic writings are inconclusive on whether use of CTG monitoring gives warning of sentinel events which result in neonatal brain injuries. In this case there was no evidence of a sentinel event. There was no basis to conclude that a CTG machine would have given a warning of impending danger. --- end --

4200

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1316/2022 In the matter between: THABO MAKWAKWA FIRST APPELLANT INDEPENDENT MEDIA (PTY) LTD SECOND APPELLANT INDEPENDENT ONLINE SA (PTY) LTD THIRD APPELLANT and MINISTER OF STATE SECURITY RESPONDENT Neutral citation: Makwakwa and Others v Minister of State Security (1316/2022) [2024] ZASCA 41 (5 April 2024) Coram: MAKGOKA, WEINER and GOOSEN JJA and CHETTY and MASIPA AJJA Heard: 21 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 time and date for hand-down is deemed to be 11h00 on the 5th day of April 2024. Summary: Interdict – Ex parte proceedings – need for good faith – intelligence report – foreign State said to be monitoring internal politics of ruling party – whether this implicates the role of the State Security Agency – whether publication of such report would negatively affect national security. 2 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Molefe J sitting on the return date of an interim interdict): 1 The appeal is upheld with costs, including the costs of two counsel. 2 The order of the High Court is set aside and replaced with the following: ‘The interim interdict granted by this Court on 22 December 2021 is discharged with costs.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Makgoka JA (Weiner and Goosen JJA and Chetty and Masipa concurring): [1] The first to third appellants appeal against an order of the Gauteng Division of the High Court, Pretoria (the High Court) per Molefe J. That court confirmed an interim interdict granted earlier by Mundzelele J, against the appellants at the instance of the respondent. The appellants were, among others, interdicted from publishing an intelligence report (the report) compiled by the State Security Agency of South Africa (the SSA). The appeal is with the leave of the High Court. The parties [2] The first appellant, Mr Thabo Makwakwa, is a journalist who writes for The Daily News and Independent Online, news publications respectively owned by the second appellant, Independent Media (Pty) Ltd (Independent Media), and the third appellant, Independent Online SA (Pty) Ltd (Independent Online). Independent Media owns and publishes several newspapers across the country.1 Independent Online owns the website ‘Independent Online’ and publishes the Independent Media’s newspapers and other reports in electronic form on its website. 1 In its stable, Independent Media has, among others, The Star, Pretoria News, Cape News, Cape Argus, The Mercury, Post, Isolezwe, Daily News, Sunday Independent. 3 [3] The respondent is the Minister of State Security (the Minister),2 the National Executive responsible for the administration of the Ministry of State Security, including the SSA. The mandate of the SSA is, among other things, to provide government with intelligence on domestic and foreign threats to national stability, the constitutional order and the safety of the people of South Africa. Background facts [4] During December 2021, Mr Makwakwa came to be in possession of the report. On 20 December 2021, he sent text messages about the report to the following people: the Deputy Minister of State Security; the head of communications and media relations at SSA (Mr Mava Scott); the spokesperson for the President of the Republic; the spokesperson for the African National Congress (ANC); as well as the Press and Media Coordinator of the USA Embassy. Mr Makwakwa listed several questions about the contents of the report and requested a response from each of them. None of them gave him any meaningful response. Mr Scott spoke to Mr Makwakwa telephonically on 21 and 22 December 2021. On both occasions, Mr Scott demanded to know how Mr Makwakwa obtained the report and demanded of him to return the report as he was not authorised to possess it. Mr Makwakwa refused to comply with that demand. The ex parte proceedings [5] On the evening of 22 December 2021, the Minister launched an urgent application in the High Court. The appellants were not given notice. The matter came before Mundzelele J, without any papers. Counsel for the Minister addressed the court as to the urgency of the matter and was granted leave to lead the oral evidence of Mr Scott. After his evidence, counsel closed the Minister’s case and addressed the court without handing up a copy of the report to the court. Having heard Mr Scott and counsel’s submissions, the court gave a short judgment. It recorded its satisfaction that the requisites for urgency as well as those for an interim interdict, had been met. As regards the merits of the application, the court reasoned that the Minister is the custodian of the report and Mr Makwakwa had not been authorised to possess it. He 2 A Minister originally oversaw South Africa’s civilian intelligence agencies and national security matters. In 2021 the ministry was abolished and the function of the Minister was taken over by the Presidency, with a Deputy Minister reporting to the President. There was therefore an erroneous citation of a non-existing Minister. But nothing turns on this, and I will keep the citation as originally done in the High Court. 4 was therefore in unlawful possession of the report and that its publication will harm state security. Accordingly, the court interdicted the appellants from publishing the report. A rule nisi was issued, returnable on 24 February 2022, for the appellants to show cause why the interim interdict should not be made final.3 Confirmation proceedings before the High Court [6] On 24 January 2022, the Minister applied to the high court seeking confirmation of the interim interdict. The founding affidavit was deposed to by the Deputy Director-General of State Security (the Deputy Director). By and large, he repeated the evidence of Mr Scott during the ex parte proceedings. The only difference was the classification of the report. Whereas Mr Scott had testified that the report was classified ‘Top Secret’, the Deputy Director said that it was simply classified as ‘Secret’.4 [7] The appellants opposed the application. In their answering affidavit, deposed to by Mr Makwakwa, the appellants contended that the report had nothing to do with national security, but revealed an impermissible involvement of the SSA in factional battles within the ANC. This, they argued, the public was entitled to know. They denied that there would be any harm to State security if the report was to be published. On these bases, the appellants sought the discharge of the interim interdict. [8] The application for the confirmation of the interim interdict came before Molefe J on the return date. Unlike Mundzelele J, she was given a copy of the report. Upon hearing the matter, she concluded that ‘[a]bsent a request for access to information in terms of PAIA or an application if such access is refused, or an 3 Shortly after the order was granted, counsel for the Minister contacted Mr Makwakwa and informed him of the fact that the appellants had been interdicted from publishing an article about the report. Despite this, the appellants went on to publish the article in The Star under the headline ‘US, ANC leaders "spying on the party", and in the Daily News under the headline ‘US Political Office “guiding ANC policy”’. This, on the face of it, constituted contempt of court. However, that is not before us, and I make no further comment on it. 4 The classification is done in terms of the national security policy known as the Minimum Information Security Standards (MISS). All official matters requiring the application of security measures must be classified as 'Restricted', 'Confidential', 'Secret', or 'Top Secret'. According to this policy, ‘Secret’ is the classification given to information that can be used by malicious/opposing/hostile elements to disrupt the objectives and functions of an institution and/or state, and intelligence/information must be classified ‘Secret’ when the compromise thereof can: (a) disrupt the effective execution of information or operational planning and/or plans; (b) disrupt the effective functioning of an institution; and (c) damage operational relations between institutions and diplomatic relations between states. 5 application for a declarator, the report will remain classified’. She accordingly confirmed the interim interdict with costs. The appellants were interdicted from publishing the report or any portion thereof on any medium and/or platform. Mr Makwakwa was ordered to immediately return all copies of the report to the Minister. When granting leave to appeal, the High Court made an order in terms of s 18 of the Superior Courts Act5 that pending the determination of the appeal in this Court, its order ‘shall operate and be executed’. The effect thereof was that despite the appeal, the appellants remained interdicted from publishing the report. In this Court [9] The appellants submitted that: (a) the classification of a document is not decisive; (b) the Minister failed to discharge the onus resting on her; and (c) the Minister did not observe the requisite of good faith in the ex parte proceedings. For her part, the Minister supported the judgment of the High Court and the reasoning underpinning it. The contents of the report [10] A copy of the report was given to each member of the Court. Before I consider the issues, it is necessary to set out the salient features of the report. The report is a seven and quarter-page document, marked ‘SECRET’ at the foot of each page. The purpose of the report is set out in clause 1 as being to inform the Minister of the extent of the United States' (USA) interest in the political dynamics of the ANC. This was ‘specifically in relation to developments regarding [former] ANC Secretary-General . . . and his perceived anti-President Cyril Ramaphosa’s positioning’. The report further states in clause 2 that the USA had collected its information mainly from its embassy in Pretoria, which coordinates the US Mission in South Africa, and includes the USA consulates in Johannesburg, Durban and Cape Town. [11] Clause 3 is titled ‘Introduction and background’. In clause 3.1 the report notes that foreign intelligence actors continue to monitor policy conceptualisation in the ANC. The USA, through its National Security Strategy, has mandated its intelligence agencies to monitor the activities of State and non-state entities to warn of future 5 Superior Courts’ Act 10 of 2013. 6 developments on issues. In South Africa, the Political Office of its embassy in Pretoria (the Political Office) continues to gather information related to the ANC, which is then sent to the USA State Department. [12] In clause 3.2 the report alludes to reported factional battles within the ANC, and that the Political Office has drawn its conclusions about them through a network of ANC party officials, ‘who wittingly or unwittingly, share privileged information’. No names are mentioned in this regard. It is further stated that the conclusions were that the former ANC Secretary-General was galvanising support in anticipation of his arrest for corruption. [13] Clause 4 is titled ‘Intelligence collected by the US Embassy on the political dynamics within the ANC’. In summary, the conclusions said to have been drawn by the USA embassy were that: (a) The ANC Youth League (ANCYL) in the Free State supported the former ANC Secretary-General, and its efforts to have Mr Ramaphosa removed as ANC President in a then-pending National General Council (NGC) and to lobby other provinces to support them. (b) Unidentified business people from the Free State were co-ordinating support for both the former ANC Secretary-General and former President Zuma, (c) Former President Zuma’s refusal to testify at the Zondo Commission was part of his strategy with former ANC Secretary-General to weaken the Zondo Commission and President Ramaphosa and that they met regularly in Durban for that purpose. (d) The campaign to weaken President Ramaphosa was led and coordinated by ‘key Zuma allies’. [14] Clause 5 is headed ‘Analysis and Projection’. Clause 5.1 states that the USA mission views the ANC’s party dynamics, especially the manifestation of factionalism, as a barometer of the political climate within the ruling party and ‘tries to gauge future political-economic scenarios’. The report further notes that there is ‘a very close cooperation taking place between the USA diplomatic community and the USA intelligence community in South Africa’. 7 [15] Clause 5.2 notes that over the years, the US Mission had created a comprehensive network of contacts and that these efforts have been successful considering the kind of intelligence it had acquired. In this regard, it is mentioned that the USA Consulate in Durban had, for example, managed to establish various regular contacts amongst political parties including the ANC, the Inkatha Freedom Party (IFP), the Economic Freedom Fighters (EFF) and the Democratic Alliance (DA). [16] Finally, in clause 6, under ‘Recommendation’, it is noted that the USA had cultivated good access in the ruling party with the purpose of either influencing policy direction in South Africa or determining how it can be subverted. It is recommended to the Minister that the government should take note of the vulnerabilities in the ruling party and take steps in this regard. Under clause 7, the conclusion is that legislation aimed at the protection of State information should be promulgated to ‘neutralise’ ‘unrestrained access to covert information’ by foreign agents. [17] On the face of it, what is discussed in the report implicates the mandate of the SSA. The suggestion that foreign intelligence agencies have infiltrated the ruling party with a view to influence its policy, and implicitly that of the country, is sufficient to trigger the SSA’s attention. I therefore do not agree with the contention of the appellants that the report has nothing to do with the mandate of the SSA but internal ANC politics. The issues [18] The overarching issue before us is whether the High Court properly exercised its discretion when it confirmed the interim interdict. That issue has the following subsets: (a) whether the Minister observed the requisite good faith in the ex parte proceedings; (b) the effect of classification of the report; and (c) whether the report deserves protection from publication. I consider each, in turn. Good faith [19] Since Schlesinger v Schlesinger,6 (Schlesinger) it is settled that in ex parte applications all material facts which might influence a court in coming to a decision must be disclosed. The non-disclosure or suppression of facts need not be wilful or mala fide to incur the penalty of rescission. The Court, apprised of the true facts, has 6 Schlesinger v Schlesinger 1979 (4) SA 342 (W). 8 the discretion to set aside the interim order or to preserve it.7 The discretion that the court must exercise in this regard, is one in the true sense. Thus, an appeal court will only interfere if the court of first instance exercised its discretion on a wrong principle or made a decision that was not reasonably open to it.8 [20] In Phillips v National Director of Public Prosecutions9 this Court set out the factors which a court should consider in exercising its discretion where there is non-disclosure as including: (a) the extent of the non-disclosure; (b) whether the first court might have been influenced by proper disclosure; (c) the reasons for the non-disclosure and (d) the consequences of setting the provisional order aside. [21] With these precepts in mind, I must determine whether in the ex parte proceedings, the Minister made full disclosure of the material facts, or whether there was any misleading information or misstatements. In this regard, I consider: (a) that the report was not made available to the court; (b) that the court was informed that the report was classified as 'Top secret'; (c) whether accurate information was conveyed to the court about the nature and contents of the report. The report not available to the court [22] It is common cause that the report was not made available to the court in the ex parte proceedings. There is no explanation for this, neither in the evidence of Mr Scott, the submissions by the Minister’s counsel, nor the founding or replying affidavits on behalf of the Minister. The silence in this regard is deafening. The High Court said nothing about this. ‘Top secret’ v ‘Secret’ [23] As mentioned, Mr Scott incorrectly testified that the report was classified as ‘Top Secret’, instead of ‘Secret’. In his founding affidavit, the Director General 7 Ibid at 348E-349B. The Schlesinger test has since been applied in subsequent cases by this Court. See for example, Trakman NO v Livshitz 1995 (1) SA 282 (A) at 288E-F; Powell NO v Van der Merwe NO 2005 (5) SA 62 (SCA) paras 74-75; National Director of Public Prosecutions v Basson [2001] ZASCA 111; 2002 (1) SA 419 (SCA); [2002] 2 All SA 255 (SCA) para 21; Recycling and Economic Development Initiative of South Africa MPC v Minister of Environmental Affairs 2019 (3) SA 521 (SCA) (Redisa) paras 45-52. 8 Redisa para 87. 9 Phillips v National Director of Public Prosecutions 2003 (6) SA 447 (SCA) para 29. 9 attributed this to ‘a reasonable mistake’, given the extreme urgency under which the application was brought. There was no confirmatory affidavit by Mr Scott about his alleged mistake. In their answering affidavit, the appellants challenged the Minister to provide a better explanation for this. In the reply on behalf of the Minister, the Director-General brushed this aside, and stated that this ‘has been fully explained in the founding affidavit and is reasonable’. The High Court agreed, and held that this was not material, as ‘the document is exempted from disclosure and warranted security’. [24] I disagree. The materiality of the failure lies in what Mr Scott testified to be the implications of a ‘Top secret’ classification. This, he testified, ‘is a type of report that should not be accessed by ordinary members of the public or anyone who is not authorised by a top-secret clearance. Without such clearance, he said, ‘the possession of the report was illegal’. This is highly material because the category of people who are prohibited from possessing or seeing the report, as per Mr Scott’s testimony, would include the court itself, as it: (a) is ‘[an] ordinary member of the public’, and (b) presumably did not have a ‘top-secret clearance’. Mr Scott's chilling warning might explain why the court did not bother to request that the report be made available to it. It could not risk being in ‘illegal possession’ of the report. [25] In my view, the Deputy Director’s laconic statement constitutes no explanation for the misstatement of fact by Mr Scott. It was the latter who allegedly made an error in his testimony, and not the Deputy Director. It follows that Mr Scott was the only person who could shed light on the circumstances under which the error allegedly occurred. When the appellants challenged the Minister for a better explanation, this presented an opportunity for a full explanation, confirmed by Mr Scott in a confirmatory affidavit. She elected not to do so. In the absence of this explanation, the statement by the Deputy Director is speculative and carries no weight. [26] Another consequence of the absence of a proper explanation is that an irresistible inference arises that Mr Scott would have found it difficult to explain the alleged error. I say this because it would be difficult for anyone who has read the report, to miss its classification ‘SECRET’ (in uppercase) as it stands conspicuously alone at the bottom centre of each page. One would assume that Mr Scott had read 10 the report to enable him to testify about it and did in fact, have it in front of him when he testified. It would indeed be surprising if he did not. [27] Counsel for the Minister must also have had sight of the report to enable him to make the submissions he made to the court. Therefore, for Mr Scott and the Minister’s counsel to have conveyed to the court in the ex parte proceedings as they did, they must either: (a) not have read the report; or (b) deliberately misled the court about its classification. Either way, this does not redound to the Minister’s case. Viewed in this light, the High Court erred in summarily dismissing the materiality of this non-disclosure. In the absence of any satisfactory explanation for this, I consider it to be a misrepresentation of a material fact to the court in the ex parte proceedings. Were the nature and contents of the report accurately conveyed to the court? [28] Core to this, are counsel’s submissions and the testimony of Mr Scott. In his opening address, counsel informed the court that the report contained ‘sensitive intelligence information compiled by the USA together with the SSA’. The publication of the report ‘would likely expose these two governments [South Africa and USA] to serious diplomatic relations’. Later, in his closing address, counsel reiterated the partnership between the USA and South Africa in the compilation of the report. He said that the USA and South Africa are partners in the intelligence community, where ‘trust was of the utmost importance’, and once that is lost with a partner, ‘then you have problems’. He further testified that the report was ‘produced by [the USA] that is making certain allegations, working with [the SSA]’. (Emphasis added.) [29] As to the likely impact of the publication of the report, Mr Scott testified: ‘The first one is the one that I alluded to with regard to diplomatic relations because as you would imagine agencies all over the world share information and they work together. If that information ends up in the wrong hands, then there is a level of distrust that develops between the agencies. It has the potential to [adversely] affect the image of the country. To break the trust of our country with international partners.’ (Emphasis added.) [30] Having outlined the salient features of the report, the statement by counsel and the testimony of Mr Scott that the report was compiled by the USA in collaboration with the SSA is simply not correct. Far from being a co-author of the report, the USA 11 Embassy appears to be the subject of counter-surveillance by the SSA. What was emphasised to Mundzelele J was that having worked with the SSA to produce a secret report in confidence, the USA would feel betrayed by the breach of confidentiality were it to be published. This, in turn, would lead to a diplomatic fallout and loss of trust between the intelligence agencies of the two countries. Were this to be true, any court would understandably be concerned about the implications of the publication of the report. This is where the evidence that the report was classified as ‘Top secret’ assumes significance. It would have been uppermost in the court’s mind when considering whether to grant the interim interdict. This was a material misstatement. [31] Mr Scott also testified that ‘[t]he report also talks about how [the USA] political office is working within the ruling party to divide it and to exacerbate what they call the factions within’. (Emphasis added.) There is no such claim in the report. This was a further material misstatement. [32] Lastly, Mr Scott testified that the report makes ‘certain allegations . . . implicating certain high political people, some of whom involve the former President’. He said: ‘The second [point of concern] relates to the implicated people in that report who happen to be high office bearers of political office. The type of information that is being disseminated with regards to the factions of the ruling party and who [are] still in those. Those [have], in our view, . . . the potential to return us to what I would call the July events because some of the insinuations made, especially in the questions are leading us to that direction. It also has the potential on our own national security given the sensitivity of the issues that are in those questions.’ [33] There are several incorrect statements in the above testimony of Mr Scott. First, the report does not ‘implicate’ anyone. It simply states what the Political Office would have analysed regarding reported factions in the ANC. I have already stated the context in which individuals named in the report were mentioned, namely, their alleged loyalty to former President Zuma in reported factions of the ruling party. This has been widely reported in the media. If this is what Mr Scott sought to convey to the court when he testified that there were ‘allegations’ against certain individuals who were ‘implicated’ in the report, he was mistaken. This was another material misstatement. 12 [34] The report does not say that the USA intelligence was making any allegations. It says that it is taking note of the allegations which had been widely reported about factions in the ruling party, to influence the ruling party’s policy. Mr Scott’s evidence conveyed to the court an impression that the report contained ‘sensitive’ allegations against individuals, who are ‘implicated’ in something sinister or some wrongdoing. As seen from the outline of the contents of the report, there is nothing in the report to that effect. This is another material misstatement. Secondly, Mr Scott’s testimony that the publication of the report might lead to ‘the July events,’10 is a bald statement not supported by any facts. It is not clear what link Mr Scott drew between the two. This is a further material misstatement. Thirdly, the claim that the publication of the report would harm our national security is also a bald statement without any factual basis. Mr Scott did not explain the link. This was a further material misstatement. [35] I have identified a misrepresentation (the classification issue) and five material misstatements made to the court during the ex parte proceedings. It is immaterial whether they were made deliberately to mislead or were simply misstated. As pointed out in Powell NO v Van der Merwe11 the Schlesinger test applies equally to the relief obtained 'on facts which are incorrect because they have been misstated or inaccurately set out in the application for an order . . . or, because they have not been sufficiently investigated . . . '12 These influenced the court’s decision to grant the interim interdict. Had Mundzelele J been placed in possession of the report during the hearing, some of the issues identified above would have become apparent to the Judge as not being factually correct. The outcome might have been different. [36] The position is that courts will always frown on an order obtained ex parte on incomplete information,13 unless there is a very cogent practical reason why an order should not be rescinded. In my view, the materiality and multiplicity of the misstatements, and the misrepresentation, identified above, required a cogent reason to deviate from the default position. The Minister has proffered none. This leads to an 10 This refers to a wave of civil unrest that occurred in South Africa in KwaZulu-Natal and parts of Gauteng from 9-18 July 2021 in protest against the imprisonment of former President Zuma for defying an order of the Constitutional Court to testify at a Commission of Inquiry. 11 Powell NO and Others v Van der Merwe and Others [2004] ZASCA 25; [2005] 1 All SA 149 (SCA); 2005 (5) SA 62 (SCA); 2005 (1) SACR 317 (SCA); 2005 (7) BCLR 675 (SCA). 12 Ibid para 75. 13 Schlesinger at 350B. 13 inescapable conclusion that the Minister did not observe the duty of utmost good faith in the ex parte proceedings. [37] The High Court, having had sight of the report, failed to have any regard to these misstatements and the misrepresentation. It follows that it did not exercise any discretion at all. If it did, it was on the wrong principle. On this basis alone, the appeal must succeed. This Court is therefore at large to replace the High Court’s order with one it should have made. For the sake of completeness, I consider the other two issues. The effect of classification [38] How a court should approach the question as to whether a classified document, should be made available to the public, was enunciated by the Constitutional Court in Independent Newspapers v Minister for Intelligence Services: in re Masetlha14 (Masetlha). It was held that the mere fact that documents in a court record have been classified does not oust the jurisdiction of a court to decide whether they should be protected from disclosure to the media and the public. The mere say-so of the Minister concerned does not place such documents beyond the reach of the courts. The court went on to explain that once the documents are placed before a court, they are susceptible to its scrutiny and direction as to whether the public should be granted or denied access.15 [39] The appellants relied on this dictum and urged the High Court to look beyond the classification and read the report to determine whether it should be disclosed to the public. The court agreed with the appellants’ contention and noted that it ‘had the privilege of examining the content of [the report] to determine whether the report can be described as national security information or not’. However, it sought to distinguish the present case from Masetlha and President of RSA v M & G Media Ltd16 (Mail and Guardian) on the basis that in those cases, there was a request made for access to 14 Independent Newspapers (Pty) Ltd v Minister for Intelligence Services: in re Masetlha v President of the Republic of South Africa (Freedom of Expression Institute as Amicus Curiae) [2008] ZACC 6; 2008 (5) SA 31 (CC); 2008 (8) BCLR 771 (CC); (Masetlha); Helen Suzman Foundation v Judicial Service Commission [2018] ZACC 8; 2018 (4) SA 1 (CC); 2018 (7) BCLR 763 (CC) paras 54-55. 15 Masetlha para 53. 16 President of Republic of South Africa v M & G Media Ltd [2011] ZACC 32; 2012 (2) BCLR 181 (CC); 2012 (2) SA 50 (CC). 14 the record in terms of the Promotion to Access of Information Act17 (PAIA), which was not the case in this matter. The court said that Mr Makwakwa had failed to request the report under PAIA ‘and rather elected to obtain and retain a copy of the report unlawfully’. The court did not elaborate on the effect of the last statement. [40] I understand it to mean that the Masetlha dictum applies only where access to a document is sought through a court application, but not where a document is already in the hands of a party without authorisation, as is the case here. In other words, according to the High Court, for as long as the report remains classified, the court’s jurisdiction to consider its contents is ousted. This is fortified by its remark that ‘the [report] is exempted from disclosure and warranted security’. [41] I cannot agree with this reasoning. In these matters, the question is always whether, irrespective of classification, a court is entitled to have regard to the contents of the classified document to determine whether it should be made available to the public. This is an objective test, to be decided discretely from whether the application before the court is one for access, or as here, about the right to publish a document already in the possession of a party, albeit obtained in an unauthorised manner. Although Masetlha concerned the principle of open justice to compel public disclosure of discrete portions of a record of court proceedings, the dictum applies with equal force to cases such as the present. [42] Were the distinction drawn by the High Court correct, it would lead to an absurd result in that once the Minister asserts that a document had been classified, the court would be obliged to accept her word, and not go beyond the classification. This is directly at odds with the express holding in Masetlha. The absurdity is also demonstrated by the fact that in this case the report was made available to the court. This begs the question. For what purpose if not for the court to scrutinise its contents to determine whether it should be published? [43] Despite its apparent conclusion that it was precluded from scrutinising the report because it was classified and Mr Makwakwa had not applied to access it, the 17 Promotion to Access of Information Act 3 of 2000. 15 High Court said that it did consider the report in confirming the interim interdict. But there is no evidence of this in its judgment, as there is no analysis or overview of the report. This suggests that, despite it having read the report, the court considered the report to be beyond its scrutiny merely because of the classification. In this, the High Court erred and on this basis too, the appeal should succeed. Should the report be published? [44] The onus to establish that the report should not be in the public domain because of national security, rested on the Minister. This seems to have eluded the High Court, it approached the matter on the footing that the ‘classification [of the report as “secret”] stands until set aside’. This unwittingly shifted the onus to the appellants to establish why they should be allowed to publish a report that they have not been authorised to possess. [45] The High Court identified the issue before it as being whether, after reading its contents, 'the report can be described as national security information or not'. The court stated that having had the so-called ‘judicial peek’ of the report, it considered: (a) the availability of the information in the public domain; (b) how the report came to be in the public domain by illegal public disclosure; (c) whether further disclosure would increase the risk to national security. [46] However, nowhere in its judgment did the High Court discuss or elaborate on any of these issues or explain what, in the report, implicates national security. This is despite the appellants pertinently placing this in dispute, and the court itself acknowledging that Mr Makwakwa had provided ‘a detailed analysis’ of the report for his contention that the report did not implicate national security. Having made that observation, the court surprisingly did not consider whether Mr Makwakwa’s ‘detailed analysis’ had merit. Instead, it remarked that Mr Makwakwa was ‘not an expert’. It is not clear what this had to do with the analysis of the report. To be clear, the analysis of the report required no expert witness. [47] I have earlier set out the salient features of the report. In sum, the report is about the USA Embassy and its intelligence community which are said to be observing the widely reported factions in the ruling party to influence domestic policy and shape 16 the USA’s own decisions. The information considered in the report is in the public domain already. For example, the mention of certain leaders of the ANC as being supporters of former President Zuma is nothing new. Thus, there is nothing ‘sensitive’ about the contents of the report. They are so banal that one could even doubt whether the conclusions said to be drawn by the USA intelligence community resulted from any intelligence-gathering exercise, as opposed to ordinary research. Indeed, a browse through the local media on the reported factions in the ruling party would easily enable one to make the same conclusions. [48] The Minister accepted that the information contained in the report is already in the public domain. She also accepted the fact that embassies gather intelligence information. But she contended that what is not in the public domain and has not been reported on, was the fact that the USA Embassy, as part of the USA intelligence community, has a network of ANC party officials with whom they share intelligence information. According to the Minister, should this information be ‘misconstrued or published, the security of South Africa and the individuals may be compromised’. However, the Minister does not explain how this implicates national security, or how the individuals will be compromised since their names are not disclosed in the report. Conclusion [49] In all the circumstances, I conclude that the Minister had failed to discharge the onus to establish that national security would be implicated by the release of the report. On this basis, too, the appeal should succeed. Costs should follow the result. Both parties employed two counsel. Given the issues involved, this was warranted. [50] The following order is made: 1 The appeal is upheld with costs, including the costs of two counsel. 2 The order of the High Court is set aside and replaced with the following: ‘The interim interdict granted by this Court on 22 December 2021 is discharged with costs.’ ___________________ TM MAKGOKA JUDGE OF APPEAL 17 APPEARANCES: For appellants: PA Myburgh (with him V Bruinders) (Heads of argument having been drawn by HJ De Waal SC and PA Myburgh) Instructed by: Abraham Kiewitz Inc., Cape Town Webbers Attorneys, Bloemfontein For respondent: DB du Preez SC (with him NP Mashabela) Instructed by: State Attorney, Pretoria State Attorney, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY FROM The Registrar, Supreme Court of Appeal DATE 5 April 2024 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. Makwakwa and Others v Minister of State Security (1316/2022) [2024] ZASCA 41 (5 April 2024). Today, the Supreme Court of Appeal, per Makgoka JA (Weiner and Goosen JJA and Chetty and Masipa concurring) handed down a judgment upholding an appeal against the order of the Gauteng Division of the High Court, Pretoria. That court, sitting in confirmation proceedings in respect of an interim interdict, made the interim interdict final. The matter concerned an intelligence report compiled by the State Security Agency of South Africa (the SSA), marked ‘Secret.’ The report is about the USA Embassy and its intelligence community which were said to be observing the widely reported factions in the ruling party, the African National Congress (ANC) to influence domestic policy and shape the USA’s own decisions. The first appellant, Mr Thabo Makwakwa, is a journalist who writes for The Daily News and Independent Online, news publications respectively owned by the second appellant, Independent Media (Pty) Ltd (Independent Media), and the third appellant, Independent Online SA (Pty) Ltd (Independent Online). Independent Media owns and publishes several newspapers across the country. During December 2021, Mr Makwakwa came to be in possession of the report. He directed questions to, among others, the Deputy Minister of State Security, among other people. The Ministry indicated to Mr Makwakwa that his possession of the report was unauthorised and therefore, unlawful. He was instructed to return the copy of the report to the Ministry. He did not. On the evening of 22 December 2021, the Ministry of State Security launched an urgent application in the High Court, without giving notice to the appellants and without any court papers (ex parte proceedings). Oral evidence was led of the Ministry’s Deputy Director 2 General. Among other things, it was conveyed to the court in his testimony, and in the submissions by the legal representative of the Ministry, that the report had been marked ‘Top Secret’, and had been prepared by the USA intelligence community together with the SSA, and that the publication of the report would: (a) affect diplomatic relation between South Africa and the USA; and (b) endanger national security. The court was not given a copy of the report. Having heard the oral evidence, and having considered counsel’s submissions, the court issued an interim interdict preventing the appellants from publishing the report. A rule nisi was issued, returnable on 24 February 2022, for the appellants to show cause why the interim interdict should not be made final. On the return date, the parties had exchanged full sets of affidavits. A copy of the report was given to the court. After hearing the parties, the High Court (Molefe J) concluded that ‘[a]bsent a request for access to information in terms of PAIA or an application if such access is refused, or an application for a declarator, the report will remain classified’. She accordingly confirmed the interim interdict with costs. The appellants were finally interdicted from publishing the report or any portion thereof on any medium and/or platform. Mr Makwakwa was ordered to immediately return all copies of the report to the Ministry. The appellants were granted leave to appeal to the Supreme Court of Appeal (the Court). In its judgment, the Court considered the overarching issue to be whether the High Court properly exercised its discretion when it confirmed the interim interdict, with the following owing subsets: (a) whether the Minister observed the requisite good faith in the ex parte proceedings; (b) the effect of classification of the report; and (c) whether the report deserved protection from publication. With regard to the requisite of good faith, the Court referred to the test settled in Schlesinger that in ex parte applications all material facts which might influence a court in coming to a decision must be disclosed. The non-disclosure or suppression of facts need not be wilful or mala fide to incur the penalty of rescission. The Court, apprised of the true facts, has the discretion to set aside the interim order or to preserve it. In this regard, the Court considered that: (a) the report was not made available to the court in ex parte proceedings and there was no explanation for this; (b) that the court was informed that the report was classified as 'Top secret' whereas it was merely classified ‘Secret’; (c) inaccurate information was conveyed to the court about the nature and contents of the report. The Court pointed out several material misstatements and a misrepresentation made during the oral evidence of the Deputy Director, and in the submissions by counsel. On these bases, the Court concluded that the Ministry did not observe the duty of utmost good faith in the ex parte proceedings. The High Court was 3 remiss in failing to have regard to these factors, and in the process, it did not exercise any discretion at all. The Court also clarified the effect of a classification of a report with reference to the Independent Newspapers v Minister for Intelligence Services: in re Masetlha. There, the Constitutional Court held that the mere fact that documents in a court record have been classified does not oust the jurisdiction of a court to decide whether they should be protected from disclosure to the media and the public. The mere say-so of the Minister concerned does not place such documents beyond the reach of the courts. The Constitutional Court went on to explain that once the documents are placed before a court, they are susceptible to its scrutiny and direction as to whether the public should be granted or denied access. The High Court had sought to distinguish the present case from Masetlha and President of RSA v M & G Media Ltd on the basis that in those cases, a request had been made for access to the record in terms of the Promotion to Access of Information Act (PAIA), which was not the case in this matter. The High Court implied that the Masetlha dictum applies only where access to a document is sought through a court application, but not where a document is already in the hands of a party without authorisation, as is the case here. In other words, according to the High Court, for as long as the report remains classified, the court’s jurisdiction to consider its contents is ousted. The Supreme Court of Appeal disagreed with this reasoning. It held that the Masetlha dictum applies, irrespective of whether the application before the court is one for access, or about the right to publish a document already in the possession of a party, albeit obtained in an unauthorised manner. Finally, the Court considered whether, in all the circumstances, the report should be published, regard being had to the alleged risk to national security. It took into account: (a) the fact that the information contained in the report (about reported factions in the ANC) was already in the public domain; (b) the report does not contain names of ANC leaders who are said to be collaborating with the USA intelligence community about factional battles within the organisation. The Court concluded that the Ministry had failed to discharge its onus to establish that the publication of the report would endanger national security. Accordingly, the Supreme Court of Appeal upheld the appellants’ appeal with costs. ***END***

4251

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1003/2022 In the matter between: DEON MARIUS BOTHA N O FIRST APPELLANT JOHANNES SACHARIAS HUMAN MULLER N O SECOND APPELLANT LOUISA SIBIYA N O THIRD APPELLANT and LOUIS JONKER FIRST RESPONDENT JOHANNA JACOBA JONKER SECOND RESPONDENT MUSTANG CHEMICALS (PTY) LTD THIRD RESPONDENT Neutral citation: Botha N O and Others v Jonker and Others (1003/2022) [2024] ZASCA 78 (27 May 2024) Coram: PETSE DP, GOOSEN JA and UNTERHALTER AJA Heard: 23 November 2023 Delivered: 27 May 2024 Summary: Liquidation – close corporation – first meeting of creditors and members of close corporation summoned more than one-month after date of final liquidation – effect of failure by liquidator to obtain consent of the Master in terms of s 78(1) of Close Corporations Act, 69 of 1984 – whether the Master entitled to consent to summoning of meeting ex post facto. 1 ORDER On appeal from: Free State Division of the High Court, Bloemfontein (Reinders ADJP and Van Rhyn J, sitting as a court of first instance): 1 The appeal is dismissed. 2 The costs of the appeal shall be costs in the liquidation. 3 It is declared that s 78(1) of the Close Corporations Act, 69 of 1984 permits the Master to grant consent to a liquidator to summon a first meeting of creditors and members after the expiry of one-month from the date of final liquidation, at any time before the meeting so summoned is held. JUDGMENT Goosen JA (Unterhalter AJA concurring): [1] This appeal concerns the consequences of a failure to obtain the consent of the Master to summon a meeting of creditors after the expiry of the period of one month prescribed in s 78(1) of the Close Corporations Act, 69 of 1984 (the Close Corporations Act). The appellants are the joint liquidators (the liquidators) of Jonker Products CC (Jonker Products). The first respondent is the sole member of Jonker Products. He is married to the second respondent, who is a shareholder and director of the third respondent, Mustang Chemicals (Pty) Ltd (Mustang). [2] The issue on appeal arose when the respondents were summoned to appear at a second meeting of creditors of Jonker Products for the purposes of 2 an enquiry into its affairs. The respondents obtained a rule nisi before the Free State Division of the High Court (the high court) setting aside as invalid the proceedings of the first meeting and all resolutions adopted at the meeting. The rule nisi was confirmed on the return date. The appeal is with the leave of the high court. The facts [3] On 23 July 2020, the Land and Agricultural Bank of South Africa (the Land Bank) launched an application for the provisional winding up of Jonker Products. On 27 August 2020, the Land Bank instituted an urgent application to set aside a resolution adopted by Jonker Products to place it in business rescue and to expedite its liquidation. On 11 September 2020, Jonker Products was placed under a provisional order of liquidation. The liquidators were appointed as such on 21 October 2020. On 29 October 2020, a final order of liquidation was granted, and the liquidators received their letters of appointment from the Master on 9 November 2020. [4] The liquidators summoned the first meeting of creditors of Jonker Products by publication of a notice in the Government Gazette on 9 April 2021. The notice was defective since it did not indicate that both the first and second meeting would be convened on the appointed date. A corrected notice was published on 16 April 2021, and the meeting was convened before the Magistrate at the Magistrates’ Court, Bothaville (Magistrates’ Court), on 6 May 2021. The first respondent did not attend the meeting. The Land Bank was the only creditor to prove a claim. A resolution was adopted to postpone the second meeting to permit witnesses to be summoned for an enquiry into the affairs of Jonker Products. Other resolutions were taken to ratify certain 3 actions taken by the liquidators prior to the meeting, including the sale, by auction, of certain property held by Jonker Products. [5] On 11 June 2021, summonses calling upon the respondents to appear at the second meeting of creditors, scheduled for 2 and 9 July 2021, were issued. They were served on 22 June 2021. On 25 June 2021, the respondents’ attorney requested reasons for the issuing of the witness summonses. On 2 July 2021, the attorney requested the liquidators to provide a copy of the written consent of the Master to convene the first meeting on 6 May 2021, after the one-month period provided by s 78(1) of the Close Corporations Act had lapsed. The liquidators stated that they did not have such consent. On 5 July 2021, the respondents wrote to the liquidators stating that the first meeting and the resolutions adopted on 6 May 2021, were invalid. They called upon the liquidators to cancel the enquiry meeting. [6] On 6 July 2021, the liquidators wrote to the Master advising that a first meeting of creditors had been convened on 6 May 2021. They requested the Master to consent to the meeting. On 7 July 2021, the Master informed the liquidators that she was not aware of any statutory provision which would permit her to provide such consent ex post facto. On the same date, the respondents launched an application to declare that the first meeting of creditors held on 6 May 2021 was invalid considering the absence of the consent of the Master. They also sought orders setting aside the proof of claims and the resolutions adopted at the meeting, including the resolution authorising the issuing of witness summonses. 4 The high court proceedings [7] On 8 July 2021, the high court granted a rule nisi calling upon the liquidators to show cause on 5 August 2021, why a final order setting aside the first meeting, should not be granted. The liquidators opposed the application and filed a counter-application, seeking an order that the meeting was not invalid. In the alternative, they requested the high court to issue directives for the further conduct of the liquidation process, in terms of s 386(5) and s 387(3) of the Companies Act 61 of 1973 (the 1973 Companies Act). [8] The application and counter-application were heard on 7 February 2022. The respondents contended that no provision is made in the Close Corporations Act or in the Insolvency Act 24 of 1936 (Insolvency Act), for the Master to grant consent to convene a meeting ex post facto, ie after the meeting has been held. They submitted that the consent of the Master as required by s 78(1) of the Close Corporations Act, is not a mere formality, the absence of which may be condoned. The proceedings of such meeting are a nullity. [9] The liquidators argued that, upon a proper business-like interpretation of s 78(1), consent may be obtained after the expiry of the one-month period and after the meeting had been held. They contended that, even if the section does not permit consent to be obtained after the meeting has been held, s 157 of the Insolvency Act permits non-compliance to be condoned. This was so, it was submitted, because the consent of the Master is merely a formality. Since no substantial injustice or prejudice to creditors flowed from the 5 absence of the Master’s consent, the failure to obtain such consent, did not invalidate the proceedings of the meeting. [10] On 30 March 2022, the high court granted a final order declaring the proceedings of the meeting held on 6 May 2021 to be invalid and set aside the resolutions adopted at the meeting. It dismissed the counter-application. The high court, however, issued orders directing that the first and second meeting of creditors be convened within one month of the date of its order.1 [11] The high court reasoned that s 78(1) was peremptory in requiring the consent of the Master to convene a meeting after the expiry of the period of one month from the date of final order of liquidation. It held that the Master is a creature of statute and is only entitled to exercise powers which are expressly conferred. The high court found that the section did not confer on the Master authority to consent to the holding of a meeting after it had been held. The meeting of 6 May 2021 was, therefore, vitiated by irregularity and its proceedings, invalid. [12] In relation to costs, the high court stated that since the consequence was brought about by the failure of the liquidators to comply with the provisions 1 The relevant orders read as follows: ‘3. In terms of section 386(5), read with section 387(3) of the Companies Act, Act 61 of 1973, it is directed that meetings of the creditors and members of Jonker Products CC (in liquidation), with Master’s reference B 102/2020, be convened within one month from the date of this order, on a date to be determined by the Magistrate. 4. At the aforesaid meetings of creditors and members of Jonker Products CC (in liquidation), creditors may submit claims for proof in terms of section 44 of the Insolvency Act, 24 of 1936 and the Magistrate must ascertain the wishes of the creditors and members in accordance with the provisions of section 412 of the Companies Act, 61 of 1973. 5. [The liquidators] are ordered, upon the Master providing a date for the meeting to be held before the Magistrate, to publish a notice in accordance with the provisions of section 412 of the Companies Act, 61 of 1973, read with the regulations thereto, in the Government Gazette and in a daily newspaper.’ 6 of s 78(1) of the Close Corporations Act, Jonker Products should not bear the costs. It ordered the liquidators to pay the costs of the application and counter-application. [13] The leave to appeal granted by the high court was confined to the order confirming the rule nisi, dismissing the counter-application and its costs order. The directives issued pursuant to ss 386 and 387 of the 1973 Companies Act are not subject to appeal before this Court. The issues [14] Two issues arose for consideration by this Court. The preliminary question was whether the liquidators had, by their conduct, acquiesced in the high court order thereby waiving their right of appeal. The second, substantive question, concerned the meaning and effect of s 78(1) of the Close Corporations Act. Peremption of the appeal [15] It was common ground that the liquidators had published a notice summoning a first and second meeting of creditors and members pursuant to the directive orders issued by the high court.2 It was also common ground that the meeting had been postponed considering the appeal to this Court. [16] The respondents’ heads of argument filed contained extensive reference to facts and correspondence which were not included in the record of appeal. These facts, it was contended, supported the conclusion that the liquidators 2 See fn 1 above. 7 had acquiesced in the high court order. At the hearing, the argument was not pursued with vigour. Counsel for the respondents accepted that this Court could not have regard to documents not properly before us. Counsel also accepted that the respondents bore a full onus to show an unequivocal intention to acquiesce in the court order appealed against;3 and to establish conduct on the part of the liquidators which ‘indubitably and necessarily’ points to a conclusion that the summoning of the court sanctioned meeting was inconsistent with an intention to attack the judgment.4 [17] Apart from the fact that the liquidators had summoned a meeting of creditors, authorised by the high court order, there was no evidence which pointed to a waiver of rights or acquiescence in the order. Nor is that the only inference to be drawn from the summoning of the meeting. Accordingly, the onus to prove acquiescence could not be discharged. [18] It was nevertheless urged upon us that directive orders rendered the appeal moot. I fail to see upon what basis that would be so. The meeting was postponed, pending the outcome of the appeal. Ironically, this was at the instance of the respondents. The substantive issue regarding the meaning and effect of s 78(1) remains alive. Furthermore, the practical effect of the appeal, is that the decisions taken at the meeting of 6 May 2021, if re-instated, would avoid the need to commence the process afresh.5 3 Natal Rugby Union v Gould 1999 (1) SA 432 (A) at 445. 4 Ibid at 443. 5 Compare Gentiruco SA (Pty) Ltd v Firestone SA (Pty) Ltd 1972 (1) SA 589 (A) at 600A-C. 8 The meaning and effect of s 78(1) [19] The liquidation of a close corporation is regulated by the provisions of the Close Corporations Act and the 1973 Companies,6 and by the Insolvency Act, applied with changes necessary to suit the context.7 [20] Item 9 of Schedule 5 of the Companies Act 71 of 2008 (the 2008 Companies Act) provides that Chapter 14 of the 1973 Companies Act shall apply to the liquidation of companies. Certain provisions are, however, excluded in the liquidation of solvent companies. For present purposes, the whole of Chapter 14 applies and is relevant to the proper construction of s 78(1) of the Close Corporations Act. [21] In the winding up of a close corporation by the court order, all the property and assets of the corporation are deemed to be in the custody and under the control of the Master.8 Upon receipt of the winding up order, the Master assumes control over the liquidation process. The liquidation is carried out by one or more liquidators, under the direction of the Master. The authority to appoint a suitably qualified person as liquidator, vests in the Master. [22] In the case of a company, the appointment of a liquidator is a matter addressed at the first meeting of creditors. In terms of s 364 of the 1973 Companies Act, the Master must summon the first meeting of creditors to 6 Section 66 of the Close Corporations Act states, with reference to the Companies Act, 2008, that: ‘(1) The laws mentioned or contemplated in item 9 of Schedule 5 of the Companies Act, read with the changes required by the context, apply to the liquidation of a corporation in respect of any matter not specifically provided for in this Part or in any other provision of this Act.’ 7 See s 78(2)(a) of the Close Corporations Act. See also s 339 of the 1973 Companies Act. 8 Section 361 of the 1973 Companies Act. 9 consider, inter alia, the statement of affairs of the company prepared by the directors; the proof of claims against the company; and nominations for the appointment of a suitable liquidator. The appointment is made by the Master in terms of s 367. The Master may, if necessary, appoint a provisional liquidator pending the appointment of a final liquidator.9 [23] In the case of a close corporation, the appointment of a liquidator follows a different course. The Master appoints a liquidator in terms of s 74 of the Close Corporations Act. The section, however, imposes an obligation upon the Master to appoint a liquidator ‘as soon as practicable after receipt of a provisional winding up order’.10 The appointment therefore occurs prior to final liquidation and prior to the first meeting of creditors and members of the corporation. It is for this reason, no doubt, that s 78 requires the liquidator to summon the first meeting of creditors and members of the corporation. [24] Section 381 of the 1973 Companies Act places the Master in control of the administration of the liquidation process. It provides in relevant part that: ‘(1) The Master shall take cognizance of the conduct of liquidators and shall, if he has reason to believe that a liquidator is not faithfully performing his duties and duly observing all the requirements imposed on him by any law or otherwise with respect to the performance of his duties, or if any complaint is made to him by any creditor, member or contributory in regard thereto, enquire into the matter and take such action thereanent as he may think expedient. 9 Section 368 of the 1973 Companies Act. 10 Section 74(2) reads as follows: ‘(2) The Master shall make an appointment as soon as is practicable after a provisional winding-up order has been made, or a copy of a resolution for a voluntary winding-up has been registered in terms of section 67(2).’ 10 (2) The Master may at any time require any liquidator to answer any enquiry in relation to any winding-up in which such liquidator is engaged, and may, if he thinks fit, examine such liquidator or any other person on oath concerning the winding-up. (3) The Master may at any time appoint a person to investigate the books and vouchers of a liquidator.’ [25] The principal objective of a winding-up is to realise the assets of the corporation, to cover the costs of the liquidation process, and to distribute the proceeds of liquidation to proven creditors in accordance with the ranking of their claims.11 To facilitate this task, a liquidator is given wide powers.12 They include the authority to execute deeds or documents in the name of and on behalf of the corporation; to prove claims in the estate of a debtor; and the power to summon general meetings of the creditors or members of the corporation to obtain authorisation for the conduct of the liquidation process. The liquidator may alienate property owned by the corporation with the consent of the Master. A liquidator may also perform a wide range of functions on the authority of a resolution of creditors or members in a general meeting.13 Where authorisation is not given by resolution, the liquidator may 11 Section 391 of the 1973 Companies Act provides that: ‘A liquidator in any winding-up shall proceed forthwith to recover and reduce into possession all the assets and property of the company, movable and immovable, shall apply the same so far as they extend in satisfaction of the costs of the winding-up and the claims of creditors, and shall distribute the balance among those who are entitled thereto.’ 12 See s 386 of the 1973 Companies Act. 13 See s 387(1) of the 1973 Companies Act. Section 386(4) sets out the nature of these powers, as follows: (a) to bring or defend in the name and on behalf of the company any action or other legal proceeding of a civil nature, and, subject to the provisions of any law relating to criminal procedure, any criminal proceedings: Provided that immediately upon the appointment of a liquidator and in the absence of the authority referred to in subsection (3), the Master may authorize, upon such terms as he thinks fit, any urgent legal proceedings for the recovery of outstanding accounts; (b) to agree to any reasonable offer of composition made to the company by any debtor and to accept payment of any part of a debt due to the company in settlement thereof or to grant an extension of time for the payment of any such debt; (c) to compromise or admit any claim or demand against the company, including an unliquidated claim; (d) except where the company being wound up is unable to pay its debts, to make any arrangement with creditors, including creditors in respect of unliquidated claims; 11 seek a direction from the Master.14 If the Master does not provide such direction, the liquidator may seek authorisation from the court.15 [26] It is against this backdrop that s 78(1) of the Close Corporations Act must be read. In Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others16 this Court stated that: ‘The much-cited passages from Natal Joint Municipal Pension Fund v Endumeni Municipality (Endumeni) offer guidance as to how to approach the interpretation of the words used in a document. It is the language used, understood in the context in which it is used, and having regard to the purpose of the provision that constitutes the unitary exercise of interpretation. I would only add that the triad of text, context and purpose should not be used in a mechanical fashion. It is the relationship between the words used, the concepts expressed by those words and the place of the contested provision within the scheme of the agreement (or instrument) as a whole that constitutes the enterprise by recourse to which a coherent and salient interpretation is determined. As Endumeni emphasised, citing well-known cases, ‘[t]he inevitable point of departure is the language of the provision itself.’ [27] Section 78(1) reads as follows: ‘(1) A liquidator shall as soon as may be and, except with the consent of the Master, not later than one month after a final winding-up order has been made by a Court or a resolution of a creditors’ voluntary winding-up has been registered— (a) summon a meeting of the creditors of the corporation for the purpose of— (e) to submit to the determination of arbitrators any dispute concerning the company or any claim or demand by or upon the company; (f) to carry on or discontinue any part of the business of the company in so far as may be necessary for the beneficial winding-up thereof: …. (g) … (h) to sell any movable and immovable property of the company by public auction, public tender, or private contract and to give delivery thereof; (i) to perform any act or exercise any power for which he is not expressly required by this Act to obtain the leave of the Court.’ 14 Section 387(2) of the 1973 Companies Act. 15 Section 387(3) of the 1973 Companies Act. 16 Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) para 25. 12 (i) considering the statement as to the affairs of the corporation lodged with the Master; (ii) the proving of claims against the corporation; (iii)deciding whether a co-liquidator should be appointed and, if so, nominating a person for appointment; and (iv) receiving or obtaining, in a winding-up by the Court or a creditors’ voluntary winding-up, directions or authorization in respect of any matter regarding the liquidation; and (b) summon a meeting of members of the corporation for the purpose of— (i) considering the said statement as to the affairs of the corporation, unless the meeting of members when passing a resolution for the voluntary winding-up of the corporation has already considered the said statement; and (ii) receiving or obtaining directions or authorization in respect of any matter regarding the liquidation.’ [28] The formal administration of the liquidation of a close corporation commences when the liquidator is appointed. Upon appointment the liquidator takes charge of the affairs of the corporation. The duty to execute the liquidation process, in accordance with legislation and subject to the control and oversight of the Master, commences upon appointment. Section 78(1) imposes the duty to summon the first meeting of creditors and members, upon the liquidator. It requires that the meeting be summoned ‘not later than one month after’ the final order of liquidation is made. The section does not specify how the meeting is to be summoned. For this we turn to s 40(1) of the Insolvency Act.17 It provides a first meeting of creditors is ‘convened’ by publication of a notice stating the date and time of the meeting, in the Gazette. Regulation 5 of the Insolvency Regulations18 provides that the notice 17 Section 339 of the 1973 Companies Act makes the law of insolvency applicable in the absence of any specific provision. 18 GNR 1379 24 August 1962. 13 published in the Gazette must state the date, time, place, and purpose of the meeting. It must be published at least ten days before the date of the meeting. [29] The act of summoning a first meeting must therefore be understood to involve the determination of when and where the meeting will take place, and what its purpose will be. In this regard, it must be stated what business is to be conducted at the meeting. The act of summoning the first meeting of creditors is carried out by the Master, in the case of a company in liquidation and in the case of an insolvent estate. This is so because the liquidator or trustee (as the case may be) is appointed upon nominations received at the first meeting of creditors. Since a liquidator of a close corporation is appointed at the stage of provisional liquidation, the authority to summon the first meeting of creditors must necessarily be exercised by the liquidator.19 [30] The setting of a period in s 78(1) underscores the need for expedition in the administration of the liquidation process. The need is emphasised in several relevant provisions. The liquidator must, in accordance with s 391 of the 1973 Companies Act, act ‘forthwith’. Members of a corporation or directors of a company must file a statement of affairs with the Master within 14 days of the date of final liquidation.20 Section 402 requires the liquidator to submit a report to creditors and members within three months of the date of appointment as liquidator. Section 79 of the Close Corporation Act contains the same obligation in the case of a close corporation in liquidation. 19 Section 386(4) of the 1973 Companies Act. 20 Section 363(2) of the 1973 Companies Act. The Master of the court may extend the period for special reasons. 14 [31] The use of the phrase ‘except with the consent of the Master’, indicates that the consent of the Master is a necessary condition for the exercise of the authority conferred by the section. It serves to limit the authority of the liquidator. It must equally be construed as conferring upon the Master the power to either grant or withhold consent to a liquidator acting in terms of s 78(1). ‘Consent’ must mean, as the term suggests, that Master agrees with and approves the act of summoning the meeting at that stage, ie after the expiry of the one-month period. This accords with the general scheme of control exercised by the Master over a liquidator, as provided by s 381 of the 1973 Companies Act.21 Seen in this light, the requirement that consent be obtained to summon the meeting serves to ensure that the Master maintains effective control over the liquidation leading to the first meeting of creditors. It is consonant with the authority exercised by the Master in the case of a company liquidation or sequestration. [32] The central question in this matter is this: when may the required consent be obtained? Counsel for the respondent initially argued that the consent of the Master must be obtained within the stipulated one-month period. That argument was, however, correctly abandoned. Instead, it was argued that the Master’s consent to summon a meeting after the expiry of the period, must be obtained prior to the meeting being summoned, ie prospectively. If, it was submitted, consent was not obtained before the meeting was summoned, the act of summoning the meeting was unauthorised and invalid. 21 The Master is entitled to hold a liquidator to account for the administration of the affairs of the liquidated corporation. The Master is empowered to appoint a co-liquidator where necessary or to seek the removal of a liquidator, in terms of s 379. The Master may also disallow remuneration of a liquidator, either in whole or part, if the liquidator has failed to fulfil functions or unduly delayed, in terms of s 384. 15 [33] At face value, the language of the section is open to this interpretation. There are, however, three scenarios to which the section might apply: consent obtained before a meeting is summoned; consent obtained at any time before a summoned meeting takes place; and consent obtained after the meeting has been held. [34] Section 78 (1) gives to the liquidator the authority to make the determinations necessary to summon the first meeting of creditors and members. The authority is unrestricted for the period of one-month after the date of final liquidation. Thus, if the liquidator decides to issue a notice summoning the meeting before the expiry of one month, then the liquidator alone decides when and where the meeting is to be held and what business is to be conducted. The plain language of the section says this. If, however, the liquidator exercises the authority to summon the meeting, after the expiry of the one-month period, it can only be exercised with the consent of the Master. [35] The section, however, does not state that consent must be obtained prior to the meeting being summoned. To read it as requiring that consent may only be obtained before the meeting is summoned would, in my view unduly fetter the Master’s authority. It would mean that a meeting convened at a time and place and for the purpose of business with which the Master agrees, could not validly proceed merely because consent was not obtained before the notice was published. Yet, the Master could immediately grant consent to summoning another meeting where the same business would be conducted. On the other hand, to read the section as permitting the Master to consent at any time prior to the meeting being held, does not conflict with the purpose 16 served by the section. The Master would still be able to exercise the authority that s 78(1) confers upon the Master. It must be emphasised that, in the case of a corporation, the liquidator would have commenced the liquidation process prior to the first meeting. It might therefore be expected that the business of the first meeting would include consideration of such actions and approval by the creditors. The determination of whether the meeting should then be held and what business is to be conducted at the first meeting therefore assumes greater significance. The Master would still be able to decide upon these matters, prior to the meeting being held. If the Master was satisfied that the liquidator had faithfully fulfilled their obligations, including that of expedition, and that the proposed business of the meeting would serve to fulfil the objects of the liquidation process, consent might be given. If not, withholding consent would mean that the meeting could not, validly, continue. In that event, the Master and the liquidator could take whatever steps they were authorised to take to advance the liquidation process. [36] To hold that consent may be obtained at any time prior to the meeting being held, does not diminish the effect of a failure to obtain consent. Consent remains a necessary condition for the validity of the meeting. Nor does it mean that the Master’s consent is available for the mere asking. On the contrary, the Master remains bound to ensure that the objects of liquidation will be met and that the interests of parties will be served by the meeting. [37] Different considerations, however, come to the fore in the third scenario, namely whether consent may be obtained after the first meeting has been held. Once the meeting has been held and resolutions have been adopted or directions given by creditors, the Master is no longer able to exercise the 17 authority conferred by s 78(1) of the Close Corporations Act. The Master is unable to consent to the act of summoning the meeting nor consent to its purpose and the business to be conducted at the meeting. Instead, the Master would be faced with outcome of business already conducted at the meeting, in respect of which resolutions may have been adopted. The ‘consent’ then sought would require the Master to validate invalid conduct and to ratify decisions taken at the meeting. Such decision would require the Master to consider whether there is reason to nullify the proceedings. The language of the section does not confer such power upon the Master. To read the concept of ‘consent’ as embodying the authority to determine the validity of the outcome of the business conducted at a meeting of creditors, goes beyond interpretation and the ascertainment of contextual meaning If it had been intended to clothe the Master with such authority, then express language to that effect would have been employed. There is also no reason for such authority to be conferred upon the Master. The high court has jurisdiction to intervene, as it did in this instance, to deal with unlawful or unauthorised conduct. It issued appropriate directions to facilitate the liquidation process. [38] There are, in my view, further considerations which militate against obtaining the Master’s consent after the meeting has been held. Permitting consent to be obtained at that stage would introduce considerable uncertainty in the liquidation process. The status of decisions taken at the meeting would depend upon the Master’s consent. It would also encourage liquidators to act without reference to the Master in the knowledge that they could obtain approval after the fact. Furthermore, the exercise of a power to validate the meeting ex post facto would undoubtedly be subject to lawfulness challenges. 18 This would create further scope for protracted delays in the liquidation process. [39] The high court was correct in finding that the absence of consent by the Master rendered the proceedings of the meeting held on 6 May 2021, invalid. It was, however, not correct in concluding that the consent could not be obtained after the meeting had been summoned by the liquidators. In my view, the consent of the Master may be obtained after a meeting has been summoned but before the meeting is held. In this case the Master was asked to consent after the meeting had been held. The Master formed the view that there was no statutory provision permitting her to give consent after the meeting. She was correct. It is nevertheless appropriate to clarify, in an order, when the consent required by s 78(1) of the Close Corporations Act may be obtained. [40] In the circumstances the high court was correct to declare that the meeting of 6 May 2021 was invalid and to set aside the resolutions adopted at the meeting. The counter-application was also correctly refused. As far as the high court’s costs order is concerned, it was not suggested that the high court had, in effect, failed to exercise its discretion. There is, therefore, no basis for this Court to interfere. The liquidators pursued the appeal, principally, to clarify the interpretation and application of s 78(1) of the Close Corporations Act. In the circumstances, the costs of the appeal should be costs in the liquidation. [41] I therefore make the following order: 1 The appeal is dismissed. 2 The costs of the appeal shall be costs in the liquidation. 19 3 It is declared that s 78(1) of the Close Corporations Act, 69 of 1984 permits the Master to grant consent to a liquidator to summon a first meeting of creditors and members after the expiry of one-month from the date of final liquidation, at any time before the meeting so summoned is held. ________________________ GOOSEN JA JUDGE OF APPEAL Petse DP (dissenting): [42] I have had the benefit of reading, with interest, the first judgment penned by my colleague Goosen JA. Up to a certain point, we both travel on the same path during which our views converge. However, halfway through, our paths diverge in a most fundamental way, taking us to different destinations. Thus, our disagreement has a direct bearing on the outcome of the appeal. Hence, I have been compelled to write for reasons that will be set out below as succinctly as the circumstances dictate. [43] First, this appeal requires us to decide, as the first judgment has found, two discreet and prominent disputes between the protagonists in this litigation. The first dispute is whether, on its terms and proper interpretation, s 78(1) of the Act permits the Master to consent to the convening of the first meeting of creditors and members of a close corporation in liquidation for the purposes 20 spelt out in the section in question in circumstances where the liquidator who bears the obligation to convene such meeting ‘not later than one month after’ the final order of liquidation is made has failed to do so. The first judgment rightly observes that the expression ‘except with the consent of the Master’ located in s 78(1) is a clear indication that the consent of the Master is a prerequisite for the lawful exercise by the liquidator of the authority conferred by the section beyond the one month period. On these aspects, we both make common cause. I therefore agree with the first judgment that the argument advanced on behalf of the respondents that the Master’s consent must be obtained before the meeting is summoned – in circumstances where s 78(1) finds application – is without merit for, to construe the section in that way would, in the language of Natal Joint Municipal Pension Fund v Endumeni Municipality,22 lead to insensible or unbusinesslike results, or undermine the manifest purpose of the provision. Therefore, nothing more need be said on this score. [44] The second dispute is whether the Master is still empowered to grant the consent contemplated in s 78(1) in circumstances where a liquidator of a close corporation has, without reference to the Master – and thus absent the latter’s consent – not only summoned a meeting outside the one-month period prescribed in s 78(1), but has, in fact, proceeded to hold the first meeting and transactions of the kind of business that s 78(1) contemplates are concluded. [45] As to the second dispute, the first judgment holds that ‘Different considerations, however come to the fore…, namely whether consent may be 22 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) (Endumeni). 21 obtained after the first meeting has been held’. In support of its conclusion on this score the first judgment reasons as follows: ‘Once the meeting has been held and resolutions have been adopted or directions given by creditors, the Master is no longer able to exercise the authority conferred by s 78(1) of the Close Corporations Act. The Master is unable to consent to the act of summoning the meeting nor consent to its purpose and the business to be conducted at the meeting. Instead, the Master would be faced with outcome of business already conducted at the meeting, in respect of which resolutions may have been adopted. The 'consent' then sought would require the Master to validate invalid conduct and to ratify decisions taken at the meeting. Such decision would require the Master to consider whether there is reason to nullify the proceedings. The language of the section does not confer such power upon the Master. To read the concept of 'consent' as embodying the authority to determine the validity of the outcome of the business conducted at a meeting of creditors, goes beyond interpretation and the ascertainment of contextual meaning. If it had been intended to clothe the Master with such authority, then express language to that effect would have been employed. There is also no reason for such authority to be conferred upon the Master…’23 [46] It then concludes: ‘There are, in my view, further considerations which militate against obtaining the Master’s consent after the meeting has been held. Permitting consent to be obtained at that stage would introduce considerable uncertainty in the liquidation process. The status of decisions taken at the meeting would depend upon the Master’s consent. It would also encourage liquidators to act without reference to the Master in the knowledge that they could obtain approval after the fact. Furthermore, the exercise of a power to validate the meeting ex post facto would undoubtedly be subject to lawfulness challenges. This would create further scope for protracted delays in the liquidation process.’24 For reasons that will soon become apparent, I see the resolution of the second dispute differently. 23 Para 37 of the first judgment. 24 Para 38 of the first judgment. 22 [47] I am grateful to the first judgment for its rendition of the factual background and its traversal of the submissions advanced by counsel on both sides which, unsurprisingly, were diametrically opposed. Therefore, except to the extent required by dictates of this judgment, the facts will not be repeated. And for the sake of completeness, it behoves me to state that I endorse the reasoning and conclusion relating to the first dispute at which the first judgment has arrived. [48] At the core of this appeal, is the proper meaning to be ascribed to s 78(1). In particular, the question is whether on its terms the section is open to the interpretation that nothing precludes the Master from considering and, if deemed appropriate, granting consent, even in circumstances where the meeting has come and gone with the result, inter alia, that: (a) the statement as to the affairs of the corporation lodged with the Master has been considered; (b) claims against the corporation have been proved; and (c) directions or authorisation in respect of any matter regarding the liquidation have been obtained or received. [49] The principles of statutory interpretation are by now well settled. It is therefore not necessary to rehash them. Suffice it to emphasise that in Endumeni this Court restated the proper approach to statutory interpretation. It explained that statutory interpretation is the objective process of attributing meaning to the words used in legislation. And that this unitary interpretive exercise entails a simultaneous consideration of: (a) the language used in the 23 light of the ordinary rules of grammar and syntax; (b) the context in which the provision appears; and (c) the apparent purpose to which it is directed.25 [50] In Cool Ideas 1186 CC v Hubbard and Another,26 the Constitutional Court said the following concerning statutory interpretation: ‘A fundamental tenet of statutory interpretation is that the words in a statute must be given their ordinary grammatical meaning, unless to do so would result in an absurdity. There are three important interrelated riders to this general principle, namely: (a) that statutory provisions should always be interpreted purposively; (b) the relevant statutory provision must be properly contextualised; and (c) all statutes must be construed consistently with the Constitution, that is, where reasonably possible, legislative provisions ought to be interpreted to preserve their constitutional validity. This proviso to the general principle is closely related to the purposive approach referred to in (a).’ (Footnotes omitted.) And, as Endumeni emphasised, ‘[t]he inevitable point of departure is the language of the provision itself’.27 Therefore, what has been said in the preceding paragraph and this one is all I have to say for present purposes concerning statutory interpretation. [51] Section 78(1) has already been quoted in para 27 of the first judgment. However, for convenience it will be quoted again. It reads: ‘(1) A liquidator shall as soon as may be and, except with the consent of the Master, not later than one month after a final winding-up order has been made by a Court or a resolution of a creditors’ voluntary winding-up has been registered— (a) summon a meeting of the creditors of the corporation for the purpose of— (i) considering the statement as to the affairs of the corporation lodged with the Master; 25 Endumeni para 18. 26 Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869 (CC) (Cool Ideas) para 28. 27 Endumeni para 18. 24 (ii) the proving of claims against the corporation; (iii) deciding whether a co-liquidator should be appointed and, if so, nominating a person for appointment; and (iv) receiving or obtaining, in a winding-up by the Court or a creditors’ voluntary winding-up, directions or authorization in respect of any matter regarding the liquidation; and (b) summon a meeting of members of the corporation for the purpose of— (i) considering the said statement as to the affairs of the corporation, unless the meeting of members when passing a resolution for the voluntary winding-up of the corporation has already considered the said statement; and (ii) receiving or obtaining directions or authorization in respect of any matter regarding the liquidation.’ [52] Although the facts of this case are, as alluded to above, fully set out in the first judgment, I have deemed it necessary to add some observations of my own in order to underscore certain material facts that will conduce to a better understanding of this judgment. They are the following. Jonker Products was placed under final liquidation on 29 October 2020. The appellants were appointed joint liquidators by the relevant Master on 21 October 2020. Accordingly, the appellants were required by law to summon the first meeting on or before 28 November 2020. However, they failed to do so. Instead, the first meeting was summoned some four months later and therefore outside the prescribed one month period and held on 6 May 2021. Certain resolutions were adopted at the meeting. The crucial one that precipitated this litigation was the decision to interrogate witnesses on 2 and 9 July 2021, including the first and second respondents. 25 [53] Realising that the liquidators had summoned the first meeting outside the one month period, the respondents requested the liquidators to provide them with the requisite Master's consent. None was provided as none existed. Only on 6 July 2021 did it dawn on the respondents, who had been oblivious to that fact, that they required the Master's consent which they belatedly requested. On 7 July 2021 the Master informed the liquidators that he was not aware of any statutory provision empowering him to grant consent after the meeting had been summoned and held. With an impasse having arisen, the respondents resorted to litigation. [54] To recapitulate, the first judgment holds that ‘the Master is no longer able to exercise the authority conferred by s 78(1)’ once the meeting has already taken place and resolutions adopted as happened in this case. It then proceeds to say that granting ‟consent” in such circumstances is tantamount to requiring ‘the Master to validate invalid conduct and to ratify decisions taken at the meeting’. To do so, the first judgment reasons, would in effect be straining the language of s 78(1) and taking it outside the realm of statutory interpretation, ie ‘cross the divide between interpretation and legislation’. [55] I respectfully disagree. I can conceive of no reason why, if the Master is empowered to grant consent after the meeting has been summoned by a liquidator but before it takes place, as the first judgment has found, the Master’s power cannot extend to similarly granting consent, if deemed appropriate, even in circumstances where the meeting has already taken place and resolutions, if any, adopted. The first judgment points out that granting consent is not a mere formality or is there for the mere asking. Thus, it is no small matter, but a momentous one. That much I would accept without 26 question. Drawing a solid line in the sand at the point where the first judgment does, ie before the meeting is held is, to my mind, both artificial and arbitrary. [56] It is an indubitable fact that, whenever a meeting of creditors is held not later than one month after the final winding-up order or registration of a resolution of creditors placing the corporate entity in liquidation, a liquidator enjoys a wide latitude. That the consent of the Master is sought only after the meeting has taken place and resolutions adopted can in no way undermine or frustrate the authority of the Master in ensuring that there is effective control of the liquidation process. Evidently, when consent is sought at this belated stage a liquidator would presumably provide a full report to the Master when seeking the latter's consent after the fact. It would still be open to the Master to consider the belated request on its merits and then decide whether in the light of all relevant factors consent should nevertheless be granted. One of such relevant factors would undoubtedly be the interests of the creditors and members of the entity in liquidation. The extent of the delay, reasons therefor and the need for expeditious finalisation of the liquidation process would all bear on the matter. [57] The first judgment (at para 35) rightly notes that s 78(1) ‘does not state that consent must be obtained prior to the meeting being summoned’. It proceeds to state that, to construe the section to require this ‘would unduly fetter the Master’s authority’. But this begs the question: If there is nothing that precludes the Master from granting consent after the meeting has been summoned but before it actually takes place, for the reasons stated, why then, one might rhetorically ask, should the Master not have the power to decide the same question even after the meeting has taken place at which resolutions 27 are adopted? Significantly, s 78(1) does not require that the Master’s consent may be granted only before the meeting takes place and that beyond that point the situation is rendered irredeemable. [58] To posit that the section empowers the Master to grant consent, if deemed appropriate, before the meeting takes place but not after, simply does not accord with the ordinary and natural meaning of the text of s 78(1). And it is noteworthy that the section itself draws no such distinction. On its clear and unambiguous terms, it cannot be read to mean that the Master is denied the right to even entertain a liquidator's request for consent under s 78(1) and determine it on its merits. As the Constitutional Court tells us in Cool Ideas, the ordinary and clear meaning of the words used in a statute must be given effect to, unless to do so would result in absurdity.28 It is as well to remember that a meaning that frustrates the apparent purpose of a statutory provision or leads to unbusinesslike results should whenever possible be eschewed.29 Accordingly, absent any glaring absurdity or undue straining of the language of the section, there is no room in the present case to warrant a departure from the ordinary grammatical meaning of s 78(1). [59] The first judgment (at para 36) opines that to ‘hold that consent may be obtained at any time prior to the meeting being held does not diminish the effect of a failure to obtain consent’. For my part, and in similar vein, I do not see how granting consent after the meeting has already been held would diminish the effect of a failure to obtain consent after the meeting has already taken place, especially when it is accepted, as the first judgment does, that the 28 Op cit fn 26 above. 29 Op cit fn 22 above. 28 section does not require that such consent be sought prior to the meeting being summoned. As already indicated, liquidators enjoy a wide latitude in going about the liquidation process and are vested with extensive statutory powers, subject only to the strictures of the relevant statutory framework and the collective interests of the creditors and members of the liquidated entity. Before the expiry of the one month period, it is the liquidators themselves who determine the date of the meeting and the nature of the business to be transacted at the meeting to give effect to the object of s 78(1). [60] That consent is sought only after the meeting has been held it in no way entails that the Master should then consider ‘[validating] invalid conduct and to ratify decisions taken at the meeting’. (Emphasis added.) The Master will be called upon to determine one issue only, be it before or after the meeting has been held, namely whether to grant consent ex post facto in circumstances where such consent should have been sought in advance. Thus, there is nothing curious about the fact that the language of the section does not confer powers on the Master to consider whether there is reason to nullify the proceedings. What the Master is required to do, on the plain wording of s 78(1), after all, is to consider whether consent should be granted ex post facto and nothing more. [61] Accordingly, there is no logical reason why the Master may not grant consent even after the meeting has been held. Such construction equally does not diminish the effect of a failure to obtain consent, which remains the necessary pre-requisite for validity of the conduct of the liquidators. The Master’s oversight responsibility remains, which is to ensure that liquidators 29 comply with their statutory duties and responsibilities in the course of the winding-up process. [62] Therefore, I incline to the view that there is nothing in the text of s 78(1) that precludes the Master from granting consent, even retrospectively, to the summoning of a meeting of creditors and members of the corporate entity in liquidation, which has already taken place even after the expiry of the period of one month as prescribed in the section. In these circumstances, it must follow that, whilst the high court was correct in finding that the absence of consent by the Master had a bearing on the validity of the proceedings of the meeting held on 6 May 2021, it was, however, not correct in its ultimate conclusion that the Master’s consent could not be obtained retrospectively. [63] I pause here to mention that it is common cause in this case that the Master was belatedly asked to grant consent. The liquidators’ letter, dated 6 July 2021, addressed to the Master requesting consent, in relevant part, reads: ‘We hereby request you to condone the fact that the First Meeting of Creditors was not convened within the period as set out in Section 78(1) for the following reasons:  The inability to publish the meeting as set out above;  The effect of the state of disaster declared by the State President on 15 March 2020 due to the Covid-19 outbreak;  The effect of the various directives that were issued during this time and that is still being published by the Chief Master from time to time to ensure the safety of all concerned had;  The obstructive behaviour by the member of the close corporation and specifically in not providing the Master or the liquidators with a Statement of Affairs being the primary purpose of the First Meeting of Creditors in the estate of a close corporation; 30  The fact that the late convening of the First Meeting did in no way lead to a substantial injustice to anyone.’ The letter then concludes by stating that: 'We therefore formally apply to the Master of the High Court to condone the formal defect by not convening the First Meeting of Creditors within the time period prescribed in Section 78(1) for the reasons set out above.' [64] In response, the Master did not grant or refuse consent. Rather, the Master expressed the view that there was no statutory provision conferring such powers on her or him to do so. The effect of the Master’s response is that the liquidators’ request for consent remains undetermined. Thus, it is still open to the Master to decide the fate of the liquidators’ request for consent ex post facto on its merits. No doubt in so doing, the Master will, inter alia, bear uppermost in his or her mind that the finalisation of the liquidation process has been held up for some four years already whilst litigation was underway. [65] For all the foregoing reasons, I would uphold the appeal and grant consequential relief. Since mine is a minority judgment, it is not necessary to set out the terms in which such consequential relief would have been framed. ________________________ X M PETSE DEPUTY PRESIDENT SUPREME COURT OF APPEAL 31 Appearances For appellants: J E Smit Instructed by: J I Van Niekerk Incorporated, Pretoria Symington De Kok, Bloemfontein For respondent: F G Janse van Rensburg Instructed by: Geyser Attorneys, Viljoenskroon Hendre Conradie 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: 27 May 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 Botha N O and Others v Jonker and Others (1003/2022) [2024] ZASCA 78 (27 May 2024) The Supreme Court of Appeal (SCA) today dismissed an appeal against an order of the Free State Division of the High Court (per Reinders ADJP and Van Rhyn J) (the high court), which declared invalid a first meeting of creditors held without the consent of the Master as required by s 78(1) of the Close Corporations Act, 69 of 1984 (the CC Act). The SCA declared that s 78(1) of the CC Act permits the Master to grant consent to a liquidator to summon a meeting after the expiry of one month from date of final liquidation, at any time before the meeting is held. Jonker Products CC was finally liquidated on 29 October 2020. The liquidators summoned a first meeting of creditors by publication of a notice in the Government Gazette on 9 April 2021. A corrected notice was published on 16 April 2021 and the meeting was held on 6 May 2021 before the magistrate of Bothaville. The Land and Agricultural Bank of South Africa (the Land Bank) was the only creditor to prove a claim. Several resolutions ratifying the actions of the liquidators were adopted. The meeting also resolved to summon Mr and Mrs Jonker (the Jonkers) and company controlled by Mrs Jonker to appear at the second meeting of creditors for purposes of inquiry. They were required to appear on 2 July 2021. They requested the liquidators to provide a copy of the written consent of the Master to convene the meeting on 6 May 2021. The liquidators stated that they did not have the consent of the Master. On 5 July 2021 the Jonkers informed the liquidators that the meeting of creditors was unauthorised and that the resolutions adopted at the meeting were invalid. They called on the liquidators to cancel the inquiry meeting. On 6 July 2021, the liquidators requested the Master to consent to the meeting that had been held on 6 May 2021. The Master responded by stating that there was no statutory provision which allowed consent to be given after the meeting had been held. The Jonkers launched an application in the high court to declare that the meeting and the resolutions adopted at the meeting were vitiated by irregularity and therefore invalid. A rule nisi was obtained on 8 July 2021 and on 30 March 2022, the high court granted a final order. It found that s 78(1) of the CC Act was peremptory in requiring the consent of the Master to convene a meeting after expiry the period of one month after date of final liquidation. The high court found that the section did not confer authority to consent to a meeting after it had been held. It therefore set aside the resolutions adopted on 6 May 2021. The high court, however, granted orders in terms of s 386(5) of the Companies Act 61 of 1973, permitting the liquidators to convene a first meeting of creditors afresh. The central issue on appeal to the SCA concerned the interpretation of s 78 of the CC Act. The SCA, by majority (per Goosen JA and Unterhalter AJA), held that the granting of consent as required by s 78(1) of the CC Act is a necessary condition for the exercise of the power of a liquidator to summon a meeting after the period of one month had expired. The Master may either grant or 2 withhold consent. Such authority is consonant with the statutory scheme of control that the Master exercises over the liquidation process. The requirement that consent be obtained serves to ensure that the Master maintains effective control over the process. The Master’s consent meant approval of arrangements for the meeting and the business to be conducted at the meeting. The SCA found that the section did not require the Master’s consent to be obtained prior to publication of the notice by which a meeting is summoned. Upon a sensible interpretation of the section the Master would still be able to exercise his authority to control the process, if consent was sought before the meeting of creditors occurred. At that stage the Master would still be able to decide whether the envisaged meeting would fulfil the liquidation process. Once the meeting is held, different considerations apply. Creditors exercise control over the liquidation process by resolutions adopted at the meeting. Once that occurs, the Master is no longer able to exercise the authority to consent or withhold consent. At that stage consent could only be granted if the Master is satisfied that the proceedings of the meeting ought to be validated. Section 78(1) does not confer upon the Master the power to validate the proceedings of a meeting of creditors. The majority therefore held that the high court order was correct. The SCA issued a declaratory order to clarify when the Master may grant consent in terms of s 78(1) of the CC Act. In a minority judgment Petse DP differed on whether the Master may consent after a meeting had been held. He found that since consent could be given after publication of the notice summoning a meeting, there was no reason why such consent could not be given after the meeting. The Master would, at that stage, be no less able to exercise supervisory control over the process. --------ends-------

4277

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not reportable Case no: 136/2023 In the matter between: CITY OF TSHWANE METROPOLITAN MUNICIPALITY APPELLANT and GLOFURN (PTY) LTD RESPONDENT Neutral citation: City of Tshwane Metropolitan Municipality v Glofurn (Pty) Ltd (136/2023) [2024] ZASCA 101 (19 June 2024) Coram: MBATHA and MATOJANE JJA, and TOLMAY, SMITH and BLOEM AJJA Heard: 23 February 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 19 June 2024. Summary: Civil law and procedure – whether the municipality was entitled to implement credit control measures against the company; whether the dispute lodged under s 102(2) of the Local Government: Municipal Systems Act 32 of 2000 remained unresolved – thereby precluding the municipality from implementing debt collection measures; whether the high court correctly treated an approved policy of a municipality as a nullity when not challenged in review proceedings; requirements for an interdict satisfied. 2 ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Janse van Nieuwenhuizen J, sitting as court of first instance): The appeal is dismissed with costs, including costs of two counsel where so employed. JUDGMENT Mbatha JA (Matojane JA and Smith and Bloem AJJA concurring): Introduction [1] This appeal concerns whether the City of Tshwane Metropolitan Municipality (the City) was entitled to implement credit control measures against Glofurn Pty Ltd (Glofurn) by threatening to disconnect the electricity supply to its premises. The key issue is whether Glofurn's dispute lodged under s 102(2) of the Local Government: Municipal Systems Act 32 of 2000 (the Systems Act) remained unresolved, thereby precluding the City from implementing such measures. The Gauteng Division of the High Court, Pretoria (the high court) granted an interim interdict in favour of Glofurn, interdicting the City from disconnecting Glofurn's electricity supply pending resolution of the dispute. The City now appeals against this order. Background facts [2] The background facts are largely common cause. The dispute between the City and Glofurn relates to two accounts for electricity. One is a post-paid account, and the other is a pre-paid account. Both these accounts appear in the 3 City records. Account number 2059776379 is an old post-paid account allocated to Glofurn. This account was closed by the City as of 1 March 2022. After the closure of the old account, the City migrated Glofurn to a pre-paid system and allocated account number 5017747050. [3] Although Glofurn did not receive any invoices from the City, since the closure of the old account number, it continued to make average payments to the old account. By June 2022, the old account was in credit in the amount of R400 000.00. On the other hand, the City continued to bill Glofurn using the new account. The City issued the first invoice on 29 June 2022, reflecting that Glofurn was in arrears in the amount of R766 457.81. Glofurn disputed that it was in arrears, as alleged by the City. [4] The City countered by stating that notification for migration of the post-paid account to the pre-paid account was dispatched to Glofurn’s email address on their system. In addition, it stated that the electricity had not been charged to Glofurn’s old account since the migration. Glofurn was invited to view their balance on the pre-paid portal using the City’s accompanying link. Despite this response, Glofurn continued to make payments into the old account. [5] This prompted Glofurn to lodge a formal dispute in terms of s 95(f) read with s 102(2) of the Systems Act with the City. The dispute was couched as follows: ‘The account does not belong to the complainant, the complainant never applied for an account, never opened an account, did not receive any documents, application forms, meter readings, rates and taxes or any account before 29 June 2022. The complainant denies that it is indebted to the City in respect of the amount of R 766 457,81.’ [6] As the City threatened to cut off its electricity services to it, Glofurn launched an urgent application to the high court where it sought an order 4 interdicting the City from implementing its debt collection and credit control measures at its premises in Koedoespoort, Pretoria, pending the determination of the dispute between itself and the City. It also sought an order for costs on an attorney and client scale against the City. The application was opposed by the City on the basis that Glofurn had been notified of the migration from the post-paid to the pre-paid system as far back as in 2021. In addition, as of 28 February 2022, it was provided with the bank details and advised to keep a positive balance on the new account. The City maintained this stance even when Glofurn sought an undertaking that pending the dispute resolution process, the City should not implement its debt collection and credit control measures. [7] On 25 October 2022, the high court (per Jansen van Nieuwenhuizen J) granted the interdictory relief in favour of Glofurn, together with a costs order. The subsequent application for leave to appeal by the City was dismissed by the high court. The appeal serves before us with leave granted by this Court on 27 January 2023. The parties’ submissions [8] The City submitted that the high court erred in declaring its policy a nullity in urgent interdict proceedings, which is contrary to the principles set out by the Constitutional Court in National Treasury and Others v Opposition to Urban Tolling Alliance.1 The Constitutional Court in that case expressed itself as follows: ‘Under the Setlogelo test, the prima facie right a claimant must establish is not merely the right to approach a court in order to review an administrative decision. It is a right to which, if not protected by an interdict, irreparable harm would ensue. An interdict is meant to prevent future conduct and not decisions already made. Quite apart from the right to review and to set aside impugned decisions, the applicants should have demonstrated a prima facie right that is 1 National Treasury and Others v Opposition to Urban Tolling Alliance and Others [2012] ZACC 18; 2012 (6) SA 223 (CC); 2012 (11) BCLR 1148 (CC). 5 threatened by an impending or imminent irreparable harm. The right to review the impugned decisions did not require any preservation pendente lite.’2 [9] In addition, the City argued that the high court was wrong in finding that its Credit Control and Debt Policy3 (the policy) was unenforceable against its customers. It was submitted that this finding was made in urgent interdictory proceedings without directly attacking the policy. The significance of this is that the case argued by Glofurn differed from the case pleaded in its founding affidavit. It was emphasized that since the finding by the high court was made on the premise of an issue that was not before the court, Glofurn was not entitled to the relief granted by the high court. The City maintained its stance that the dispute had been resolved and that there was no outstanding dispute between the parties. [10] Glofurn countered by contending that there was no merit in the argument presented by the City in that the case made out in the founding affidavit was different from the one argued before the high court. It submitted that once the dispute remained unresolved, the City was precluded by s 102(2) of the Systems Act from implementing its policy. Glofurn submitted that during the legal argument, it relied on various legal provisions, including the Standard Electricity By-laws,4 in support of its contention that the disputes had not been resolved. As a result, the question of whether the City’s policy should have been preferred over the promulgated By-laws constituted a legal argument. [11] Before us, Glofurn pointed out that the high court had requested supplementary heads of argument to address specific legal issues, including the question of whether the policy had been properly adopted. As a result, all the issues were fully ventilated before the high court. Relying on various authorities, 2 Ibid para 50. 3 City of Tshwane Metropolitan Municipality, Credit Control and Debt Management Policy for the 2022/23 financial year. 4 City of Tshwane Metropolitan Municipality Standard Electricity Supply By-laws, GN227, 7 August 2013. 6 including the judgment in Heckroodt NO v Gamiet5 it was submitted on behalf of Glofurn, that it is trite that a party in motion proceedings may advance legal argument in support of the relief or defence claimed by it even where such arguments are not specifically mentioned in the papers, provided that they arise from the facts alleged in the papers before the court. Therefore, Glofurn, contended that it was free to argue any point of law arising from the facts. [12] Glofurn maintained that the high court did not pronounce on the validity of the policy. It submitted that the high court merely found that By-laws should be passed to give effect to the policy, that until such time as By-laws are promulgated to give effect to the policy, the policy will not be enforceable against the public and that the policy cannot be in conflict with duly promulgated By-laws. Glofurn argued that the high court correctly exercised its discretion in granting an interdict against the City. It did so by considering all the relevant facts and legal principles. For this contention, it relied on National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others,6 wherein the court expressed itself as follows: ‘A court of appeal is not entitled to set aside the decision of a lower court granting or refusing a postponement in the exercise of its discretion merely because the court of appeal would itself, on the facts of the matter before the lower court, have come to a different conclusion; it may interfere only when it appears that the lower court had not exercised its discretion judicially, or that it had been influenced by wrong principles or a misdirection on the facts, or that it had reached a decision which in the result could not reasonably have been made by a court properly directing itself to all the relevant facts and principles. On its face, the complaint embodied in the ground of appeal sought to be introduced by the amendment does not meet this test because it alleges only an error in the exercise of its discretion by the High Court. Even assuming, however, that such ground correctly formulates the test which would permit interference by this Court, the respondents have got nowhere near to establishing such a ground, on the facts 5 Heckroodt NO v Gamiet 1959 (4) SA 244 (T) at 246A-C; also see Van Rensburg v Van Rensburg en Andere 1963 (1) SA 505 (A) at 509 E-510B. 6 National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others [1999] ZACC 17; 2000 (2) SA 1; 2000 (1) BCLR 39. 7 before the High Court. No such vitiating error on the part of the High Court was contended for by the respondents in their written or oral argument before this Court and none can, on the papers, be found. In fact, I am of the view that the High Court correctly dismissed the application for good and substantial reasons and that both the applications in this Court relating to such dismissal ought to be refused. The question of the appropriate costs order will be dealt with at the conclusion of this judgment.’7 Legal framework [13] It is important that I should set out the relevant provisions of the applicable legislation to the dispute. Glofurn lodged a dispute in terms of s 102 read with s 95 of the Systems Act. Section 102 provides that: ‘(l) A municipality may— (a) consolidate any separate accounts of persons liable for payments to the municipality; (b) credit a payment by such a person against any account of that person; and (c) implement any of the debt collection and credit control measures provided for in this Chapter in relation to any arrears on any of the accounts of such a person. (2) Subsection (1) does not apply where there is a dispute between the municipality and a person referred to in that subsection concerning any specific amount claimed by the municipality from that person.’ Section 95(f) should be read in line with the definition of a dispute as provided in s 1 of the policy. It states that: ‘[A] dispute or complaint with regards to a specific amount charged by the Municipality and that is lodged on the prescribed forms and manner in terms of section 102 read together with sections 95 (f), (g) and (h) of the Municipal Systems Act, 2000, and the Municipality’s policy requirements in this regard.’ Section 95(f) of the System Act provides as follows: ‘In relation to the levying of rates and other taxes by a municipality and the charging of fees for municipal services, a municipality must, within its financial and administrative capacity— . . . (f) provide accessible mechanisms for those persons to query or verify accounts and metered consumption, and appeal procedures which allow such persons to receive prompt redress for inaccurate accounts.’ 7 Ibid para 11. 8 [14] The policy also makes provision for credit control measures in clause 4,8 applicable to properties which are in arrears in respect of municipal service charges, in respect of water or electricity or both of these services or any other municipal services that are supplied by the City. In the case where the consumer is in arrears, it allows for dispatching a reminder to such consumer to regulate its position within a period of 14 days after delivery of the notification. Should the consumer not respond within the specified period, the electricity supply and other services will be disconnected. [15] Clause 6.19 of the policy prescribes how consumers can lodge a dispute with the City. It provides that: ‘In the interim, the consumer will remain liable to pay the average of the last three months of the account, where the history of the account is available. Where no history is available, the consumer will be obliged to pay an estimate provided by the Municipality before the due date for payment, until the matter is resolved. The relevant department will give a written acknowledgement of receipt of a dispute, investigate the matter, and inform the customer in writing of the outcome of the investigation within one month. Any adjustments to the customer’s account will be done within a reasonable time.’10 In addition, clause 6.1(e) provides that the decision of the authorised official of the council is final and will result in the immediate implementation of any credit control and debt collection measures provided for in the policy. [16] I also point out that the policy in clause 6.211 makes provision for an appeal. It states that the consumer may give notice in the prescribed form within 21 days after notification of the outcome of the dispute to the City Manager who will finally consider such disputes.12 The City Manager will be at liberty to consider 8City of Tshwane Metropolitan Municipality, Credit Control and Debt Management Policy for the 2022/23 financial year at 18-19. 9 Ibid at 28. 10 Ibid at clause 6.1(c). 11 Ibid at 31. 12 Ibid at clause 6.2.1. 9 and review the decision of the dispute resolution committee.13 Most importantly, clause 6.2.3 provides that the decision on appeal by the City Manager or the delegated official will be final. [17] The provision of electricity is a local government competency. Amongst the general duties of a municipality set out in s 73(1)(c) of the Systems Act, is that a municipality must ‘ensure that all members of the local community have access to at least the minimum level of basic services’. Section 73(2)(c) requires a municipality to be financially sustainable. In order to realise that goal, Chapter 9 of the Systems Act regulates credit control and debt collection measures for services rendered by the municipality. Section 96 of the Systems Act14 places the responsibility for debt collection on the municipality. As a result, in terms of s 98 of the Systems Act, a municipal council must adopt By-laws to give effect to its credit control and debt collection policy, its implementation and enforcement.15 [18] It is apposite that I should highlight that the supply of electricity is by agreement between the consumer and the municipality and that the consumer is liable for the electricity supplied or consumed. In the event that the consumer fails to pay for such services, the municipality has a right to disconnect and suspend the supply thereof. 13 Ibid at clause 6.2.2. 14Section 96 of the Systems Act 32 of 2000 provides: ‘Debt collection responsibility of municipalities. —A municipality— (a) must collect all money that is due and payable to it, subject to this Act and any other applicable legislation; and (b) for this purpose, must adopt, maintain and implement a credit control and debt collection policy which is consistent with its rates and tariff policies and complies with the provisions of this Act.’ 15 Section 98 provides: ‘By-laws to give effect to policy. — (1) A municipal council must adopt By-laws to give effect to the municipality’s credit control and debt collection policy, its implementation and enforcement. (2) By-laws in terms of subsection (1) may differentiate between different categories of ratepayers, users of services, debtors, taxes, services, service standards and other matters as long as the differentiation does not amount to unfair discrimination.’ 10 Evaluation [19] The City’s contention was that the dispute had been finalised, as envisaged in clause 6.1(e) of the policy when Glofurn was informed on 29 June 2022 that the old account was no longer in operation and that it had been migrated to a new pre-paid account. A second dispute was lodged on 8 July 2022, whereby Glofurn disavowed knowledge of the new account and that it was indebted to the City in the amount of R766 457.81. When the second dispute was lodged, the City responded on the very same day per email by Ms Lebudi, which stated that notification of the migration was sent to the email address provided in the system and that electricity was not charged to the client’s old account since the migration. Glofurn was invited to view their balance on the pre-paid portal on the link provided in the email. This report by Ms Lebudi, according to the City, concluded the dispute between the parties. [20] The City’s contention that the second dispute had been resolved is in my view misplaced. As the aggrieved consumer, Glofurn, was entitled to note an appeal in terms of clause 6.2 of the policy within a period of 21 days after receipt of the City’s decision. The City’s argument does not address the right of appeal as envisaged in clause 6.2. Therefore, Ms Lebudi’s response could not have been final. The dispute lodged in terms of s 102 remained unresolved. Glofurn had satisfied the jurisdictional factors in terms of s 102, in that it proved that it had a dispute with the City which remained unresolved. Finally, the City relied on the correspondence communicated by Ms Lebudi to Glofurn and there was no indication of whether this was a committee or an individual decision. The position of Ms Lebudi and the capacity in which she acted remained unexplained by the City. [21] The City contradicts itself when it contends that the application lodged before the high court was lodged simultaneously with the lodging of the second 11 dispute. I point out that the City responded on the same day of the lodging of the dispute. Nothing suggests that the City investigated the dispute, as it was enjoined to do in terms of clause 6.1 of the policy. It merely gave a final decision without investigating the allegations by Glofurn in the second dispute. Disturbingly, on the same day of lodging the second dispute, a representative of the City telephonically contacted Glofurn and indicated that the electricity supply would be disconnected within three days. This allegation was never disputed by the City. This indicates the nonchalant and dismissive attitude of the City’s officials. [22] I conclude that the investigation should have been done by the City before dismissing the issues raised by Glofurn. Glofurn was not even afforded time to contemplate their next move before a threat to disconnect electricity was communicated to them. Glofurn acknowledged in its founding affidavit that, as a rule, the City was entitled to implement debt collection and credit control measures where there are arrears in any account. However, as correctly advanced by Glofurn, s 102(2) of the Systems Act proscribes the implementation of such measures where a dispute exists between the consumer and the municipality. [23] It behoves me to highlight the relevant provisions of the City’s By-law. Section 4(1) of the Electricity By-law provides that the provision of electricity is governed by the agreement between the City and the relevant person who has concluded the agreement with the City. Section 4(3) provides for cases where the applicant is not the registered owner of the premises. In that case, there must be an agreement in writing between the parties which binds both the consumer and the owner of the premises. Section 18 regulates the payment for all the electricity supplied, whether metered or unmetered. The City is obligated to render an account to the consumer on a regular basis. In the event that the consumer fails to pay, the City must notify the consumer and eventually disconnect the electricity supply to the consumer’s premises in terms of s 18(3). Section 18(4) provides that: 12 ‘[a]s regards the accounts envisaged in sub-section 2, an error or omission from the Municipality or failure by the Municipality to render an account does not relieve the consumer of any obligation to pay for the amount due for electricity supplied to and consumed at the premises. The onus is on the consumer to ensure that the account rendered is in accordance with prescribed tariff, charges and fees in respect of the electricity supplied to the premises’. [24] The City’s argument was that even if the amount paid in the old account was transferred into the new account, there was still a deficit. Glofurn’s counter submission, amongst others, was that as early as 2022 it had installed a solar system on its premises. It had an expectation of a reduced amount due to the City. I find this to be a reasonable ground, which should have been investigated by the City. Accordingly, Glofurn had in all respects, established a clear right to have the dispute investigated before the City was entitled to disconnect the electricity supply. [25] It must be borne in mind that electricity is a basic municipal service.16 Section 2 of the National Energy Act 34 of 2008 provides that its objective, amongst others, is to ensure an uninterrupted supply of energy to the nation and to facilitate energy access to improve the quality of life of South African people. However, the right to access electricity is not absolute. Non-payment for the provision of electricity impacts negatively on the supply thereof. As a result, Chapter 9 of the Systems Act regulates the credit control and debt collection processes of the municipality, which ensures that the consumer and the municipality can regulate their relationship and also resolve disputes between themselves. [26] The high court correctly found that Glofurn had satisfied the requirements of an interdict. On a proper consideration of the founding affidavit, 16 Joseph and Others v City of Johannesburg and Others [2009] ZACC 30; 2010 (3) BCLR 212 (CC); 2010 (4) SA 55 (CC) para 34. 13 supplementary affidavits supplemented by the argument on a question of law, I find that the high court was justified in granting the order sought by Glofurn. Nothing requires this Court to interfere with the exercise of the discretion of the high court. [27] I return to the question of law raised by the City before us, being, whether it was competent for the high court to have made a finding that the policy adopted by the City was a nullity. There is no merit in the question of law raised. The high court’s comments related to the argument that the policy was unenforceable because it had not been promulgated into a By-law, as required in terms of s 98(1) of the Systems Act. The finding did not relate to the validity of the policy. It was common cause that the City did not adopt a By-law to provide for the ‘implementation and enforcement’ of its Credit Control Policy and in terms of s 98(1) the policy was consequently unenforceable by operation of law. Glofurn was fully entitled to raise that issue by way of a point of law without assailing the validity of the policy. The principles enunciated in Oudekraal Estates (Pty) Ltd v City of Cape Town and Others (Oudekraal) and MEC for Health, Eastern Cape v Kirland Investments,17 (Kirkland) namely that administrative decisions remain valid and effectual until set aside by a competent court, can therefore not avail the City. In any event, the high court’s comments were obiter and are not legally binding. This is apparent from the fact that the order granted by the high court is silent on the status of the City’s policy. The order merely granted the interdictory relief sought by Glofurn. [28] Accordingly, I make the following order: 17 Oudekraal Estates (Pty) Ltd v City of Cape Town and Others [2004] ZASCA 48; [2004] 3 All SA 1 (SCA); 2004 (6) SA 222 (SCA) para 26; MEC for Health, Eastern Cape v Kirland Investments (Pty) Ltd [2014] ZACC 6; 2014 (5) BCLR 547 (CC); 2014 (3) SA 481 (CC). 14 The appeal is dismissed with costs, including costs of two counsel where so employed. _____________________ Y T MBATHA JUDGE OF APPEAL 15 Tolmay AJA [29] I have had the pleasure of reading the judgment of Mbatha JA and I agree that the appeal should be dismissed. I am, however, of the view that the fact that the high court allowed a new point to be raised for the first time in supplementary heads of argument and then found on that point that the policy is unenforceable, need to be addressed. I also have some doubt that the pronouncement of the high court on the question of enforceability of the policy can be regarded as obiter, in light of the fact that the high court was specifically called upon to consider this issue in supplementary heads of argument. [30] The respondent initiated urgent legal proceedings in the high court. The sole purpose was to obtain an interdict that would prevent the appellant from disconnecting the respondent's electricity supply, until the resolution of the ongoing dispute between the two parties. The high court, after examining the evidence, appropriately concluded that the respondent had presented a sufficient case to warrant the issuance of an interdict, which would remain in effect until the underlying dispute was settled. [31] The high court, in my view erred in allowing the respondent to raise an issue regarding the validity of the policy for the first time in the supplementary heads of argument, and then finding that the policy relied upon by the appellant was unenforceable against its customers.18 Parties are required to set out and define the nature of their case in the pleadings or affidavits. In Fischer and Another v Ramahlele and Others19 this Court expressed itself as follows: 18 High court Judgment para 21 reads as follows: ‘The policy relied upon by the respondent herein, has, however, not been adopted in a By-Law and is therefore not enforceable against customers.’ 19 Fischer and Another v Ramahlele and Others [2014] ZASCA 88; 2014 (4) SA 614 (SCA); [2014] 3 All SA 395 (SCA) para 13; See also Public Protector v South African Reserve Bank [2019] ZACC 29; 2019 (9) BCLR 1113 (CC); 2019 (6) SA 253 (CC). 16 ‘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 “it 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.’ [32] Although a court may, of its own accord, raise a question of law in certain instances, such questions must emerge from the evidence before it.20 In this instance nothing was raised regarding the validity of the policy in the affidavits, nor was any review of the policy sought. The issue about the validity and enforceability of the policy would have required a substantially different response from the appellant in its affidavit. By not being granted the opportunity to address this issue in the answering affidavit and filing a record, as is required in review proceedings the appellant was prejudiced. The appellant was denied the opportunity to address the implications, financial and otherwise of how arbitration in terms of By-law 9 of the Standard Electricity By-laws, as opposed to the internal mechanisms provided by the policy, would affect it. In review proceedings the court would have been able to address any potential prejudice by granting a just and equitable remedy, in terms of s 172 of the Constitution and s 8 of The Promotion of Administrative Justice Act 3 of 2000 (PAJA). 20 Public Protector v South African Reserve Bank paras 234-235; See also Advertising Regulatory Board NPC and Others v Bliss Brands (Pty) Ltd [2022] ZASCA 51; [2022] 2 All SA 607 (SCA); 2022 (4) SA 57 (SCA); [2022] HIPR 201 (SCA). 17 [33] The high court was seized with an application to grant an interdict. In National Treasury and Others v Opposition to Urban Tolling Alliance and Others21 (OUTA) the court dealt with an application in two parts: Part A was the interdict and Part B was the review, this was not done in the matter before us. The way that the application in OUTA was structured enabled the court to first consider whether the requirements for an interdict had been met and, after the filing of the record and supplementation of the papers, whether the requirements for a review had been met. The following was said in OUTA: ‘A court must also be alive to and carefully consider whether the temporary restraining order would unduly trespass upon the sole terrain of other branches of Government even before the final determination of the review grounds. A court must be astute not to stop dead the exercise of executive or legislative power before the exercise has been successfully and finally impugned on review. This approach accords well with the comity the courts owe to other branches of Government, provided they act lawfully. Yet another important consideration is whether in deciding an appeal against an interim order, the appellate court would in effect usurp the role of the review court. Ordinarily the appellate court should avoid anticipating the outcome of the review except perhaps where the review has no prospects of success whatsoever.’22 In this instance there was no review application before the high court and the prospects of success of the review could therefore not be considered. [34] The decision to implement a policy by the appellant is an administrative action and is regulated by PAJA and falls squarely within the definition of an administrative action as defined in s 1 of PAJA.23 21 National Treasury and Others v Opposition to Urban Tolling Alliance and Others [2012] ZACC 18; 2012 (6) SA 223 (CC); 2012 (11) BCLR 1148 (CC). 22 Ibid para 26. 23 Section 1 of PAJA reads as follows: ‘1 Definitions In this Act, unless the context indicates otherwise– “administrative action” means 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 legal effect, but does not include– 18 [35] The appellant is an organ of state and the decision to terminate electricity supply and the empowering provision would be the policy, as a result a review application in terms of s 6 of PAJA is required to set it aside. In my view the (aa) the executive powers or functions of the National Executive, including the powers or functions referred to in sections 79 (1) and (4), 84 (2) (a), (b), (c), (d), (f), (g), (h), (i) and (k), 85 (2) (b), (c), (d) and (e), 91 (2), (3), (4) and (5), 92 (3), 93, 97, 98, 99 and 100 of the Constitution; (bb) the executive powers or functions of the Provincial Executive, including the powers or functions referred to in sections 121 (1) and (2), 125 (2) (d), (e) and (f), 126, 127 (2), 132 (2), 133 (3) (b), 137, 138, 139 and 145 (1) of the Constitution; (cc) the executive powers or functions of a municipal council; (dd) the legislative functions of Parliament, a provincial legislature or a municipal council; (ee) the judicial functions of a judicial officer of a court referred to in section 166 of the Constitution or of a Special Tribunal established under section 2 of the Special Investigating Units and Special Tribunals Act, 1996 (Act 74 of 1996), and the judicial functions of a traditional leader under customary law or any other law; (ff) a decision to institute or continue a prosecution; (gg) a decision relating to any aspect regarding the nomination, selection or appointment of a judicial officer or any other person, by the Judicial Service Commission in terms of any law; (hh) any decision taken, or failure to take a decision, in terms of any provision of the Promotion of Access to Information Act, 2000; or (ii) any decision taken, or failure to take a decision, in terms of section 4 (1); “administrator” means an organ of state or any natural or juristic person taking administrative action; “Constitution” means the Constitution of the Republic of South Africa, 1996; “court” means– (a) the Constitutional Court acting in terms of section 167 (6) (a) of the Constitution; or (b) (i) a High Court or another court of similar status; or (ii) a Magistrate's Court for any district or for any regional division established by the Minister for the purposes of adjudicating civil disputes in terms of section 2 of the Magistrates' Courts Act, 1944 (Act 32 of 1944), either generally or in respect of a specified class of administrative actions, designated by the Minister by notice in the Gazette and presided over by a magistrate, an additional magistrate or a magistrate of a regional division established for the purposes of adjudicating civil disputes, as the case may be, designated in terms of section 9A; within whose area of jurisdiction, the administrative action occurred or the administrator has his or her or its principal place of administration or the party whose rights have been affected is domiciled or ordinarily resident or the adverse effect of the administrative action was, is or will be experienced; “decision” means any decision of an administrative nature made, proposed to be made, or required to be made, as the case may be, under an empowering provision, including a decision relating to– (a) making, suspending, revoking or refusing to make an order, award or determination; (b) giving, suspending, revoking or refusing to give a certificate, direction, approval, consent or permission; (c) issuing, suspending, revoking or refusing to issue a licence, authority or other instrument; (d) imposing a condition or restriction; (e) making a declaration, demand or requirement; (f) retaining, or refusing to deliver up, an article; or (g) doing or refusing to do any other act or thing of an administrative nature, and a reference to a failure to take a decision must be construed accordingly; “empowering provision” means 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; “failure”, in relation to the taking of a decision, includes a refusal to take the decision; “Minister” means the Cabinet member responsible for the administration of justice; “organ of state” bears the meaning assigned to it in section 239 of the Constitution; “prescribed” means prescribed by regulation made under section 10; “public”, for the purposes of section 4, includes any group or class of the public; “this Act” includes the regulations; and “tribunal” means any independent and impartial tribunal established by national legislation for the purpose of judicially reviewing an administrative action in terms of this Act.’ 19 enforceability of the municipal policy may not be pronounced on before the matter is taken on review and set aside. [36] In Oudekraal24 it was stated as follows: ‘Thus the proper enquiry in each case - at least at first - is not whether the initial act was valid but rather whether its substantive validity was a necessary precondition for the validity of consequent acts. If the validity of consequent acts is dependent on no more than the factual existence of the initial act, then the consequent act will have legal effect for so long as the initial act is not set aside by a competent court.’25 This approach was also confirmed and applied in Kirland26 and Merafong City v AngloGold Ashanti.27 (Merafong) [37] It would seem that the high court was swayed by the minority judgment in Department of Transport and Others v Tasima (Pty) Limited28 which found that: ‘An invalid administrative act that does not exist in law cannot itself have legal force and effect.’29 [38] The majority however confirmed the principle set out in Oudekraal and the line of cases that followed it was stated as follows: ‘146. But these sentiments did not prevail in those cases. The majority judgment in Kirland held that the Court should not decide the validity of the decision because “the government respondents should have applied to set aside the approval, by way of formal 24 Oudekraal fn 17 above. 25 Ibid para 31. 26 MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd [2014] ZASCA 48; [2014] (5) BCLR 547 (CC); 2014 (3) SA 481(CC) paras 64-66, 68 and 87. 27 Merafong City Local Municipality v AngloGold Ashanti Limited [2016] ZACC 35; 2017 (2) BCLR 182 (CC); 2017 (2) SA 211 (CC) paras 40-42. 28 Department of Transport and Others v Tasima (Pty) Limited [2016] ZACC 39; 2017 (1) BCLR 1 (CC); 2017 (2) SA 622 (CC) paras 87-88, 121, 145-146. 29 Ibid paras 87-88 reads as follows: ‘The Supreme Court of Appeal’s reliance on Oudekraal here was mistaken. Nowhere does Oudekraal say that an administrative action performed in violation of the Constitution should be treated as valid until set aside. Much worse, that its unlawfulness does not matter as long as it is not set aside and that a delay in challenging it validates the action concerned. As mentioned, this proposition turns the supremacy of the Constitution principle on its head. On the contrary Oudekraal lays down a narrower principle that applies in specific circumstances only. That principle draws its force from the distinction between what exists in law and what exists in fact. An invalid administrative act that does not exist in law cannot itself have legal force and effect. Yet the act may still exist in fact, for example an administrative act performed without legal power. It exists in fact until set aside on review. However, since the act does not exist in law, it can have no binding effect.’ 20 counter application.” In the absence of that challenge – reactive or otherwise – the decision has legal consequences on the basis of its factual existence. One of the central benefits of this approach was said to be that requiring a counter-application would require the state organ to explain why it did not bring a timeous challenge. The same was required of the Municipality in Merafong.’30 [39] In conclusion, I therefore find that the high court was not empowered to allow the point of validity of the policy to be raised in the supplementary heads of argument for the first time. And to pronounce on the enforceability of the policy in the absence of a review application to set aside the decision. The high court was however correct in granting the interdict. ___________________________ R G TOLMAY ACTING JUDGE OF APPEAL 30 Ibid para 146. See also Magnificent Mile Trading 30 (Pty) Limited v Charmaine Celliers NO and Others [2019] ZACC 36; 2020 (1) BCLR 41 (CC); 2020 (4) SA 375 (CC) para 43. 21 Appearances For the appellant: J A Motepe SC with M S Manganye Instructed by: Mothle Jooma Sabdia Inc., Pretoria Symington De Kok, Bloemfontein For the respondent: A Vorster with J Stroebel Instructed by: Albert Hibbert Attorneys Inc., Pretoria Webbers Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 19 June 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 City of Tshwane Metropolitan Municipality v Glofurn (Pty) Ltd (136/2023) [2024] ZASCA 101 (19 June 2024) Today the Supreme Court of Appeal (SCA) has dismissed an appeal by the City of Tshwane Metropolitan Municipality against a Gauteng High Court decision in a dispute with Glofurn Pty Ltd over electricity accounts. The dispute arose after the City migrated Glofurn from a post-paid to a pre-paid system, leading to confusion over billing and payments. Key points: 1. The SCA majority judgment held that the dispute between the City and Glofurn remained unresolved, precluding the City from disconnecting Glofurn's electricity supply under the Local Government: Municipal Systems Act. 2. The SCA found no merit in the City's question of law regarding the enforceability of its Credit Control Policy, stating that the High Court's comments on this issue were obiter and not legally binding. 3. The SCA minority judgment agreed with the order but differed on the High Court's handling of the policy enforceability issue, stating that it should have been addressed through a separate review application. 4. The appeal was dismissed with costs, including the costs of two counsel where so employed.

4310

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 627/2023 In the matter between: THE PUBLIC PROTECTOR OF SOUTH AFRICA APPELLANT and THE CHAIRPERSON OF THE SECTION 194(1) COMMITTEE FIRST RESPONDENT KEVIN MILEHAM SECOND RESPONDENT THE SPEAKER OF THE NATIONAL ASSEMBLY THIRD RESPONDENT ALL POLITICAL PARTIES REPRESENTED IN THE NATIONAL ASSEMBLY FOURTH TO SEVENTEENTH RESPONDENTS Neutral citation: The Public Protector of South Africa v The Chairperson of the Section 194(1) Committee and Others (627/2023) [2024] ZASCA 131 (1 October 2024) Coram: PONNAN, NICHOLLS and MOTHLE JJA and MASIPA and DIPPENAAR AJJA Heard: 28 August 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website, 2 and release to SAFLII. The date for hand down is deemed to be 1 October 2024 at 11h00. Summary: Uniform rule 15 – applies to change of status not change of persona – finds no application in the high court after judgment or the supreme court of appeal at all. 3 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Allie, Cloete and Savage JJ, sitting as court of first instance): The appeal is struck from the roll with costs, including those of two counsel, to be paid by Ms Busisiwe Mkhwebane. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Ponnan JA (Nicholls and Mothle JJA and Masipa and Dippenaar AJJA concurring): [1] ‘Curiouser and curiouser!’, to borrow from Lewis Carroll, is how one may describe the matter.1 The appeal to this Court was initially brought in the name of ‘The Public Protector of South Africa’, even though the person whose interests it seeks to advance, the previous Public Protector, Ms Busisiwe Mkhwebane, had by that stage already been removed from office. What is more, the application, the subject of the appeal, which had commenced as an urgent application, had been brought in the middle of a process that has since been finalised, and was thereafter followed by no less than three further decisions – none of which have been challenged. [2] The litigation has a well-documented history. There are several judgments dealing with the matter.2 It is thus unnecessary to say much by way of introduction. A brief summary will accordingly suffice: In 2016, Ms Busisiwe Mkhwebane was appointed Public Protector of the Republic of South Africa. On 21 February 2020, Ms Natasha Mazzone, the Chief Whip of the then official opposition, the Democratic 1 ‘“Curiouser and curiouser!” Cried Alice (she was so much surprised, that for the moment she quite forgot how to speak good English).’ L Carroll Alice’s Adventures in Wonderland and Through the Looking-Glass (1998) at 16. 2 See inter alia Public Protector of SA v Speaker of the National Assembly and Others [2022] ZAWCHC 117; Speaker of the National Assembly v Public Protector and Others; Democratic Alliance v Public Protector and Others [2022] ZACC 1; 2022 (3) SA 1 (CC); 2022 (6) BCLR 744 (CC); and Public Protector of South Africa v Speaker of the National Assembly and Others [2022] ZAWCHC 180; [2022] 4 All SA 417 (WCC). 4 Alliance, submitted a motion to the National Assembly for an enquiry to be initiated under s 194(1) of the Constitution to investigate Ms Mkhwebane’s removal from office on the grounds of misconduct and incompetence.3 On 26 February 2020, the Speaker of the National Assembly accepted the motion and referred the matter to an independent panel for a preliminary assessment as contemplated in Rules 129T and 129U of the National Assembly (the Rules).4 [3] On 24 February 2021, the independent panel headed by retired Justice Nkabinde issued a report recommending that the complaints of incompetence and misconduct levelled against Ms Mkhwebane be referred to a committee in accordance with the Rules. On 16 March 2021, the National Assembly resolved to adopt the report of the independent panel and to proceed with an enquiry in terms of s 194 of the Constitution. The matter was thereafter referred to a Committee, comprising members of each of the 14 political parties represented in the National Assembly, for a formal enquiry in terms of Rules 129AA and 129AB.5 A veritable avalanche of legal challenges, primarily at the instance of Ms Mkhwebane, followed.6 3 Section 194(1) of the Constitution provides: ‘The Public Protector, the Auditor General or a member of a Commission established by this Chapter may be removed from office only on – (a) the ground of misconduct, incapacity or incompetence; (b) a finding to that effect by a committee of the National Assembly; and (c) the adoption by the Assembly of a resolution calling for that person's removal from office.’ 4 Those Rules of the National Assembly provide: ‘129T. Referral of motion When the motion is in order, the Speaker must – (a) immediately refer the motion, and any supporting documentation provided by the member, to an independent panel appointed by the Speaker for a preliminary assessment of the matter; and (b) inform the Assembly and the President of such referral without delay. . . . . 129U. Establishment The Speaker must, when required, establish an independent panel to conduct any preliminary inquiry on a motion initiated in a section 194 enquiry.’ 5 Those Rules provide: ‘129AA. Establishment There is a committee to consider motions initiated in terms of section 194 and referred to it. 129AB. Composition and appointment (1) The committee consists of the number of Assembly members that the Speaker may determine, subject to the provisions of Rule 154(2) Notwithstanding Rule 155(2), the members of the committee must be appointed as and when necessary.’ 6 See Public Protector of South Africa v Chairperson: Section 194(1) Committee and Others [2023] ZAWCHC 73; [2023] 2 All SA 818 (WCC) paras 13-25. 5 [4] This appeal arises from an application that was launched on 7 November 2022, out of the Western Cape Division of the High Court, Cape Town. Ms Mkhwebane, who deposed to the founding affidavit in the application, stated: ‘1. I am the Public Protector of South Africa duly appointed as such in terms of Section 1A(2) of the Public Protector Act 23 of 1994 (“the Public Protector Act”) by the President of the Republic of South Africa. . . . 3. I am the applicant in this matter.’ [5] The application cited: (a) the first respondent, Mr Qubudile Richard Dyantyi, in his official capacity as the Chairperson of the s 194(1) Committee and ‘in his personal capacity as the decision-maker in respect of his personal non-recusal decision;’ (b) the second respondent, Mr Kevin Mileham, as a member of the National Assembly representing the Democratic Alliance and ‘in his personal capacity as an officer or member of the Committee’; (c) the Speaker of the National Assembly, in her official capacity as such; and, (d) the fourth to seventeenth respondents, against whom no relief was sought, being the political parties represented in the National Assembly and the Committee, who were cited insofar as they may have an interest in the outcome of the application. [6] The following relief was sought: ‘2. Declaring the first and/or second respondents’ decision(s): 2.1 to dismiss the recusal application(s) of the applicant taken on 17 October 2022; 2.2 taken on 27 October 2022, to dismiss the adjournment application and/or to continue with its proceedings as presently constituted, to be unlawful, invalid and/or unconstitutional; and/or 2.3 taken and/or confirmed on or before 17 October 2022, to refuse and/or omit to summon, subpoena and/or recall relevant witnesses to testify at the enquiry. 3. Setting aside the said decision/s referred to in prayer 2 above. 4. Substituting the said decision/s with the following: 4.1 that the first respondent is hereby recused and/or removed from his office as Chairperson of the section 194(1) Committee; and/or 4.2 that Mr Kevin Mileham is hereby recused and/or removed from his membership of the section 194(1) Committee; and/or 6 4.3 relevant witnesses to be subpoenaed and/or recalled to testify; and/or 4.4 that the Committee proceedings will only take place after its composition has been duly corrected and/or confirmed by this Honourable Court. 5. Granting any further, appropriate, just and/or equitable remedies in terms of section 8 of PAJA, section 38 and/or section 172(1)(b) of the Constitution. 6. Costs against any opposing respondents on the punitive scale.’ [7] The application was opposed by: (a) the first respondent on behalf of the s 194 Committee and on his own behalf; (b) the second respondent in respect of the relief sought against him; and, (c) the fifth respondent, the Democratic Alliance. On 13 May 2023, the application failed before a specially constituted court consisting of three judges (per Allie, Cloete and Savage JJ), sitting as a court of first instance (the high court). [8] The high court concluded: ‘[50] . . . on the basis of in medias res, that it would not be appropriate for this Court to permit a piecemeal review of proceedings. With no exceptional circumstances demonstrated, the balance of convenience favours a decision to dismiss the application brought by the applicant. . . . [58] It is also not necessary, given our finding that the applicant has sought relief in media res, to determine the test for bias in proceedings before the Committee established under section 194(1) or whether a case for bias has been made out against either the Chairperson or Mr Mileham; or whether the issues complained of by the applicant concerning inter alia the widening of the scope of the enquiry and the violation of her right to audi alteram partem have merit.’ The high court accordingly dismissed the application ‘with costs, including the costs of three counsel for the first respondent where so employed, as well as the costs of counsel for the second respondent and [the] Democratic Alliance as one of the fifth respondents.’ 7 [9] On 3 May 2023, what was described as a ‘Notice of Application for an Urgent Appeal’ was filed with the high court. The respondents sought leave to cross-appeal the issue of costs. On 1 June 2023, the high court issued the following order: ‘1. That the applicant’s application for leave to appeal to the Supreme Court of Appeal is granted. 2. That the first respondent’s conditional application for leave to cross-appeal to the Supreme Court of Appeal is granted. 3. That the conditional applications for leave to cross-appeal by the second and fifth respondents to the Supreme Court of Appeal are granted; and 4. That the costs shall be costs in the appeal.’ It came to be accepted in this Court that the cross appeal need not detain us, accordingly nothing further need be said about it. [10] After the grant of leave to appeal, the Committee, having completed its task, recommended that Ms Mkhwebane be removed from office.7 The National Assembly adopted that resolution with the support of more than two thirds of its members on 11 September 2023. The President removed Ms Mkhwebane from the position of Public Protector in terms of s 194(3)(b) of the Constitution on 13 September 2023. Ms Kholeka Gcaleka was thereafter appointed as her successor by the President for a non-renewable term of seven years with effect from 1 November 2023. [11] On 8 February 2024, the attorney representing the Democratic Alliance, the fifth respondent in the appeal, Minde, Schapiro & Smith, wrote to the Office of the Public Protector: ‘9. . . . we have reason to believe that the appeal is being prosecuted personally by Adv Mkhwebane, and not by the Public Protector of South Africa. 10. We wish to inquire whether you are aware of this appeal, and whether you have instructed RMT Attorneys to prosecute the appeal on behalf of the Public Protector.’ [12] That letter elicited the following response from the Senior Manager: Legal Services on 28 February 2024: 7 The Committee’s report is available at https://www.parliament.gov.za/committee-section-194-enquiry. [Accessed on 13 September 2024] 8 ‘3. The attorneys who represented Adv Mkhwebane in the impeachment proceedings before the Committee for the Section 194 Enquiry, were expressly advised that the PPSA was not in a position to authorise, commit funding to or mandate any litigation in respect of Adv Mkhwebane’s application for the recusal of the Chairperson and one member of the Section 194 Committee. 4. Furthermore, I wish to confirm that neither Adv Kholeka Gcaleka in her capacity as the current incumbent of the office of Public Protector, nor the PPSA has authorised or instructed RMT Attorneys to prosecute the appeal in SCA Appeal Case No: 627/2023 on behalf of the Public Protector.’ [13] On 5 March 2024, Minde, Schapiro & Smith served a notice in terms of Supreme Court of Appeal Rule 5 (rule 5),8 disputing the authority of Ramushu Mashile Twala Attorneys (the attorney) to act on behalf of the appellant and requesting that ‘they lodge with the Registrar a copy of a power of attorney duly signed by or on behalf of the Public Protector of South Africa, that they are duly authorised to act on behalf of the appellant in the prosecution of this appeal’. [14] In response, on 8 March 2024, the attorney filed a ‘Notice of Application for Substitution as Appellant’. The notice described ‘Busisiwe Mkhwebane’ as the ‘Applicant/Appellant’. It read: ‘TAKE NOTICE THAT the abovementioned Applicant/Appellant due to her change of status, hereby applies to be substituted as the appellant for the Public Protector in the pending appeal, in terms of Rule 15 of the Uniform Rules of Court, applied mutatis mutandis herein.’ 8 SCA rule 5 headed ‘Power of attorney’, reads: ‘When required (1) A power of attorney need not be filed, but the authority of a legal practitioner to act on behalf of any party may, within 10 days after it has come to the notice of any other party that the legal practitioner is so acting, or with the leave of the Court on good cause shown at any time before judgment, be disputed by notice, whereafter upon expiry of 10 days after service of the notice the legal practitioner shall no longer so act, unless a power of attorney is lodged with the registrar within that period. Format (2) Every power of attorney shall be signed by or on behalf of the party giving it, and shall otherwise be executed according to law. Exemptions (3) No power of attorney shall be required to be filed by – (a) the National Prosecuting Authority; (b) a legal practitioner acting pro deo or amicus curiae; or (c) the State Attorney, any deputy state attorney or any professional assistant to the State Attorney, or any attorney instructed in writing or by telegram or facsimile by or on behalf of the State Attorney or a deputy state attorney in any matter in which the State Attorney or deputy state attorney is acting as such by virtue of any statute.’ 9 [15] The type of authority contemplated by rule 5 is not in the nature of a general authority by one person to another to represent him or her in legal proceedings, but the special type of power that is given by a client to an attorney authorising such attorney to institute or defend legal proceedings on the client’s behalf.9 It is the power to take certain formal procedural steps on behalf of a litigant. It is the institution and prosecution of the proceedings (in this case the appeal) that must be authorised.10 If the attorney is authorised to act, the proceedings are necessarily those of the client. In reference to the comparable High Court provision, Uniform rule 7, Fleming DJP said ‘As to when and how the attorney’s authority should be proved, the Rule-maker made a policy decision. Perhaps because the risk is minimal that an attorney will act for a person without authority to do so, proof is dispensed with except only if the other party challenges the authority’.11 [16] Rule 5 is a means of achieving production of a power of attorney in order to establish the authority of an attorney to act for the client. It may be called for simply by notice. The object of the rule is to clearly establish the mandate between the client and attorney, in order to prevent the person who is cited as a party and whose name appears on the documents lodged with the registrar of the court from denying their validity or the authority of the attorney concerned. Where an attorney’s authority to act on behalf of a party is challenged, then in terms of rule 5, the attorney is required to satisfy the Court that he or she is properly authorised so to act. Until that is done, such attorney is precluded from acting further.12 When challenged, the attorney was unable to produce a power of attorney, but sought to meet the challenge with a notice of substitution in terms of Uniform rule 15 (to which I shall presently turn). However, that was no answer to the challenge. It must accordingly be accepted that the institution of, and the steps taken by the attorney to prosecute the appeal were not duly authorised; certainly not by the Public Protector of South Africa, in whose name and on whose behalf the attorney purported to act. 9 South African Allied Workers’ Union and Others v De Klerk NO and Others 1990 (3) SA 425 (E). 10 Ganes and Another v Telecom Namibia Ltd 2004 (3) SA 615 (SCA) at para 19 (Ganes). 11 Eskom v Soweto City Council 1992 (2) SA 703 (W) at 705G-H, which has been referred to with approval in Ganes fn 10 above and Unlawful Occupiers of the School Site v City of Johannesburg 2005 (4) SA 199 (SCA) paras 14–16. The relevant authorities are usefully collected in the Full Court judgment per Gorven J (Tshabalala JP and Swain J concurring) in the matter of Umvoti Municipality v ANC Umvoti Council Caucus and Others 2010 (3) SA 31 (KZP). 12 First Rand Bank Ltd v Fillis and Another [2010] ZAECPEHC 50; 2010 (6) SA 565 (ECP) para 12. 10 [17] The import and purport of Uniform rule 15 has most recently been considered by this Court in Tecmed v Nissho Iwai Corporation, where Brand JA had this to say: ‘In considering the approach of the court a quo, sight should not be lost of the import of Rule 15. The purpose of the Rule was not to afford the High Court the power to substitute a party to proceedings. The High Court already had that inherent power under the common law (see eg Curtis-Setchell & McKie v Koeppen 1948 (3) SA 1017 (W) at 1021; Putzier v Union and South West Africa Insurance Co Ltd 1976 (4) SA 392 (A) at 402E-F). The court still has that power to grant a substitution of parties on substantive application where Rule 15 does not apply (see eg Waikiwi Shipping Co Ltd v Thomas Barlow & Sons (Natal) Ltd 1978 (1) SA 671 (A) at 678G; Devonia Shipping Ltd v MV Luis (Yeoman Shipping Co Ltd intervening) 1994 (2) SA 363 (C) at 369F-370B). The purpose of Rule 15 is merely to provide a simplified form of substitution, subject to the right of any affected party to apply to court for relief in terms of Rule 15(4) (see eg LTC Harms Civil Procedure in the Supreme Court B-1 to 5; HJ Erasmus Superior Court Practice B1-118). In the absence of any substantive application for substitution the effectiveness of a Rule 15 notice will obviously depend on whether it was given in a situation covered by the rule. But where, as in this case, a substantive application for substitution had in fact been brought, any investigation into the effectiveness of a preceding Rule 15 notice is most likely to result in a futile exercise. If the substantive application is upheld, the substitution will materialise. Caedit questio. If, on the other hand, the application is dismissed on its merits, the situation cannot be saved by a notice under Rule 15.’13 [18] Prior to the introduction of Uniform rule 15, when a party died or otherwise underwent a change of status, an application to court was necessary to substitute some other person in the stead of such party. Importantly, without the substitution, the matter cannot proceed, because there is no one with standing before the court.14 The rule regulates the procedure only where substitution becomes necessary by reason of a change of status.15 If a substitution is necessitated by other factors that do not involve a change of status, it can be granted on application if there is no substantial procedural prejudice to the other party.16 If no change of status is involved, the court 13 Tecmed (Pty) Limited and Others v Nissho Iwai Corporation and Another [2009] ZASCA 143; [2010] 3 All SA 36 (SCA); 2011 (1) SA 35 (SCA) paras 12-13 (Tecmed). 14 Estate Huisman and Others v Visser and Others 1967 (1) SA 470 (T). 15 D E van Loggerenberg & E Bertelsmann Erasmus: The Superior Courts Practice at D1-159 (Erasmus). 16 D Harms Civil Procedure in the Superior Courts Service Issue 46 at B15.1-B15.2 (Harms); Curtis-Setchwell & McKie v Koeppen 1948 (3) SA 1017 (W) (Curtis-Setchwell); Friedman v Woolfson 1970 (3) 11 will, under its common law power, grant an application for substitution involving the introduction of a new persona on being satisfied that no prejudice will be caused to the other party.17 [19] In Curtis-Setchell v McKie & Koeppen, the court was concerned with an application for the substitution of the applicants as plaintiffs in a pending action instituted against the defendant by a partnership consisting of two partners.18 After the issue of summons, the partnership was dissolved and a new partnership (being the applicant in those proceedings) was formed, which took over all book and other debts due to the old one. Roper J referred to a number of cases including several in which the court had granted applications for substitution involving the introduction of a new persona on being satisfied that no prejudice would be caused to the opposite parties. The learned judge concluded ‘. . . the Court is entitled to allow the substitution applied for in this case, but only on condition that no prejudice can result to the defendant’.19 [20] In Kader v Frank and Warshaw, the respondent was a firm of attorneys who had conducted a case pro deo for a plaintiff in a magistrate’s court for damages, and on the day when judgment was given for the plaintiff, took cession from him of his rights and interest in the judgment and taxed costs. Two days later, the defendant noted an appeal and the respondent procured a cancellation of the cession. The court had granted the plaintiff leave to defend the appeal in forma pauperis and the defendant, after the noting of the appeal, moved for the substitution of the name of the respondent for the name of the plaintiff in the appeal proceedings. The application was refused on grounds that are not presently relevant. In the course of his judgment, Innes CJ said: ‘This procedure of approaching the Court in order to obtain its assistance for the enforcement of a ceded judgment seems to have been adopted in South African practice and to have taken the form of an application to substitute the cessionary’s name for that of the cedent upon the record . . . And of that practice Frank and Warshaw might have availed themselves. Or they might have obviated the execution of the judgment in ordinary form and then claimed the SA 521 (D) (Friedman); Mwandingi v Minister of Defence Namibia 1991 (1) SA 851 at 864–86 confirmed on appeal in Minister of Defence Namibia v Mwandingi 1992 (2) SA 355 at 368; Tecmed fn 13 above. 17 Erasmus fn 15 above D1-160. 18 Curtis-Setchell fn 16 above. 19 Ibid at 1022. 12 proceeds from the Sheriff. It does not follow, however, that after notice of appeal they could have claimed to be substituted upon the record for the purpose of defending the appeal; at any rate without the consent of the other party.’20 [21] The approach of Roper J found favour with Leon J in Friedman v Woolfson. There, in the course of considering the power of a court to grant an order substituting a plaintiff even where no change of status was involved but a totally new plaintiff, and after referring to the dictum of Innes CJ in Kader’s case, supra, Leon J stated: ‘In my judgment it is not correct to say that as a matter of law there cannot be a substitution without the consent of the other party. I consider the true position to be that a cessionary is entitled to bring an application for substitution even without such consent but, if in a particular case there is prejudice to the other side, then the application will be refused.’21 The view of Leon J was endorsed by Jansen JA in Waikiwi Shipping Co Ltd v Thomas Barlow and Sons (Natal) Ltd in these terms: ‘[t]his is a matter apparently within the discretion of the court and the court will refuse the substitution if there is any prejudice to the other side (Friedman v Woolfson)’.22 [22] On the strength of Kader’s case: Harms observes that ‘it is doubtful whether the rule applies to a situation after the grant of judgment and an application to court may be necessary where it is desired to substitute a party after judgment has been given’;23 and, Erasmus states: ‘[i]n view of the proviso to [subrule (2)], application to court will be necessary where it is desired to substitute a party after judgment is given’.24 Indeed, support for such a view is to be found in the judgment of Fourie AJA in Cilliers v Ellis: ‘. . . notice of the substitution of Mrs Cilliers in her personal capacity as the second appellant by the executrix of her deceased estate, was given in terms of rule 15. In so doing, the first proviso to rule 15(2) was overlooked, which states that, save with the leave of the court granted on such terms as to it may seem meet, no such notice shall be given after the commencement of the hearing of any opposed matter. The leave of the court a quo, or the leave of this court, was not sought prior to the filing of this notice in terms of rule 15 . . . absent an application to court for the substitution of the executrix of the deceased estate of Mrs Cilliers, the purported 20 Kader v Frank and Warshaw 1926 AD 344 at 347-348. 21 Friedman fn 16 above at 525H. 22 Waikiwi Shipping Co Ltd v Thomas Barlow and Sons (Natal) Ltd 1978 (1) SA 671 (A) at 678G. 23 Harms fn 16 above B15.1. 24 Erasmus fn 15 above D1-160. 13 substitution is irregular and the executrix has no locus standi to participate in this appeal. It follows therefore that there is simply no appellant herein with the necessary locus standi to pursue the appeal.’25 [23] The effect of the above authorities is that Ms Mkhwebane could not by dint of a mere notice under Uniform rule 15, without more, achieve the desired substitution. This for at least two reasons: first, because the rule finds application only where a change of status has occurred and not, as here, where, what is sought to be achieved is a change of persona; and, second, as the proviso to ss 2 makes plain, no notice of substitution may be given after the commencement of the hearing of any opposed matter. If no notice of substitution may be given in terms of Uniform rule 15 after the hearing of any opposed motion in the high court, it would stand to reason that it can hardly thereafter be given in this Court. There is thus much to be said for the proposition that Uniform rule 15 does not apply at all, whether in the high court or this Court, after the grant of judgment by the former; leading to the conclusion that ‘Rule 15 of the Uniform Rules of Court, [does not apply] mutatis mutandis herein’, as appears to have been erroneously assumed in the notice of substitution filed on behalf of Ms Mkhwebane with this Court. [24] Reference was made to three judgments of this Court, namely Adendorffs Boerderye v Shabalala & others,26 Mgwenya NO and Others v Kruger and Another27 and Marais NO and Another v Maposa and Others,28 in support of the argument that Uniform rule 15 finds application in a situation such as the present. In each, the approach of the Court appeared to rest on the supposition that Uniform rule 15 applied. None undertook any considered analysis, accepting en passant, so it would seem, that Uniform rule 15 applied. In any event, the last two of the three judgments appear to contemplate, in each instance, a substantive application and not, as in this matter, the mere filing of a notice. I believe that it now has to be accepted that Uniform rule 15 finds no application in this Court. Such acceptance would on the present state of the law and the jurisprudence of this Court create certainty and accordingly be in the best interests of litigating parties. 25 Cilliers & others v Ellis & another [2017] ZASCA 13 para 25. 26 Adendorffs Boerderye v Shabalala & others [2017] ZASCA 37. 27 Mgwenya NO and Others v Kruger and Another [2017] ZASCA 102. 28 Marais NO and Another v Maposa and Others [2020] ZASCA 23; 2020 (5) SA 111 (SCA). 14 [25] This does not mean that Ms Mkhwebane or other similarly placed litigants would be left remediless. This Court retains the power to grant an application for substitution on being satisfied that no prejudice will be caused to the other party. All that this means is that the simplified form of substitution envisaged by Uniform rule 15 does not avail them. A substantive application would thus be necessary. In argument at the bar, it was suggested that the ‘Notice of Application for Substitution as Appellant’ filed on behalf of Ms Mkhwebane fell to be treated as a substantive application as contemplated in the authorities alluded to. The short response is that it is not. Although the notice does state that she ‘hereby applies to be substituted as the appellant for the Public Protector in the pending appeal’, it departs from the erroneous premise that Uniform rule 15 applies ‘mutatis mutandis’ ‘due to her change of status’. It must be said that there was simply no attempt at any stage of the argument to move an application from the bar. Rather, Counsel’s entire approach was predicated on the assumption that the notice had achieved the necessary substitution and that Ms Mkhwebane was properly before us as the appellant in the matter. [26] Moreover, the notice was not accompanied by an affidavit. We are thus in the dark as to when it first dawned on Ms Mkhwebane, given what she describes as her ‘change of status’, that a substitution was indeed necessary and what steps, if any, were subsequently taken. The stance adopted by the respondents throughout had always been that Ms Mkhwebane was improperly using the cloak of her office to advance her personal interests (and not those of the Office of the Public Protector) in the litigation. They went so far as to suggest that in those circumstances any order for costs as may issue should operate as against her personally and not the public purse. Indeed, the judgment of the high court on the application for leave to appeal records: ‘[5] It is however necessary to deal with one of the grounds advanced by the first respondent, formulated as follows in his notice of application for leave to appeal: “3. It was common cause that the President suspended Adv Mkhwebane as the Public Protector before she instituted these proceedings. Accordingly, the powers of the Public Protector, including the power to institute litigation in the name of the office – had already vested in the Acting Public Protector, in terms of section 2A(7) of the Public Protector Act, 1994. 15 4. Adv Mkhwebane does not allege that the Acting Public Protector, or a duly delegated person in the Office of the Public Protector, authorised the institution of this application on behalf of the institution of the Public Protector.” . . . .’ [27] That notwithstanding, the high court granted leave to appeal to this Court. In that, it passed over the question and seemed not to be attuned to the true import and effect of an appeal at the instance of Ms Mkhwebane, in circumstances where leave had been granted, not to her, but the Public Protector of South Africa. The high court did not pause to consider what effect, if any, Ms Mkhwebane’s removal from office would have on the continued litigation in the name of the Public Protector of South Africa or for that matter whether the application for leave to appeal that served before it had been duly authorised by that office. When the point was raised on behalf of the respondents, it also ought to have focused the attention of Ms Mkhwebane’s legal representatives on their continued authority to act in the matter. That did not happen. [28] What is more, nothing was done to address the issue, until the authority of the attorney to act in the appeal was challenged by the respondents in March 2024. By then several steps had been taken in this Court with a view to the prosecution of the appeal, including: (a) the noting of the appeal – the notice of appeal having been filed on 27 June 2023; (b) the filing of the appeal record on 6 November 2023; and, the filing of Heads of Argument on 13 December 2023. All of these steps were taken in the name of ‘The Public Protector of South Africa’, who had been cited as the appellant in the matter. But the Public Protector did not validly authorise the taking of any of these steps. When Ms Mkhwebane and her legal representatives did eventually act it was by means of the simple expedient of a Uniform rule 15 notice, which came to be filed on 8 March 2024, some three days after the authority of the attorney had been challenged by the respondents. This occurred approximately ten months after leave had been granted, when, by that stage at the very latest, it should have been obvious that steps had to be taken to address the question of Ms Mkhwebane’s standing in the appeal and her attorney’s authority to act in the matter. 16 [29] That the challenge to the attorney’s authority served as the trigger for the filing of the Uniform rule 15 notice, is inescapable. The dilatoriness and inertia otherwise remain unexplained. This, in circumstances where not only is Ms Mkhwebane, in her own right, an Advocate and officer of the court, as also the former head of an important Chapter 9 Institution, but who was represented at all material times by a firm of attorneys and a team of three Advocates including Senior Counsel. On any reckoning therefore, Ms Mkhwebane is certainly not ‘an indigent or bewildered litigant, adrift on a sea of litigious uncertainty, to whom the courts must extend a procedure-circumventing lifeline’; there may well be a ‘higher duty on [her] to respect the law’ and ‘to fulfil the procedural requirements’.29 [30] There is yet a further reason why the envisaged appeal does not get out of the starting stalls. It is this: even if the appeal succeeds on the in media res point, and even if this Court concludes that the Chairperson and/or Mr Mileham acted illegally, the determination of the appeal will have no practical effect within the meaning of s 16(2)(a)(i) of the Superior Courts Act 10 of 2013 (Superior Courts Act).30 That section ‘is a reformulation of principles previously adopted in our Courts in relation to appeals involving what were called abstract, academic or hypothetical questions. The principle is one of long standing’.31 In that regard, it is trite that courts should and ought not to decide issues of academic interest only.32 [31] It is so that the lack of practical effect or mootness is not an absolute bar to the determination of issues on appeal,33 and that this Court can consider cases that present no existing or live controversy if the interests of justice so require. That will ordinarily be so where the appeal raises a discrete legal issue of public importance 29 MEC for Health, Eastern Cape v Kirland Investments (Pty) Ltd [2014] ZACC 6; 2014 (5) BCLR 547 (CC); 2014 (3) SA 481 (CC) (Kirland). 30 Section 16(2)(a)(i) of the Superior Courts Act 10 of 2013 provides: ‘[w]hen 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’. 31 Legal Aid South Africa v Magidiwana and Others [2014] ZASCA 141; 2015 (2) SA 568 (SCA); [2014] 4 All SA 570 (SCA) para 3, quoting and applying Coin Security Group (Pty) Ltd v SA National Union for Security Officers and Others 2001 (2) SA 872 (SCA) para 7, which referred to the predecessor of s 16(2)(a)(i), s 21A of the Supreme Court Act 59 of 1959. See also Premier, Provinsie Mpumalanga, en 'n Ander v Groblersdalse Stadsraad 1998 (2) SA 1136 (SCA). 32 Clear Enterprises (Pty) Ltd v Commissioner for South African Revenue Services and Others [2011] ZASCA 164 para 12. 33 Spagni v The Director of Public Prosecutions, Western Cape and Others [2023] ZASCA 24 para 12 (Spagni). 17 that would affect matters in the future.34 However, it remains a ‘prerequisite for the exercise of the discretion that any order the court may ultimately make will have some practical effect either on the parties or on others’.35 [32] It is well settled that: ‘ . . . Courts of Law exist for the settlement of concrete controversies and actual infringements of rights, not to pronounce upon abstract questions, or to advise upon differing contentions, however important’ (per Innes CJ in Geldenhuys & Neethling v Beuthin).36 Some eight decades later, the Constitutional Court echoed what had been said by the learned Chief Justice in these terms: ‘A case is moot and therefore not justiciable if it no longer presents an existing or live controversy which should exist if the Court is to avoid giving advisory opinions on abstract propositions of law.’37 [33] In this matter, there is no challenge to: (a) the recommendation of the Committee that Ms Mkhwebane be removed from office; (b) the resolution of the National Assembly adopting that recommendation; (c) the exercise of the Presidential power to remove Ms Mkhwebane from office; or (d) the exercise of the Presidential power to appoint Ms Gcaleka as Ms Mkhwebane’s successor. Those decisions remain valid unless and until set aside by a court.38 Absent a challenge to those decisions, no order of this Court could disturb their validity. As the Constitutional Court put it in MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd, ‘official conduct that is vulnerable to challenge may have legal consequences and may not be ignored until properly set aside’.39 34 Centre for Child Law v The Governing Body of Hoërskool Fochville & Another [2015] ZASCA 155; [2015] 4 All SA 571 (SCA); 2016 (2) SA 121 (SCA) para 11. 35 Minister of Justice and Correctional Services and Others v Estate Late James Stransham-Ford and Others [2016] ZASCA 197; [2017] 1 All SA 354 (SCA); 2017 (3) BCLR 364 (SCA); 2017 (3) SA 152 (SCA) para 22 (Stransham-Ford). 36 Geldenhuys & Neethling v Beuthin 1918 AD 426 at 441. 37 In National Coalition for Gay and Lesbian Equality & others v Minister of Home Affairs & others 2000 (2) SA 1 (CC) para 21 fn 8. 38 Oudekraal Estates (Pty) Ltd v City of Cape Town and Others [2004] ZASCA 48; [2004] 3 All SA 1 (SCA). 39 Kirland fn 29 above para 103. 18 [34] Not having challenged her removal as Public Protector (or even attempted to do so), the recommendations and resolutions culminating in her removal thus stand. Despite her challenge before the high court having long been overtaken by these events, Ms Mkhwebane seeks to persist in the appeal. She urges this Court to enquire into the legality of three interlocutory rulings, made during the enquiry by the s 194 Committee and she asks for those rulings to be set aside and substituted. But the enquiry is over, the National Assembly has impeached her, she has been removed from office and a new Public Protector has been appointed. Further, in terms of s 183 of the Constitution, Ms Mkhwebane’s non-renewable seven-year term has run its course. There can hardly be a challenge to any of those decisions now, given that her fixed term of office would in any event have ended in mid-October 2023, had she not been removed. Restoration to office is thus constitutionally and factually impossible. In the circumstances, no public benefit can come from a judicial pronouncement on the regularity of the s 194 Committee’s rulings. [35] Thus, whatever this Court decides, it plainly will have no practical effect within the meaning of s 16(2)(a)(i) of the Superior Courts Act. Is it nevertheless in the interests of justice to decide the appeal? Plainly not. The matter presents no discrete legal issue. The only question on which the high court decided the case was on the in media res point. That is not a discrete legal issue entirely divorced from the ‘factual matrix’.40 The remaining issues are intimately connected to the facts and raise no discrete legal issue. Even were we inclined to decide those issues, we would be sitting as a court of first – and possibly last – instance, which cannot be in the interests of justice.41 In R v Secretary of State for the Home Department, Ex Part Salem, Lord Slynn of Hadley said: ‘The discretion to hear disputes, even in the area of public law, must, however, be exercised with caution and appeals which are academic between the parties should not be heard unless there is a good reason in the public interest for doing so, as for example (but only by way of example) when a discrete point of statutory construction arises which does not involve detailed 40 Spagni fn 27 above para 12; The Kenmont School and Another v D M and Others [2013] ZASCA 79 para 12. 41 Bruce and Another v Fleecytex Johannesburg CC and Others [1998] ZACC 3; 1998 (2) SA 1143 (CC); 1998 (4) BCLR 415 (CC) para 8. 19 consideration of facts and where a large number of similar cases exist or are anticipated so that the issue will most likely need to be resolved in the near future.’42 [36] Ms Mkhwebane’s counsel accepted in argument that the relief sought in paragraph 4 of the notice of motion has been rendered moot. The same, he argued, does not hold true for paragraphs 2 and 3 of the notice of motion. Why that would be so, is hard to fathom. The substitutory relief sought in paragraph 4 is inextricably linked to, and flows from, the relief sought in the preceding paragraphs. However, even standing on its own, paragraph 2 of the notice of motion conduces to confusion. The declaratory relief sought in paragraphs 2.1 and 2.3 is formless, incomplete and incoherent. Inchoate and impermissibly vague orders violate the rule of law, which is a founding principle of our Constitution.43 Unlike paragraphs 2.1 and 2.2, it is only in paragraph 2.2 that a declaration of unlawfulness and unconstitutionality is sought. As the substitutory relief is no longer being persisted in, the relief now sought is a declaration, without more, that the decisions by the Committee to dismiss an application for an adjournment and to continue with the proceedings are unlawful and unconstitutional. [37] In West Coast Rock Lobster Association v Minister of Environmental Affairs and Tourism, Navsa JA pointed out: ‘It is true that this court said more than four decades ago, in Ex parte Nell 1963 (1) SA 754 (A), that the absence of an existing dispute was not an absolute bar to the grant of a declaratory order. 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 42 R v Secretary of State for the Home Department, Ex Parte Salem [1999] 2 All ER 42 (HL) at 47d-f. Cited in Port Elizabeth Municipality v Smit 2002 (4) SA 241 (SCA) para 7; Rand Water Board v Rotek Industries (Pty) Limited 2003 (4) SA 58 (SCA) para 20 and Executive Officer: Financial Services Board v Dynamic Wealth Ltd and Others [2011] ZASCA 193; 2012 (1) SA 453 (SCA); [2012] 1 All SA 135 (SCA) para 44. 43 Minister of Water and Environmental Affairs v Kloof Conservancy [2015] ZASCA 177; [2016] 1 All SA 676 (SCA) para 14. 20 declaratory order and it is held on appeal that that decision is wrong the matter will usually be remitted to the lower court.’44 [38] Here, remittal to the high court would be pointless. All of the decisions sought to be impugned were taken in October 2022. Thereafter, the proceedings continued to finality before the Committee. Having completed its work, the Committee made a recommendation that has since been acted upon. Two consequences flow from the fact that the Committee has ceased to exist: (a) the decisions taken in October 2022 can obviously not be reconsidered by it, so any contemplated further remittal by the high court (were it to be so inclined) to the Committee would be pointless; and (b) there is no interested party upon whom any declaratory order would be binding. [39] A further string to counsel’s bow was that we were obliged in terms of s 172(1)(a) of the Constitution to declare invalid the conduct complained of (which came to be described as egregious violations of Ms Mkhwebane’s constitutional rights). Accordingly, so the argument went, technicalities should not be allowed to stand in the way of her vindicating her constitutional rights. Importantly, however, there is no mention of s 172(1)(a) of the Constitution in the notice of motion. However difficult, a litigant is required to set her course and proceed accordingly. A court and the other parties to the litigation are entitled to assume that the relief asked for is the relief wanted. In that regard, it bears emphasis that it is not the function of this Court to act in an advisory capacity. [40] To borrow from Kriegler J in Ferreira v Levin: ‘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 44 West Coast Rock Lobster Association and Others v Minister of Environmental Affairs and Tourism and Others [2010] ZASCA 114; [2011] All SA 487 (SCA) para 45. 21 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.’45 [41] There remains a question of some delicacy – the necessity to say something about the manner in which the matter was conducted. None of the points that have been held to be decisive against Ms Mkhwebane were even alluded to, much less dealt with, in the heads of argument filed with this Court, despite the fact that Ms Mkhwebane’s standing to prosecute the appeal and the issue of mootness had already been raised on behalf of the respondents before the high court. One would have expected the heads to address whether the appeal was properly before us, inasmuch as: (a) the attorney, who had taken steps in the prosecution of the appeal, had not been validly authorised by the cited appellant, the Public Protector of South Africa; and, (b) there was no proper appellant, whether in the guise of the Public Protector of South Africa or in the person of Ms Mkhwebane, before the Court to prosecute the appeal. Those issues were ignored. So too, the claim by the respondents that the appeal was moot. [42] In the circumstances, the registrar of this Court was requested on 12 June 2024 to inform the parties that counsel will be required at the hearing of the matter to address whether, after the grant of leave to appeal by the high court and after the filing of the notice of appeal in this Court, Ms Mkhwebane could, by notice under Uniform rule 15, be substituted for the Public Protector, as the appellant in the pending appeal. If so, counsel for Ms Mkhwebane would be required to address whether the decision sought by her on appeal will have any practical effect or result within the meaning of s 16(2)(a)(i) of the Superior Courts Act. [43] However, despite having been forewarned, counsel for Ms Mkhwebane, who seemed not to be sufficiently well-versed with the relevant authorities, was of little to no assistance to the Court. Long before the notice of appeal was filed with this Court, there ought to have been an objective analysis of the case with a proper focus on the legal and procedural issues that would occupy our attention at the hearing of the 45 Ferreira v Levin NO & others; Vryenhoek v Powell NO & others 1996 (1) SA 984 (CC) para 199. 22 matter. To understand the decision-making process, those who practice in this Court are expected to have more than just a nodding acquaintance with the relevant rules, as also the established jurisprudence of this Court. Developed skills in legal research, analysis and writing are an indispensable part of an appellate practitioner’s toolkit. Conclusionally assertions that a lower court disregarded the law or turned a blind eye to egregious violations of a litigant’s rights, can hardly carry the day. [44] Where, as here, counsel has been involved in many matters involving the same client, they can easily become convinced of the merits of their client’s cause, oftentimes to the detriment of the client. Unless the matter is approached from a detached perspective, a legal representative may well develop tunnel vision, thereby losing all objectivity. Had counsel stepped back apace or had Ms Mkwebane taken advice from a disinterested member of the bar, schooled in appellate practice, she would have been advised not to pursue this appeal, which self-evidently was dead on arrival. We cannot conceive that any reasonable legal practitioner could disagree with this appraisal. [45] As the Court of Appeal of California (Fourth District, Division Three) pointed out: ‘Appellate work is most assuredly not the recycling of trial level points and authorities . . . the orientation of trial work and appellate work is obviously different . . . but that is only the beginning of the differences that come immediately to mind. For better or worse, appellate briefs receive greater scrutiny than trial level points . . . The judges . . . will . . . be able to study the attorney’s “work product” more closely . . . to . . . identify errors in counsel’s reasoning, misstatements of law and miscitations of authority, and to do original research to uncover ideas and authorities that counsel may have missed, or decided not to bring to the court’s attention. . . . [A]ppellate practice entails rigorous original work in its own right. The [lawyer] who takes trial level points and authorities and, without reconsideration or additional research, merely shovels them into an appellate brief, is producing a substandard product.’46 46 In re Marriage of Shaban (2001) 88 Cal. App. 4th 398. 23 [46] In his address, on 6 June 2000, to the Advocates’ Society Spring Symposium entitled the ‘Role of the Courts and Counsel In Justice’, the then Chief Justice of Ontario, The Honourable R Roy McMurty had this to say: ‘Lawyers are not solely professional advocates or “hired guns”. And while they do not surrender their free speech rights upon admission to the Bar, they are also officers of the court with fundamental obligations to uphold the integrity of the judicial process, both inside and outside the courtroom. It is the duty of counsel to be faithful both to their client and to the administration of justice.’47 [47] The former Chief Justice of the Supreme Court of Victoria, the Honourable Marilyn Warren put it thus: ‘The lawyer’s duty to the court is an incident of the lawyer’s duty to the proper administration of justice. This duty arises as a result of the position of the legal practitioner as an officer of the court and an integral participant in the administration of justice. The practitioner’s role is not merely to push his or her client’s interests in the adversarial process, rather the practitioner has a duty to “assist the court in the doing of justice according to law.” The duty requires that lawyers act with honesty, candour and competence, exercise independent judgment in the conduct of the case, and not engage in conduct that is an abuse of process. Importantly, lawyers must not mislead the court and must be frank in their responses and disclosures to it. In short, lawyers “must do what they can to ensure that the law is applied correctly to the case.” The lawyer’s duty to the administration of justice goes to ensuring the integrity of the rule of law. It is incumbent upon lawyers to bear in mind their role in the legal process and how the role might further the ultimate public interest in that process, that is, the proper administration of justice. As Brennan J states, “[t]he purpose of court proceedings is to do justice according to the law. That is the foundation of a civilized society.” When lawyers fail to ensure their duty to the court is at the forefront of their minds, they do a disservice to their client, the profession and the public as a whole.’48 47 R McMurtry. (2000) Role of the Courts and Counsel In JusticeThe Advocates’ Society Spring Symposium 2000 Advocacy in the 21st Century, Ontario. 6 June 2000. Available at https://www.ontariocourts.ca/coa/about-the-court/archives/role-of-the-courts-and-counsel-in-justice/ [Accessed on 14 September 2024.] 48 M, Warren. (2009) The Duty Owed to the Court – Sometimes Forgotten The Judicial Conference of Australia Colloquium, Melbourne. 9 October 2009. Available at https://www.ajoa.asn.au/wp-content/uploads/2022/05/Warren-2009-paper.pdf [Accessed on 14 September 2024.] See also General Council of the Bar of South Africa v Geach and Others, Pillay and Others v Pretoria Society of Advocates and Another, Bezuidenthout v Pretoria Society of Advocates [2012] ZASCA 175; [2013] 1 All SA 393 (SCA); 2013 (2) SA 52 (SCA) para 87. 24 [48] Brevity is the hallmark of good advocacy. Clarity of thought, logical coherence and conciseness of presentation are the product of painful preparation. Said Winston Churchill: ‘If you want me to speak for two minutes, it will take me three weeks of preparation. If you want me to speak for thirty minutes, it will take me a week to prepare. If you want me to speak for an hour, I am ready now.’ Exasperated sighs, soapbox oratory, empty rhetoric, political posturing, theatrical gestures and long-winded dismissive non-sequiturs have no place in a courtroom, particularly in response to searching questions from the bench. The taking of ‘miserable, pettifogging point[s]’, as Innes CJ described them over a century ago, are bound to fail. The learned Chief Justice added: ‘But points of that kind do commend themselves to a certain class of practitioner, and do undoubtedly possess an attraction for a certain stamp of mind . . .’49 [49] It must follow that, inasmuch as there is neither an appeal properly before this Court, nor an appellant to prosecute it, the matter falls to be struck from the roll. The regret is that unmeritorious appeals, such as this, impact not just the immediate parties and the Court (that has to increasingly deal with congested court rolls), but also other litigants whose matters are truly deserving of the attention of this Court. Those litigants have to wait in line whilst we process frivolous appeals such as this. [50] In the result, the appeal is struck from the roll with costs, including those of two counsel, to be paid by Ms Busisiwe Mkhwebane. ________________ V M PONNAN JUDGE OF APPEAL 49 Incorporated Law Society v Bevan 1908 TS 724 at 730. 25 Appearances For the appellant: DC Mpofu SC, B Shabalala with N Khooe Instructed by: Ramushu Mashile Twala Inc., Johannesburg Claude Reid Attorneys, Bloemfontein For the first respondent: I Jamie SC, A Nacerodien with UK Naidoo Instructed by: The State Attorney, Cape Town The State Attorney, Bloemfontein For the second & fifth respondents: P Maharaj-Pillay Instructed by: Minde, Schapiro & Smith Attorneys, Cape Town Symington & De Kok Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 1 October 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 The Public Protector of South Africa v The Chairperson of the Section 194(1) Committee and Others (627/2023) [2024] ZASCA 131 (1 October 2024) Today the Supreme Court of Appeal (SCA) struck the appeal of the former Public Protector of South Africa, Ms Busisiwe Mkhwebane, from the roll and ordered her to pay the costs, including those of two counsel. The appeal arises from an application that was launched on 7 November 2022, out of the Western Cape Division of the High Court, Cape Town (the high court). The application was brought in the name of the ‘The Public Protector of South Africa’, even though Ms Mkhwebane sought to advance her personal interests in the litigation. In 2016, Ms Mkhwebane was appointed Public Protector of the Republic of South Africa. On 21 February 2020, Ms Natasha Mazzone, the Chief Whip of the then official opposition, the Democratic Alliance, submitted a motion to the National Assembly for an enquiry to be initiated under s 194(1) of the Constitution to investigate Ms Mkhwebane’s removal from office on the grounds of misconduct and incompetence. On 26 February 2020, the Speaker of the National Assembly accepted the motion and referred the matter to an independent panel for a preliminary assessment. On 24 February 2021, the independent panel recommended that the complaints of incompetence and misconduct levelled against Ms Mkhwebane be referred to a committee in accordance with the Rules of Parliament. The matter was thereafter referred to a Committee for a formal enquiry. The Committee recommended that Ms Mkhwebane be removed from office. The National Assembly adopted that resolution with the support of more than two thirds of its members on 11 September 2023. The President removed Ms Mkhwebane from the position of Public Protector pursuant to s 194(3)(b) of the Constitution on 13 September 2023. Ms Kholeka Gcaleka was thereafter appointed as her successor by the President for a non-renewable term of seven years with effect from 1 November 2023. On 8 February 2024, the attorney representing the Democratic Alliance (Minde, Schapiro & Smith) wrote to the Office of the Public Protector inquiring whether she is aware of the appeal that was before the SCA and whether she had instructed Ramushu Mashile Twala Attorneys (the attorney) to prosecute the appeal on behalf of the Public Protector. The Office of the Public Protector confirmed that the appeal had not been authorised by it. On 5 March 2024, Minde, Schapiro & Smith served a notice in terms of SCA Rule 5 (rule 5), disputing the authority of the attorney and requesting that ‘they lodge with the Registrar a copy of a power of attorney 2 duly signed by or on behalf of the Public Protector of South Africa, that they are duly authorised to act on behalf of the appellant in the prosecution of this appeal’. In response, on 8 March 2024, the attorney filed a ‘Notice of Application for Substitution as Appellant’ in terms of Rule 15of the Uniform Rules of the High Court (Uniform rule 5). The notice described ‘Busisiwe Mkhwebane’ as the ‘Applicant/Appellant’. Rule 5 is a means of achieving production of a power of attorney in order to establish the authority of an attorney to act for the client. When challenged, the attorney was unable to produce a power of attorney, but sought to meet the challenge with a notice of substitution in terms of Uniform rule 15. The SCA took the view that was no answer to the challenge. Uniform rule 15 regulates the procedure only where substitution becomes necessary by reason of a change of status and not a change of persona. If no change of status is involved, a substitution can be granted on a substantive application if there is no substantial procedural prejudice to the other party. The SCA concluded that, in any event, Uniform rule 15 finds no application in the high court after judgment or in the SCA at all. Moreover, not having challenged her removal as Public Protector (or even attempted to do so), the recommendations and resolutions culminating in her removal stood. Despite her challenge before the high court having long been overtaken by these events, Ms Mkhwebane persisted in the appeal. She nonetheless urged the SCA to enquire into the legality of three interlocutory rulings, made during the enquiry by the s 194 Committee and asked for those rulings to be set aside and substituted. But, said the SCA, the enquiry is over, the National Assembly has impeached her, she has been removed from office and a new Public Protector has been appointed. Further, in terms of s 183 of the Constitution, Ms Mkhwebane’s non-renewable seven-year term has run its course. There can hardly be a challenge to any of those decisions now, given that her fixed term of office would in any event have ended in mid-October 2023, had she not been removed. The SCA held that restoration to office is thus constitutionally and factually impossible. In the circumstances, no public benefit can come from a judicial pronouncement on the regularity of the s 194 Committee’s rulings. Thus, any appeal as may avail Ms Mkhwebane will have no practical effect. The SCA accordingly concluded that inasmuch as there is neither an appeal properly before it, nor an appellant to prosecute it, the matter fell to be struck from the roll. The SCA was critical of the manner in which the matter was conducted, stating that none of the points that were held to be decisive against Ms Mkhwebane were even alluded to, much less dealt with, in the heads of argument filed with the Court, despite the fact that Ms Mkhwebane’s standing to prosecute the appeal and the issue of mootness had already been raised on behalf of the respondents before the high court. The SCA pointed out the Counsel for Ms Mkhwebane seemed not to be sufficiently well-versed with the relevant authorities and was of little to no assistance to the Court. The SCA added that appellate work is not the recycling of trial level points and that had the matter been approached from a detached perspective Ms Mkhwebane would have been advised not to pursue the appeal, which self-evidently was dead on arrival. --------oOo--------

4272

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 356/2023 In the matter between: KSL APPELLANT and AL RESPONDENT Neutral citation: KSL v AL (Case no 356/2023) [2024] ZASCA 96 (13 June 2024) Coram: ZONDI, MOKGOHLOA, and MABINDLA-BOQWANA JJA Heard: 27 February 2024 Delivered: The 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 13 June 2024 at 11h00. Summary: Civil procedure – anti-dissipation interdict – whether requirements for an interim anti-dissipation interdict are satisfied – whether intention is a requirement or a lesser threshold is applicable – an interim interdict appealable in the interest of justice. 2 ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Van der Schyff J, sitting as court of first instance): 1. The application to submit further evidence is dismissed with costs. 2. The appeal is upheld with costs, such costs limited to the costs of one counsel. 3. Paragraphs 5 and 6 of the order of the high court are set aside and replaced with the following: ‘The anti-dissipation application is dismissed with costs.’ JUDGMENT Mokgohloa JA (Zondi and Mabindla-Boqwana JJA concurring): Introduction [1] The issues for determination in this appeal are threefold. First, whether the respondent succeeded in establishing the requirements of an interim interdict in her application for an anti-dissipation order. Second, whether the high court applied the correct legal principles pertaining to the order granted. Third, whether an interim interdict order is appealable. The facts [2] The facts giving rise to this appeal are briefly the following. The appellant, KSL (the husband) and the respondent, AL (the wife), were married to each other on 3 April 1992 out of community of property with the inclusion of the accrual system as envisaged in Chapter 1 of the Matrimonial Property Act 88 of 1984. 3 They have two major children. Their marriage did not survive and, in May 2009, the appellant instituted divorce proceedings against the respondent. The parties attempted to reconcile but were unsuccessful. Ultimately, the marriage was dissolved on 14 March 2019. The divorce court granted the decree of divorce and the issue of their proprietary rights (the accrual) was postponed to be determined at a later stage. [3] Whilst the divorce was still pending, on 19 July 2018 the appellant founded a trust named the Lovell Children Educational Trust and donated an amount of R1 800 000 to the trust with the objective of providing financial support for the parties’ children. According to the respondent, she only learnt about this in December 2018. During October 2018, the appellant caused an amount of R5 114 740.75 to be invested in a living annuity held with Investec Assets Management Services (Pty) Ltd. [4] On 12 December 2018, the appellant presented to the respondent a ‘with prejudice tender’ in terms of rule 34 of the Uniform Rules of Court. The appellant proposed in the tender that an amount of R550 000 be paid by the appellant to the respondent in full and final settlement of her accrual claim. He further proposed that in order for the respondent to properly consider the settlement offer, a power of attorney be prepared by the respondent’s attorneys to be signed by the appellant to enable the respondent to investigate the appellant’s financial position. If the respondent was not satisfied with the settlement offer, the appellant proposed that a referee be appointed. The respondent rejected this tender. [5] During May 2021, two years after the parties’ divorce, the appellant sold his immovable property, 6 Coombe Close, Northwold, Extension 11, Johannesburg (the property). The respondent became aware of the sale in June 4 2021. As a result, she instituted an anti-dissipation application in the Gauteng Division of the High Court, Pretoria (the high court) on 1 July 2021. In the application, she sought an order directing the appellant’s attorneys as conveyancers mandated to give effect to the transfer of the property: ‘1. . . .to retain the total net proceeds of the sale of the Immovable Property being an amount equivalent to the purchase consideration less the cost of bond cancellation, estate agents commission, taxes and necessary disbursements and imposts (“the Net Proceeds”) in an interest-bearing trust account as envisaged by section 86(3) of the Legal Practice Act 2014, (No. 28 of 2014) pending the determination of the [respondent’s] accrual claim in the divorce action. 2[I]n the event that the Net Proceeds of the sale of Immovable Property have been paid to the [appellant], or his nominee, at the time of the hearing of this application:- 2.1. the [appellant’s attorneys] be directed to furnish the [respondent], care of her attorneys, within 5 (five) days, with a statement of account reflecting the purchase consideration achieved for the Immovable Property and detailing the disbursement of expenses including but not restricted to bond cancellation, estate agents commission, taxes and necessary disbursements and imposts; 2.2. the [appellant] be directed to, within 5 (five) days, pay an amount equivalent to the Net Proceeds to the [appellant’s attorneys] to be retained in an interest-bearing trust account as envisaged by section 86(3) of the Legal Practice Act 2014, (No. 28 of 2014) pending the determination of the [respondent’s] accrual claim in the divorce action.’ The high court granted the relief sought. Thereafter the appellant applied for leave to appeal. The high court dismissed the application. The appeal is with leave of this Court. In the high court [6] In her founding affidavit, the respondent averred that as at a date of divorce, the estate of the appellant had shown an accrual in excess of the accrual in her estate. This, according to her, was evident from the tender that the appellant made to her on 12 December 2018 which ‘constitutes clear evidence of the fact that [the 5 appellant] accepts that his estate had shown greater accrual to [her estate]’. Consequently, she contended that she had a vested interest in the assets sought to be preserved being the net proceeds of the sale of the appellant’s immovable property. She contended further that the appellant’s conduct prior to the dissolution of the marriage relating to the money donated to the trust and invested in the annuity, gave her concern that the appellant would dissipate and diminish his assets with the objective of frustrating her claim. [7] The appellant opposed the application contending that the respondent had not made out a case for the relief sought. First, that the trust was created for the benefit of the parties’ children. Second, the funds invested in the annuity (which amounted to R5 million at the time of the application) had not been dissipated and he retained his right to the proceeds thereof. Third, the appellant made a calculation in his opposing affidavit to show that his estate had shown a lesser accrual to that of the respondent as at the date of divorce. He denied that he sold the property with the intention of dissipating his estate. He contended that he had debts to pay and had to sell his property to settle them. [8] As to whether a prima facie right to the accrual claim had been established, in granting the anti-dissipation relief, the high court made the following findings: ‘[46] . . . The defendant [respondent] states that she has an accrual claim against the plaintiff [appellant] because her estate has shown no accrual and the plaintiff’s estate has shown an accrual. She does not substantiate this submission with any primary facts, e.g. referring to the assumed values of the two estates. This blank statement needs, however, to be considered against the context created in the Rule 34 “with- prejudice” offer made by the plaintiff. . . [47] The plaintiff’s with-prejudice tender is substantiating a view that the defendant has succeeded in proving, albeit prima facie, that the accrual of the plaintiff’s estate exceeds the accrual of her estate.’ 6 [9] The court based this on these two paragraphs appearing in the rule 34 ‘with prejudice’ offer: ‘In full and final settlement of the accrual claim of the Defendant against the Plaintiff, the Plaintiff tenders to the Defendant a sum in the amount of R550 000.00 (five hundred and fifty thousand rand) (‘the accrual tender’)’ ‘if the Defendant believes that the accrual tender is lower than what the Defendant is entitled to in terms of her accrual claim against the Plaintiff, the defendant may refer the matter to referee for the referee to establish the quantum of the Defendant's accrual claim against the Plaintiff. . . ’ [10] On the question of whether there was a well-grounded irreparable apprehension of harm, the court said the following: ‘If the defendant succeeds in her counterclaim, and the plaintiff is allowed to sell the house without the proceeds being kept in trust, it will significantly frustrate the enforcement of her claim. The plaintiff, who had several assets at his disposal just before the divorce order was granted, managed his estate in such a way that although he still benefits, directly or indirectly, from the value of the assets, the assets are removed from his direct control. The prejudice that will be suffered by the defendant if she is successful in her counterclaim and the order is not granted, meets the requirement of a well-grounded apprehension of irreparable harm.’ (Emphasis added.) The court ultimately found that the balance of convenience favoured the respondent, and she had no other remedy. In this Court [11] The appellant contended that (a) the respondent failed to establish the prima facie right for the granting of an anti-dissipation order; and (b) the high court applied the wrong legal principles in granting the relief sought. He also applied for leave to submit further evidence on appeal and submitted that he would be prejudiced if the high court’s order was not upset on appeal. The respondent on the other hand, submitted that the appellant’s conduct prior to the 7 dissolution of the marriage relating to money donated to the trust and invested into the annuity, reasonably considered, amounted to the conduct required for the anti-dissipation interim relief. Application to introduce further evidence on appeal [12] Before I discuss the parties’ contentions on the merits, I deal with the appellant’s application to submit further evidence on appeal. The evidence which the appellant seeks to introduce is that the property was transferred to the new owners on 3 March 2022. His attorneys received an amount of R1 680 000 on the same day. Various deductions were made from this gross amount totalling R614 258.76. He received additional money following the cancellation of the mortgage bond over the property which brought the net sale of the property to R1 165 848.36. The appellant used part of this money to pay off his creditors and his attorneys. As to why this evidence was not introduced during the trial, the appellant explains that he could not submit this evidence in the high court as his answering affidavit was delivered months before this evidence arose. [13] Section 19(b) of the Superior Courts Act 10 of 2013, empowers this Court to receive further evidence on appeal. The criteria as to whether evidence should be admitted are: the need for finality; the undesirability of permitting a litigant who has been remiss in bringing forth evidence and to produce it late in the day; and the need to avoid prejudice.1 In Rail Commuters Action Group and Others v Transnet Ltd t/a Metrorail and Others,2 the Constitutional Court, 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, cautioned that the power to receive further evidence on 1 Colman v Dunbar 1933 AD 141 (A) at 161-162. 2 Rail Commuters Action Group and Others v Transnet Ltd t/a Metrorail and Others [2004] ZACC 20; 2005 (2) SA 359 (CC); 2005 (4) BCLR 301 (CC) paras 41-43. 8 appeal should be exercised ‘sparingly’ and that such evidence should only be admitted in ‘exceptional circumstances’. Furthermore, in O’Shea NO v Van Zyl NO and Others,3 this Court held 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. [14] Against this background I proceed to deal with the appellant’s application to adduce new evidence. There is no merit in the appellant’s application. I discern no ‘exceptional circumstances’ to move this Court to exercise its power, which, it must be borne in mind, should be exercised sparingly. The appellant’s answering affidavit was served on 17 August 2021. According to him, the property was transferred to the new owners on 3 March 2022. His attorneys received the proceeds of the sale on the same day. He received further amounts from the bank when the bond was cancelled. He used these funds to pay his debts and his attorneys between March and April 2022. The application was heard on 23 August 2022 almost four months after this new evidence came to his knowledge. The evidence sought to be introduced should have been presented prior to hearing of the application in the high court or at the very least prior to the handing down of the judgment, as the evidence was known and available to the appellant long before then. There is no explanation why that was not done. In my view, the application to adduce further evidence on appeal must be dismissed. Anti-dissipation interdict [15] An anti-dissipation interdict may be granted where a respondent is believed to be deliberately arranging his affairs in such a way so as to ensure that by the time the applicant is in a position to execute judgment, he will be without assets 3 O’Shea NO v Van Zyl NO and Others [2011] ZASCA 156; 2012 (1) SA 90 (SCA); [2012] 1 All SA 303 (SCA) para 9. 9 or sufficient assets on which the applicant expects to execute. Its purpose is to preserve the asset which is in issue between the parties. The onus is on the applicant for such an interdict to establish the necessary requirements for the grant of the interdict. Did the respondent satisfy the requirements for an anti-dissipation interdict? [16] The requirements for an interim interdict are: (a) a prima facie right, even if it is open to some doubt; (b) injury actually committed or reasonably apprehended; (c) the balance of convenience; and (d) the absence of similar protection by any other remedy.4 In Knox D’Arcy Ltd and Others v Jamieson and Others5 (Knox D’Arcy) this Court went further and held that an anti-dissipation interdict provides a remedy where an applicant has shown on the established basis of an interim interdict; (a) a claim against a respondent and (b) that the respondent is [intentionally] secreting or dissipating assets, or is likely to do so with the intention of defeating the applicant’s claim.6 These jurisdictional facts to justify the granting of an anti-dissipatory relief were re-affirmed by this Court recently in Bassani Mining (Pty) Ltd v Sebosat (Pty) Ltd and Others.7 [17] Importantly, this Court in Knox D’Arcy asked and stated the following: ‘The question which arises . . . is whether an applicant need show a particular state of mind on the part of the respondent, i e, that he is getting rid of the funds, or is likely to do so, with the intention of defeating the claims of creditors. Having regard to the purpose of this type of interdict the answer must be, I consider, yes, except possibly in exceptional cases. As I have said, the effect of the interdict is to prevent the respondent from freely dealing with his own property to which the applicant lays no claim. Justice may require this restriction in cases where 4 Setlogelo v Setlogelo 1914 AD 221 at 227; Webster v Mitchell 1948 (1) SA 1186 (W) at 1187. 5 Knox D'Arcy Ltd. and Others v Jamieson and Others [1996] ZASCA 58; 1996 (4) SA 348 (SCA); [1996] 3 All SA 669 (A) at 31. 6 Ibid at 63. 7 Bassani Mining (Pty) Ltd v Sebosat (Pty) Ltd and Others [2021] ZASCA 126 para 1. 10 the respondent is shown to be acting mala fide with the intent of preventing execution in respect of the applicant’s claim. However, there would not normally be any justification to compel a respondent to regulate his bona fide expenditure so as to retain funds in his patrimony for the payment of claims (particularly disputed ones) against him. I am not, of course, at the moment dealing with special situations which might arise, for instance, by contract or under the law of insolvency.’8 (Emphasis added.) [18] Against these principles, the first question to determine is whether a prima facie right to an accrual claim has been established in this case. The high court found that the respondent did not substantiate the averment in the founding affidavit that she has an accrual claim against the appellant by putting any evidence. Despite that finding, the high court found that the appellant’s ‘tender is substantiating a view that the defendant has succeeded in proving, albeit prima facie, that the accrual of the plaintiff’s estate exceeds the accrual of her estate’. [19] This finding cannot be correct because a tender in terms of rule 34 whether with or without prejudice, is an offer to settle and does not amount to an acknowledgment of liability.9 Often offers to settle are made to avoid incurring further costs and to save time. Most importantly, the appellant stated that he made a ‘with prejudice’ offer in order to have this matter settled and to save costs. The high court’s finding has the effect of defeating the whole purpose of rule 34. [20] An assumption cannot be made that a claim has been admitted simply on the basis of the offer to settle. The appellant, in his answering affidavit, denied that the accrual in his estate exceeded that of the respondent. He put up detailed calculations to demonstrate that his accrual was lesser. The respondent did not attempt to contest this in her replying affidavit. The first hurdle of whether or not 8 Knox D'Arcy fn 5 at 64. 9 Visser v Visser [2012] ZAKZDHC 16; 2012 (4) SA 74 (KZN) para 32. 11 there was a prima facie right of an accrual claim, has not been overcome by the respondent. On this point alone, the application ought to have been refused. [21] The second issue is whether there was any evidence of an intention to render the respondent’s claim hollow. The only averments in this regard related to the establishment of the trust and the investment in the annuity. Apart from the fact that dispositions to the trust and the annuity occurred more than two years prior to the institution of the application, they were simply not proximate to the sale of the property. Further, the trust was expressly for the children’s financial support. The money in the annuity remains invested in the appellant’s name and he has the right to it. It did not disappear. The respondent was offered an opportunity to forensically examine the appellant’s financial position in the rule 34 offer, but she declined to do so. [22] Further, the reason to sell the property is sound. The appellant was 64 years old when the application was lodged. It is common cause that he was no longer employed. The averment that he needed to sell the property to settle his debts does not show intent to get rid of his funds in order to defeat the respondent’s claim and render it hollow. [23] Faced with the difficulty of establishing the jurisdictional requirements for the granting of the relief sought, the respondent sought to rely on the statement in Knox D’Arcy that there may be exceptional circumstances in which intention to render an applicant’s claim hollow by secreting assets, is not required to be shown. Counsel for the respondent submitted that an anti-dissipation relief in matrimonial matters is such a situation. He further submitted that the Court in Knox D’Arcy left this issue open. He referred to several high court judgments, 12 which I discuss below, as support for the view that it is ‘the likely effect’ and not the intention, which is important. [24] The respondent attempted to distinguish the facts in Knox D’Arcy from the present facts by contending that Knox D’Arcy dealt with commercial issues and not matrimonial issues as is in her matter. She argued that in her case, she had a vested right to claim against the appellant’s estate because of the dissolution of the marriage, which was premised upon the ante-nuptial contract. She alleged that she has an accrual claim against the appellant’s estate; that the appellant has acknowledged that claim by presenting the tender to her; and that according to her, fell squarely within the exceptional circumstances referred to in Knox D’Arcy. [25] The respondent did not base her claim on exceptional circumstances in her founding affidavit. Neither did she allege that the appellant’s conduct was not bona fide. In her founding affidavit she alleged that the appellant would dissipate his assets with the objective of frustrating her claim. These are the grounds on which the high court granted the relief she sought. She made her case in her founding affidavit and cannot, at this stage, change the basis of her claim. She must stand or fall by the allegations she made in her founding papers and cannot seek to make out a new case in argument and more so on appeal. [26] Even so, to qualify as exceptional, the circumstances must be out of the ordinary and of an unusual nature, something which is excepted in the sense that the general rule does not apply to it; something uncommon, rare or different.10 I am not persuaded that enough material was submitted for the respondent’s case to constitute exceptional circumstances, that would justify the application of a 10 MV Ais Mamas Seatrans Maritime v Owners, MV Ais Mamas and Another 2002 (6) SA 150 (C) at 156H-I. 13 lesser threshold than the one stated in Knox D’Arcy. Something more than the allegation that the parties’ marriage was out of community of property with accrual system may be required. This has however not been shown in this case. The findings above render it unnecessary to consider whether the other elements to satisfy an interim interdict had been met. Did the high court apply the correct applicable legal principle? [27] The high court did not deem it necessary to apply the requirements as stated in Knox D’Arcy. Instead, it preferred the dictum in JLT v CHT and Another11 (JLT) which held that: ‘. . . it is not essential to establish an intention on the part of the respondent to frustrate an anticipated judgment if the conduct of the respondent is likely to have that effect.’12 [28] The dictum in JLT does not reflect the correct legal position. This Court has made it clear in Knox D’Arcy that an applicant must show that the respondent possessed a particular state of mind in his conduct. JLT has, unfortunately, found favour with various divisions of the high court. In Gernetsky v Gernetsky13the high court held that it is not a requirement for the applicant to show a fraudulent intent for the relief, in a matter where a spouse sought anti-dissipatory relief relevant to an accrual claim. The court considered whether such relief between spouses was not an exceptional circumstance referred to in Knox D’Arcy. It however did not make a finding on this issue. JLT was recently followed and quoted wrongly in SM v JM and Another (SM)14 as though it appears in Knox-D’Arcy. 11 J.L.T v C.H.T [2021] ZAECELLC 4. 12 Ibid para 7. 13 Gernetzky v Gernetzky and Others [2007] ZAECHC 17 para 9. 14 S.M v J.M and Another [2023] ZAGPJHC 723 at para 39. 14 [29] As stated above, JLT and the cases that followed it, do not reflect the correct legal position. Knox D’Arcy, a decision of this Court, settled the matter on the requirement of intent in anti-dissipation applications. The high courts were bound to follow the decision of this Court, which is precedent. Following precedent is not simply a matter of respect for higher authority, ‘[i]t is a manifestation of the rule of law itself, which in turn is a founding value of our Constitution’.15 [30] For these reasons, I find that the high court erred in granting the relief sought. The next issue is whether the relief granted, being an interim interdict, is appealable. Appealability of an interim interdict [31] The Constitutional Court has held that the interests of justice standard has subsumed the common law test on appealability of interim orders. In City of Tshwane Metropolitan Municipality v Afriforum and Another16 it held: ‘The common-law test for appealability has since been denuded of its somewhat inflexible nature. Unsurprisingly so because the common law is not on par with but subservient to the supreme law that prescribes the interests of justice as the only requirement to be met for the grant of leave to appeal. Unlike before, appealability no longer depends largely on whether the interim order appealed against has final effect or is dispositive of a substantial portion of the relief claimed in the main application. All this is now subsumed under the constitutional interests of justice standard. The over-arching role of interests of justice considerations has relativised the final effect of the order or the disposition of the substantial portion of what is pending before the review court, in determining appealability. The principle was set out in OUTA by Moseneke DCJ in these terms: 15 Ayres and Another v Minister of Justice and Correctional Services and Another [2022] ZACC 12; 2022 (5) BCLR 523 (CC); 2022 (2) SACR 123 (CC) para 16. 16 City of Tshwane Metropolitan Municipality v Afriforum and Another [2016] ZACC 19; 2016 (9) BCLR 1133 (CC); 2016 (6) SA 279 (CC) para 40. 15 “This Court has granted leave to appeal in relation to interim orders before. It has made it clear that the operative standard is the ‘interests of justice’. To that end, it must have regard to and weigh carefully all germane circumstances. Whether an interim order has a final effect or disposes of a substantial portion of the relief sought in a pending review is a relevant and important consideration. Yet, it is not the only or always decisive consideration. It is just as important to assess whether the temporary restraining order has an immediate and substantial effect, including whether the harm that flows from it is serious, immediate, ongoing and irreparable”.’ [32] This was reaffirmed in United Democratic Movement and Another v Lebashe Investment Group (Pty) Ltd and Others17 in which the following was stated: ‘[43] Whether an interim order has final effect or disposes of a substantial portion of the relief sought in a pending review is merely one consideration. Under the common law principle as laid down in Zweni, if none of the requirements set out therein were met, it was the end of the matter. But now the test of appealability is the interests of justice, and no longer the common law test as set out in Zweni. . . . [45] What is to be considered and is decisive in deciding whether a judgment is appealable, even if the Zweni requirements are not fully met, is the interests of justice of a particular case and whether or not an order lacking one or more of the factors set out in Zweni constitutes a “decision” for the purposes of s 16(1)(a) of the Superior Courts Act. Over and above the common law test, it is well established that an interim order may be appealed against if the interests of justice so dictate. It is thus in the interests of justice that the impugned interim interdict is appealable on the allegation that the interdictory relief in question resulted in the infringement of the right to freedom of expression.’ [33] The interests of justice to have the high court’s order appealed against, have been amply demonstrated in this matter. First, the high court was wrong to regard the tender in terms of rule 34 as substantiation that the respondent had prima facie 17 United Democratic Movement and Another v Lebashe Investment Group (Pty) Ltd and Others [2022] ZACC 34; 2022 (12) BCLR 1521 (CC); 2023 (1) SA 353 (CC) paras 43 & 45. 16 demonstrated that she had an accrual claim against the appellant. The onus was on the respondent to show that her accrual was less than that of the appellant and she failed to do so. Second, the high court did not apply the correct legal principle as enunciated in Knox D’Arcy that the respondent has to show that the appellant was dissipating his assets with the intention of defeating her claim. Third, it was important for this Court to decide the matter, in view of the high court judgments that seem to suggest that intention did not need to be shown, in these kinds of cases. To allow the order of the high court to stand will, in these circumstances, results in an injustice. Costs [34] Counsel for the appellant asked for costs including costs consequent upon the employment of two counsel. Generally, costs of the appeal, including those of the application for leave to appeal must follow the result. The basic rule is that costs are in the discretion of the court. In exercising that discretion, this Court, must consider whether it was reasonable to employ two counsel. In doing so, it must consider the importance and the complexity of questions of law involved and the number of authorities referred to in the matter. In my view, the factual and legal issues argued were not complex so as to warrant the employment of two counsel. Accordingly, the appellant’s costs should be limited to costs consequent to the employment of one counsel. 17 [35] In the result, the following is made: 1. The application to submit further evidence is dismissed with costs. 2. The appeal is upheld with costs, such costs limited to the costs of one counsel. 3. Paragraphs 5 and 6 of the order of the high court are set aside and replaced with the following: ‘The anti-dissipation application is dismissed with costs.’ ____________________ F E MOKGOHLOA JUDGE OF APPEAL 18 APPEARANCES For the appellant: A Bester SC and R Bossman Instructed by: Fairbridges Wertheim Becker Attorneys, Johannesburg Phatshoane Henney Attorneys, Bloemfontein For the respondent: WA de Beer and W.C Carstens Instructed by: Shaban Clark Coetzee 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: 13 June 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 KSL v AL (Case no 356/2023) [2024] ZASCA 96 (13 June 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing the application to submit further evidence with costs, upheld the appeal with costs and set aside paragraphs 5 and 6 of the order of the Gauteng Division of the High Court, Pretoria (the high court) and replaced it with an order that: ‘The anti-dissipation application is dismissed with costs.’ The core issues before the SCA were firstly, whether the respondent succeeded in establishing the requirements of an interim interdict for an anti-dissipation order, secondly, whether the high court applied the correct legal principle pertaining to the order it granted and, thirdly, whether an interim interdict is appealable. The appellant and the respondent were married to each other out of community of property with the inclusion of the accrual system as envisaged in Chapter 1 of the Matrimonial Property Act 88 of 1989. The marriage suffered an irretrievable breakdown and a decree of divorce was subsequently granted on 14 March 2019, while the issue of their proprietary rights (the accrual) was postponed to be determined at a later stage. While divorce proceedings were pending, the appellant founded a trust with the objective of providing financial support to the parties’ major children in the amount of R1 800 000 and subsequently caused an amount of R5 114 70.75 to be invested in a living annuity. Two years after the divorce, the appellant sold his immovable property, which upon discovery, led the respondent to institute an anti-dissipation application in the high court. The high court granted the anti-dissipation order and the appellant’s conveyancing attorneys were ordered to retain the proceeds of the sale of the property in an interest bearing account and in the event that it was already paid to the appellant, the appellant was ordered to pay the proceeds into the account of the conveyancing attorneys to be retained in an interest bearing account. The application for leave to appeal was dismissed by the high court but granted by the SCA. The SCA held that the appellant had failed to show exceptional circumstances to justify an order to adduce further evidence in view of the fact that the evidence was known to him for before the matter was heard and therefore had sufficient time to adduce the evidence at that stage already. The SCA held further that the respondent failed to discharge the onus on her to show that her accrual was less than that of the appellant and as a result, the high court erred in regarding the appellant’s rule 34 tender as the respondent’s prima facie accrual claim against the appellant. 2 The SCA held further that the high court did not apply the correct legal principle as enunciated in Knox D’Arcy that the respondent has to show that the appellant was dissipating his assets with the intention of defeating her claim. The SCA considered it important to decide the matter, in view of the high courts’ judgments that suggested that intention did not need to be shown in anti-dissipation applications. The SCA held finally that the appellant has succeeded in demonstrating that the interests of justice required the order of the high court to be appealed against and that the circumstances considered, allowing the order of the high court to stand, would result in an injustice Accordingly, the appeal was upheld. ~~~~ends~~~~

4275

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 476/2023 In the matter between: KROHNE (PTY) LTD APPELLANT and STRATEGIC FUEL FUND ASSOCIATION RESPONDENT Neutral Citation: Krohne (Pty) Ltd v Strategic Fuel Fund Association (Case no 476/2023) [2024] ZASCA 99 (14 June 2024) Coram: NICHOLLS, MOTHLE and MOLEFE JJA and SMITH and MBHELE AJJA Heard: 9 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down of the judgment is deemed to be 14 June 2024 at 11h00. Summary: Arbitration law – whether the appellant’s claim, based on the enforcement of an arbitral award is founded on a valid cause of action – whether the trigger event in the arbitral award has occurred – whether the paragraphs of the appellant’s replying affidavit as set out in the respondent’s strike-out application falls to be struck out. 2 ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Wanless AJ, sitting as court of first instance): 1 The appeal is upheld with costs, including the costs of the application for leave to appeal, such costs to include the costs consequent upon the employment of two counsel. 2 Orders 1 to 4 of the high court are set aside and replaced with an order in the following terms: ‘The second point in limine raised by the respondent is dismissed with costs, such costs to include the costs consequent upon the employment of two counsel.’ 3 The matter is remitted to the high court to be determined on the merits. ______________________________________________________________ JUDGMENT ______________________________________________________________ Mothle JA (Nicholls and Molefe JJA and Smith and Mbhele AJJA concurring) [1] The crisp issue in this appeal is whether the appellant’s claim against the respondent, based on the enforcement of an arbitral award (‘the interim award’), is founded on a valid cause of action. [2] Krohne (Pty) Limited (the appellant) instituted motion proceedings in the Gauteng Division of the High Court, Johannesburg (the high court), wherein it claimed payment of the agreed outstanding balance, with interest, in terms of a service contract concluded with the Strategic Fuel Fund Association (the respondent). The high court dismissed the claim on the basis 3 that the appellant did not have a valid cause of action. The high court issued the following orders: ‘1. The application is dismissed. 2. The Applicant is to pay the costs of the application, such to include the costs of two counsel. 3. The interlocutory application instituted by the Respondent for the striking out of paragraphs 5.2, 5.7, 5.12 to 5.14 and 8 to 12.7 of the Applicant’s undated replying affidavit, deposed to by Mr George Topper and filed on the 15th of May 202[0], is postponed sine die. 4. Each party is to pay their own costs in respect of the aforesaid interlocutory application. 5. The Respondent is to pay to the Applicant the sums of 60 689.50 US Dollars (or the equivalent in South African rands); R150 799.91; 67 859.49 Euros (or the equivalent in South African rands) and 10 264.35 British Pounds (or the equivalent in South African rands). 6. The Respondent shall pay to the Applicant interest on the amounts as set out in paragraph 5 above calculated at the rate of 10% per annum from the 27th of October 2019 to the date of final payment, both days inclusive. 7. The Respondent shall pay the costs in respect of the application by the Applicant insofar as same pertain only to the amounts as set out in paragraph 5 hereof which will be determined by the Taxing Master, such to include the costs of two Counsel.’ [3] The appellant successfully applied for leave to appeal paragraphs one to four (excluding paragraphs five and six) of the order of the high court. It is thus with leave of the high court that this appeal is before us. [4] It is common cause between the parties that the respondent was established in 1964 as a s 21 non-profit company. It acquires, maintains, monitors and manages South Africa’s strategic energy feedstocks and carriers, in order to ensure security in the supply of energy. The respondent’s oil storage installation at the Saldanha Terminal comprises six in-ground concrete storage tanks, with a combined capacity of 45 million barrels of oil. A crucial aspect of the respondent’s function is to be able to measure accurately the precise volume of crude oil that is discharged into the tanks and subsequently exported out. To achieve this mandate, in February 2011, the 4 respondent issued a tender, to procure service providers. The appellant entered the competitive bidding process. [5] The appellant is an international manufacturer of custody metering systems, which in January 2012, successfully tendered for the supply, installation and commissioning of the metering system at the Saldanha Terminal. In terms of the contract concluded with the respondent, the appellant’s services included ‘…the designing, calibration and installation of metering cabinets, flow computers and master metering skids and all associated electrical reticulation, including necessary and associated equipment for the system’ (the KOG metering system). It was a term of the contract that payment for the services would be made in tranches, with the final 10% being retained as a performance retention fee, payable upon completion and certification of the appellant’s performance of the services. [6] A dispute arose between the appellant and the respondent in regard to the accuracy of the KOG metering system. The appellant contended that it had completed its task as contracted and was entitled to payment of the 10% balance of the contract price. On demand of such payment, the respondent raised the query that the installed system did not operate within the specification agreed to in the contract, which is within the accuracy range of 0.3% (positive or negative), as set out in the International Metrology Organisation Standard OIML R117-1, 2007 Edition, Section 2.4 Accuracy Classes. [7] The parties agreed to refer that dispute to arbitration as per Clause 171 of the contract. An arbitrator, Advocate CHJ Badenhorst SC was appointed and at the commencement of the arbitration, the parties reached a settlement agreement, whereby they agreed to refer the question of the accuracy of the KOG metering system to a third-party expert for determination. The settlement 1 Clause 17 provides that disputes shall be resolved and determined by an arbitrator whose decision ‘shall be final and binding, and save in the case of manifest error, shall not be subject to appeal and/or review.’ 5 agreement was endorsed by the arbitrator, who issued it as an interim award. Of significance, the interim award, whose material terms are stated as follows: ‘1. The arbitration is postponed sine die. 2. The costs of the arbitration are reserved . . . 5. Within 30 days from date hereof the parties shall jointly nominate and appoint an appropriately qualified and experienced specialist from an independent third party (intended to be SGS) (“the independent expert”). The findings of the independent expert shall be final and binding on the Claimant and Respondent… 6. The terms of reference of the independent expert shall be: 6.1 to conduct an assessment of the system to establish whether the system operates within the specification agreed to by the parties in their agreement [contract], and within the accuracy range of 0.3% (positive and negative) as set out in OIML R117-1 edition, section 2.4 Accuracy Classes and the South African National Standards; and 6.2 to ascertain why the meter readings obtained by the Claimant’s [as in the arbitration] Krohne meters and the static measurements obtained by the Respondent’s [in the arbitration] current system are so far apart, and to make recommendations of what measures, if any, can be implemented so as to bring the conflicting measurements as close together as possible. . . 8. In the event of the independent expert concluding that the system operates as set out in paragraph 6.1 above, within 30 days of such determination, the Respondent shall: 8.1 reimburse the Claimant that portion of the independent expert’s costs paid by the Claimant; 8.2 pay the capital sum of R 7 669 363.74 claimed in prayer 3 of the Statement of Claim, together with mora interest thereon calculated at the rate of 9.5% per annum from 1 April 2014 to date of payment; and 8.3 pay the Claimant’s legal costs of the arbitration proceedings as either agreed or taxed . . . 10. The Respondent undertakes to pay to the Claimant the full amount of R7 669 363.74 once the independent expert certifies that the system operates as set out in paragraph 6.1 . . .’ [8] The parties appointed SGS Gulf Limited (SGS) as the third-party expert. The terms of reference of the independent expert are stated in clause 6 of the interim award. SGS consultant, Mr Jim McCabe, conducted 6 the design review of the KOG metering System in stages, issuing a report at the end of each stage, with the first report dated 19 October 2017. SGS’s Final Report was issued on 20 September 2019. [9] On 14 October 2019, the appellant’s attorneys, represented by Mr Alan Jacobs, sent an email to the respondent’s attorneys, which read in part thus: ‘Dear Marius [‘Diemont’] Further to the report received from SGS and their findings, I refer you specifically to their summary at point 2 which is entitled “Management summary”. You will note that the last paragraph under this heading confirms that my client’s metering systems operate within the specification agreed to by the parties. In view of the above confirmation, kindly let me have payment from your client of the total capital balance outstanding including interest which my client has calculated, and I attach the calculation, demonstrating the outstanding amount of R12 745 881.89 . . .’ [10] The appellant received no response from the respondent’s attorneys, even after a reminder in the e-mail of 12 November 2019. The appellant then issued an application in the high court in which he claimed payment on the basis of the SGS report, contending that the report disposed of the dispute between the parties. The respondent filed an answering affidavit in which it stated that the certificates issued by SGS ‘do not serve as evidence of a certification by SGS of the operation of the system, but merely of the manner in which it was designed and installed by Krohne, which is not the subject of the dispute referred to in the settlement agreement’. (Emphasis added.) [11] The respondent, in the answering affidavit, in essence raises two contentions in opposition to the appellant’s claim. The first, with reference to clause 8 of the settlement agreement (the interim award), is that ‘In the event of the independent expert [SGS] concluding that the system operates as set out in paragraph 6.1 [of the mandate] above [i.e. within the specification agreed upon in terms of the agreement, and within the accuracy range of 0.3% (positive or negative), within 30 days of such determination, the Respondent [SFF] shall: reimburse the Claimant . . .’ This was the trigger 7 event for payment of the retention amount, as foreshadowed in the settlement agreement. (Emphasis added.) [12] Second, and related to the trigger event, was the question whether after the trigger event had been met, would there still be outstanding issues in dispute between the parties, which would require adjudication by the arbitrator? The high court determined the matter on a completely different question which was not the central dispute in the affidavits. It was a question raised in the respondent’s argument, namely whether the appellant was barred from advancing a cause of action based on the arbitral award. [13] In dismissing the application, the high court reasoned and found in paragraphs 30, 31, 32, 35, 36 and 38, respectively, of its judgment thus: ‘…The parties did not elect to place their dispute before a court which potentially could have given rise to the appointment of referee. Neither did they elect, without going to arbitration, to appoint an expert whose decision would be binding upon them and finally resolve the dispute. So it is to the provision of the Arbitration Act that this Court must look in order to decide whether the Applicant can rely on the Final Report by the expert to seek payment by the Respondent of the capital amount in terms of the Interim Award. The crisp question then becomes whether the Interim Award complies with the provisions of the Arbitration Act or is in conflict therewith. The answer thereto is that the Interim Award is patently in conflict with material provisions of the Arbitration Act. To begin, the very definition of “arbitration proceedings” makes it clear that these proceedings are ones which are conducted by an arbitration tribunal for the settlement by arbitration of a dispute which has been referred to arbitration in terms of an arbitration agreement. . . In addition thereto, no provision was made in the Interim Award for the findings of the expert (in whatever form these findings were eventually contained) to be brought before the Arbitrator to be made an award as defined in the Arbitration Act. Hence, there was no compliance with the peremptory provisions of subsection 24(1) of the Arbitration Act. . . Of course, what would have been permissible was for the parties to have agreed, with the consent of the Arbitrator, to seek the opinion of an independent expert on the workings of the system. This opinion could have proven invaluable to assist the 8 Arbitrator in resolving the dispute. Of course, it could also have had the practical effect of either bringing about a settlement of the dispute between the parties or, at the very least, narrowing the technical issues in dispute between the parties. But this report could never be final and binding upon the parties in terms of the Arbitration Act. It is for this reason, as pointed out by Adv Jamie SC, that the Arbitrator possibly made the orders in the Interim Award whereby the arbitration proceedings were postponed sine die and the costs of the arbitration proceedings were reserved. . . Most importantly, the present application would never have seen the light of day and the various grounds of opposition, as raised by the Respondent (not without merit), would have been avoided (as would the incurring of costs). The aforegoing confirms (if confirmation is necessary) the correctness of the finding by this Court that the point taken by the Respondent that the Applicant is barred from advancing a cause of action based on the enforcement of an arbitral award, is a good one. In light of the finding by this Court that the Applicant has no valid cause of action in respect of its claim for the capital sum, it is not necessary for this Court to deal with the remaining grounds of opposition raised by the Respondent thereto. This is so (despite this Court spending a great deal of time considering same) since the finding made disposes of the claim in respect of the capital sum in its entirety.’ [14] Before dealing with the high court’s reasoning and conclusion as quoted above, it is apposite to revisit the trite concept of the arbitration. The Arbitration Act 42 of 1965 (the Act), defines an arbitration agreement as ‘a written agreement providing for the reference to arbitration of any existing dispute or any future dispute relating to a matter specified in the agreement, whether an arbitrator is named or designated therein or not’. Section 3(1) of the Act provides that ‘[u]nless the agreement otherwise provides, an arbitration agreement shall not be capable of being terminated except by consent of all the parties thereto’. [15] This Court in Total Support Management (Pty) Ltd and Another v Diversified Health Systems (SA) (Pty) Ltd and Another,2 stated as follows: ‘The hallmark of arbitration is that it is an adjudication, flowing from the consent of the parties to the arbitration agreement, who define the powers of 2 Total Support Management (Pty) Ltd and Another v Diversified Health Systems (SA) (Pty) Ltd and Another [2002] ZASCA 14; 2002 (4) SA 661 (SCA) at para 25. 9 adjudication, and are equally free to modify or withdraw that power at any time by way of further agreement. This is reflected in s 3(1) of the Act.’ An arbitration is thus a product of an agreement. [16] It is common cause, that the parties agreed in the contract of service, to have an arbitration clause, in this case clause 17 of the contract. It is further common cause that when a dispute was declared, the parties agreed to resolve the dispute through arbitration. They activated clause 17 of the contract. Prior to the commencement of the arbitration, they entered into a settlement agreement, to refer the essence of the dispute to an independent expert. The settlement agreement was made an interim award by the arbitrator, which in terms of s 1 of the Act, is an award. Therefore, the arbitration’s jurisdiction, powers, procedures and processes were driven by agreement and consent between the parties to the dispute. (Emphasis added.) [17] The high court erred in its approach when it digressed from the main dispute raised in the papers, and dealt with a collateral issue raised in argument, styled as a point in limine. The issue before the high court was not the validity or otherwise of the interim award. The issue before the high court was whether the SGS report concluded that the system operated as set out in clauses 8, 9 and 10, read with clause 6.1 of the interim award. Clause 10 of the interim award was the agreed condition precedent to the payment being affected, in terms of the interim award. The high court thus misconstrued the issue to be decided before it. [18] The high court also erred in concluding that the SGS report was not final and binding between the parties. It is evident from clause 5 of the interim award, that the SGS report would be final and binding on the parties. Clause 5 of the interim award provides that ‘the findings of the independent expert shall be final and binding on the Claimant and Respondent.’ It is the finding in the final report of SGS which constitutes the cause of action. 10 [19] The high court further erred in stating the following: ‘The crisp question then becomes whether the Interim Award complies with the provisions of the Arbitration Act or is in conflict therewith. The answer thereto is that the Interim Award is patently in conflict with material provisions of the Arbitration Act.’ The learned Judge was not aware of two important sources of law dealing with this issue. First, in terms of the definitions in s 1 of the Act, ‘award includes an interim award.’ The settlement agreement signed by the appellant and the respondent to refer the dispute to an independent expert, was endorsed as an award by the arbitrator, Mr Badenhorst SC. (Emphasis added.) [20] Second, this Court has endorsed the principle that it is permissible for an arbitrator to record a settlement agreement concluded by the parties to the dispute before him or her, as an award in terms of common law. In Bidoli v Bidoli and Another 3 (Bidoli), three brothers had conducted business together with their father in separate entities. Disputes arose between the brothers which were by agreement, referred to arbitration. On the day of commencement of the arbitration, the parties met and reached a settlement agreement, which they signed. Three days later, one of the parties requested the arbitrator to re-open the arbitration, stating that he was dissatisfied with the settlement agreement. He explained that he signed the settlement agreement by mistake, but the arbitrator informed him that he intended to make the settlement agreement his award and he was at liberty to raise his objection at court. When an application was made to the Western Cape Division of the High Court, Cape Town (the Western Cape high court), for the arbitral award to be made an order of court, the dissatisfied party opposed the application and sought an order declaring the award and the settlement agreement void ab initio, alternatively, that it be declared void and the arbitration hearing be re-opened. After considering the arguments, the Western Cape high court held: ‘I accordingly agree with the submission of [counsel], that, upon the settlement of their disputes by the parties, the arbitrator’s appointment was at an end, for there was nothing left for him to decide in terms of the referral to arbitration. The publication of any award thereafter, which merely incorporates the settlement 3 Bidoli v Bidoli and Another [2011] ZASCA 82; 2011 (5) SA 247 (SCA). 11 concluded by the parties, did not, in my opinion, bring about a valid award which may be made an order of court in terms of section 31 of the Arbitration Act. Nor can it, in terms of our common law, be regarded as a valid arbitral award.’4 [21] Bidoli came on appeal in this Court where the decision of the Western Cape high court was reversed. This Court, following a section of an English statute on arbitration, accepted the principle that ‘where the parties settle their dispute in the course of the arbitration it enables the arbitrator to issue an award recording the terms agreed. An agreed award thus has the status and effect of any other award on the merits. Accordingly, an agreed award is enforceable even though the arbitrator has not actually made a decision but simply recorded the agreed terms.’5 [22] Where the parties to a dispute referred to arbitration reach a settlement agreement on the main issue in the dispute, that could result in the arbitration proceedings being redundant, as there would be no further dispute to adjudicate. This question would be best answered with reference to the circumstances of each case, primarily on the merits. In this instance the high court did not deal with the merits. This Court therefore declines to adjudicate the merits as it is not a court of first instance. An appropriate order in this regard would be to refer the matter back to the high court for the adjudication of the merits. [23] In this case the high court erred in law and fact, in dismissing the appellant’s claim on a point in limine. The parties agreed in clause 5 of the interim award that the final report of the independent expert will be binding on them. The appellant’s cause of action is therefore founded on that report. The appeal should therefore succeed and the order of the high court should be set aside. As regards the costs, these should follow the result. 4 Bidoli v Bidoli [2010] ZAWCHC 39 para 28. 5 Bidoli v Bidoli and Another [2011] ZASCA 82; 2011 (5) SA 247 (SCA) para 8. 12 [24] The following order shall issue: 1 The appeal is upheld with costs, including the costs of the application for leave to appeal, such costs to include the costs consequent upon the employment of two counsel. 2 Orders 1 to 4 of the high court are set aside and replaced with an order in the following terms: ‘The second point in limine raised by the respondent is dismissed with costs, such costs to include the costs consequent upon the employment of two counsel.’ 3 The matter is remitted to the high court to be determined on the merits. _____________________ S P MOTHLE JUDGE OF APPEAL 13 APPEARANCES: For appellant: A. G Sawma SC with D.L Williams Instructed by: Alan Jacobs & Associates, Johannesburg Lovius Block Attorneys, Bloemfontein For respondent: I Jamie SC with L Stansfield Instructed by: Webber Wentzel Attorneys, Cape Town Phatshoane Henny Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 14 June 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 Krohne (Pty) Ltd v Strategic Fuel Fund Association (Case no 476/2023) [2024] ZASCA 99 (14 June 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal, with costs, against the decision of the Gauteng Division of the High Court, Johannesburg (the high court). Paragraphs 1 to 4 of the order of the high court was set aside and replaced with an order that: ‘The second point in limine raised by the respondent is dismissed with costs, such costs to include the costs consequent upon the employment of two counsel, one of whom is senior counsel; The matter is remitted to the high court to be determined on the merits.’ Strategic Fuel Fund Association (the respondent), acquires, maintains, monitors and manages South Africa’s strategic energy feedstocks and carries, in order to ensure security in the supply of energy. One of the crucial aspects of the respondent’s functions was to measure accurately the precise volume of crude oil that is discharged into the tanks and subsequently exported out of the tanks of its facilities. Krohne (Pty) Ltd (the appellant) successfully tendered for the supply, installation and commissioning of the metering system at the Saldanha Terminal. In terms of the contract concluded between the appellant and the respondent, the appellant’s services included the designing, calibration and installation of the metering cabinets, flow computers and master metering skids and all associated electrical reticulation, including necessary and associated equipment for the system (the KOG metering system). It was a further term of the agreement that payment would be made in tranches, with the final 10% retained as a performance retention fee, payable upon completion and certification of the appellant’s performance of the services. A dispute arose between the appellant and the respondent in regard to the accuracy of the KOG metering system. The appellant contended that it had completed its task as contracted and was entitled to payment of the 10% balance of the contract price. On demand of such payment, the respondent raised the query that the installed system did not operate within the specification agreed to in the contract. The parties agreed to refer the matter to arbitration, where a settlement agreement was entered into in terms of which the parties agreed to appoint an independent expert to determine the accuracy of the KOG metering system. The settlement agreement was endorsed by the arbitrator as an interim award. The parties further agreed that upon the certification of the accuracy of the KOG metering system, the respondent would be liable for payment of the outstanding 10% performance retention fee to the appellant together with interest thereon. SGS Gulf Limited (SGS) was appointed by the parties, who 2 eventually provided a final report on the functioning of KOG metering systems. The appellant interpreted the final report to confirm that the metering systems operated within the specification agreed to by the parties. The appellant subsequently made a demand for payment in terms of the arbitration and upon failure of the respondent to pay, issued an application for the recovery of the agreed outstanding balance in the high court. The high court upheld the respondent’s point in limine and dismissed the application on the basis that the appellant lacked a cause of action. The appeal is with leave of the high court. The SCA held that the high court misdirected itself when it dealt with the validity or otherwise of the interim award. The issue to be dealt with by the high court was whether the SGS report concluded that the KOG metering system operated in accordance with the specifications agreed to by the parties. The SCA held further that the high court erred in law and fact by dismissing the appellant’s claim on a point in limine. The parties agreed in the interim award that the final report of the independent expert would be binding on them and held further that the appellant’s cause of action was founded on the report. The SCA accordingly upheld the appeal and remitted the matter back to the high court for determination on the merits. ~~~~ends~~~~

4305

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 783/2023 In the matter between: MEMBER OF THE EXECUTIVE COUNCIL FOR ECONOMIC DEVELOPMENT, GAUTENG FIRST APPELLANT GAUTENG GROWTH AND DEVELOPMENT AGENCY SOC LTD SECOND APPELLANT and SIBONGILE VILAKAZI FIRST RESPONDENT THANDIWE GODONGWANA SECOND RESPONDENT LENTSWE MOKGATLE THIRD RESPONDENT DAVID MAIMELA FOURTH RESPONDENT THEMBISA FAKUDE FIFTH RESPONDENT Neutral citation: MEC for Economic Development, Gauteng and Another v Sibongile Vilakazi and Others (783/2023) [2024] ZASCA 126 (17 September 2024) Coram: DAMBUZA, MOCUMIE, KGOELE and SMITH JJA, and DOLAMO AJA Heard: 23 August 2024 Delivered: 17 September 2024 Summary: Civil procedure – whether requirements for interim interdict satisfied – appealability of interim order – order has final effect and disposed substantial portion of disputes – mootness – whether judgment will have practical effect. 2 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Nyathi J, sitting as court of first instance): 1 The appeal is upheld with costs including the costs of two counsel, where so employed. 2 The order of the high court is set aside and replaced with the following order: ‘(a) The application is dismissed. (b) Costs shall follow the result of the relief sought in Part B of the notice of motion.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Smith JA (Dambuza, Mocumie and Kgoele JJA, and Dolamo AJA concurring): Introduction [1] This is an appeal against the judgment of the Gauteng Division of the High Court, Pretoria (the high court), delivered on 18 May 2023 and granting the respondents interim relief pending the finalisation of a review application. The first appellant is the Member of the Executive Council for Economic Development, Gauteng, (the MEC). The second appellant is the Gauteng Growth and Development Agency (Proprietary) Limited (the Agency), a company established in terms of the Gauteng Growth and Development Agency Act (Proprietary) Limited Act 5 of 2003 (the Act). Its objects are, inter alia, to promote economic growth, enable private sector investment and to create sustainable employment opportunities in the Province.1 The respondents were members of the Agency’s board of directors until 24 March 2023, when the MEC, being of the view that the relationship between her and board members had irretrievably broken down, terminated their directorships and dissolved the board. [2] Aggrieved by the MEC’s decision, the respondents brought an application, inter alia, for an order reviewing and setting aside the decision. Their notice of motion was 1 Section 3 of the Gauteng Growth and Development Agency (Proprietary) Act 5 of 2003. 3 structured in two parts, with Part A, inter alia, seeking the suspension of the MEC’s decision pending the finalisation of the relief sought in Part B, which is the review application. [3] The high court (per Nyathi J) found for the respondents and ordered that: (a) the MEC’s decision to terminate the directorships of the respondents was suspended with effect from 24 March 2023; (b) the respondents were reinstated as board members with effect from the same date; and (c) the MEC was interdicted from appointing any board members in substitution of the respondents. The high court also ordered the appellants, jointly and severally, to pay the respondents’ costs on the attorney and client scale. The punitive costs order was based on a finding that, in dissolving the board, the MEC was motivated by ulterior purposes. [4] The appellants contend that the high court failed to consider properly whether the respondents had established the legal requirements for interim relief and has impermissibly purported to pronounce finally on issues which fell for decision in the review application. They appeal against the order with the leave of the high court. The factual background [5] The following material facts are common cause. On 1 October 2021, the MEC’s predecessor, Mr Parks Tau (Mr Tau) appointed the respondents as members of the Agency’s board of directors for a period of three years in terms of s 8 of the Act. That section provides that the MEC must appoint a board of directors, consisting of not less than nine and no more than 12 members. A board member’s term of office is three years, and he or she is eligible to be reappointed for another term. In terms of s 8 of the Act, a board member may, however, not serve more than two consecutive terms. The MEC also appointed the first respondent as the Chairperson of the board. In terms of s 8(2) of the Act, the MEC also has the power to appoint the Agency’s Group Chief Executive Officer (the GCEO). [6] By the time that the MEC had replaced Mr Tau as the responsible member of the executive council, the board had already commenced the recruitment process for the appointment of a GCEO. That process was purportedly undertaken in terms of the department’s ‘Transversal Policy on Recruitment and Secondment’ and overseen by 4 the Head of the Department of Economic Development. Upon completion of the recruitment process, the board submitted a report to Mr Tau recommending the appointment of the acting GCEO, Mr Simphiwe Hamilton (Mr Hamilton), on a five-year fixed term contract. [7] Mr Tau concurred with the board’s recommendation and, on 27 September 2022, he prepared a memorandum to the executive council recommending that Mr Hamilton be appointment as GCEO. However, before he could present the memorandum to the executive council, the Premier announced a reshuffling of the executive council. Mr Tau was removed as MEC of Economic Development and replaced by the current MEC. [8] On 10 November 2022, the first respondent, in her capacity as Chairperson of the board, met with the MEC to introduce herself, and to brief her regarding organisational strategy and the profile of the preferred candidate for appointment as the new GCEO. At that meeting, the MEC informed the first respondent that she already had a person in mind for the position of GCEO. According to the MEC, that person would assist her in areas where she considered herself challenged, such as interacting with investors. The MEC’s preferred candidate was not amongst those who had been interviewed and shortlisted by the board. [9] The MEC thereafter sent the profile of her preferred candidate to the first respondent by WhatsApp. The latter, being of the view that the candidate did not have the requisite skills and experience, informed the MEC that her preferred candidate did not meet the minimum requirements for the position. The MEC then undertook to arrange for her and the first respondent to meet with her preferred candidate, whereafter they would agree on the way forward. The MEC, however, never arranged the meeting but instead met separately with Mr Hamilton. She told Mr Hamilton that even though he had been recommended by the board, she preferred the recruitment process to start afresh and that he was welcome to apply for the position. [10] Being of the view that the recruitment process was a matter jointly for the board and the MEC, the board took offence at the MEC’s intervention and, on 18 January 2023, wrote to her seeking her concurrence in Mr Hamilton’s appointment. 5 The MEC responded on 3 February 2023, expressing the view that the board’s submission was incomplete since it did not address the risk posed by the former GCEO’s legal challenge to his dismissal. The board replied that in its view there was no such risk since the position was vacant and had to be filled to ensure organisational stability. [11] The letter that appeared to have precipitated the breakdown in the relationship between the board and the MEC was penned by the latter on 22 February 2023. In that letter the MEC, inter alia, asserted her statutory powers, reminding the board that the power to appoint the GCEO vested in her, both in terms of the Act and the Memorandum of Incorporation. The MEC also took the board to task for its attempts to enlist the concurrence of the Provincial Government (as shareholder) and stated that in terms of the enabling legislation, she alone exercised the powers of the shareholder. [12] She also stated that she would ‘be restarting the process to appoint a GCEO in line with s 8 of the GCDA Act’. She requested the board to nominate a person to serve on the recruitment panel which will be responsible for shortlisting, interviewing and recommending a person to be appointed as the GCEO. [13] The board replied to that letter on 25 February 2023, apologising if the tone of its letter ‘came across as disrespectful, undermining or an act of defiance’. It also stated that the board members had deliberated about the matter and resolved to meet with her to discuss the differences regarding ‘interpretation and implications’ of her instruction. [14] The MEC’s response, on 24 February 2023, was firm and categorical. She was of the view that there was nothing to discuss since the relevant statutory provisions are unambiguous regarding her powers to appoint the GCEO. She insisted that her instructions were therefore lawful. She accordingly refused the request for a meeting and asked the board members to provide written reasons, on or before 6 March 2023, why her lawful instructions could not be executed by the board. 6 [15] After writing to the MEC to explain that the board members’ conduct should not be construed as an act of defiance against the MEC but merely an attempt to clear misunderstandings between them, the board again wrote to her on 13 March 2013, invoking the dispute resolution process provided for in the Shareholders Compact. While the MEC initially indicated her willingness to engage in the process, she wrote to the board members, on 22 March 2023, informing them that after having obtained legal advice, she decided to withdraw the letter wherein she indicated her willingness to submit to the dispute resolution process. She further informed them that they were required to submit written reasons, by 17h00 on 23 March 2023, why they should not be removed as board members. [16] Only the first, fourth and fifth respondents submitted representations before the deadline. On 24 March 2023, the MEC wrote to them informing them that she was of the view that there had been a breakdown of trust, the relationship between her and the board was no longer functional and she had therefore decided to terminate their directorships. She also wrote to the second and third respondents on the same day confirming that they had failed to submit representations and informing them of the termination of their directorships. [17] It is against the backdrop of the foregoing factual matrix that this Court must consider the following issues: (a) Is the order of the high court a ‘decision’ as contemplated in terms of s 16(1)(a) of the Superior Courts Act 10 of 2013 (the Superior Courts Act), in other words, is the order appealable? (b) Has the appeal been rendered moot because the respondents’ terms of office as board members will expire on 31 September 2024? (c) And, depending on the findings in respect of (a) and (b), whether the respondents satisfied the requirements for an interim interdict. Appealability of the high court’s order [18] The first issue that I must consider regarding the appealability of the high court’s order, is the relevance, if any, of a judgment of that court (per Van de Schyff J; case 7 number 2023-032601, delivered on 14 August 2023),2 in an application brought by the MEC for relief in terms of s 18(2) of the Superior Courts Act for the suspension of the order pending the finalisation of the appeal. The high court, in addition to dismissing the application, also declared that ‘[t]he order handed down by Nyathi J on 18 May 2023 is an interim order that does not have the effect of a final judgment’. [19] While the respondents initially contended that the judgment was dispositive of the issue of appealability, they understandably did not really pursue that point with any vigour in argument before us. There is a fundamental reason why that order cannot bind this Court. It is trite that once leave to appeal to this Court against an order of the high court has been granted, this Court becomes seized of, not only the appeal but of all other ancillary issues, including that of the appealability of the order. The order, having been granted by the high court in the context of s 18 proceedings, is therefore inconsequential as to the question whether the jurisdiction of this Court has been engaged. That remains an issue to be determined by this Court in the exercise of its appellate jurisdiction. [20] The respondents also contend that the high court’s order is ‘classically interlocutory’ and therefore not appealable. In support of this submission, counsel for the respondents placed particular emphasis on the fact that the high court’s order was explicitly stated to be ‘[p]ending the finalization of the review envisaged in Part B of the notice of motion’ and submitted that the MEC’s decision was merely ‘suspended’ as opposed to ‘set aside.’ Properly construed in terms of the accepted canons of construction, the order is manifestly temporary in nature and effect, or so counsel argued.3 [21] In Zweni v Minister of Law and Order (Zweni), this Court laid down the following requirements for appealability of an order: (a) the decision must be final in effect and not open to alteration by the court of first instance; (b) it must be definitive of the rights 2 MEC responsible for Economic Development, Gauteng v Vilakazi and Others [2023] ZAGPPHC 686. 3 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) at para 18. 8 of the parties; (c) and it must have the effect of disposing of at least a substantial portion of the relief claimed in the main proceedings.4 [22] It is, however, now established law that even if an order does not meet the Zweni test, a matter may be appealable if it is in the interests of justice that it should be regarded as such. In United Democratic Movement and Another v Lebashe Investment Group (Pty) Ltd and Others (Lebashe), the Constitutional Court made it clear that the ‘interests of justice approach’ is not limited to the Constitutional Court but applies equally to this Court.5 [23] In Government of the Republic of South Africa and Others v Von Abo, this Court summarised the present approach to appealability of orders in our law as follows: ‘It is fair to say that there is no checklist of requirements. Several considerations need to be weighed up, including whether the relief granted was final in its effect, definitive of the rights of the parties, disposed of a substantial portion of the relief claimed, aspects of convenience, the time at which the issue is considered, delay, expedience, prejudice, the avoidance of piecemeal appeals and the attainment of justice.’6 [24] The fact that the interim order was interlocutory to the review application is not decisive as to appealability.7 In Lebashe, the Constitutional Court explained that: ‘In deciding whether an order is appealable, not only the form of the order must be considered, but also, and predominantly, its effect. Thus, an order which appears in form to be purely interlocutory will be appealable if its effect is such that it is final and definitive of any issue or portion thereof in the main action. By the same token, an order which might appear, according to its form, to be finally definitive in the above sense may, nevertheless, be purely interlocutory in effect.’8 [25] Applying these legal principles to the facts of this matter, there can, in my view, be little doubt that the order is appealable. First, as I said earlier, the judgment purports 4 Zweni v Minister of Law and Order [1992] ZASCA 197; [1993] 1 All SA 365 (A); 1993 (1) SA 523 (A) at 532J–533. 5 United Democratic Movement and Another v Lebashe Investment Group (Pty) Ltd and Others [2022] ZACC 34; 2023 (1) SA 353 (CC); 2022 (12) BCLR 1521 (CC) para 45. 6 Government of the Republic of South Africa v Von Abo [2011] ZASCA 65; 2011 (5) SA 262 (SCA); [2011] 3 All SA 261 (SCA) para 17. 7 Cyril and Another v The Commissioner for the South African Revenue Service [2024] ZASCA 32. 8 Lebashe para 41. 9 to make final pronouncements regarding virtually all the issues that will fall for decision in the review application. These relate not only to the rationality of the MEC’s decision but also her bona fides. Moreover, a punitive costs order was made against her based on those findings. The judgment thus has the effect of disposing of a substantial portion of the relief sought in Part B of the notice of motion. [26] Second, the suspension of the MEC’s decision to dissolve the board and the reinstatement of the respondents as board members have immediate and substantial consequences for the second appellant. Apart from the fact that her decision to terminate the respondents’ memberships of the board has been suspended, she is also interdicted from appointing other board members in their stead. This undesirable situation has now endured for more than 18 months. I am accordingly satisfied that the high court’s order meets all the requisites for appealability enunciated in Zweni and that, in any event, it is in the interest of justice that the appeal be heard. I am accordingly satisfied that the order of the high court is a ‘decision’ contemplated in s 16(1)(a) of the Superior Courts Act. Is the appeal moot? [27] This appeal was heard on 23 August 2023. It is common cause that the respondents’ term of office will expire on 31 September 2024. They contend that for this reason the appeal has become moot and will serve no practical purpose. Any pronouncement that this Court will make regarding the disputes between the parties will therefore amount to ‘advisory opinions and abstract propositions of law’. [28] Mootness is when a matter ‘no longer presents an existing or live controversy’. The doctrine is based on the notion that judicial resources ought to be used efficiently and should not be dedicated to advisory opinions or abstract propositions of law, and that courts should avoid deciding matters that are ‘abstract, academic or hypothetical’.9 9 National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs [1999] ZACC 17; 2000 (2) SA 1; 2000 (1) BCLR 39 para 21. 10 [29] The Constitutional Court, in Normandien Farms (Pty) Limited v South African Agency for Promotion of Petroleum Exportation and Exploitation SOC Limited and Others,10 held that ‘mootness is not an absolute bar to the justiciability of an issue [and that this] Court may entertain an appeal, even if moot, where the interests of justice so require.’ The Court ‘has discretionary power to entertain even admittedly moot issues.’11 [30] Factors which guide the exercise of the court’s discretion include: ‘(a) whether any order which it may make will have some practical effect either on the parties or on others; (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.’12 [31] In my view, there are various compelling factors in this matter that militate against a finding of mootness. First, as I explain below, even though the high court’s order is framed as an interlocutory order, it is final in effect. The high court has finally pronounced on all the issues that will fall for decision in the review application. Instead of limiting its enquiry to the issue of whether the respondents have established reasonable prospects of success in the review, it has effectively and impermissibly pronounced on the review application. The high court has, inter alia, finally pronounced on the nature and extent of the MEC’s statutory powers and how such powers should be exercised by the MEC. That finding has far-reaching implications for the MEC and her future interactions with the Agency’s board. [32] Second, and as the appellants’ counsel pointed out, the respondents will, upon the expiry of their terms of office, become eligible for re-appointment for another term. 10 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) (Normandien Farms) para 48. 11 POPCRU v SACOSWU [2018] ZACC 24; 2019 (1) SA 73 (CC); 2018 (11) BCLR 1411 (CC) para 44; see also President of the Republic of South Africa v Democratic Alliance [2019] ZACC 35; 2020 (1) SA 428 (CC); 2019 (11) BCLR 1403 (CC) para 17. 12 Normandien Farms para 50. 11 The reasons for the termination of their directorships will no doubt be relevant when the MEC considers whether to reappoint them. [33] Finally, the high court found that, in terminating the respondents’ membership of the board, the MEC has acted maliciously and for ulterior reasons. That finding was the basis for imposing the punitive costs order. This is also a final decision which will prejudice the MEC in her defence in respect of the review application. For these reasons, I am of the view that the judgment of this Court will have a practical effect and that the matter is consequently not moot. Discussion [34] The respondents challenged the MEC’s decision to dissolve the Agency’s board of directors (communicated to them on 24 March 2023), on the following grounds: (a) The MEC’s decision was ‘capricious’ and she acted with ulterior motives, namely that she wanted to impose a candidate of her choice, even though he had not been shortlisted and interviewed for the position. Her decision was therefore influenced by bias and is consequently unlawful; (b) The MEC’s instruction to the board to commence the recruitment process afresh constituted an abuse of her powers; (c) The decision was procedurally unfair since they were only given 24 hours to make representations – that period was unreasonably short in the circumstances; (d) The MEC interfered in the recruitment process in ‘a corrupt, unethical, unprofessional manner against governance rules and the law’; (e) The power to recruit and select the GCEO had been delegated to the Agency in terms of the Transversal Recruitment Policy. The policy does not usurp the statutory powers of the MEC but allows the exercise of those powers within a corporate governance framework that promotes efficiency, transparency and fairness. The MEC’s unwarranted interference in the recruitment process thus constituted an abuse of her powers and was consequently unlawful; and (f) The decision offends the principle of legality because it was irrational and unreasonable. [35] As mentioned, the high court, although being mindful of the fact that it was only seized with Part A of the notice of motion, nevertheless made substantive and final 12 findings regarding matters which fell for decision in Part B of the notice of motion. Although it correctly summarised the legal requirements for interim relief, it identified the ‘central issue to be decided’ as being ‘whether the MEC has the powers to appoint directors and the CEO’. It then found that the conduct of the MEC was ‘left wanting’ because she did not obtain the shareholder’s resolution to dissolve the board, thereby lending credence to the respondents’ assertions that she had ulterior motives; impermissibly cancelled the dispute resolution process; ignored the involvement of her predecessor in the matter; and refused to meet with the board on more than three occasions, thus failing to comply with the shareholder compact. [36] The high court then found that ‘the inescapable conclusion is that the board has unbeknown to it, through asserting its independence and by being diligent invited the wrath of the first respondent, resulting in its demise’. And, based on its earlier finding that the MEC was motivated by ulterior motives, and she has behaved in an ‘inordinately harsh and heavy-handed’ manner, the high court expressed its ‘displeasure by way of a punitive costs order’. [37] There is no indication in the judgment that the high court has given any consideration to whether the respondents have established the legal requirements for interim relief. For this reason, it falls to this Court to decide whether, on the facts put up by the respondents, they were entitled to the interim interdict. [38] The respondents’ application for interim relief was based on the following contentions: (a) They have been affected by the allegations made by the MEC in ‘their various professional, full-time, and non-executive director roles’; they continue to suffer ‘reputational damage’; and the termination of their directorships will impact their economic prospects and opportunities for future appointments in the public or private sector. They will therefore not be able to obtain substantial redress in due course; (b) The constitutional rights of the directors have been violated and they had no alternative but to seek legal protection of those rights; (c) It is in the public interests that the Agency should be stable and subject to proper corporate governance and the MEC’s decision has had the effect of destabilizing the Agency; 13 (d) There was a reasonable apprehension that the MEC would swiftly appoint a new board. Such an appointment would be invalid and would lead to fruitless and wasteful expenditure; (e) The unlawful dissolution of the board has had serious consequences for the second appellant’s four subsidiaries. As a result of the dissolution, meetings of their risk and auditing committees had to be cancelled before their risk plans could be finalised in accordance with the Public Finance Management Act 1 of 1999, thus creating a governance crisis; and (f) The MEC’s decision to terminate Mr Hamilton’s acting appointment before the expiry of his acting period has had a negative effect on the Agency’s stability. [39] The requirements for an interim interdict are: (a) a prima facie right, even if it is open to some doubt; (b) injury actually committed or reasonably apprehended; (c) the balance of convenience; and (d) the absence of similar protection by any other remedy.13 [40] An applicant is not required to establish his or her right on a balance of probabilities. It is sufficient if the right is prima facie established, though open to some doubt. The proper approach is to take the facts averred by the applicant together with any facts averred by the respondent and which the applicant cannot dispute. The court must then consider whether, on the probabilities, the applicant could on those facts obtain final relief in due course. In other words, an applicant must establish that he or she has reasonable prospects of success in the main proceedings.14 [41] As explained above, it is trite that the approach that a court hearing an application for interim relief will adopt in considering whether a proper case has been made out for the relief sought is radically different from that applicable to final relief. In respect of the latter, the principles enunciated in Plascon Evans Paints (TVL) Ltd v Van Riebeeck Paints (Pty) Ltd15 are applicable, meaning that the application is 13 Setlogelo v Setlogelo 1914 AD 221 at 227; Webster v Mitchell 1948 (1) SA 1186 (W) (Webster v Mitchell) at 1187. 14 Webster v Mitchell at 1189. 15 Plascon-Evans Paints (TVL) Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; [1984] 2 All SA 366 (A); 1984 (3) SA 623; 1984 (3) SA 620 (AD). 14 effectively decided on the respondent’s version. The court hearing an application for interim relief must therefore be cautious not to make any final findings in respect of issues that will fall for consideration in the main proceedings. [42] Furthermore, the Constitutional Court, in National Treasury and Others v Opposition to Urban Tolling Alliance and Others (Urban Trolling Alliance), held that the prima facie right that an applicant is required to establish is not merely the right to approach a court in order to review an administrative decision, ‘[i]t is a right to which, if not protected by an interdict, irreparable harm would ensue. An interdict is meant to prevent future conduct and not decisions already made.’16 [43] While it was not immediately apparent from the respondents’ founding affidavit exactly what prime facie rights they sought to assert in the application for interim relief, during argument, their counsel nailed their colours firmly to the mast of a constitutional entitlement to a fair procedure. In this regard, their counsel submitted that the 24 hours allowed for them to provide reasons why their directorships should not be terminated, was wholly inadequate and unfair. [44] Section 3(1) of the Promotion of Administrative Justice Act 3 of 2000 (PAJA), provides that administrative action that materially and adversely affects the rights and legitimate expectations of any person must be procedurally fair. However, s 3(2)(a) of PAJA provides that ‘fair administrative procedure depends on the circumstances of each case’. In Zondi v MEC for Traditional and Local Government Affairs, the Constitutional Court held that the overriding consideration will always be what fairness demands in the circumstances of a particular case.17 [45] Section 3(3) of PAJA provides that, in order to give effect to the right to fair administrative action, an administrator must give the affected person adequate notice of the nature and purpose of the proposed administrative action; a reasonable opportunity to make representations; a clear statement of the administrative action; 16 National Treasury and Others v Opposition to Urban Tolling Alliance and Others [2012] ZACC 18; 2012 (6) SA 223 (CC); 2012 (11) BCLR 1148 (CC) (Urban Trolling Alliance) para 50. 17 Zondi v MEC for Traditional and Local Government Affairs [2004] ZACC 19; 2005 (3) SA 589 (CC); 2005 (4) BCLR 347 (CC) para 114; see also s 3(2)(a) of PAJA and Joseph and Others v City of Johannesburg and Others [2009] ZACC 30; 2010 (3) BCLR 212 (CC); 2010 (4) SA 55 (CC). 15 adequate notice of any right of review or internal appeal; and adequate notice of the right to request reasons in terms of s 5. [46] The respondents’ main complaint regarding the procedure adopted by the MEC was that the period of 24 hours allowed for representations was unreasonably short in the circumstances. Although 24 hours may, on the face of it, appear to be a rather short period for written representations, the abovementioned authorities confirm that procedural fairness is contextual. Thus, what may be an unreasonably short period in the context of a particular factual matrix, may well be regarded as reasonable in another. [47] There are various factors that rendered the period of 24 hours eminently reasonable in the circumstances. First, there had been extensive correspondence between the parties regarding the very issue in respect of which the MEC required representations, namely the board’s refusal to comply with her instructions regarding the recruitment process. The MEC had, in several letters addressed to the board, expressed her views regarding the applicable statutory provisions and what she expected from the board. Board members could, therefore, hardly have been under any illusion regarding the cause of her dissatisfaction. Moreover, it is evident from the correspondence between the board and the MEC that the former had, on various occasions, comprehensively addressed the MEC’s assertions regarding their respective roles in the recruitment process. The board members could, thus, hardly have reasonably complained that they required more time to formulate their representations. [48] Second, the first, fourth and fifth respondent did, in fact, submit their written representations by the stated deadline and it appears from the founding affidavit that they were able to do so relatively comprehensively. Furthermore, not one of them has indicated that they would have said more if they had more time. I am accordingly not persuaded that they have been able to prove prima facie rights. [49] Furthermore, on the common cause facts, the scales had been tipped comprehensively in favour of the appellants in respect of the other requisites for interim relief. It is common cause that four directors had resigned and four did not bother to 16 make representations. The directorships of the latter group were also terminated and they did not challenge the MEC’s decision. Since the Act provides that the board must have at least nine members at any time, the interim re-instatement of the respondents was legally inconsequential and had no practical effect. [50] The high court also failed to consider that the respondents had made serious allegations of misconduct against the MEC, inter alia, accusing her of corruption. Apart from the fact they had failed to provide any factual basis for these serious allegations, it undoubtedly had the effect of further souring the relationship between the parties and removing any possibility of the level of cooperation which good corporate governance would demand. The balance of convenience was therefore manifestly in favour of the appellants. [51] The respondents also failed to establish that they would suffer irreparable harm if the interim were not granted. Their claims that they would suffer reputational harm and that their prospects of future appointments would be prejudiced if they were not vindicated through reinstatement were exaggerated, if not farfetched. It is common cause that their directorships were terminated because of the breakdown of the relationship between them and the MEC and not because of any alleged misconduct on their part. The only harm that they could possibly have suffered would have been financial in nature. There was therefore no reason why they could not obtain substantial redress in respect of any financial losses that they may be able to prove in due course. [52] Finally, the respondents also failed to show that there are reasonable prospects that they would succeed in the review application. They have conceded that s 8 of the Act unambiguously vests the power to appoint the Agency’s GCEO and board of directors in the MEC (and by implication also the power to terminate their memberships). There is no requirement in the Act that she must enlist the concurrence of the Provincial Government when exercising those powers. Furthermore, the respondents’ assertions regarding bias and ulterior motives on the part of the MEC are bald allegations without any factual bases. The correspondence annexed to their founding affidavit evince that the MEC terminated the respondents’ directorships because they were unable to see eye to eye regarding the recruitment process for a 17 new GCEO; the board refused to acknowledge her statutory powers; and, in her view, the relationship between her and the board members had broken down irretrievably. There is no indication in the judgment that the high court considered the respondents’ prospects of success in the review application in the light of these factors. For the purposes of this appeal, I need not put it any higher than this. [53] There is another reason why the high court should have refused the interim relief and it is the following. In Urban Tolling Alliance, the Constitutional Court held that in deciding whether to interdict the exercise of executive or legislative powers a court must carefully consider how the interdict will disrupt those functions and thus ‘whether its restraining order will implicate the tenet of the division of powers’.18 The Court further cautioned that: ‘While a court has the power to grant a restraining order of that kind , it does not readily do so, except when a proper and strong case has been made for the relief and, even so, only in the clearest of cases.’19 [54] For the reasons set out above, I am of the view that this is not one of those cases where judicial limitation of executive powers can be justified. The high court should thus have refused the interim relief for this reason also. I am consequently of the view that the respondents failed to establish the requisites for interim relief and the appeal must therefore succeed. Order [55] In the result I make the following order: 1 The appeal is upheld with costs including the costs of two counsel, where so employed. 2 The order of the high court is set aside and replaced with the following order: ‘(a) The application is dismissed. (b) Costs shall follow the result of the relief sought in Part B of the notice of motion.’ 18 Urban Trolling Alliance para 65. 19 Ibid. 18 ________________ J E SMITH JUDGE OF APPEAL 19 Appearances For the appellants: M Sello SC with M E Manala Instructed by Mncedisi Ndlovu & Sedumedi Attorneys Johannesburg Honey Attorneys, Bloemfontein. For the respondents: M Majozi Instructed by: Mgeno Mteto Inc., Johannesburg Kramer Weihmann Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 17 September 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 MEC for Economic Development, Gauteng and Another v Sibongile Vilakazi and Others (783/2023) [2024] ZASCA 126 (17 September 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal with costs, including the costs of two counsel, where so employed. It further set aside and substituted the order of the Gauteng Division of the High Court, Pretoria (the high court). The appellants are the Member of the Executive Council for Economic Development, Gauteng, (the MEC) and the Gauteng Growth and Development Agency (Proprietary) Limited (the Agency), a company established in terms of the Gauteng Growth and Development Agency Act (Proprietary) Limited Act 5 of 2003 (the Act). The respondents were members of the Agency’s board of directors until 24 March 2023, when the MEC, being of the view that the relationship between her and board members had broken down irretrievably, terminated their directorships and dissolved the board. The respondents, aggrieved by the MEC’s decision, approached the high court, inter alia, for an order reviewing and setting aside that decision. The high court found for the respondents and ordered that: (a) the MEC’s decision to terminate the directorships of the respondents was suspended with effect from 24 March 2023; (b) the respondents were reinstated as board members with effect from the same date; and (c) the MEC was interdicted from appointing any board members in substitution of the respondents. The high court also ordered the appellants, jointly and severally, to pay the respondents’ costs on the attorney and client scale, basing the punitive costs order on a finding that, in dissolving the board, the MEC was motivated by ulterior purposes. The material facts leading up to the application above are as follows. On 1 October 2021, the MEC’s predecessor, Mr Parks Tau (Mr Tau) appointed the respondents as members of the Agency’s board of directors for a period of three years in terms of s 8 of the Act. He also appointed the first respondent as the Chairperson of the board. In terms of s 8(2) of the Act, the MEC also has the power to appoint the Agency’s Group Chief Executive Officer (the GCEO). By the time that the MEC had replaced Mr Tau as responsible member of the executive council, the board had already commenced the recruitment process for the appointment of a new GCEO. Upon completion of the recruitment process, the board submitted a report to Mr Tau recommending the appointment of the acting GCEO, Mr Simphiwe Hamilton (Mr Hamilton), on a five-year fixed term contract. Mr Tau concurred with the board’s recommendation and, on 27 September 2022, he prepared 2 a memorandum to the executive council recommending that Mr Hamilton be appointment as GCEO. However, before he could present the memorandum to the executive council, the Premier announced a reshuffling of the executive council. Mr Tau was removed as MEC of Economic Development and replaced by the current MEC. On 10 November 2022, the first respondent, in her capacity as Chairperson of the board, met with the MEC to introduce herself, and to brief her regarding organisational strategy and the profile of the preferred new GCEO. At that meeting, the MEC informed the first respondent that she already had a person in mind for the position of GCEO. The MEC’s preferred candidate was not amongst those who had been interviewed and shortlisted by the board. There then followed extensive correspondence between the board and the MEC, in which the latter asserted her statutory powers to appoint the GCEO and the former insisted that it was a matter jointly for the board and the MEC. On 22 March 2023, the MEC wrote to the board members informing them of her unwillingness to submit to dispute resolution process as agreed earlier. She further informed them that they were required to submit written reasons, by 17h00 on 23 March 2023, why they should not be removed as board members. Only the first, fourth and fifth respondents submitted representations before the deadline, and, on 24 March 2023, the MEC wrote to them informing them that she was of the view that there had been a breakdown of trust, the relationship between her and the board was no longer functional and she had therefore decided to terminate their directorships. She also wrote to the second and third respondents on the same day confirming that they had failed to submit representations and informing them of the termination of their directorships. It was this event that caused the respondents to approach the high court as stated above. The three issues before the SCA related to: (a) whether the order of the high court was a ‘decision’ as contemplated in terms of contemplated in s 16(1)(a) of the Superior Courts Act 10 of 2013 (the Superior Courts Act) and is appealable; (b) whether the appeal has been rendered moot as the respondents’ terms of office as board members will expire on 31 September 2024; and (c) depending on the findings in respect of (a) and (b), whether the respondents satisfied the requirements for an interim interdict. On the first issue, the SCA found that on the facts before it, there can be little doubt that the order is appealable because the high court’s judgment purported to make final pronouncements regarding virtually all the issues that will fall for decision in the review application. The SCA found that the suspension of the MEC’s decision to dissolve the board and the reinstatement of the respondents, as board members, had immediate and substantial consequences for the second appellant. The SCA consequently concluded that that the order of the high court is a ‘decision’ contemplated in s 16(1)(a) of the Superior Courts Act. With regards to the question of mootness, the SCA held that there are various compelling factors that militate against a finding of mootness because, first, even though the high court’s order was framed as an interlocutory order, it was final in effect. Second, the SCA pointed out that, upon the expiry of their terms of office, the respondents will become eligible for re-appointment for another term. And third, the SCA concluded that the high court’s finding that the MEC had acted maliciously and for ulterior reasons was the basis for imposing the punitive costs order. That was also a final decision which would prejudice the MEC in her defence in respect of the review application. The SCA held that, on the common cause facts, the respondents have failed to prove prima facie rights; the scales had been tipped comprehensively in favour of the appellants in respect of the other requisites for interim relief; and that the interim re-instatement of the respondents was legally inconsequential and had no practical effect. In addition, the respondents also failed to establish that they would suffer irreparable harm if the interim relief was not granted and to show that there were reasonable prospects that they would succeed in the review application. 3 In the result, the SCA upheld the appeal with costs, including the costs of two counsel, where so employed, set aside the order of the high court and replaced it with an order dismissing the application for interim relief. --------oOo--------

4328

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 773/23 In the matter between: GERDA RUTH PRINGLE APPELLANT and JOSEPH MATOME MAILULA RESPONDENT Neutral citation: Pringle v Mailula (773/2023) [2024] ZASCA 146 (25 October 2024) Coram: MOKGOHLOA, MABINDLA-BOQWANA and KEIGHTLEY JJA and BAARTMAN and MASIPA AJJA Heard: 19 September 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 25 October 2024. Summary: Protection from Harassment Act 17 of 2011 (the Act) – whether the magistrates’ court had powers to consider new evidence in terms of ss 9(2) and (3) of the Act – whether in accepting further evidence the magistrates’ court compromised the respondent’s right to a fair trial – whether associating someone with ‘Verwoerd’ amounts to racial slur – did racial slur and electronic correspondence amount to harassment. 2 ORDER On appeal from; Limpopo Division of the High Court, Polokwane (Naude- Odendaal J and Mdhluli AJ, sitting as a court of appeal): 1 The appeal is upheld with no order as to costs. 2 The order of the high court is set aside and replaced with the following: ‘The appeal is dismissed with no order as to costs.’ JUDGMENT Baartman AJA (Mokgohloa, Mabindla-Boqwana, Keightley JJA and Masipa AJA concurring): [1] The Limpopo Division of the High Court, Polokwane (the high court) set aside a harassment order, granted in terms of the Protection from Harassment Act 17 of 2011 (the Act) by the magistrate at Modimolle (the magistrates’ court). In setting aside the order, the high court held that the magistrates’ court had accepted further evidence in circumstances that violated the respondent’s right to a fair hearing. The appeal is against that order with the special leave of this Court. [2] At the times relevant to this judgment, the appellant, Ms Gerda Ruth Pringle, was the principal of Eenheid Primary School (the school) in Modimolle and the respondent, Mr Joseph Matome Mailula’s minor child was a pupil at the school. Both parties were members of the school’s governing body (the SGB), the appellant ex lege, and the respondent, as an elected parent. Soon after he became a member of the SGB, the respondent addressed email correspondences to the appellant seeking information regarding the operations of the SGB. The appellant answered some of the emails and referred others to the chairperson of the SGB. In the answering affidavit, the respondent annexed, among others, email 3 correspondence AA11, dated 31 May 2021 at 07h26, addressed to the appellant in which he stated: ‘I have asked you on numerous occasions to give me access to school information and you have either given me the run around or deferred the matter to the SGB. . . I will be launching a formal complaint with your employer regarding your unprofessional conduct as the principal of the school.’ [3] Matters came to head at the SGB meeting on 1 June 2021 (the June meeting) where the majority of the members resolved to suspend the respondent. He did not take kindly to his suspension and went into a rage pointing his finger at Mr Chisi calling him a joke; he referred to three white SGB members, including the appellant, still finger pointing, ‘I will deal with Verwoerd’s kids’ and, pointing at the remainder of the SGB members, threatened to deal with them as well. [4] The appellant considered the remark ‘I will deal with Verwoerd’s kids’ defamatory, racist and a threat. She removed the respondent from the SGB’s WhatsApp group and blocked his cellular telephone number on her personal cellular telephone. Undeterred, the respondent used an alternate cellular telephone number to contact the appellant. Thereafter, and on 3 June 2021, the appellant approached the magistrates’ court and applied for an order in terms of the Act. In her application, on the prescribed form, the appellant gave the following as grounds for the order she sought: (a) despite a request from the SGB, the respondent continued to contact her, even using an alternate number after she had blocked him on her personal phone, (b) on 1 June 2021, the respondent had threatened, pointing in her direction, that he ‘…will deal with Verwoerd’s kids’. (c) he made false accusations against her to the Department of Education and thereby brought her into disrepute with her employer. 4 (d) the appellant further alleged that she had felt threatened by the repetitive electronic communications and threats. Being in the respondent’s presence was also threatening to her. (e) she had laid criminal charges against the respondent and annexed her affidavit in those proceedings in which she alleged among others that, ‘The suspect is a very dangerous individual and will attack without provocation’. In the magistrates’ court [5] On 3 June 2021, the magistrate granted an interim order in the appellant’s favour, with the return date set for 14 June 2021, in the following terms: ‘3.1 The respondent is prohibited by this court from – . . . (b) enlisting the help of another person to engage in the harassment of the complainant and/or above related person/s; and/or (c) committing any of the following act/s: (i) Not to communicate with or contact the applicant/applicant’s children directly or indirectly neither via social media nor electronically. (ii) Not to be in the vicinity of the applicant’s house and or person. (iii) Not to threaten the applicant directly or indirectly. Not to attend any SGB meetings at school. . . . 3.2 (a) The respondent can contact the chairperson of the SGB regarding his child’s academic [performance].’ [6] On the return date, the respondent appeared in person and the magistrate reconsidered the order prohibiting the respondent from attending SGB meetings and removed that prohibition. Thereafter, the matter was postponed to afford the respondent an opportunity to seek legal representation. The respondent deposed to his answering affidavit on 21 July 2021 but filed it on 16 August 2021. 5 [7] In his answering affidavit, he alleged that the June 2021 meeting had not been called to ‘specifically address problems arising from emails and letters sent by [him]’, instead, it was to deal with his complaints against members of the SGB, as well as complaints against him from members of the SGB. He confirmed his temporary suspension from the SGB pending referral to a tribunal consisting of independent specialists. He denied that his communications with the appellant had been either ‘oppressive or unreasonable’, instead, it was ‘to enable [the respondent] to discharge [his] duties as a duly elected member of the SGB, and the parent of a pupil of Eenheid Primary school’. The respondent further annexed AA3-AA15 comprising email correspondence with the appellant. He described the conduct complained of as being at best, ‘unattractive’ and denied that the appellant had met the test for an interdict. [8] On 16 August 2021, the appellant filed a comprehensive replying affidavit that included a recording of the June 2021 meeting which the respondent had attached to email correspondence to her. She alleged that the recording had been edited and challenged the respondent to place the full recording before the court. He did not. The appellant had, in her replying affidavit, set out the time frame and subject matter of AA7 to AA15, emails that the respondent had annexed to his answering affidavit. The following appears from the summary: (a) On 28 May 2021, the respondent emailed her at 07:21 ‘requesting demographic records’. At 07:54 another email was sent, seeking further information. At 08:39 the respondent sent an email ‘…again demanding records’. At 09:01 he sent an email ‘requesting the school’s PAIA manual’, and at 09:05 another one ‘enquiring about lawyers appointed by the SGB’. On the same day, the appellant forwarded ‘all emails’ from the respondent to the SGB members seeking advice on how to respond. 6 (b) On 31 May 2021 at 06:15, the respondent started with an email to the appellant ‘regarding [his son’s] report’. The appellant responded at 06:53. At 07:02 the appellant referred ‘the respondent’s enquiry to the SGB members and requested members to address all matters concerning the SGB to the SGB’. At 07:26, the respondent sent an email accusing the appellant ‘of a corrupt relationship with certain SGB members and threating [her] with formal complaints’. At 12:39 ‘Email from the respondent to SGB members questioning the proposed SGB meeting requesting answers from [her]’. At 12:42 the appellant responded to the respondent’s mail. At 17:11 ‘Email from the respondent to SGB members – respondent does not accept the school’s code of conduct for SGB members’. (c) On 1 June 2021 at 08:23 in another email, the respondent accused the appellant of ‘denying [him] access to the school and access to information’. On 2 June 2021 at 06:05 the respondent sent an email to the appellant enquiring into the appellant’s ‘position as a board member of FEDSAS’. At 06:19 another email from the respondent was sent to the appellant insinuating ‘election tampering’. At 06:23, in another email, the respondent enquired about ‘an alleged incident concerning his child’. Later the same day at 10:51 the respondent requested ‘the school’s code of conduct for learners and the school’s language policy’ from the appellant. At 12:26 and 12:35 the respondent sent emails ‘to the Department questioning his suspension from the SGB’. [9] Annexed to the replying affidavit was also a victim impact statement compiled by Rhoda van Niekerk, a clinical social worker and criminologist in private practice. She described the impact the respondent’s conduct had on the appellant as follows: ‘The impact of the victimisation events: As victim of the incidents, [the appellant] encountered that [the respondent] disregarded the law and the basic human rights of people. She experienced emotional distress during and after 7 this traumatic events. She was confronted with fear, anxiety, nervousness, frustration, and powerlessness. As victim she experienced the following psychological reactions: • Increase in the realisation of personal vulnerability. • The perception of the world as unfair and incomprehensible. The experience of victimisation resulted in an increasing fear on the part of the victim, and the spread of fear within the school system.’ [10] At the magistrates’ court hearing, of 18 August 2021, both parties were legally represented, and the respondent raised the following points in limine: (a) the appellant failed to prove repetitive behaviour on his part and therefore she was not entitled to the relief sought; (b) the appellant impermissibly introduced new facts in reply seeking to introduce a new cause of action; (c) the appellant should have sought the court’s permission to amplify her case in reply; and (d) he would be prejudiced if the new facts were allowed as he has had no opportunity to respond thereto. [11] After hearing argument, the magistrate dismissed the points in limine, allowed the replying affidavit and gave the respondent an opportunity to apply for a postponement if he needed time to deal with ‘new or further evidence’ in the appellant’s replying affidavit. The respondent’s attorney, after an adjournment to consult, indicated that the respondent was ready to proceed and would not seek a postponement due to possible costs implications. [12] The matter proceeded with the appellant leading the evidence of the chairperson of the SGB (Mr Chisi) who confirmed that the respondent had been suspended at the June 2021 meeting whereupon the respondent had reacted by calling him a ‘joke’ and pointing fingers at him saying, ‘I am going to deal with you and after dealing with you I am going to deal with these children of 8 Verwoerd’. As he made those remarks, the respondent pointed at the white colleagues that were present at the meeting. The appellant was one of three white colleagues. The respondent was very aggressive. The recording of the June 2021 meeting was played in court, and Mr Chisi identified the respondent as the person referring to him as a joke in the recording. [13] In cross-examination, Mr Chisi maintained that the respondent’s suspension had been necessary to protect members of the SGB. He insisted that the respondent had bombarded them with email correspondence. The appellant closed her case after leading Mr Chisi’s evidence. The respondent closed his case without leading any evidence. The magistrate confirmed the interim order as follows: ‘In terms of the protection order, the respondent is prohibited by this court from engaging or attempting to engage in the harassment of number one, the complainant. B. Enlisting the help of another person to engage in the harassment of the complainant. C number 3. Committing any of the following acts: 1. Not to engage in electronic communication aimed at the applicant including communication through social media. 2. Not to send electronic mail or causing the delivery of electronic mail to the applicant. 3. Not to threaten the applicant with phycological, mental or physical harm; and 4. The court impose the following additional condition that I am of the view is necessary to protect and to provide for safety and wellbeing of the complainant, to wit, not to enter the house where the applicant resides. 5. No order as to costs.’ In the high court [14] On appeal, the high court did not deal with the merits of the application, instead, it criticised the magistrates’ court’s handling of the points in limine. The high court upheld the appeal and set aside the order holding that the respondent’s right to a fair trial had been violated as follows: 9 ‘It is not an issue for this court that further evidence was tendered, but the manner in which same was considered to the detriment of the [respondent]. By dismissing the points in limine when they should have been upheld, the court misdirected itself and violated the [respondent’s] rights to a fair hearing and the benefit of application of the audi alteram partem principle. … Upholding the points in limine by the [respondent], would not necessarily have disposed of the matter, it would have enabled the principles of natural justice to be applied. Given the above misdirection, I am of the view that the court can interfere with the finding of the court a quo and further persuaded that the [respondent] has made out a case for the relief sought.’ Despite this finding the high court did not remit the matter for fresh consideration in the magistrates’ court. In this Court [15] The issues on appeal are: (a) whether the respondent’s right to a fair trial was compromised by the admission of further evidence contained in the replying affidavit; (b) whether, on the merits, the appellant met the requirements for a final protection order. [16] The appellant submitted that the magistrates’ court was entitled to receive the further evidence and that the respondent had ample opportunity to respond to it but chose not to. In the circumstances, so the submission went, the respondent’s right to a fair trial was not compromised and the appellant met the requirements for a final order. Conversely, the appellant submitted that the evidence was admitted in circumstances that compromised his right to a fair trial and that the appellant, in any event, did not meet the requirements for a final protection order. [17] Section 9 of the Act, in relevant parts, provides as follows: ‘9 Issuing of protection order . . . 10 (2) If the respondent appears on the return date and opposes the issuing of a protection order, the court must proceed to hear the matter and – (a) consider any evidence previously received in terms of section 3 (1); and (b) consider any further affidavits or oral evidence as it may direct, which must form part of the record of the proceedings. . . . (4) Subject to subsection (5), the court must, after a hearing as provided for in subsection (2), issue a protection order in the prescribed manner if it finds, on a balance of probabilities, that the respondent has engaged or is engaging in harassment.’ [18] The section is mandatory in that the court must consider further affidavits or oral evidence presented. It is obvious that the court hearing the application has a discretion to allow further affidavits and, in the exercise of that discretion, must ensure that the rights of all parties to the proceedings are protected. The reason for this being that the Protection from Harassment Act, like the Domestic Violence Act 116 of 1998, seeks to grant access to court for an unrepresented person who is confronted with a perceived threat to safety or dignity to obtain protection. Therefore, the clerk of the court is mandated to assist a person seeking protection under the Act.1 The prescribed form on which the application is made, further directs the applicant to annex available affidavits and to preserve any documents, photographs, and recordings, among others, to which reference is made in the application for a subsequent hearing. It is anticipated that a full hearing will follow the initial application and therefore the presiding officer must deal with the application as follows: ‘3 Consideration of application and issuing of interim protection order 1 Section 2 of the Act provides as follows: ‘Application for protection order. (1) A complainant may in the prescribed manner apply to the court for a protection order against harassment. (2) If the complainant or a person referred to in subsection (3) is not represented by a legal representative, the cleck of the court must inform the complainant or person, in the prescribed manner, of- (a) the relief available in terms of this Act; and (b) the right to also lodge a criminal complaint. . . .’ 11 (1) The court must as soon as is reasonably possible consider an application submitted to it in terms of section 2(7) and may, for that purpose, consider any additional evidence it deems fit, including oral evidence or evidence by affidavit, which must form part of the record of the proceedings. (2) If the court is satisfied that there is prima facie evidence that - (a) the respondent is engaging or has engaged in harassment; (b) harm is being or may be suffered by the complainant or a related person as a result of that conduct if a protection order is not issued immediately; and (c) the protection to be accorded by the interim protection order is likely not to be achieved if prior notice of the application is given to the respondent, the court must, notwithstanding the fact that the respondent has not been given notice of the proceedings referred to in subsection (1), issue an interim protection order against the respondent, in the prescribed manner.’ (Emphasis added) [19] It is self-evident that on the return date, the respondent must be able to challenge the evidence adduced in his absence. The interim order is clearly designed to avert imminent threats of harm of which the court on prima facie evidence is satisfied exists. Given the brutal society in which we live, the legislature was compelled to allow for this sui generis procedure with greater latitude given to the presiding officer to receive further evidence.2 There is nothing to suggest that the procedure envisaged is limited to the ordinary civil standard of three sets of affidavits of which the replying affidavit is ordinarily the shortest. This is so, as the court, on granting the order, also authorises a warrant for the respondent’s arrest.3 Insistence on the ordinary civil process would frustrate the purpose of the Act. The preamble of the Act envisages that its purpose is to protect victims of harassment by: ‘. . . (a) afford(ing) victims of harassment an effective remedy against behaviour; and 2 Omar v The Government of The Republic of South Africa and Others [2005] ZACC 17; 2006 (2) BCLR 253 (CC); 2006 (2) SA 289 (CC); 2006 (1) SACR 359 (CC) paras 12-19. 3 Section 11 of Act. 12 (b) introduce(ing) measures which seek to enable the relevant organs of state to give full effect to the provisions of the Act.’ [20] Those victims are usually unrepresented and must navigate the process with the assistance of a clerk who is not legally trained. Section 9(2)(a) and (b) of the Act further envisage a hearing on the return date, at which the court must consider any further evidence submitted.4 This is not problematic as the evidence is received with appreciation of the rights of both parties to respond thereto. The complaint that the admission of the evidence should have been preceded by an application to file same misconstrues the purpose of the Act which is specifically designed to address urgent relief and gives the court inquisitorial powers to receive evidence that it may so direct. [21] The complaint that the appellant had the opportunity to supplement her founding affidavit prior to the respondent filing his answering affidavit does not take the matter any further. The respondent had the replying affidavit before the hearing. At that stage he was legally represented and could have sought agreement from his opponent to postpone the matter if he needed an opportunity to respond to it. These were factors the magistrates’ court was entitled to take into consideration in the exercise of its discretion. The magistrate, after argument, exercised a discretion to allow the evidence as it was relevant to the determination of the matter. This was in compliance with s 9 of the Act. [22] Thereafter, the magistrate allowed the respondent ample opportunity to consider how he wanted to deal with the ‘further evidence’. The respondent 4 Sections 9(2)(a) and (b) provide as follows: ‘(2) If the respondent appears on the return date and opposes the issuing of a protection order, the court must proceed to hear the matter and— (a) consider any evidence previously received in terms of section 3(1); and (b) consider any further affidavits or oral evidence as it may direct, which must form part of the record of proceedings.’ 13 elected to proceed with the hearing and closed his case without leading any evidence despite his answering affidavit consisting, in the main, of bare denials. His choice has consequences. In those circumstances, it is opportunistic for the respondent to complain that his right to a fair hearing was compromised. [23] I am unable to agree with the finding of the high court that the respondent was denied a fair trial. It follows that the high court’s order stands to be set aside. Both parties require finality to the matter and have requested this Court to deal with the merits. I turn to that enquiry. [24] The terms ‘harassment’ and ‘harm’ are defined in s 1 of the Act as follows: ‘[H]arassment means directly or indirectly engaging in conduct that the respondent knows or ought to know- (a) causes harm or inspires the reasonable belief that harm may be caused to the complainant or a related person by unreasonably- (i) following, watching, pursuing or accosting of the complainant or a related person, or loitering outside of or near the building or place where the complainant or a related person resides, works, carries on business, studies or happens to be; (ii) engaging in verbal, electronic or any other communication aimed at the complainant or a related person, by any means, whether or not conversation ensues; or (iii) sending, delivering or causing the delivery of letters, telegrams, packages, facsimiles, electronic mail or other objects to the complainant or a related person or leaving them where they will be found by, given to, or brought to the attention of, the complainant or related person; . . . “harm” means any mental, psychological, physical or economic harm.’ [25] It is common cause that the respondent sent the emails summarised above. The respondent’s zeal went far beyond what could reasonably be expected of the appellant to tolerate from a concerned parent and SGB member. His personal attacks on the appellant are a cause for concern. He followed through with his 14 threat and reported the appellant to the local Head of the Department of Education. An informal hearing absolved her as the local Head of the Department agreed that the SGB was the custodian of the relevant documents, and that the respondent should request it from the SGB. The flurry of emails sent outside normal business hours indicate complete disregard for the recipient. [26] The respondent has downplayed his behaviour at the meeting following his suspension and denied that he referred to the appellant and two other white members of the SGB as ‘Verwoerd’s kids’. The evidence to the contrary is overwhelming. Mr Chisi gave a credible account of the events at the meeting and the appellant reported the incident to the police shortly after the meeting. The magistrates’ court accepted that the respondent uttered those words. The record bears out the correctness of the finding. [27] In argument before this Court, the respondent, while denying that he made the Verwoerd comment, submitted that, in any event, referring to three white SGB members as ‘Verwoerd’s kids’ could not be construed negatively as there are streets and a town bearing the name. In the South African context, reference to Verwoerd’s kids carries a racial connotation associated with the late former South African Prime Minister Dr Hendrick Verwoerd and what he stood for. The streets and town named after Verwoerd is merely an incident of our past and, if anything, should serve as a warning from history against what he stood for. In City of Cape Town v Freddie and Others,5 the Court held as follows: ‘Concerning the Verwoerd racist slur email: The former South African Prime Minister Dr Hendrik Frederik Verwoerd is notoriously known. . . . . . one should expect to see all right-minded and peace-loving people not to dare to be even perceived as associating themselves with anything to do with Verwoerd and his lieutenants, as well as his similar-minded successors.’ 5 City of Cape Town v Freddie and Others [2016] ZALAC 8; [2016] 6 BLLR 568 (LAC); (2016) 37 ILJ 1364 (LAC) para 54-55. 15 [28] Those remarks still reflect the current position in society. It follows that the respondent used a racial slur while threatening to deal with the appellant. The incident was not isolated as it was preceded by the unacceptable bombardment of email correspondence. The question is whether cumulatively these acts by the responded constituted harassment. [29] In her initial application, the appellant stated, ‘I feel intimidated and threatened by his presence as well as when we communicate electronically’. She further referred to the June meeting incident and that the respondent had reported her to her employer which had brought her into disrepute. She annexed the affidavit she had made to the police in support of a complaint of crimen injuria, from which the following appears: ‘At 17:13 the members at the meeting came to unanimous decision to suspend Mr Mailula. . . [he] jumped up in a very aggressive manner. . .I will deal with Verwoerd’s kids. . .At this time I was very emotional and felt threatened and afraid and racially attacked and offended and my dignity was severely attacked and damaged. I am emotionally damaged and felt that he permanently damages my reputation in front of the whole meeting. At this moment with the body language Mr Mailula displayed I feared for my own safety. . . . . . I am devasted emotionally, physically, and psychologically. . . The suspect is a very dangerous individual and will attack without provocation.’ [30] Mr Chisi confirmed that the respondent was aggressive at the June meeting following his suspension. He also referred to the email bombardment, as he was also copied in a number of these emails. The summary referred to above bears out the correctness of that statement. It is further apparent that the appellant consulted Mrs van Niekerk on 4 June 2021, shortly after the June meeting. As Ms van Niekerk did not testify or qualify herself as an expert the magistrates’ court did not have the opportunity to consider the basis for her expert opinion, the 16 probative value of which is therefore minimal. However, it does confirm that at relevant times, the appellant felt emotional as she described in the initial affidavit. The reason for such emotion is obvious. The respondent imposed on her impermissibly at unreasonable hours and seemed to have focused his frustrations on her. The circumstances of this matter are such that, at the June meeting, the appellant was already vulnerable and worn down from the persistent electronic harassment. [31] The manner, tone and times, together with requests to desist from the correspondence leave no doubt that the respondent ought to have known that his conduct was harmful to the appellant. He compounded the deliberate obstructive behaviour when he reported her to the Department and, after his suspension, found creative means to contact her in flagrant continued harassment. The racial slur coupled with the threat caused further emotional trauma. This added to his already outrageous behaviour and was no doubt intended to cause harm. [32] In the circumstances of this matter, the cumulative effect of the electronic communications, the aggressive stance the respondent took in his dealings with the appellant culminating in racial slur and threat, brings his behaviour within the definition of harassment. It follows that the magistrates’ court was correct in holding that the appellant met the requirements for a final order. I further agree with the magistrates’ court that given the nature of the matter a costs order would be inappropriate.6 Order [33] In the result the following order is issued: 1 The appeal is upheld with no order as to costs. 6 Section 16 of the Act. 17 2 The order of the high court is set aside and replaced with the following: ‘The appeal is dismissed with no order as to costs.’ _____________________ E D BAARTMAN ACTING JUDGE OF APPEAL 18 Appearances For the appellant: M Barnard Instructed by: Breytenbach Keulder Inc, Modimolle Hendre Conradie Inc, Bloemfontein For the respondent: J M Mailula in person Instructed by: In person.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 25 October 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 Pringle v Mailula (773/2023) [2024] ZASCA 146 (25 October 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal from the Limpopo Division of the High Court, Polokwane (the high court) with no order as to costs. It further set aside and substituted the order of the Limpopo Division of the High Court, Polokwane (the high court). The appellant was the principal of Eenheid Primary School (the school) in Modimolle, and the respondent’s minor child was a pupil at the school. Both the parties were members of the school’s governing body (the SGB), the appellant ex lege, and the respondent, as an elected parent. Soon after the respondent became a member of the SGB, he addressed email correspondences to the appellant seeking information regarding the operations of the SGB. The appellant answered some of the emails and referred others to the chairperson of the SGB. After numerous interactions between the appellant and respondent, wherein the respondent, inter alia, requested the school’s demographic record; requested the school’s PAIA manual; enquired about the lawyers appointed by the SGB; enquired about his son’s school report; accused the appellant of having a corrupt relationship with certain SGB members and threating her with formal complaints; and made it known that he does not accept the school’s code of conduct for SGB members, the respondent, on 1 June 2021 at 08h23, accused the appellant of ‘denying [him] access to the school and access to information’. At meeting held on 1 June 2021, (the June meeting) the majority of the SGB members resolved to suspend the respondent from the SGB. In response to this, the respondent went into a rage and pointed his finger at Mr Chisi, the chairperson of the SGB, calling him a joke. He further pointed a finger at three white SGB members, which included the appellant, and stated that ‘I will deal with Verwoerd’s kids’ and, continuing to point at the remainder of the SGB members, threatened to deal with them as well. The appellant said in an affidavit that she considered the remark as defamatory, racist and a threat. As a result, she removed the respondent from the SGB’s WhatsApp group and blocked his cellular telephone number on her personal cellular telephone. Undeterred, the respondent used an alternate cellular telephone number to contact the appellant. Consequently, on 3 June 2021, the appellant approached the clerk at the magistrates’ court and applied for a protection order in terms of the Protection from Harassment Act 17 of 2011 (the Act). The magistrate granted the interim order which also prohibited the respondent from attending SGB meetings, with the return date set for 14 June 2021. 2 To the return date, the respondent appeared in person and the magistrates’ court reconsidered the order prohibiting the respondent from attending SGB meetings and removed that prohibition. Thereafter, the matter was postponed to afford the respondent an opportunity to seek legal representation. The respondent deposed to his answering affidavit on 21 July 2021 but filed it on 16 August 2021. In this affidavit, the respondent explained that the June 2021 meeting had not been called to ‘specifically address problems arising from emails and letters sent by [him]’, instead, it was to deal with his complaints against members of the SGB, as well as complaints against him from members of the SGB. He confirmed his temporary suspension from the SGB pending referral to a tribunal consisting of independent specialists. In denying that his communications with the appellant had been either ‘oppressive or unreasonable’, he stated that his communication was ‘to enable [the respondent] to discharge [his] duties as a duly elected member of the SGB, and the parent of a pupil of Eenheid Primary school’. In essence, the respondent maintained that the conduct complained of had been, at best, unattractive and denied that the appellant had met the test for an interdict. On 16 August 2021, the appellant filed a comprehensive replying affidavit that included a recording of the June 2021 meeting which the respondent had included in email correspondence to her. She alleged that the recording had been edited and challenged the respondent to place the full recording before the court which he did not do. In her replying affidavit, the appellant set out the time frame and subject matter of an annexure which the respondent had attached to his answering affidavit. She further attached a victim impact statement compiled by Rhoda van Niekerk, a clinical social worker and criminologist in private practice. At the hearing, on 18 August 2021, both parties were legally represented, and the respondent raised points in limine to the effect that (a) the appellant had failed to prove repetitive behaviour on his part; (b) the appellant impermissibly introduced new facts in reply seeking to introduce a new cause of action; (c) the appellant should have sought the court’s permission to amplify her case in reply; and (d) he would be prejudiced if the new facts were allowed as he has had no opportunity to respond thereto. The magistrates’ court dismissed the points in limine, allowed the further evidence and gave the respondent an opportunity to apply for a postponement if he needed time to deal with new or further evidence in the appellant’s replying affidavit. The respondent’s attorney, after an adjournment to consult, indicated that the respondent was ready to proceed and would not seek a postponement due to possible costs implications. After the evidence was led, the magistrate confirmed the interim order with no order as to costs. On appeal, the high court did not deal with the merits of the application and, instead, it criticised the magistrates’ court handling of the points in limine. Ultimately, the high court upheld the appeal and set aside the magistrates’ court’s order, holding that the respondent’s right to a fair trial had been violated. The issues before the SCA related to: (a) whether the respondent’s right to a fair trial was compromised by the admission of further evidence contained in the replying affidavit; and (b) whether, on the merits, the appellant met the requirements for a final order. In addressing the first issue, the SCA did not to agree with the finding of the high court that the respondent was denied a fair trial. It held that, after the parties’ arguments, the presiding magistrate exercised a discretion to allow the evidence, in compliance with s 9 of the Act, as it was relevant to the determination of the matter. Thereafter, the magistrate allowed the respondent ample opportunity to consider how he wanted to deal with the further evidence and, as the respondent elected to proceed with the hearing and closed his case without leading any evidence, his choice to do so had consequences. In addressing the second issue, the SCA held that respondent’s zeal went far beyond what could reasonably be expected of the appellant to tolerate from a concerned parent and SGB member. It held that his personal attacks on the appellant (coupled by a flurry of emails sent outside normal business hours) were a cause for concern. In conclusion on this point, the SCA held that the cumulative effect of the electronic communications, the aggressive stance the respondent took in his dealings with the appellant which culminated in racial slur and a threat, brought his behaviour within the definition of 3 harassment. The SCA therefore agreed with the court magistrates’ court in holding that the appellant met the requirements for a final order. In the result, the SCA made an order in which it upheld the appeal with no order as to costs and further set aside and substituted the high court’s order. --------oOo--------

4208

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 223/2023 In the matter between: GENSINGER AND NEAVE CC FIRST APPELLANT DJ FUELS (PTY) LTD SECOND APPELLANT STEIN FUELS (PTY) LTD THIRD APPELLANT SCHOEVIV ENTERPRISES CC FOURTH APPELLANT and MINISTER OF MINERAL RESOURCES AND ENERGY FIRST RESPONDENT CONTROLLER OF PETROLEUM PRODUCTS SECOND RESPONDENT SHIPTECH MATATIELE (PTY) LTD THIRD RESPONDENT MATATIELE SERVICE STATION (PTY) LTD FOURTH RESPONDENT Neutral Citation: Gensinger and Neave CC & Others v Minister of Mineral Resources and Energy (223/2023) [2024] ZASCA 49 (15 April 2024) Coram: MOKGOHLOA, MBATHA and WEINER JJA and COPPIN and BLOEM AJJA Heard: 16 February 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, published on the Supreme Court of Appeal 2 website, and released to SAFLII. The date and time for hand-down is deemed to be 11h00 on 15 April 2024. Summary: Administrative law – interpretation of section 12A(1)(a) of the Petroleum Products Act 120 of 1977 – whether the holders of site and retail licences are persons ‘directly affected’ by the Controller’s decision to grant site and retail licences to applicants to retail petroleum products in the same area as the holders of those licences – whether the holders of such licences have a right to appeal against the Controller’s decision – whether the Controller’s administrative decision is suspended by an appeal against that decision. 3 ORDER On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Padayachee AJ) sitting as court of first instance): 1. The appeal is upheld with costs. 2. The order of the court a quo is set aside and replaced with the following order: ‘1. It is declared that the provisions of the Petroleum Products Act 120 of 1977 (the Act) do not oust the common law principle that there is a presumption that an administrative decision is suspended by an appeal against that decision. 2. It is declared that the applicants’ appeal, in terms of section 12A of the Act, against the decisions of the Controller of Petroleum Products to approve the third and fourth respondents’ applications for site and retail licences and subsequently to issue those licences to them suspends the Controller’s decisions pending the finalisation of such appeal. 3. The costs are to be paid by the third and fourth respondents, jointly and severally, the one paying the other to be absolved. 4. The third and fourth respondents’ counter application is dismissed with costs.’ 3. The application is remitted to the High Court for it to deal with the application for an interim interdict. JUDGMENT Bloem AJA (Mokgohloa, Mbatha and Weiner JJA and Coppin AJA concurring): [1] Two issues call for determination in this appeal. The first issue is whether 4 holders of site and retail licences1 under the Petroleum Products Act 120 of 1977 (the Act) are ‘directly affected’, as contemplated in s 12A of the Act, by a decision of the Controller of Petroleum Products (the Controller), the second respondent, to approve applications for site and retail licences. The decision in issue related to the Controller approving applications for site and retail licences to the third and fourth respondents, to whom site and retail licences were subsequently issued in respect of the same area in which the appellants, as holders of site and retail licences, retail petroleum products. I shall refer to the decision to grant the site and retail licences and the decision to subsequently issue the licences as ‘the Controller’s decision’, unless the context indicates otherwise. The second issue is whether an appeal to the Minister of Mineral Resources and Energy (the Minister), the first respondent, against the Controller’s decision has the effect of suspending that decision pending the outcome of the appeal. [2] The four appellants are holders of site and retail licences issued to them under the Act in respect of three outlets. They operate the three outlets in the central business district of Matatiele, where petroleum products are sold or offered for sale to customers. These outlets are near to each another. During May 2019, the third respondent made an application to the Controller in terms of the Act for a site licence and the fourth respondent applied for a retail licence in respect of the same site (applications for site and retail licences) to enable them to operate an additional outlet in Matatiele. I shall refer to the third and fourth respondents, being Shiptech Matatiele (Pty) Ltd and Matatiele Service Station (Pty) Ltd, as ‘the respondents’. The appellants lodged an objection against the applications, contending that an additional retailer in Matatiele would ‘cannibalise’ the sales of the existing retailers and undermine the requirements 1 In terms of s 1 of the Act, ‘site’ means premises on land zoned and approved by a competent authority for the retailing of prescribed petroleum products; ‘retail licence’ means a licence to conduct the business of a retailer; ‘retail’ means the sale of petroleum products to an end-consumer at a site and ‘retailer’ shall be interpreted accordingly; and ‘outlet’, in relation to a petroleum product, means any place where any petroleum product is offered for sale to consumers’. 5 stipulated in the Act of efficacy and economic viability. Despite the objection, the Controller was satisfied that the respondents’ applications met the requirements of the Act and the Regulations regarding Petroleum Products Site and Retail Licences2 (the regulations) and approved the applications. The Controller issued the site and retail licences to the respondents on 8 March 2021. [3] On 8 April 2021, the Controller’s office informed the appellants that the respondents’ applications for site and retail licences were successful3 and informed the appellants that they had 60 days within which to appeal to the Minister against the Controller’s decision. The appellants lodged their appeal on 7 June 2021, within the 60-day period, and claimed that they understood the common law to be that the appeal suspended the Controller’s decision pending the outcome of an appeal and that, during that period, the respondents would not act on the licences to which they had objected. The Department of Mineral Resources and Energy (the Department) and seemingly the respondents adopted the attitude that nothing in the Act or the regulations ‘suspends the issued site and retail licences pending an appeal nor is there any provision that prohibits a licencee from constructing a filling station or commencing with retailing activities pending an appeal’. [4] Fearing that the respondents would commence operations as a retailer in Matatiele before the appeal was finalised, the appellants approached the KwaZulu Natal Division of the High Court, Pietermaritzburg (the high court) for declaratory orders and an interdict. They sought an order declaring that the provisions of the Act do not oust the common law principle that an administrative 2 Published under GN R286 in GG 28665 of 27 March 2012, as amended by GN R1061 in GG 35984 of 19 December 2012. 3 The appellants attached two unsigned and undated letters from the Controller to the main replying affidavit. The deponent of the replying affidavit stated that those letters were received four days before the main answering affidavit was deposed to. In those letters the third and fourth respondents were informed that their applications for site and retail licences had not been granted. Since the letters were referred to in the replying affidavit and since there was no response thereto, it would be inappropriate to make a finding in respect thereof. 6 appeal noted against an administrative decision suspends the decision; and declaring that the granting of the site and retail licences to the respondents, and the subsequent issuing of those licences to them, be suspended pending the finalisation of their appeal to the Minister.4 They also sought an order that the respondents be interdicted and restrained, pending the finalisation of this application and the appeal to the Minister, from retailing under the Act from the designated site in Matatiele and costs. [5] The respondents opposed the application. They also instituted a counter-application wherein they sought an order declaring that the appellants were not directly affected by the Controller’s decision and that the purported appeal against the Controller’s decision, alternatively against the issuing of the site and retail licences, be declared of no force or effect; alternatively, an order declaring that the appeal lodged by the appellants lapsed on 6 September 2021; and alternatively, that after that date, the licences issued to them were not suspended. [6] The high court found in favour of the respondents. It found that the appellants were not directly affected by the Controller’s decision; that they were accordingly not entitled to appeal against the Controller’s decision; and that, therefore, no proper appeal had been lodged. It also found that it was only the Controller, and not private parties, such as the appellants, who was entitled to enforce the provisions of the Act. Thus, the appellants did not have standing to institute the application for a declarator against the respondents. The appeal is with the leave of the high court. Statutory framework [7] In terms of s 2B(1) of the Act, the Controller must issue licences in 4 The second prayer is not for a declarator. It is an order that gives effect to the first declarator, if granted. 7 accordance with the Act. In considering the issuing of any licence under the Act, the Controller shall give effect to the provisions of s 2C and the objectives set out in s 2B(2). Those objectives are: ‘(a) promoting an efficient manufacturing, wholesaling and retailing petroleum industry; (b) facilitating an environment conducive to efficient and commercially justifiable investment; (c) the creation of employment opportunities and the development of small businesses in the petroleum sector; (d) ensuring countrywide availability of petroleum products at competitive prices; and (e) promoting access to affordable petroleum products by low-income consumers for household use.’ [8] Section 2C provides for the transformation of the South African petroleum and liquid fuels industry. Section 2C(1)(a) and (b) provide that, in considering licence applications in terms of the Act, the Controller shall promote the advancement of historically disadvantaged South Africans; and give effect to the Charter. [9] The Charter is set out in Schedule 1 of the Act. In terms of the Charter, the signatories thereto must provide a framework for progressing the empowerment of historically disadvantaged South Africans in the liquid fuels industry. They have agreed to create a fair opportunity for entry to the retail network and commercial sectors by historically disadvantaged South African companies. [10] In relevant part, s 2E(1) provides that the Minister must prescribe a system for the allocation of sites and their corresponding retail licences by which the Controller shall be bound, provided that the Controller shall only be bound by the 8 provisions of such a system for the period set out in that regulation or any amendment thereto, or any substitution thereof, which period may not exceed 10 years from the date of commencement of that regulation. In terms of ss 2E(3)(a), (b), (c) and (d) the system for the allocation of licences, contemplated in s 2E(1), must intend to transform the retail sector into one that has the optimum number of efficient sites; must intend to achieve an equilibrium amongst all participants in the petroleum products industry within the constraints of the Act; must be based on the objectives referred to in s 2B(2) and 2C; must promote efficient investment in the retail sector and the productive use of retail facilities and may in this regard: (i) limit the total number of site and corresponding retail licences in any period; (ii) link the total number of site and corresponding retail licences in any period, to the total mass or volume of prescribed petroleum products sold by licensed retailers; and (iii) use any other appropriate means. [11] Section 12A of the Act provides for appeals and ss (1) reads as follows: ‘Any person directly affected by a decision of the Controller of Petroleum Products may, notwithstanding any other rights that such a person may have, appeal to the Minister against such decision.’ [12] Chapter 1 of the regulations deals with applications for site licences while Chapter 2 thereof deals with applications for retail licences. In terms of regulation 3(2), an application for a site licence must be lodged together with an application for a corresponding retail licence. [13] Regulations 4 and 16 require applicants for a site licence and a retail licence respectively to give notice of such applications. Those notices must be published in a prominent manner and must state: ‘(a) the name of the applicant; 9 (b) the application number issued by the Controller upon acceptance of the application; (c) the purpose of the application; (d) the place where the application will be available for inspection by any member of the public; (e) the period within which any objection to the issuing of the licence may be lodged with the Controller; and (f) the address of the Controller where objections may be lodged.’5 [14] Regulation 18(2) provides that in the case of an application for a retail licence made by a person in respect of whom s 2D6 of the Act is not applicable, the Controller must be satisfied that (a) the retailing business is economically viable; and (b) the retailing business will promote licensing objectives stipulated in s 2B(2) of the Act. [15] It is against the above statutory framework that it must be considered whether the appellants are directly affected by the Controller’s decision, as contemplated under s 12A(1) of the Act. If they are not, then they did not have the right to appeal against the Controller’s decision. They would then not have had standing to institute the application for the relief sought, and the appeal must then be dismissed. If it is found that they are directly affected by the Controller’s decision, then they had the right to appeal against the Controller’s decision. The effect of the appeal must then be considered. Whether the appellants are directly affected by the Controller’s decision [16] In terms of s 1 thereof, the Act includes any regulation, notice and licence issued or given in terms of the Act. It means that the Act includes the above regulations, since the Minister issued them in terms of the Act. The right to appeal must be seen in the context that, in terms of regulations 4(2)(d) and 16(2)(d), any 5 Regulations 4(2) and 16(2). 6 Section 2D of the Act provides for transitional licensing provisions, which provisions are not applicable to the facts of this case. 10 member of the public has the right to inspect the notice of application for a licence. Regulations 4(2)(e) and 16(2)(e) provide that the notice for a licence must state the period within which any objection to the issuing of the licence may be lodged with the Controller. The respondents submitted that not every member of the public has the right to object to the granting of a licence to an applicant. They limited the right to lodge an objection to participants in the application, namely those who made the application for a licence. [17] The drafters of the regulations intended the process of applying for a licence to be transparent, hence the right of any member of the public to inspect an application. The purpose of allowing objections is to ensure that, when the Controller considers whether to issue a licence, he or she is in possession of as much information as possible, relevant to that application, to enable him or her to give effect to the provisions of s 2C and the objectives contained in s 2B(2)(a) to (e) of the Act. That information cannot be obtained from only an applicant. If the above regulations are read purposively in the context of the scheme of the Act, they must be interpreted to mean that any member of the public, inclusive of holders of site and retail licences, has the right to lodge an objection to the issuing of a licence to an applicant. In that way the Controller will obtain sufficient information to enable him or her to give effect to the objectives contained in s 2B(2) and the provisions of s 2C. The submission made by the respondents can accordingly not be sustained. [18] Once the Controller has decided to approve an application for a licence, not every member of the public has the right to appeal to the Minister against the Controller’s decision. That much is clear from s 12A which limits that right to persons who are ‘directly affected’ by the Controller’s decision. There is accordingly a difference between the objection stage and the appeal stage of the application process. The objection stage is open to any member of the public, whereas the appeal stage is open only to persons who are ‘directly affected’ by 11 the Controller’s decision. Whether a person is ‘directly affected’ by the Controller’s decision depends on the facts of each case, as well as the scheme and purpose of the Act. [19] To interpret the meaning of the words ‘directly affected’ in s 12A(1), the provisions of s 2C and the objectives contained in s 2B(2) must be considered. In this case, the applicable objectives are the facilitation of an environment which is conducive to efficient and commercially justifiable investment, the creation of employment opportunities and the development of viable small businesses in the petroleum sector. Where the probabilities indicate that an additional retailer will sell less volumes of petroleum products required for feasibility, such an investment by the additional retailer will neither be efficient nor commercially justifiable. The situation will be aggravated when the additional retailer causes the existing retailers to lose volumes in sales. The investments in all the retailers, existing and additional, will be at stake. The Controller will, under those circumstances, neither promote a retail sector that has the optimum number of efficient sites, and an efficient retailing petroleum industry in Matatiele, nor will he or she develop any of those small businesses.7 [20] The appellants submitted that it is immediately apparent from the wording of s 12A that the right of appeal is not confined only to an unsuccessful applicant for a licence, but that the right is extended to any person ‘directly affected’ by the Controller’s decision. They submitted that, in this case, they would be included in the class of persons directly affected by the Controller’s decision because first, they lodged an objection to the granting of site and retail licences to the respondents, having been invited in the notice of application to do so; and second, they have site and retail licences, which allow them to retail petroleum products at their respective outlets in the area. The appellants contended that the granting 7 ABM Motors v Minister of Minerals and Energy and Others 2018 (5) SA 540 (KZP) para 4. 12 of the site and retail licences to the respondents will negatively affect their respective outlets, in that customers using their outlets would be re-allocated to the respondents’ outlet at their (the appellants’) expense. [21] In support of their submission that they were “directly affected” by the Controller’s decision, the appellants relied on Cianam Trading 104 CC v Peters MP and Others (Cianam).8 But Cianam is distinguishable. In Cianam the court was required to determine whether the applicant had a right directly affected by the Minister’s appeal decision. The issue in the present case is whether the appellants had the right to appeal against the Controller’s decision. Section 12A(1) is not concerned with the effects of the Minister’s ‘appeal decision’ on a person who is affected thereby. It concerns the right to appeal to the Minister by a person directly affected by the Controller’s decision. Whether the applicant in Cianam was a ‘person directly affected by [the] decision of the Controller’ was not an issue before the court. The finding by the high court that ‘the applicant has a right to appeal to the [Minister] against the dismissal of any objection by the Controller’ was therefore obiter. [22] The appellants also relied on Pine Glow Investments (Pty) Ltd v Minister of Energy and Others9 (Pine Glow) for the submission that they were directly affected by the Controller’s decision. The respondents sought to distinguish Pine Glow from the present case. Their counsel pointed out that in Pine Glow the parties accepted that standing existed provided that the facts showed that the applicant was suffering losses. He furthermore pointed out that there was no legal challenge on whether an objector has the right to appeal the Controller’s decision and the right to challenge the Minister’s appeal decision on review. The appellants submitted that it was on that basis that the court found that the respondents’ challenge to the alleged lack of standing was staggering. They 8 Cianam Trading 104 CC v Peters MP and Others [2014] ZAGPPHC 974. 9 Pine Glow Investments (Pty) Ltd v Minister of Energy and Others [2021] ZAMPMBHC 49. 13 concluded that the court found in the applicant’s favour ‘on the factually based issue of whether the applicant had shown prejudice, therefore that it had standing. That is a different issue to the one which served before the court a quo.’ In Pine Glow two of the respondents contended that the applicant, as a wholesaler of petroleum products, failed to establish that it had standing. They contended that the applicant would not be ‘adversely and materially affected’ by the Controller’s decision awarding the site and retail licences to the respondents. [23] The court in Pine Glow found that the fact that the applicant was a site licence holder, on its own, gave it a direct interest in the matter.10 The court also considered that one of the respondents was the applicant’s business tenant because it operated an outlet on land belonging to the applicant. The applicant received rental income from that respondent. The court found that, in the event of a decline in the number or volume of petroleum products sold by that respondent, the knock-on effect on the applicant, as holder of a wholesale licence, would be inexorable. It was found that the applicant’s interests were not only direct, but also real and not hypothetical. The court considered the applicant’s evidence to the effect that, if the respondents were to be allowed to open an outlet, the applicant stood to lose on revenue. The respondents expected to pump 350 litres of petroleum products11 per month, which means that the existing retailers in the area, including the applicant, would absorb the decline in volumes. The court found that the anticipated decline in volumes and resultant loss in revenue was material ‘and it will affect the Applicant negatively insofar as it will diminish its financial margins. Over and above the financial interest, it cannot be in the interest of justice to deny the Applicant’s locus standi where the granting of another licence may not enhance the constitutional goals set in the PPA – to ensure the observance of the transformative agenda as contained in s 2C of the PPA. The satisfaction of the transformative agenda does not entail substituting 10 Ibid para 16. 11 I am sure that the learned Judge meant to refer to 350 000 litres of petroleum products per month. 14 one previously disadvantaged individual by another.’ In the circumstances, it was found that the Controller’s decision materially and adversely affected the applicant and that it had accordingly successfully demonstrated that it had standing. The reasoning and conclusion of the court in Pine Glow cannot be faulted. [24] In Giant Concerts CC v Ronaldo Investments (Pty) Ltd and Others12 (Giant Concerts) it was held that a litigant who approaches the court in its own interest must show that a contested law or decision directly affects its rights or interests, or potential rights or interests, and that the requirement of standing must be generously and broadly interpreted to accord with constitutional goals. Such a litigant must establish that its rights or interests are directly affected by the impugned law or conduct. Those interests must be real and not hypothetical or academic. The litigant must show that its interests and the direct effect are not unsubstantiated. The appellants in the present case obviously have a commercial interest in the Controller’s decision. It is that interest that they seek to assert. It was also found in Giant Concerts13 that a commercial interest in the subject matter of the transaction14 will be sufficient to establish own interest standing to challenge that transaction. [25] In the light of Giant Concerts and Pine Glow it should be determined whether the appellants have demonstrated, factually, that their rights or interests have been or will directly be affected by the Controller’s decision. The right to appeal does not arise from or is not acquired from the Controller’s decision, but from the effect that the Controller’s decision will have on the appellants’ interests. In their endeavour to demonstrate how the Controller’s decision would directly affect their interests, the appellants commissioned a report by a consulting firm, 12 Giant Concerts CC v Ronaldo Investments (Pty) Ltd and Others [2012] ZACC 28; 2013 (3) BCLR 251 (CC) para 41. 13 Ibid para 51. 14 The sale of land by the eThekwini Municipality to Rinaldo Investments (Pty) Ltd. 15 FTI Consulting (FTI), for the purposes of commenting on the viability of an additional retailer, considering the prevailing circumstances in the Matatiele area. FTI expressed the view that, based on the sales at the existing outlets, the monthly sales of 300 000 litres of fuel are widely accepted as the lower bound for a feasible outlet; that, based on its calculation, the volume of sales at the respondents’ outlet would be between 162 688 and, at best, 225 000 litres of fuel per month, well below the 300 000 litres per month required for feasibility. FTI found that there was no basis to expect that the respondents’ outlet would receive a high volume of traffic to sustain a minimum of 300 000 litres of fuel per month required for feasibility. FTI also considered the actual fuel volumes at the three existing outlets in Matatiele and found a declining trend in monthly fuel sales since March 2020. FTI concluded that, if no additional demand for fuel sales could be created, which was not foreseen, the existing demand for such fuel would merely be re-allocated. That will have a negative effect on the existing outlets, resulting in loss of income and loss of employment at those outlets. The drafters of the report also considered that every sale that the respondents’ outlet will make, will negatively impact on the sales at the appellants’ existing outlets. The decline in sales at the appellants’ outlets will in all probability lead to job losses. [26] In addition, the appellants relied on the Minister’s decision on 19 May 2020, less than a year before the Controller’s decision was taken in the present case, to uphold the Controller’s decision not to grant applications for site and retail licences to Pearden Investments (Pty) Ltd and Pearden Trading (Pty) Ltd (Pearden) in respect of a new outlet for the retail of petroleum products in Matatiele. One of the Minister’s reasons for dismissing the appeal was that there was no need for a new outlet in Matatiele if regard was had to, inter alia, the actual fuel sales for the existing outlets in Matatiele and the fact that a new outlet would cause a re-allocation of sales to itself at the expense of the existing outlets. The appellants contended that, since the factual situation has not improved in Matatiele, the Controller should, when she approved the applications in the 16 present case on 8 March 2021, instead have followed the Minister’s reasoning in Pearden. The appellants contended that, on appeal, the Minister will in all probability make the same decision as in Pearden, for the same reasons. [27] Regard being had to all the evidence adduced by the parties, inclusive of the contents of the FTI report and the Minister’s decision in Pearden, I am satisfied that the appellants have demonstrated, based on the grounds upon which they relied, that the Controller’s decision will directly affect their commercial rights or interests, as contemplated in s 12A of the Act, in that the sale of petroleum products at their outlets will be negatively affected. Right to appeal [28] In the circumstances, since the appellants will be directly affected by the Controller’s decision, they have the right to appeal to the Minister against the Controller’s decision. It accordingly means that the appellants had standing to institute the application. The effect of the appeal on the Controller’s decision [29] It is the accepted common law rule of practice in our Courts that, generally, the execution of a judgment is automatically suspended upon the noting of an appeal, with the result that, pending the appeal, the judgment cannot be carried out and no effect can be given thereto, except with the leave of the Court which granted the judgment.15 Regarding appeals against administrative decisions, the common law principle is that, where an administrative decision has been taken and an appeal has been noted against that decision, there is a presumption that the administrative decision is suspended by the appeal against that decision, unless the applicable legislation provides that such decision is not suspended by an 15 South Cape Corporation (Pty) Ltd v Engineering Management Services (Pty) Ltd 1977 (3) SA 534 (A) at 544H-545A and Commissioner for Inland Revenue v NCR Corporation of South Africa (Pty) Ltd 1988 (2) SA 765 (A). Those authorities obviously deal with decisions granted by courts and not administrative bodies. 17 appeal. Legislation may expressly or by necessary implication provide that an appeal does not suspend the decision appealed against.16 The rule of automatic suspension was applied in Max v Independent Democrats and Others17 because, among others, there was neither a statutory provision nor a provision in the code of conduct of the political party in question to suggest that the rule should not apply. [30] The Act grants a person, who is directly affected by the Controller’s decision, the right to appeal to the Minister. The Act does not provide that an appeal against the Controller’s decision does not suspend that decision. It follows that the Controller’s decision will be suspended when a person, who is directly affected by the Controller’s decision, appeals to the Minister against the Controller's decision. It has already been found that the appellants are directly affected by the Controller's decision. The common law principle is applicable to the facts of this case, with the result that the appellants’ appeal in terms of s 12A of the Act suspends the Controller’s decision. The Minister has, for no apparent reason, not yet decided the appellants’ appeal. The respondents’ contention that the appeal has lapsed, has no factual or legal basis. Declarator [31] An applicant seeking a declaratory order must satisfy the court that he or she is a person interested in an existing, future or contingent right or obligation.18 16 Cotty and Others v Registrar, Council for Medical Schemes and Others [2021] ZAGPPHC 68; 2021 (4) SA 466 (GP) paras 42-64 and the authorities referred to therein. 17 Max v Independent Democrats and Others Max v Independent Democrats and Others 2006 (3) SA 112 (CPD) 118F-120H. 18 See section 21(1)(c) of the Superior Courts Act 10 of 2013. Section 21 deals with the persons over whom and the matters in relation to which Divisions of the High Court have jurisdiction. One such matter is a declaration of rights. Section 21 reads as follows: ‘(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; 18 In Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd19 this Court emphasised that once the applicant has satisfied the court that it is interested in an existing, future or contingent right or obligation, it does not mean that the court is bound to grant a declarator. The court must consider and decide whether it should refuse or grant a declarator, following an examination of all the relevant factors. The court accordingly has a discretion. In the exercise of that discretion, the court considers whether an applicant, in seeking such a declarator, has standing in terms of s 38 of the Constitution. In line with the doctrine of ripeness, the court may enquire as to whether alternative remedies have been exhausted. In addition, a court will not grant a declaratory order on moot or academic issues, as this would conflict with the doctrine of effectiveness. [32] Since it has been found that the respondents are directly affected by the Controller’s decision and all the relevant factors having been considered above, I find that the appellants have succeeded on appeal to have it declared that the provisions of the Act do not oust the common law principles that an administrative appeal lodged against the Controller’s decision suspends the decision. Interim interdict [33] The appellants launched the application on 13 October 2021, two and a half years ago. The high court did not consider the merits of the interdict, considering the conclusion to which it arrived in respect of the question of the appellants’ standing. The question that arises is what should be done in relation to that issue. (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. (2) A Division also has jurisdiction over any person residing or being outside its area of jurisdiction who is joined as a party to any cause in relation to which such court has jurisdiction or who in terms of a third party notice becomes a party to such a cause, if the said person resides or is within the area of jurisdiction of any other Division. (3) Subject to section 28 and the powers granted under section 4 of the Admiralty Jurisdiction Regulation Act, 1983 (Act 105 of 1983), any Division may issue an order for attachment of property to confirm jurisdiction.’ 19 Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd 2005 (6) SA 205 (SCA) at para 17. 19 One of the four requirements20 that the appellants must satisfy to be entitled to the protection of an interim interdict is that the balance of convenience favours the granting of such an interdict. It would be inappropriate for this court to weigh the harm that the appellants are likely to suffer if the interim interdict is not granted against the harm that the respondents are likely to suffer if it is granted, when it is unaware of the present factual situation in respect of the respondents’ outlet.21 Accordingly, it would be just and appropriate for this Court to refer the application back to the high court to consider the merits of the interim interdict. The parties might want to place further facts before the high court to give a correct picture of the present situation. The parties ought to be given an opportunity to do so. In the determination of the interim interdict, the high court should consider the declarator made as far as it is relevant to the merits of the interim interdict. [34] In the circumstances, the appeal must be upheld. Since the appellants were substantially successful, they are entitled to the costs of the appeal. [35] In the result, the following order is made: 1. The appeal is upheld, with costs, such costs to include the costs of the application for leave to appeal. 2. The order of the court a quo is set aside and replaced with the following order: ‘1. It is declared that the provisions of the Petroleum Products Act 120 of 1977 (the Act) do not oust the common law principle that there is a presumption that an administrative decision is suspended by an appeal against that decision. 20 The requirements of an interim interdict are that the applicant must show (i) that he or she has a prima facie right, albeit open to some doubt; (ii) that he or she will suffer irreparable harm if the interdict were not to be granted; (iii) that the balance of convenience favours the granting the interdict; and (iv) that the applicant has no satisfactory alternative remedy. 21 City of Tshwane Metropolitan Municipality v AfriForum and Another [2016] ZACC 19; 2016 (6) SA 279 (CC) para 62. 20 2. It is declared that the applicants’ appeal, in terms of section 12A of the Act, against the decisions of the Controller of Petroleum Products to approve the third and fourth respondents’ applications for site and retail licences and subsequently to issue those licences to them suspends the Controller’s decisions pending the finalisation of such appeal. 3. The costs are to be paid by the third and fourth respondents, jointly and severally, the one paying the other to be absolved. 4. The third and fourth respondents’ counterapplication is dismissed with costs.’ 3. The application is remitted to the High Court for it to deal with the application for an interim interdict. ___________________________ GH BLOEM ACTING JUDGE OF APPEAL 21 Appearances For the appellants: M J Engelbrecht SC. Instructed by: Redfern & Findlay attorneys, Pietermaritzburg. Symington de Kok attorneys, Bloemfontein. For the third and fourth respondents: A Stokes SC. Instructed by: Cox Yeats, Umhlanga Ridge. McIntyre van der Post 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: 15 April 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 Gensinger and Neave CC & Others v Minister of Mineral Resources and Energy (223/2023) [2024] ZASCA 49 (15 April 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal with costs. It further set aside and substituted the order of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court), directing that the application be remitted to the high court for it to deal with the application for an interim interdict. The four appellants are holders of site and retail licences issued to them under the Petroleum Products Act 120 of 1977 (the Act). They operate three outlets in the central business district of Matatiele, where petroleum products are sold or offered for sale to customers. These outlets are near to each other. During May 2019 the third respondent made an application to the third respondent (the Controller) for a site licence and the fourth respondent applied for a retail licence (applications for site and retail licences) to enable them to operate an additional outlet in Matatiele. The appellants lodged an objection against the granting of the site and retail licences to the respondents, contending that an additional retailer in Matatiele would ‘cannibalise’ the sales of the existing retailers and be contrary to the statutory requirements of efficacy and economic viability. Despite the objection, the Controller was satisfied that the respondents’ applications met the requirements of the Act and the Regulations regarding Petroleum Products Site and Retail Licences (the regulations) and informed the respondents that their applications were successful. The Controller issued the site and retail licences to the respondents on 8 March 2021. On 8 April 2021 the Controller’s office informed the appellants that the respondents’ applications for site and retail licences were successful. The appellants then lodged their appeal on 7 June 2021, within the 60-day period. Since the appellants appealed against the Controller’s decision, they claimed that they understood the common law to be that the appeal suspended the Controller’s decision and that, consequently, the respondents would not act on the licences that the Controller had granted to them until the appeal process had been finalised. However, building works commenced. The appellants approached the high court for two declarators and an interdict. They sought an order that it be declared that the provisions of the Act do not oust the common law principle that an administrative appeal noted against an administrative decision suspends such decision; and declaring that the granting of the site and retail licences to the respondents and the subsequent issuing of those licences to them be suspended pending the finalisation of their appeal to the Minister. They also sought an order that the respondents be interdicted and restrained, pending the finalisation of the current 2 application and the appeal to the Minister, from retailing under the Act from the designated site in Matatiele. The respondents opposed the application. They also instituted a counter-application wherein they sought an order declaring that the appellants were not directly affected by the Controller’s decision and that the purported appeals against the Controller’s decision, alternatively against the issuing of the site and retail licences, be declared of no force or effect; alternatively an order declaring that the appeals lodged by the appellants lapsed on 6 September 2021, alternatively that after that date, the licences issued to the respondents are not suspended. The high court found that the appellants were not directly affected by the Controller’s decision, that they were accordingly not entitled to appeal against the Controller’s decision and that, therefore, no proper appeal had in fact been lodged. It also found that it was only the Controller, and not private parties, like the appellants, who was entitled to enforce the provisions of the Act and that the appellants accordingly did not have standing to institute the application against the respondents. Before the SCA, the issues for determination were thus: (a) whether the holder of site and retail licences under the Act is ‘directly affected’ by a decision of the Controller to approve applications for site and retail licences to another applicant to whom site and retail licences were subsequently issued; and (b) whether holders of site and retail licences who have objected to the granting of site and retail licences to an applicant who seek to retail in the same area have standing to seek an order interdicting that applicant from giving effect to the site and retail licences after the Controller had approved the applicant’s application for site and retail licences. In addressing the first issue, the SCA reasoned that the drafters of the regulations intended the process of applying for a licence to be transparent, hence the right of any member of the public to inspect an application. The SCA pointed out that the purpose of allowing objections was to ensure that, when the Controller considers whether to issue a licence, he or she was in possession of as much information as possible relevant to that application. The regulations then, read purposively in the context of the scheme of the Act, must be interpreted to mean that any member of the public has the right to lodge an objection to the issuing of a licence to an applicant. The SCA concluded that the appellants had a commercial interest in the Controller’s decision and that a commercial interest in the subject matter of the transaction would be sufficient to establish own interest standing to challenge that transaction. On the second issue, the SCA reasoned that since the appellants will be directly affected by the Controller’s decision, they do have the right to appeal to the Minister against the Controller’s decision which accordingly meant that the appellants had standing to institute the application. The SCA also held that it would be inappropriate for it to weigh the harm that the appellants are likely to suffer if the interim interdict was not granted against the harm that the respondents are likely to suffer if it was granted, when it was unaware of the present factual situation in respect of the respondents’ outlet. The SCA then stated that it would be just and appropriate for it to refer the application back to the high court to decide whether the interim interdict should be granted or refused as the parties might want to place further facts before the high court to give a correct picture of the present situation. In the result, the SCA upheld the appeal with costs and set aside and replaced the order of the high court, further directing that the application be remitted to the high court for it to deal with the application for an interim interdict. --------oOo--------

4308

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 573/2023 Name of Ship: MV ‘SMART’ In the matter between: MINMETALS LOGISTICS ZHEJIANG CO LTD APPELLANT and THE OWNERS AND UNDERWRITERS OF THE MV ‘SMART’ FIRST RESPONDENT THE NATIONAL PORTS AUTHORITY, A DIVISION OF TRANSNET (SOC) LTD SECOND RESPONDENT Neutral citation: Minmetals Logistics Zhejiang Co Ltd v The Owners and Underwriters of the MV ‘Smart’ and Another (573/2023) [2024] ZASCA 129 (1 October 2024) Coram: PONNAN, DAMBUZA, MOCUMIE and NICHOLLS JJA and KOEN AJA 2 Heard: 9 September 2024 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 1 October 2024. Summary: Maritime law – s 5(1) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act) – application to compel litigant to produce documents – documents arising from private arbitration in London between the litigant and a peregrinus third party – documents alleged to be confidential – whether third party has a direct and substantial interest in application to compel – whether third party should be joined to application to compel – whether an Admiralty Court has the power in terms of s 5(1) of the Act to join peregrinus third party – whether order for joinder of third party granted pursuant to such power appealable. 3 ______________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: KwaZulu-Natal Division of the High Court, Durban (Lopes J, sitting as a court of first instance exercising admiralty jurisdiction): 1 The appeal is struck from the roll; 2 The appellant is directed to pay the costs of the first and second respondents, such costs to include the costs of two counsel where employed. ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Koen AJA (Ponnan, Dambuza, Mocumie and Nicholls JJA concurring): Introduction [1] On 29 July 2022, the KwaZulu-Natal Division of the High Court, Durban (per Lopes J) (the high court), exercising its admiralty jurisdiction and relying on the provisions of s 5(1) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act),1 granted an order joining the appellant, Minmetals Logistics Zhejiang Co Ltd (Minmetals), as a party to an application to compel. The application to compel was brought by the second respondent, the National Ports Authority, a division of Transnet (SOC) Ltd (Transnet), against the first respondent, the Owners and Underwriters of the MV ‘Smart’ (the owners), in respect of an action pending between them. Transnet seeks to compel the owners to produce certain documents arising from an arbitration between the owners and Minmetals in London. Minmetals is a peregrinus.2 [2] The appeal is against the granting of the joinder order, with the leave of the high court. The questions required to be answered in the appeal are whether the high court 1 All references to sections hereinafter are to the provisions of the Act, unless stated otherwise. 2 Minmetals is a Chinese company. 4 had jurisdiction to grant such an order, and if so, whether its decision to grant the order, is appealable. Background [3] On 19 August 2013, the fully laden bulk carrier, the MV ‘Smart’, time chartered by Minmetals, ran aground in the vicinity of the Richard Bay harbour entrance when departing from the port, causing it to break up and sink. This incident has given rise to various legal proceedings, including: (a) arbitration proceedings by the owners against Minmetals in London, alleging a breach of a safe port warranty; (b) Minmetals, in turn, suing Transnet in delict, based on its control of the Richards Bay harbour, for an indemnification should it be held liable to the owners in the London arbitration; and, (c) the owners suing Transnet in delict in the high court (the action), based on an alleged breach of various legal and statutory duties owed to them, for the value of the lost cargo, hull, bunkers and other losses. The order for the joinder of Minmetals, which is the subject of this appeal, arose in respect of the last-mentioned action by the owners against Transnet. [4] Underpinning the arbitration and the action, are allegations that Transnet failed to provide a safe port. In its award handed down on 12 June 2020, the London arbitration tribunal however found that although there were some shortcomings in the running of the port, it was the Master’s negligent navigation of the vessel, which caused the ‘Smart’ to ground, and that such negligence constituted a novus actus interveniens which broke the chain of causation, including the alleged lack of safety of the port. On 28 October 2020, Minmetals, in view of these findings, withdrew its indemnity action against Transnet. The owners’ action against Transnet continues. It is defended on the basis, inter alia, as found in the arbitration, that the loss or damage suffered by the owners was as a result of the negligence of the Master and crew. [5] In the action between the owners and Transnet, the owners asserted privilege in respect of various discovered documents relating to the arbitration. In addition, on 5 15 September 2020, Transnet served a notice in terms of rule 35(3) on the owners requesting further documents which had featured in the arbitration. Transnet seeks to compel the disclosure of these documents. The owners have resisted producing the documents, claiming that they are privileged from disclosure, as they were subject to an implied contractual undertaking of confidentiality between it and Minmetals, and that some are irrelevant. That stance notwithstanding, the owners are willing to waive their privilege in respect of the documents, subject to certain timing constraints. They, however, cannot unilaterally waive confidentiality, and any privilege as may attach to the documents, without the concurrence of Minmetals. [6] Minmetals refuses to agree to the disclosure of the documents: it is of the view that the documents are confidential/private; that it is not obliged to consent to the release of the documents and will not do so; that it did not require nor wish to be joined to any application to compel production; but, that it might consider not objecting to the disclosure if the owners were ordered by a court to produce the documents and the owners produced the documents pursuant to such an order. The owners accordingly accept that they are precluded from making disclosure of the documents in the absence of a court order. [7] On 4 May 2021, Transnet launched an application against the owners to compel the production of the documents. The issue pertinently raised in the application is whether the documents are confidential and privileged from disclosure. The owners reiterated their willingness to disclose the documents, but that they cannot do so while Minmetals is not prepared to accede to any disclosure, whether qualified or unqualified. That, the owners maintain, would leave them in an invidious position if a South African court were to order disclosure of the documents in the absence of Minmetals as a party to the application to compel, and the documents were found by an English court or tribunal to be privileged and prohibited from disclosure. They will then find themselves subject to two competing, conflicting and inconsistent orders, and that might result in damaging sanctions, because if a South African court should order disclosure, and the order was not complied with because of a conflicting English order, then it could result in the dismissal of their South 6 African action. They might also face alternative sanctions before the English courts. That would be the result unless Minmetals consents to not pursuing any relief in London in relation to the claim for production of the documents, which it has refused to do. [8] To avoid such conflicting results, a multiplicity of actions, possible conflicting orders, incompatible outcomes and potential prejudice, the owners settled on seeking the joinder of Minmetals as the only appropriate solution. Minmetals could then elect to take whatever further steps it may deem fit, but it could not resist its joinder to keep open its option to seek relief in England to counter the effect of an order, which might be granted in this country. On 10 June 2021, the owners, relying on the provisions of s 5(1) of the Act, moved for the joinder of Minmetals to the application to compel so Minmetals could assert its position, if so advised, but regardless, be bound by an order of a South African court as to whether the documents should be disclosed. [9] Transnet did not oppose the joinder application. Its attitude was that there was no need for Minmetals to be joined as the documents sought were in the possession of the owners and should simply be produced. That however would ignore the claims to confidentiality. It participated in the joinder application and also in this appeal simply to dispute Minmetals’ allegation that Transnet has no right to the disclosure of the documents because they are privileged or otherwise immune from production. [10] Minmetals opposed the application for joinder, maintaining its stance that the documents could never be disclosed without its consent. It also did not abandon the possibility of proceeding before the arbitration tribunal, or an English court, for an order restraining the owners from producing the documentation. Indeed, it implicitly reserved the right to do so by maintaining that it was the United Kingdom courts which would have the jurisdiction to rule on the issue of the confidentiality of the documents. 7 In the high court [11] On 29 July 2022, the high court, relying on the provisions of s 5(1) joined Minmetals as a party to the application to compel.3 The high court reasoned that Minmetals would be bound by the findings in the application to compel, whatever those may be, and accordingly, that it would be in the interest of justice for it to be joined, to require it to argue its claim to confidentiality in the application to compel, also as this may be relevant to any further proceedings instituted in an English court or arbitration. The joinder would effectively compel Minmetals to decide whether to waive any right which might prevent the owners from disclosing the documents, or to justify why the documents should not be disclosed. [12] The high court’s order expressly confined Minmetals’ joinder to the ‘application to compel discovery brought by the Transnet . . .’ It further granted Minmetals leave to file answering affidavits, if any, in the application to compel and directed Minmetals to pay the owners’ costs of the application, such costs to include the costs consequent upon the employment of two counsel. [13] The high court concluded that it was not required of the owners to establish a prima facie case against Minmetals, because they were not seeking to enforce a claim, but to achieve a procedural remedy, simply to protect themselves against possible claims. It held further, that even if the owners were required to establish any prima facie right against Minmetals, that they had done so, as the English law, which Minmetals submitted applies, recognises exceptions to the implied privilege rule, including that disclosure of the documents may be ordered where it would be in the interests of justice. Whether disclosure should indeed be ordered, will however ultimately only be determined by the court hearing the application to compel.4 3 Paragraph (a) of the order of the high court is in the following express terms: ‘(a) Minmetals Logistics Zhejiang Co Ltd, the charterers of the mv ‘Smart’, are, in terms of s 5(1) of the Admiralty Jurisdiction Regulation Act, 1983, joined in the main application to compel discovery brought by Transnet National Ports Authority (‘the TNPA’). (Emphasis added.) 4 Ali Shipping Corporation v Shipyard Trogir [1998] 1 Lloyd’s Rep 643 at 105, 107 and 129. 8 The need for joinder [14] In City of Johannesburg Metropolitan Municipality v Blue Moonlight Properties 39 (Pty) Ltd and Another,5 the Constitutional Court held that: ‘Generally, a party must be joined in proceedings if it has a direct and substantial interest in any order the court might make, or when an order cannot be effected without prejudicing it.’ A direct and substantial interest means an interest in the subject-matter of the litigation, not a mere financial or academic interest. If a party has a direct and substantial interest, it is a necessary party6 and should be joined unless the court is satisfied that it has waived the right to be joined.7 [15] On the facts of this matter, whether the documents should be produced is a disputed question, the resolution of which will arise in the application to compel. The application to compel is incidental to the court exercising its jurisdiction in the action. The joinder of Minmetals as a party to the application to compel, is simply a necessary interlocutory procedure to achieve a proper and full ventilation of an issue relating to the action and the application to compel. If the court hearing the application to compel was to order disclosure of the documents, its order will certainly affect the legal rights of Minmetals. Whether disclosure of the documents should be ordered in the pending action would unquestionably be binding on Minmetals. Giving effect to the need for joinder [16] Accepting that Minmetals should be joined, the next enquiry is how that could be achieved. In the ordinary course it would not be competent for a South African court to join a foreign entity over which it does not have jurisdiction, to local proceedings.8 In admiralty matters joinder can be achieved, as in other high court litigation, in terms of the 5 City of Johannesburg Metropolitan Municipality v Blue Moonlight Properties 39 (Pty) Ltd and Another [2011] ZACC 33; 2012 (2) BCLR 150 (CC); 2012 (2) SA 104 (CC) para 44. 6 This court said in Judicial Service Commission and Another v Cape Bar Council and Another [2012] ZASCA 115; 2012 (11) BCLR 1239 (SCA); 2013 (1) SA 170 (SCA); [2013] 1 All SA 40 (SCA) para 12, that ‘. . . [J]oinder of a party is only required as a matter of necessity - as opposed to a matter of convenience - if that party has a direct and substantial interest which may be affected prejudicially by the judgement of the court in the proceedings concerned.' 7 D R Harms Civil Procedure in the Superior Courts (2022) Vol 1, B-103 at B10.2. 8 Section 21(2) of the Superior Courts Act 10 of 2013. 9 common law and rule 10, 9 which applies in admiralty matters by virtue of the provisions of Admiralty rule 24, and, in addition, also in terms of s 5(1) of the Act.10 The high court based its order on s 5(1). Minmetals maintained that s 5(1) did not permit its joinder. The preliminary issue to be addressed is whether the high court had the jurisdiction, in principle, to direct the joinder of a third party, like Minmetals, in terms of s 5(1). [17] Section 5(1) provides as follows: ‘A court may in the exercise of its admiralty jurisdiction permit the joinder in proceedings in terms of this Act of any person against whom any party to those proceedings has a claim, whether jointly with, or separately from, any party to those proceedings, or from whom any party to those proceedings is entitled to claim a contribution or an indemnification, or in respect of whom any question or issue in the action is substantially the same as a question or issue which has arisen or will arise between the party and the person to be joined and which should be determined in such a manner as to bind that person, whether or not the claim against the latter is a maritime claim and notwithstanding the fact that he is not otherwise amenable to the jurisdiction of the court, whether by reason of the absence of attachment of his property or otherwise.’ [18] The section provides extended powers, in the interests of justice and convenience, that would otherwise not be available to a high court when not exercising its admiralty jurisdiction, to join peregrine ‘not otherwise amenable to the jurisdiction of the court . . .by reason of the absence of attachment of his property11 or otherwise.’12 It is however a 9 Rule 10 however cannot confer substantive rights. It regulates procedural matters. 10 The owners relied on rule 10 as well before the high court and this Court. The high court found that it had no application. That finding was correct – see J Hare Shipping Law and Admiralty Jurisdiction in South Africa 2 ed (2009) at 136. The owners have again relied on the provisions of rule 10 before this Court. Whether rule 10 could have applied will not be considered further as the high court did not order the joinder of Minmetals based on rule 10, and because this judgment concludes that the joinder of Minmetals was validly achieved based on a proper interpretation of s 5(1). 11 Following Simon NO v Air Operations of Europe AB and Others [1998] ZASCA 79; 1999 (1) SA 217 (SCA); [1998] 4 All SA 573 (A) at 231B-C, no attachment would in any event have been required, as no relief is claimed against Minmetals, and the nature of the relief sought in the application to compel does not sound in money. 12 In Jamieson v Sabingo [2002] ZASCA 20; [2002] 3 All SA 392 (A) paras 21-22, it was held that ordinarily, in matters other than maritime matters, where the party to be joined is a peregrinus against whom relief ad pecuniam solvendam (sounding in money) is to be claimed, then an attachment, at least ad confirmandum jurisdictionem (to confirm the jurisdiction where the ratione jurisdictionis – reason for jurisdiction- for example a delict, occurred within the territorial jurisdiction of the court) or ad fundandum jurisdictionem (to found jurisdiction) where it did not. 10 power which can only be exercised provided the requirements of the provision are satisfied. Whether Minmetals could be made ‘amenable to the jurisdiction of the high court’ therefore turns on a proper interpretation of s 5(1). [19] Following Cool Ideas 1186 CC v Hubbard and Another13 and Natal Joint Municipal Pension Fund v Endumeni Municipality,14 the words employed in s 5(1) must be given their ordinary grammatical meaning, unless to do so would result in an absurdity, but interpreted purposively, properly contextualised, and consistent with the Constitution. Statutory interpretation is an objective process. The words in the statute must be given their ordinary general meaning,15 that will apply to all cases falling within the ambit of the statute,16 unless to do so would result in an absurdity. [20] Recently the Constitutional Court reiterated this approach in AmaBhungane Centre for Investigative Journalism NPC v President of the Republic of South Africa17 as follows: ‘. . .one must start with the words, affording them their ordinary meaning, bearing in mind that statutory provisions should always be interpreted purposively, be properly contextualised and must be construed consistently with the Constitution. This is a unitary exercise. The context may be determined by considering other subsections, sections or the chapter in which the keyword, provision or expression to be interpreted is located. Context may also be determined from the statutory instrument as a whole. A sensible interpretation should be preferred to one that is absurd or leads to an unbusinesslike outcome.’ This injunction means that there must be compelling reasons why, if the legislature used the word ‘or’, that it should be read as ‘and’. The words must be given their ordinary 13 Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC) (Cool Ideas): 2014 (8) BCLR 869 (CC) at para 28. 14 Natal Joint Municipal Pension Fund v Endumeni Municipality (Endumeni) [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 17. 15 Op cit Cool Ideas para 28; Op cit Endumeni.’ 16 Kubyana v Standard Bank of South Africa Ltd [2014] ZACC 1; 2014 (3) SA 56 (CC); 2014 (4) BCLR 400 (CC) para 78; See also Endumeni para 18. 17 AmaBhungane Centre for Investigative Journalism NPC v President of the Republic of South Africa [2022] ZACC 31; 2023 (2) SA 1 (CC); 2023 (5) BCLR 499 (CC) para 36. 11 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.18 [21] Following the above approach to interpretation, s 5(1) properly construed, contemplates three possible categories, spatially separated by the word ‘or’ where a joinder may be ordered, namely: (a) where any party to the proceedings has a claim, whether jointly with, or separately from, any other party to those proceedings, against the party to be joined; or (b) where any party to the proceedings is entitled to claim a contribution or an indemnification against the party to be joined; or (c) a person in respect of whom any question or issue in the proceedings is substantially the same as a question or issue which has arisen or will arise between the party and the person to be joined and should be determined in such a manner as to bind that person. The high court concluded that the third category conferred the power to join a party in the position of Minmetals. [22] Clearly, the present is neither an instance where (a) nor (b) finds application. Minmetals argued that (c) did not establish a separate category of persons for joinder, but qualified (a) and (b). It relies on the view of Hofmeyr19 that the word ‘or’ in ‘or . . . in respect of whom,’ immediately preceding (c) above, must be interpreted to read ‘and.’ This, it is argued, is necessary to give effect to the legislature’s intention, and to avoid, as Hofmeyr contends, a situation where in a claim based on carriage, a foreign party could be joined in South African litigation in respect of a completely unrelated non-maritime claim, such as goods sold and delivered. Such an eventuality, Minmetals submits, demonstrates the 18 See the interpretation of ‘or’ as ‘and’ in Ngcobo and Others v Salimba CC; Ngcobo and Others v Van Rensburg [1999] ZASCA 22; [1999] 2 All SA 491 (A); 1999 (2) SA 1057 (SCA) 1068A-C; See also South African Transport and Allied Workers Union and Another v Garvas and Others [2012] ZACC 13; 2012 (8) BCLR 840 (CC); [2012] 10 BLLR 959 (CC); (2012) 33 ILJ 1593 (CC); 2013 (1) SA 83 (CC) para 143 (minority judgment of Jafta J). 19 G Hofmeyr Admiralty Jurisdiction Law and Practice in South Africa 2 ed (2012) at 212. 12 absurdity and unreasonableness of interpreting s 5(1) in the manner contended for by the owners, and accepted by the high court. [23] Hofmeyr’s reasoning is not underpinned by any authority. The example of the goods sold and delivered claim, if not involving substantially the same issue or question which has arisen or will arise between the party to the action and the third party to be joined, would not be within the contemplation of the provision in any event. If it does, then the joinder would satisfy, what Hofmeyr20 himself recognises, as ‘considerations of convenience,’ so that the same issue, arising between a number of persons, can be decided in one action, rather than in a multiplicity of proceedings. That would be the antithesis of absurdity. But, even if some inconvenience is caused, inconvenience does not equate to absurdity. And further, any such alleged ‘absurdity’ is expressly contemplated in s 5(1) permitting joinder ‘whether or not the claim . . . is a maritime claim and notwithstanding the fact that [the party to be joined] is not otherwise amenable to the jurisdiction of the court.’ The alleged ‘absurdity’ is not only not an absurdity, but a deliberate feature of s 5(1). [24] There are no compelling reasons to read the provision conjunctively and the second ‘or’ as meaning ‘and’, contrary to the plain meaning thereof. The three categories should be read disjunctively. The choice of ‘or’ was deliberate. As, has been said,21 ‘[a]lthough much depends on the context and the subject matter . . . 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 be read to mean “or”, or vice versa. Words are 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.’ 20 Hofmeyr at 212. 21 Op cit fn 18 para 11. 13 [25] It is significant that (c) provides for the joinder of a person in respect of ‘whom any question . . . has arisen.’ What follows thereafter is fairly broad and almost limitless. It contemplates a joinder in respect of ‘any question or issue’, ‘which has [already] arisen’ in the past or ‘will arise’ in the future. A disjunctive interpretation is also consistent with the purpose of s 5(1) to broaden the scope for joinder in maritime matters, otherwise, there would have been little, or no need to provide for joinder beyond rule 10 and the common law. [26] The reasoning of the high court was not flawed. On the contrary, it is supported by the ordinary canons of statutory interpretation, and authorities, such as Shaw22 and Hare.23 Section 5(1) is a ‘powerful measure’24 and a ‘very far-reaching power’.25 That does not mean that effect should not be given to the clear wording thereof. As was said in MY Summit One Farocean Marine (Pty) Ltd v Malacca Holdings Ltd and Another:26 ‘Admittedly, the powers of joinder in terms of the section so construed are far-reaching. But the object of the legislature was clearly to permit all the parties to a dispute to be joined in the action. The absence of such a provision could well result in the undesirable situation of courts in different countries having to adjudicate on the same or substantially the same issues arising out of the same incident or set of facts.’ The avoidance of courts in different countries having to adjudicate on the same or substantially the same issues arising out of the same incident or set of facts, is the very mischief that the owners seek to avoid. The purpose and context of s 5(1) is plainly underpinned by considerations of convenience so that if the same issue arises between a number of persons, that issue should be decided in one action rather than in multiple proceedings.27 The importance of the section is to avoid a multiplicity of actions, with the real danger of conflicting judgments in different countries.28 22 D J Shaw Admiralty Jurisdiction and Practice in South Africa (1987) at 9 page. Although Shaw considered s 5(1) prior to its amendment, the material portions thereof have not changed. 23 Hare at 136 described s 5(1) as ‘a wide open door’ and reinforced the use of a disjunctive ‘or.’ 24 Hare at 138. 25 Shaw at 9. 26 MY Summit One Farocean Marine (Pty) Ltd v Malacca Holdings Ltd and Another [2004] ZASCA 58; [2004] 3 All SA 279 (SCA); 2005 (1) SA 428 (SCA) para 17. 27 Hofmeyr at 212. 28 Op cit fn 26 para 17. 14 [27] Accordingly, (c) applies. Accepting that the high court had the necessary authority to join a third party in the position of Minmetals, the question then becomes whether it should have directed its joinder. However, a consideration of that question need only occupy our attention if the high court’s decision to direct the joinder is appealable. It is to that issue that I then turn. Is the order of the high court appealable? [28] When the owners opposed the application for leave to appeal before the high court, they had argued that the joinder order was not appealable. The high court however concluded that its order had final effect, in the sense that in joining Minmetals, it rendered it susceptible to the jurisdiction of the court, and that this order was definitive of the rights of Minmetals. It accordingly considered its order to be appealable. In doing so, the high court, with respect, conflated the issues whether it had the jurisdiction and could order the joinder of a peregrinus in the position of Minmetals under s 5(1), and whether it should have ordered the joinder of MInmetals. The parties were accordingly requested in advance of the appeal hearing to be prepared to address this Court as to whether the order was appealable. The test for appealability [29] Zweni v Minister of Law and Order of the Republic of South Africa (Zweni)29 held that for a court order to be appealable, it had to have three attributes: the order should be final in effect and not susceptible to alteration by the court of first instance; it should be definitive of the rights of the parties, that is, it must grant definitive and distinct relief; and, it must have the effect of disposing of at least a substantial portion of the relief claimed in the main proceedings. With the passage of time, the test for appealability has become more flexible in accordance with the dictates of what is ‘in the interest of justice’. The interest of justice criterion is now paramount in deciding whether orders,30 including 29 Zweni v Minister of Law and Order [1992] ZASCA 197; [1993] 1 All SA 365 (A); 1993 (1) SA 523 (A) at 532I-533A. 30 Philani-Ma-Afrika v Mailula [2009] ZASCA 115; 2010 (2) SA 573 (SCA); [2010] 1 All SA 459 (SCA) para 20; See also S v Western Areas [2005] ZASCA 31; [2005] 3 All SA 541 (SCA); 2005 (5) SA 214 (SCA); 15 interlocutory orders31 are appealable. As to what is in the interest of justice, requires a careful weighing up of all germane circumstances. [30] These developments in our jurisprudence have been summarised by the Constitutional Court as follows in Tshwane City v Afriforum:32 ‘Unlike before, appealability no longer depends largely on whether the interim order appealed against has final effect or is dispositive of a substantial portion of the relief claimed in the main application. All this is now subsumed under the constitutional interest of justice standard. The over-arching role of interests of justice considerations has relativised the final effect of the order or the disposition of the substantial portion of what is pending before the review court, in determining appealability . . . If appealability or the grant of leave to appeal would best serve the interests of justice, then the appeal should be proceeded with no matter what the pre—Constitution common law impediments might suggest . . .’ [31] The interests of justice test has been explained further by the Constitutional Court, for example in United Democratic Movement and Another v Lebashe Investment Group (Pty) Ltd and Others (UDM)33 as follows: ‘Whether this Court should grant leave turns on what the interests of justice require. Whether it is in the interests of justice to hear and determine the matter involves a careful balancing and weighing-up of all relevant factors. However, there is no concrete and succinct definition of the phrase “interests of justice” and what it really entails. What is in the interests of justice will depend on a careful evaluation of all the relevant factors in a particular case . . .It would not be in the interests of justice that the issues in this matter are determined in a piecemeal fashion. Moreover, the issues in this matter are of such a nature that the decision sought will have a practical effect if the application for leave to appeal is granted. This matter raises issues that are of a 2005 (1) SACR 441 (SCA); 2005 (12) BCLR 1269 (SCA) para 25 and 26; Khumalo v Holomisa [2002] ZACC 12; 2002 (5) SA 401 (CC); 2002 (8) BCLR 771 para 8. 31 National Treasury and Others v Opposition to Urban Tolling Alliance and Others [2012] ZACC 18; 2012 (6) SA 223 (CC); 2012 (11) BCLR 1148 (CC) at paras 23-25. See also MEC for Health, KwaZulu Natal v Premier, Kwazulu Natal: In re Minister of Health v Treatment Action Campaign [2002] ZACC 14; 2002 (5) SA 717 (CC); 2002 (10) BCLR 1028 at para 6; Cape Metropolitan Council v Minister of Provincial Affairs and Constitutional Development [1999] ZACC 12 (CC); 1999 (12) BCLR 1353 (CC) at para 12. 32 City of Tshwane Metropolitan Municipality v Afriforum and Another [2016] ZACC 19; 2016 (6) SA 279 (CC); 2016 (9) BCLR 1133 (CC) at para 40 – 41. 33 United Democratic Movement and Another v Lebashe Investment Group (Pty) Ltd and Others [2022] ZACC 34; 2022 (12) BCLR 1521 (CC); 2023 (1) SA 353 (CC) at para 34 to 37 (footnotes omitted). 16 constitutional nature and arguable points of law of general public importance . . . The public interest will be best served by their prompt resolution. Such resolution will help to correct the wrong decision before it has further consequences, on the one hand, and to avoid delay and inconvenience resulting from the failure of this Court to hear the appeal . . .’. [32] The Zweni triad of attributes for an order to be an appealable order, is therefore no longer cast in stone,34 nor exhaustive.35 But those attributes have also not become irrelevant or supplanted by the development in our jurisprudence.36 This Court has remarked that, ‘the interests of justice should now be approached with the gravitational pull of Zweni.’37 If one of the attributes in Zweni is lacking, an order will probably not be appealable, unless there are circumstances which in the interests of justice, render it appealable. The emphasis has moved from an enquiry focused on the nature of the order, to one more as to the nature and effect of the order, having regard to what is in the interests of justice.38 What the interests of justice require depends on the facts of a particular case. This standard applies both to appealability and the grant of leave to appeal, no matter what pre-Constitution common law impediments might exist.39 [33] As regards the interests of justice, generally: ‘[T]he high court should bring finality to the matter before it, in the sense laid down in Zweni. Only then should the matter be capable of being appealed to this Court. It allows for the orderly use of the capacity of this Court to hear appeals that warrant its attention. It prevents piecemeal appeals 34 Griekwaland Wes Korporatief Beperk t/a Vaalrivier Diensstasie v Desert Oil (Pty) Ltd [2024] ZANCHC para 14. The application of the broader ‘interests of justice test’ might however provide compelling justification for an appeal against an order which otherwise would not be final in effect, whether on a question of law or otherwise. 35 Cyril and Another v Commissioner for the South African Revenue Service [2024] ZASCA 32; 2024 JDR 1335 (SCA) para 7. 36 TWK Agriculture Holdings (Pty) Ltd v Hoogveld Boerderybeleggings (Pty) Ltd and Others (TWK) [2023] ZASCA 63; 2023 (5) SA 163 (SCA). 37 Ibid TWK para 30. 38 In Jacobs and Others v Baumann NO and Others [2012] JOL 23549 (SCA) at 7 it was said that‘[t]herefore, a court determining whether or not an order is final considers not only its form but also, and predominantly, its effect.’ 39 National Commissioner of Police and Another v Gun Owners of South Africa [2020] ZASCA 88; [2020] All SA 1 (SCA); 2020 (6) SA 69 (SCA); 2021 (1) SACR 44 para 15. 17 that are often costly and delay the resolution of matters before the high court. It reinforces the duty of the high court to bring matters to an expeditious, and final, conclusion.’40 It is not in the interest of justice to have a piecemeal adjudication of litigation, with unnecessary delays resulting from appeals on issues which would not finally dispose of the litigation. As the Constitutional Court has held, albeit in a different context,41 it is undesirable to fragment a case by bringing appeals on individual aspects of the case prior to the proper resolution of the matter in the court of first instance, and an appellate court will only interfere in pending proceedings in the lower courts in cases of great rarity – where grave injustice threatens, and, intervention is necessary to attain justice. Discussion [34] This Court in Government of the Republic of South Africa and Others v Von Abo,42 held that there is no checklist of requirements to be weighed up to determine whether a decision is appealable. Several considerations need to be weighed up, including: whether the relief granted was final in its effect, whether the relief was definitive of the rights of the parties; whether it disposed of a substantial portion of the relief claimed; whether it is convenient that an appeal be entertained; what delays will be occasioned; considerations of expedience; what prejudice might ensue; whether it will avoid piecemeal appeals; and, whether it will contribute to the attainment of justice. [35] As regards the triad of attributes listed in Zweni, the parties are agreed that it is only the third requirement, that is whether the joinder of Minmetals would have the effect of disposing of a substantial portion of the relief claimed, which is implicated in this appeal. The ‘relief claimed’ required to be disposed of, is not the relief forming the subject of the application to which it relates, that is the joinder of Minmetals, otherwise every interlocutory application will meet that requirement, and be appealable. The relief is the substantive relief the parties seek to secure in the action, or at the very least, the relief 40 Op cit TWK para 21. 41 Cloete and Another v S; Sekgala v Nedbank Limited [2019] ZACC 6; 2019 (5) BCLR 544 (CC); 2019 (4) 268 (CC); 2019 (2) SACR 130 (CC) para 57-58. 42 Government of the Republic of South Africa and Others v Von Abo [2011] ZASCA 65; 2011 (5) SA 262 (SCA); [2011] 3 All SA 261 (SCA) para 17. 18 claimed in the application to which the joinder order relates, namely the relief claimed in the application to compel. The joinder of Minmetals has not finally disposed of any such relief. The application to compel, may require identifying which system of law will determine whether the documents are to be produced. The joinder order simply facilitates a full and proper ventilation of all the issues material to the determination of the application to compel, but it has not disposed of any part of any of the relief sought. On a strict application of the Zweni test, the order of the high court is not appealable. [36] The question becomes whether there are any further considerations which dictate that the joinder order should nevertheless be appealable in the interests of justice. Minmetals has not pointed to any considerations which persuade me that it is ‘in the interests of justice’ that the joinder decision should be appealable. [37] On the contrary, a survey of some of the possible relevant considerations which might apply, point in the opposite direction: allowing an appeal would simply cause further delay in the litigation involving the demise of the ‘Smart’, which now occurred some eleven years ago; an appeal will not in any way contribute to achieving finality as soon as possible, in the interests of the parties and the general administration of justice; an appeal against the joinder order will simply fragment the appeal process and further deplete scarce judicial resources; an appeal against the joinder will be largely academic if the application to compel is ultimately dismissed; any appeal in respect of interlocutory applications, specifically where interlocutory (to join) to another interlocutory application (to compel), should generally be discouraged. [38] The joinder application was an interlocutory application, not disposing of any substantial part of any final relief claimed, but a mere procedural step in relation to another interlocutory application, namely the application to compel, which is interlocutory to the owners’ main claim pending in the high court. A court still has to decide, as a matter of law, whether the resistance to disclosure of the documents based on confidentiality, 19 should prevail, and whether the owners should be compelled to produce the documents.43 It remains open to Minmetals to oppose the application to compel, or to abide the relief. There are no considerations which make an appeal imperative. [39] Minmetals’ fear that its joinder could expose it to relief sought against it by the owners or Transnet, is misplaced. It was specifically ‘joined in the main application to compel discovery brought by the Transnet National Ports Authority . . .’. Transnet is not pursuing any claim against Minmetals. The owners’ claim against Minmetals was dismissed in the charterparty arbitration. Neither the owners nor Transnet has given notice of any further claims. Having regard to the time that has elapsed since the grounding of the ‘Smart’ on 19 August 2013 any further potential claims would, by now, probably have long prescribed. Conclusion [40] Insofar as Minmetals disputed the power of the high court in terms of s 5(1), to order its joinder and thus render it subject to its jurisdiction, its contentions were misplaced and without merit. The high court correctly concluded that s 5(1) confers such a power. Having concluded that the high court could grant such an order, the sole issue was whether it should have granted the order joining Minmetals to the application to compel. An appeal lies against the order of a court, not its reasons. As the relief granted by the high court is not appealable, the appropriate order to be granted is that the appeal is struck from the roll. [41] As between Minmetals and the owners, the costs should follow the result. As regards the costs of Transnet, the high court found that its submissions were helpful, but that it was in effect a neutral party with regard to the joinder. It made no order for costs 43 The owners refer to Transnet v MV Alina II [2013] ZAWCHC 124; 2013 (6) SA 556 (WCC) para 45 as authority that a South African Court may direct the disclosure of arbitration documents in a foreign arbitration between one litigious party and another third party, but acknowledge that the issue when to override the principle of confidentiality is a vexed one. 20 with regard to its involvement in the proceedings before the high court. There is no basis to interfere in that order. As regards the interest of Transnet in the appeal, if this court was to have entertained the appeal and concluded that the owners had to establish a prima facie case for the documents to be produced, but that no prima facie case for the production of the documents had been established, then this could have impacted, as a finding of this Court, on Transnet’s application to compel in the high court. I am accordingly of the view that it was reasonable and appropriate for Transnet to have participated in the appeal to protect its rights. [42] Minmetals is accordingly directed to pay the costs of the owners and Transnet in this Court. All the parties employed two counsel and in asking for the relief they respectively claimed, sought costs, including the costs of two counsel where employed. Such an order is appropriate. Order [43] The following order is issued: 1 The appeal is struck from the roll; 2 The appellant is directed to pay the costs of the first and second respondents, such costs to include the costs of two counsel where employed. ________________________ P A KOEN ACTING JUDGE OF APPEAL 21 Appearances For the appellant: M J Fitzgerald SC and D J Cooke Instructed by: Edward Nathan Sonnenbergs Inc, Umhlanga Rocks Honey Attorneys, Bloemfontein. For the first respondent: S R Mullins SC and P J Wallis SC Instructed by: Shepstone & Wylie Attorneys, Umhlanga Rocks Matsepes Attorneys, Bloemfontein. For the second respondent: M Wragge SC and J D Mackenzie Instructed by: Webber Wentzel, 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: 1 October 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 Minmetals Logistics Zhejiang Co Ltd v The Owners and Underwriters of the MV ‘Smart’ and Another (573/2023) [2024] ZASCA 129 (1 October 2024) _________________________________________________________________________ The Supreme Court of Appeal (SCA) today struck an appeal by Minmetals Logistics Zhejiang Co Ltd (Minmetals) against the Owners and Underwriters of the MV ‘Smart’ (the Owners) and the National Ports Authority, a division of Transnet (SOC) Ltd (Transnet), from the roll with costs, including the costs of two counsel. The appeal arose from an order, granted by the KwaZulu-Natal Division of the High Court, Durban, exercising its admiralty jurisdiction and relying on the provisions of section 5(1) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act), which joined Minmetals, as a party to an application to compel. The application to compel is brought by Transnet, against the Owners, in respect of an action between them, relating to the fully laden bulk carrier, the MV ‘Smart’, time chartered by Minmetals at the time, on 19 August 2013 having run aground in the vicinity of the Richard Bay harbour entrance when departing from the port, causing it to break up and sink. Transnet seeks to compel the Owners to produce documents, relating to a private arbitration which has been finalised between the Owners and Minmetals in London, in respect of which Minmetals claims confidentiality, and which it contends are privileged from disclosure. The SCA concluded that section 5(1) of the Act, properly interpreted, provides for three instances of joinder, that these must be read disjunctively, as separated by the use of the word ‘or,’ and that the second ‘or’ in the provision should not be interpreted to mean ‘and.’ The 2 section accordingly grants the admiralty court the power and jurisdiction to order the joinder of a third party foreign company in the position of Minmetals, which has a direct and substantial interest in the application to compel. Having concluded that the section confers such power, the SCA held that the decision to join the third party, was not appealable, inter alia as it was not finally dispositive of the relief claimed, that it would fragment the appeal process, deplete judicial resources unnecessarily, cause delay as it was interlocutory to an interlocutory application, and that it was not in the interest of justice that the joinder order be treated as appealable. The appropriate order was therefore that the appeal be struck from the roll. ~~~~ends~~~~

4317

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 637/23 In the matter between: HANNERé CECILE JOOSTE FIRST APPELLANT JAN LOUIS JORDAAN SECOND APPELLANT and MEMBER OF THE EXECUTIVE COUNCIL FOR LOCAL GOVERNMENT ENVIRONMENTAL AFFAIRS & DEVELOPMENT PLANNING: WESTERN CAPE FIRST RESPONDENT DIRECTOR: DEVELOPMENT MANAGEMENT (REGION 1) OF THE DEPARTMENT OF ENVIRONMENTAL AFFAIRS & DEVELOPMENT PLANNING: WESTERN CAPE SECOND RESPONDENT DIRECTOR; WASTE MANAGEMENT DEPARTMENT OF ENVIRONMENATAL AFFAIRS & DEVELOPMENT PLANNING: WESTERN CAPE THIRD RESPONDENT SOUTH AFRICAN FARM ASSURED MEAT GROUP CC FOURTH RESPONDENT HENDRIK JOHANNES SWANEPOEL DE BOD NO FIFTH RESPONDENT JOHANNES PETRUS DU BOIS NO SIXTH RESPONDENT DANIёL JACOBUS VAN STADEN NO SEVENTH RESPONDENT Neutral citation: Jooste and Another v Member of the Executive Council for Local Government Environmental Affairs & Development Planning: Western Cape and Others (637/2023) [2024] ZASCA 138 (11 October 2024) 2 Coram: MOLEMELA P, PONNAN and KEIGHTLY JJA and BAARTMAN and DIPPENAAR AJJA Heard: 20 August 2024 Delivered: 11 October 2024 at 11h00 Summary: Appeal against dismissal of review and declaratory relief – disputes resolved in terms of settlement made an order of court – appellants did not seek to challenge or set aside the said order – issues res judicata – appellants bound by order and cannot revisit same issues – appeal dismissed with costs. 3 ________________________________________________________________________ ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Nuku J, sitting as court of first instance): 1 The appeal is dismissed. 2 The appellants are directed to pay the costs of appeal of the fourth to seventh respondents, including the costs of two counsel, where employed. JUDGMENT Dippenaar AJA (Molemela P, Ponnan and Keightly JJA and Baartman AJA concurring): Introduction [1] This appeal1 concerns the effect of a court order on review proceedings. It pertains to an environmental authorisation granted in favour of the fourth respondent, the South African Farm Assured Meat Group CC (SAFAM), in terms of s 24 of the National Environmental Management Act 107 of 1998 (NEMA), authorising Listed Activities 4 and 28 of Listing Notice 1 of 2014 (Listed Activities).2 The high court dismissed the review application as well as the ancillary relief sought, holding that the appellants made out no case for relief. The appeal is with leave of this Court. [2] Prior to the hearing, the appellants abandoned the appeal insofar as it related to a waste management licence granted to SAFAM under s 20 of the National Environmental Management: Waste Act 59 of 2008 (NEM: WA). This disposed of a substantial part of the appeal. 1 The first appellant passed away after the granting of leave to appeal and the appeal is being pursued by the second appellant. 2 Published under GG 38282, GN 983 dated 4 December 2014, as amended by GG 40772 GN 327 of 7 April 2017 and GG 41766 GN 706 of 13 July 2018 4 [3] The genesis of the appeal lies in a composting facility situated on a farm in Robertson (the project site),3 owned by the Reben Trust4 and leased by SAFAM, which operates the composting facility. SAFAM also operates abattoir facilities from other premises in Robertson. The project site is adjacent to properties owned by the first and second appellants, which form part of the Doornkloof Private Nature Reserve, a statutorily protected area,5 on which the appellants conduct tourism-based activities. The first respondent, the Member of the Executive Council for Local Government, Environmental Affairs and Development Planning: Western Cape (the MEC), the second respondent, the Director: Development Management (Region 1) of the Department of Environmental Affairs & Development Planning: Western Cape (the Director, NEMA) and the third respondent, the Director: Waste Management of the Department of Environmental Affairs and Development Planning: Western Province (the Director NEM: WA), are functionaries who were involved in the determination of those applications and the internal appeals which followed. [4] The appellants seek the setting aside of the environmental authorisation granted to SAFAM under NEMA by the Director, NEMA on 29 November 2019. Declaratory orders are further sought on the basis that SAFAM had unlawfully commenced with Listed Activities 8 and 28 of Listing Notice 1 under NEMA. An order is sought directing the Director, NEMA to take all steps necessary to enforce compliance by SAFAM with the provisions of NEMA, together with a costs order against any respondents who oppose the appeal. The appeal is opposed by the fourth to seventh respondents. The State respondents abide this Court’s decision as they did in the high court. The facts [5] The background facts are uncontentious. The composting facility was established by SAFAM during February 2017, after it was advised by the Langeberg Municipality that its abattoir waste6 could no longer be disposed of at the Municipality’s waste disposal site in 3 Portion 6 of the Farm Middelburg No. 10. 4 The fifth to seventh respondents are the trustees for the time being of the Reben Trust. 5 Under s 12 of the National Environmental Management: Protected Areas Act 57 of 2003. The properties were thus proclaimed in terms of s 12(4) of the Cape Nature Conservation Ordinance 19 of 1974 under Western Cape Provincial Gazette 5533 Notice 281 of 9 June 2000. 6 Comprising of animal by-products, blood and carcasses. 5 Ashton after the end of 2016. SAFAM’s composting facility disposes of the abattoir waste in windrows, ultimately producing organic compost which is either used on the farm or sold to third parties. The appellants complain that consequent upon the establishment of the composting facility, the use and enjoyment of their properties, and the tourism activities thereon, have been impacted by foul odours and flies emanating from the composting facility. [6] During January 2018, SAFAM submitted applications to obtain the necessary authorisations to conduct the composting facility on the project site.7 An application for environmental authorisation under NEMA was made to conduct Listed Activities 48, 89 and 28.10 [7] The appellants registered as interested and affected persons and actively participated in opposition to SAFAM’s applications to obtain the necessary environmental consents throughout the process. They consistently contended that SAFAM had unlawfully commenced with Listed Activities in violation of s 24F(1)(a) of NEMA, which prohibits the commencement of any listed activity under s 24(a) and (b) of NEMA. This would necessitate SAFAM having to apply for retrospective authorisation under s 24G of NEMA, involving, amongst others, the possible cessation of any composting activities by SAFAM at the facility 7 The environmental authorisation application was duly made in terms of regulation 16 of the Environmental Impact Assessment Regulations of 2014, published under GN R982 in GG 38282 of 4 December 2014. 8 Listed Activity 4 is defined in Listing Notice 1 as: ‘The development and related operation of facilities or infrastructure for the concentration of animals in densities that exceed – (i) 20 square metres per large stock unit and more than 500 units per facility; (ii) 8 square metres per small stock unit and; (a) more than 1000 units per facility excluding pigs where (b) applies; or (b) more than 250 pigs per facility excluding piglets that are not yet weaned; (iii) 30 square metres per crocodile and more than 20 crocodiles per facility; (iv) 3 square metres per rabbit and more than 500 rabbits per facility; or (v) 250 square metres per ostrich or emu and more than 50 ostriches or emu per facility 9 Listed Activity 8 is defined in Listing Notice 1 as: ‘The development and related operation of hatcheries or agri-industrial facilities outside industrial complexes where the development footprint covers an area of 2000 square metres or more.’ 10 Listing Activity 28 is defined in Listing Notice 1 as: ‘Residential, mixed, retail, commercial industrial or institutional developments where such land was used for agriculture, game farming, equestrian purposes or afforestation on or after 01 April 1998 and where such development: (ii) will occur outside an urban area, where the land to be developed is bigger than 1 hectare; excluding where such land has already been developed for residential, mixed, retail, commercial or industrial purposes’. 6 under s 24G(1)(aa)(A), pending the determination of such application and payment of an administrative fine under s 24G(4). [8] A draft Basic Assessment Report was circulated for comment on 14 March 2018, whereafter the Director, NEMA, during April 2018, sought, inter alia, confirmation of the size of the area used for the composting facility from SAFAM and the applicability of Listed Activity 28. Pursuant to SAFAM’s response, the Director, NEMA requested that SAFAM’s NEMA application be withdrawn on the basis that it had unlawfully commenced with Listed Activity 28, pending the conclusion of an investigation. On 23 May 2018, SAFAM was informed by the Director, NEMA that a new application would have to be submitted as the application had lapsed due to the failure to submit a final Basic Assessment Report, and that the file had consequently been closed. On 16 August 2018, the Director: NEM: WA rejected the NEM: WA application on a similar basis, namely that SAFAM had unlawfully commenced with certain listed activities, including Listed Activity 28. [9] After an unsuccessful internal administrative appeal under s 43(2) of NEMA, which was dismissed by the MEC on 13 June 2019, SAFAM launched an application in the high court on 14 August 2019 to review the dismissal of its application for a waste management licence under NEM: WA on 16 August 2018, and the dismissal of its appeal against that decision under NEMA on 13 June 2019 (the SAFAM review). Its stated purpose in doing so was ‘to resolve the series of obstacles in the form of erroneous and irrational administrative actions and conclusions, that prevent (SAFAM) from operating the existing composting facility and further expanding it’. Various declaratory and directory orders were sought against the MEC and the Department of Environmental Affairs and Development Planning (collectively the Department).11 11 In relevant part, a declaratory order was sought that SAFAM had not commenced with Listed Activity 28 under NEMA. An order was further sought directing the MEC to condone SAFAM’s failure to timeously submit its Basic Assessment Report relating to its NEMA application for environmental authorisation for Listed Activities 4, 8 and 28 within the period contemplated by regulation 19(1)(a) of the 2014 EA Regulations under s 47C, on the basis that the pending investigations by the Department were not concluded. An order was sought directing the Department of Environmental Affairs and Development Planning to consider and decide upon the NEMA application within thirty days of submission of the Basic Assessment Report. 7 [10] The Department opposed the application. In the answering papers, the Department raised substantially the self-same issues and arguments as advanced by the appellants throughout the process and in the present appeal. The central issues were whether SAFAM had unlawfully commenced Listed Activities in contravention of s 24F(1)(a) of NEMA and whether the retrospective application process in s 24G had to be followed by SAFAM. These issues had underpinned the rejection of SAFAM’s applications for environmental authorisation and a waste management licence. It was further in dispute whether SAFAM unlawfully commenced with a Listed Activity and there were issues relating to the size of the existing composting facility. [11] The appellants were not cited as parties to the SAFAM review application but became aware thereof on 10 October 2019, some six days before the hearing date. They were informed by the State Attorney, representing the Department, that settlement negotiations were underway with SAFAM. [12] A settlement was reached between SAFAM and the Department, which culminated in an order being granted by consent in the Western Cape Division of the High Court on 18 October 2019, reflecting the terms of their settlement (the settlement order).12 The 12 The order provides: ‘1. The decision taken by the first respondent (“the minister”) on the 13 June 2019 in respect of the appeal lodged by the applicants in terms of section 43(6) of National Environmental: Management Act, 107 of 1998 (“NEMA”) against the decision referred to in paragraph 2 below is reviewed and set aside. 2. The decision taken by the director, Waste Management on 16 August 2018 to reject the First Applicant’s application for a waste management licence (“the Waste Management Licence Application”) in terms of section 49(1)(c) of the National Environmental: Management Waste Act, 59 of 2008 (“NEM: WA”) is reviewed, set aside and remitted to the Director: Waste Management in terms of section 8(1)(C)(i) of the promotion of Administrative Justice Act, Act 3 of 2000, for a determination of the waste management Licence Application, with the following directions:- 2.1 the Applicants shall within 5 days of the date of the court order submit such further information as required by the department pursuant to the Waste Management Licence Application in respect of the land developed for the purposes of the composting facility in order to ascertain whether such land is bigger than 1 hectare for purposes of Activity 28 of Listing Notice 1; 2.2 the remainder of the information submitted as part of the Waste Management Licence application shall suffice and does not need to be resubmitted. 3. It is recorded that, pursuant to the settlement of this application, the Minister has, in terms of section 47C of NEMA, condoned the First Applicant’s failure to submit the final Basic Assessment Report for purposes of the First Applicant’s application for environmental authorisation in terms of the 2014 EIA Regulations for activities 4,8 and 28 as contained in listing notice 1: 2014 (“the NEMA Application”), within the time periods required by regulation 19(1) of the 2014 EIA Regulations. 8 settlement order set aside the decisions made by the Department to dismiss SAFAM’s NEMA appeal and its application for a waste management licence. The waste management licence application was remitted to the Department for consideration by a certain date, and SAFAM was directed to provide certain additional information specified in the order. Condonation was granted by the Minister under s 47C for SAFAM’s failure to timeously submit its Basic Assessment Report. Pending the determination of the authorisation applications, the Department undertook not to take any enforcement steps against SAFAM, ‘who in turn undertook not to conduct composting activities over an area exceeding 1 hectare and ten tonnes of waste per day. The appellants were furnished with a copy of the settlement order on 25 October 2019. SAFAM complied with the settlement order, culminating in the granting to SAFAM of an environmental authorisation on 29 November 2019, authorising Listed Activities 4 and 28. A waste management licence was also granted. [13] This triggered the launching of a combined internal appeal under s 43(2) of NEMA by the appellants on 13 January 2020 against the granting of the authorisation and licence. The appeal was dismissed by the MEC on 31 August 2020, who confirmed the environmental authorisation and waste management licence. This resulted in the launching of the review application, the subject of this appeal, in the high court. The issues 4. The First Applicant shall submit the final NEMA Basic Assessment Report, and the information referred to in paragraph 2.1 above to the Department within 5 days of the date of the court order. 5. Provided that the First Applicant complies with the time periods in paragraphs 2.1 and 4 above, the decision in respect of Waste Management Licence Application and the NEMA Application shall be made by no later than 29 November 2019. 6. Pending the First Applicant obtaining a waste management licence under NEM:WA, alternatively complying with the National Norms and Standards for Organic Waste Composting, if and when they come into effect, and such environmental authorisation under NEMA as may be required. 6.1 The Applicants undertake not to treat in excess of ten tons of general waste per day calculated on monthly average on portion 6 of farm Middelburg 10, Robertson (“the Farm”) and the total area within which the composting activities take place on the Farm shall not exceed 1 hectare. 6.2 The Department undertakes not to take any further enforcement steps against the applicants in terms of chapter 7 of NEMA on the basis that the Applicants have unlawfully commenced with Listed Activity 28 and/ or Waste Listed Activity 6, provided that the Applicants comply with the undertaking in 6.1. 7. The Department shall pay the Applicants’ party and party costs.’ 9 [14] In the high court, the appellants raised mainly procedural grounds of review, the majority of which were not persisted with on appeal. Before this Court, in their heads of argument, the appellants articulated their four grounds of appeal thus: (a) that the MEC’s condonation decision in terms of s 47C of NEMA was procedurally unfair as no prior notice of the MEC’s intention was given to the appellants or other interested and affected parties, no opportunity was afforded to them to make representations and no information or reasons for the decision were ever provided; (b) that the MEC was not empowered to take the condonation decision under s 47C - this ground was abandoned at the hearing and requires no further comment; (c) that SAFAM unlawfully commenced with Listed Activity 28 in breach of s 24F of NEMA; and (d) that SAFAM unlawfully commenced with Listed Activity 8 in breach of s 24F of NEMA. [15] The major obstacle facing the appellants is the settlement order of 18 October 2019. On a grammatical, contextual and purposive interpretation of the settlement order, its ambit and effect is that it sets aside the State respondents’ previous decisions and resolved the issues between the parties, which informed those decisions. This included any unlawful commencement of the impugned Listed Activities that were considered to contravene s 24F of NEMA. It further provided directions facilitating the process which culminated in the granting of the environmental authorisation on 29 November 2019, without directing any further public participation requirements. It thus resolved the very factual and legal issues regarding SAFAM’s conduct which underpin this appeal. [16] One of the core objectives of court orders is bringing finality to litigation.13 The settlement order brought finality to the lis between SAFAM and the State respondents, which became res judicata and finally disposed of those issues.14 It is of no consequence that the source of the order was a settlement between the parties. Such order is an order like all others and will be interpreted as such.15 The settlement order is not a nullity but exists in fact 13 Moraitis Investments (Pty) Ltd and Others v Montic Diary (Pty) Ltd and Others [2017] ZASCA 54; [2017] 3 All SA 485 (SCA); 2017 (5) SA 508 (SCA) para 10. 14 Eke v Parsons [2015] ZACC 30; 2015 (11) BCLR 1319 (CC); 2016 (3) SA 37 (CC) para 29 and 31. 15 Eke para 57. 10 and has legal consequences.16 It is binding and must be complied with, obeyed and respected, irrespective of whether it has been correctly or incorrectly granted, until it is set aside.17 [17] Despite prior knowledge of the pending SAFAM review application that culminated in the settlement order, the appellants did not enter the fray or seek to intervene in those proceedings to raise any issue that may have adversely impacted on the settlement negotiations. After receipt of a copy of the settlement order, they took no steps to have the order rescinded or set aside. It was open to the appellants to challenge the order and seek its rescission, which they elected not to do. The appellants have also not sought any relief in respect of the order in the present proceedings. [18] The appellants’ strident allegations of connivance between SAFAM and the State respondents and the existence of ‘irregularities’ and ‘anomalies’ in the order, set out in the appellants’ founding affidavit, lack merit and are worthy of censure. Those allegations resulted in the State respondents delivering an explanatory affidavit in response before the high court, an issue relevant to determining an appropriate costs order. [19] The appellants’ collateral attempt to challenge the validity of the settlement order by way of review proceedings which seek to revive issues which have been resolved, is untenable. This is because the appellants’ case relies on issues which preceded the settlement agreement and disregards its effect. The settlement order following upon the settlement agreement is dispositive of all of the grounds of appeal advanced. [20] In argument, this Court was urged not to mulct the appellants with costs if the appeal is not successful, and to apply the principles in Biowatch Trust v Registrar, Genetic 16 Department of Transport and Others v Tasima (Pty) Ltd [2016] ZACC 39; 2017 (1) BCLR 1 (CC); 2017 (2) SA 622 (CC) para 182. 17 Secretary of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector including Organs of State v Zuma and others [2021] ZACC 18; 2021 (9) BCLR 992 (CC); 2021 (5) SA 327 (CC) para 59. 11 Resources,18 as the appeal is not vexatious or frivolous. Reliance was also placed on the provisions of s 32(2) of NEMA,19 in arguing that the appellants acted reasonably and in the public interest. [21] These principles do not avail the appellants. Considering: (a) the history of the matter, (b) the intemperate allegations in the founding papers in the face of the clear consequences of the unchallenged settlement order; and (c) the abandonment of a substantial portion of the appeal, the conclusion may well be inescapable that the appeal was frivolous and that the appellants acted unreasonably and not in the public interest in pursuing it. It is these spurious allegations that led the State respondents to file an explanatory affidavit in the high court and to make written and oral submissions in this Court. There is thus no reason to deviate from the normal principle that costs follow the result. The State respondents elected to abide the decision on appeal, as they did in the high court and although counsel was instructed with a view to assisting this Court no costs were sought. [22] In the result, the following order is granted: 1 The appeal is dismissed. 2 The appellants are directed to pay the costs of appeal of the fourth to seventh respondents, including the costs of two counsel, where employed. _________________________ E F DIPPENAAR ACTING JUDGE OF APPEAL 18 Biowatch Trust v Registrar, Genetic Resources [2009] ZACC 14; 2009 (6) SA 232 (CC); 2009 (10) BCLR 1014 (CC) para 19. 19 Section 32(2) of NEMA provides: ‘A court may decide not to award costs against a person who, or group of persons which, fails to secure the relief sought in respect of any breach or threatened breach of any provision of this Act, including principle contained in Chapter 1, or o,f any provision of a specific environmental management Act, or of any other statutory provision concerned with the protection of the environment or the use of natural resources, if the court is of the opinion that the person or group of persons acted reasonably out of a concern for the public interest or in the interest of protecting the environment and had made due effort to use other means reasonably available for obtaining the relief sought.’ 12 Appearances For the appellants: P Lazarus SC with S Pudifin-Jones and S Khoza Instructed by: Ndlovu De Villiers Attorneys Webbers, Bloemfontein For the first to third respondents: C De Villiers Instructed by: State Attorney, Cape Town State Attorney, Bloemfontein For the fourth to seventh respondents: Van Rooyen SC with A Jansen Instructed by: Du Bois Attorneys Symington De Kok Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 9 October 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 Jooste and Another v Member of the Executive Council for Local Government Environmental Affairs & Development Planning: Western Cape and Others (637/2023) [2024] ZASCA 138 (11 October 2024) Today the Supreme Court of Appeal (SCA) handed down judgment in which it dismissed the appeal against an order of the Western Cape Division of the High Court, Cape Town (the high court). This appeal concerned the effect of a court order on review proceedings. It pertained to an environmental authorisation to conduct composting facilities granted in favour of the fourth respondent, the South African Farm Assured Meat Group CC (SAFAM), in terms of s 24 of the National Environmental Management Act 107 of 1998 (NEMA), authorising Listed Activities 4 and 28 of Listing Notice 1 of 2014 (Listed Activities). The appellants, interested parties who owned properties adjacent to the composting facility, had opposed the granting of the environmental authorisation on the basis that SAFM had unlawfully commenced with Listed Activities in breach of s 24F of NEMA. The high court dismissed the review application as well as the ancillary declaratory relief sought, holding that the appellants made out no case for relief. The appeal is with leave of the SCA. SAFM’s application for a waste management licence and environmental authorisation had gone through internal appeal processes, which were determined in the appellants’ favour. SAFAM launched a review application against the dismissal of its application for a waste management licence and its internal appeal pertaining to its environmental application, to which the appellants were not parties. Various orders were sought against the MEC and the Department of Environmental Affairs and Development Planning (the Department). A central dispute in those proceedings was whether SAFAM had unlawfully commenced Listed Activities in breach of s 24F of NEMA. A settlement was reached between SAFAM and the Department, which culminated in an order being granted by consent in the Western Cape Division of the High Court on 18 October 2019, reflecting the terms of their settlement (the settlement order). After SAFAM complied with the requirements stipulated in the order, an environmental authorisation was granted in favour of SAFAM. After an unsuccessful internal appeal, the appellants launched the unsuccessful review application in the high court, raising the same issues as had been raised in the SAFAM review application. The SCA held that one of the core objectives of court orders is bringing finality to litigation. The settlement order brought finality to the lis between SAFAM and the State respondents, which became res judicata and finally disposed of those issues. It is of no consequence that the source of the order was a settlement between the parties. Such order is an order like all others and will be interpreted as such. The settlement order is not a nullity but exists in fact and has legal consequences. It is binding 2 and must be complied with, obeyed and respected, irrespective of whether it has been correctly or incorrectly granted, until it is set aside. Despite prior knowledge of the pending SAFAM review application that culminated in the settlement order, the appellants did not enter the fray or seek to intervene in those proceedings to raise any issue that may have adversely impacted on the settlement negotiations. After receipt of a copy of the settlement order, they took no steps to have the order rescinded or set aside. It was open to the appellants to challenge the order and seek its rescission, which they elected not to do. The appellants also did not seek any relief in respect of the settlement order in the review proceedings. The SCA held that the appellants’ collateral attempt to challenge the validity of the settlement order by way of review proceedings which sought to revive issues which have been resolved, was untenable. This is because the appellants’ case relied on issues which preceded the settlement agreement and disregards its effect. The SCA held that the settlement order following upon the settlement agreement was dispositive of all of the grounds of appeal advanced. The appellants sought to avoid the granting of a costs order against them by arguing that the application was not frivolous, was reasonable and was brought in the public interest as envisaged by s 32(2) of NEMA. The SCA held that considering: (a) the history of the matter, (b) the intemperate allegations in the founding papers in the face of the clear consequences of the unchallenged settlement order; and (c) the abandonment of a substantial portion of the appeal, the conclusion may well be inescapable that the appeal was frivolous and that the appellants acted unreasonably and not in the public interest in pursuing it. The appellants’ spurious allegations led the State respondents to file an explanatory affidavit in the high court and to make written and oral submissions in the SCA. There was no reason to deviate from the normal principle that costs follow the result. The State respondents elected to abide the decision on appeal and no cost order was sought. The SCA dismissed the appeal with costs in favour of the fourth to seventh respondents. ~~~~ends~~~~

4233

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 990/2022 In the matter between: THE DIRECTOR OF PUBLIC PROSECUTIONS, WESTERN CAPE APPELLANT and BONGANI BONGO RESPONDENT Neutral citation: The DPP Western Cape v Bongo (990/2022) [2024] ZASCA 70 (6 May 2024) Coram: ZONDI, MBATHA and GORVEN JJA, SMITH and KEIGHTLEY AJJA Heard: 6 March 2024 Delivered: 6 May 2024 Summary: Reservation of questions of law in terms of s 319 of the Criminal Procedure Act 51 of 1977 – what constitutes a question of law – misdirection by trial court regarding the elements of the crime and erroneous reliance on a previous consistent statement constitute questions of law – questions reserved and determined in favour of the state – matter remitted to the high court for trial de novo. 2 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Hlophe JP, sitting as court of first instance). 1. The state is hereby granted leave to appeal against the refusal by the trial court to reserve the questions of law for determination by this Court. 2. The questions of law mentioned in the state’s founding affidavit are referred to this Court for consideration. 3. The third and sixth questions of law are determined in favour of the state. 4. The order of the trial court discharging the respondent in terms of s 174 of the Criminal Procedure Act 51 of 1977 at the close of the state case, is hereby set aside and the matter is remitted for trial de novo before a differently constituted court. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Smith AJA (Zondi, Mbatha and Gorven JJA and Keightley AJA): Introduction [1] The appellant seeks leave to appeal against the order of the Western Cape Division of the High Court, Cape Town (the trial court), refusing the state’s application to reserve questions of law for determination by this Court in terms of s 319 of the Criminal Procedure Act 51 of 1977 (the CPA). Those questions all relate to the trial court’s decision to discharge the respondent at the close of the state’s case in terms of s 174 of the CPA. [2] The respondent was arraigned in the trial court on one count and two alternative counts of corruption. In respect of the main count the state alleged that the respondent committed the crime of ‘corrupt activities relating to public officers’ in terms of s 4(1)(b) read with ss 1, 2, 24, 25, 26 (1)(a)(ii) and 26(3) of the Prevention and Combating of Corrupt Activities Act 12 of 2004 (the PRECCA). And in respect of the two alternative counts, the state alleged that, based on the same factual averments, the respondent 3 committed the offences of corruption and ‘receiving or offering of an unauthorised gratification’ mentioned in ss 3(b) and 10(b), respectively, of the PRECCA. [3] In terms of s 4(1)(b) any person who, directly or indirectly, gives or agrees or offers to give any gratification to a public officer, whether for the benefit of that public officer or for the benefit of another person: ‘in order to act, personally or by influencing another person so to act in a manner– (i) that amounts to the– (aa) illegal, dishonest, unauthorised, incomplete, or biased; or (bb) misuse or selling of information or material acquired in the course of the, exercise, carrying out or performance of any powers, duties or functions arising out of a constitutional, statutory, contractual or any other legal obligation; (ii) that amounts to– (aa) the abuse of a position of authority; (bb) a breach of trust; or (cc) the violation of a legal duty or a set of rules; (iii) designed to achieve an unjustified result; or (iv) that amounts to any other unauthorised or improper inducement to do or not do anything, is guilty of the offence of corrupt activities relating to public officers.’ [4] Section 3(b) provides that any person who acts in the aforementioned proscribed manner is guilty of the offence of corruption, and in terms of s 10(b) a person who gives or offers an unauthorised gratification to a person who is a party to an employment relationship, in order to induce him or her to perform any act in relation to his or her employment relationship, is guilty of the offence of receiving or offering an unauthorised gratification. The definition of ‘gratification’ in s 1 of the PRECCA purposely casts the net wide and includes, inter alia, money, whether in cash or otherwise; donations; loans; the avoidance of a loss or liability; and any valuable consideration or benefit of any kind. [5] The state alleged in essence that on 10 October 2017 in Cape Town, the respondent wrongfully and intentionally, either directly or indirectly, offered to give gratification to Mr Mtuthuzeli John Vanara (Mr Vanara), the Senior Manager: Legal and Constitutional Services in the office of the Speaker of Parliament. The respondent 4 allegedly intended the gratification to induce Mr Vanara to fake illness, take sick leave, or otherwise assist the respondent to delay or stop the inquiry conducted by the Parliamentary Portfolio Committee into the affairs of Eskom (the Inquiry). [6] The respondent pleaded not guilty to all charges and submitted a written plea explanation denying all the allegations against him. He also made various formal admissions in terms s 220 of the CPA. These admissions related, inter alia, to Mr Vanara’s official designation, his role in the Inquiry, that various telephone conversations between him and Mr Vanara regarding proposed meetings took place, and that he had met with Mr Vanara at the latter’s office in the parliamentary buildings on 10 October 2017. [7] The state called several witnesses and after it had closed its case, the respondent applied for discharge in terms of s 174 of the CPA. The trial court, per Hlophe JP, delivered its judgment on 26 February 2021, granting the respondent’s discharge. [8] On 16 March 2022, the state filed an application to reserve six questions of law in terms of s 319 of the CPA. The respondent opposed the application. The trial court heard the application on 5 September 2022 and dismissed it without giving any reasons. Reasons were only provided at the state’s request the following day. On 5 October 2022, the state petitioned the President of this court for leave to appeal in terms of s 317(5), read with ss 316(11), 316(12) and 316(13) of the CPA. The respondent opposed the petition. [9] On 16 February 2023, this Court granted an order referring the application for leave to appeal for oral argument in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013. The parties were also given notice that they should be prepared to address the Court on the merits, if called upon to do so. Counsel have therefore presented legal argument in respect of both the application for leave to appeal against the refusal to reserve the questions of law and, if granted, the merits of the appeal itself. [10] The state now seeks an order in the following terms: 5 (a) Granting it leave to appeal against the refusal of the trial court to reserve the questions of law; (b) That the questions of law mentioned in the founding affidavit be reserved and referred to this Court for consideration; and (c) In the event of the reserved questions of law being resolved in favour of the state, that this Court orders that the appeal succeeds, the respondent’s discharge is set aside, and the matter is remitted for trial de novo before a differently constituted court. The proceedings before the trial court [11] The state called six witnesses, namely Mr Vanara; Mr Disang Mocumi, the secretary for the Portfolio Committee on Public Enterprises; Mr Masibulele Xaso, the Secretary to the National Assembly; Mr Modibedi Phindela, the Secretary to the National Council of Provinces; Ms Penelope Tyawa, the Acting Secretary to Parliament; and the investigating officer, Lieutenant Colonel Mokhoema. [12] Mr Vanara was appointed as evidence leader of the Inquiry on 1 January 2017. He testified that the respondent called him on several occasions on 4 October 2017 while he was on his way to meet with the then Acting Chairperson of Eskom, Mr Zethembe Khoza (Mr Khoza). That meeting had been scheduled for the following day in Johannesburg. On the first occasion, the respondent asked him whether he was at his office. Mr Vanara replied that he was on his way to Durban. He explained that for security reasons he did not provide information regarding his travel arrangements to third parties. The respondent then asked him if he had arranged to meet with Mr Khoza. He replied that he was still waiting for the meeting to be confirmed. [13] On the second occasion the respondent asked Mr Vanara for his flight details and suggested that they should meet at the Cape Town airport. Mr Vanara instead agreed to meet him the following Monday. The respondent called him again, to enquire whether Mr Vanara would be meeting Mr Khoza in Cape Town. Mr Vanara told him that the meeting would take place in Johannesburg. [14] While travelling with Mr Mocumi from the airport to his hotel, Mr Vanara asked the former whether he knew the respondent. Mr Mocumi said that he knew him as a 6 member of parliament. Mr Vanara then told Mr Mocumi that the respondent seemed unusually interested in the proceedings of the Inquiry. [15] Mr Vanara said that the meeting scheduled for the following Monday did not materialise and he eventually only met the respondent at his office in the parliamentary buildings on 10 October 2017. It was at that meeting where, according to Mr Vanara, the events unfolded that resulted in the criminal charges against the respondent. He said that the respondent told him that he had been requested by Mr Khoza to ask Mr Vanara for assistance. Mr Vanara asked him what the nature of the assistance would be. The respondent replied that ‘Eskom’s people were worried about incriminating evidence against them and there would be police officials waiting to arrest them.’ The respondent also told him that the Inquiry was Mr Pravin Gordhan’s ‘brainchild and that he was conflicted.’ The respondent said furthermore that the Inquiry was also impacting on a number of other ‘parallel’ inquiries. [16] Mr Vanara testified that he was ‘confused’ as to what exactly was required of him and again asked the respondent how he could be of assistance. The respondent said that the Inquiry could not proceed in his [Mr Vanara’s] absence and that he should therefore fake illness and take sick leave. Mr Vanara protested and told the respondent that the Inquiry was initiated by the politicians and that only they had the power to stop it. [17] The respondent then told Mr Vanara ‘[j]ust name the price and tell me how you would help stop the Inquiry. I will then go back to the Eskom people, tell them of your plan to stop the Inquiry and the price they would have to pay for your assistance. They will then give me the money and I will hand the money over to you.’ Mr Vanara protested that his conscience would not allow him to acquiesce in such a scheme. He therefore told the respondent that the meeting was over, opened the door for him to leave and told him that there was nothing to consider. [18] Immediately after the meeting, Mr Vanara arranged to meet with Messrs Phindela and Xaso in Stellenbosch where they were attending a workshop. At that meeting he reported that the respondent had offered him a bribe to either delay or 7 collapse the Inquiry. He subsequently also reported the incident to Ms Tyawa and submitted an affidavit setting out the details of his encounter with the respondent. [19] During cross-examination counsel for the respondent took Mr Vanara to task for his failure to report the incident to the police. He put to Mr Vanara that he was required to do so in terms of s 34(2) of the PRECCA and that his failure to comply with that provision constituted an offence. [20] Counsel for the respondent also criticised Mr Vanara for delaying the filing of his affidavit and for denying that he had known before October 2017 that the respondent was an advocate. According to instructions given to his counsel by the respondent, he and Mr Vanara had discussed a domestic dispute between the latter and his wife, which had resulted in criminal charges (which were later withdrawn) being preferred against Mr Vanara. Counsel also put to Mr Vanara that it was improbable that the respondent would have known about that incident if he had not been told by Mr Vanara. Mr Vanara, however, denied ever having discussed his domestic affairs with the respondent and was adamant that he did not know the respondent before 4 October 2017. [21] Counsel for the respondent further put to Mr Vanara that on 5 September 2018, and in an adjacent office occupied by one Ms Shihaam Lagkar, Mr Mocumi had allegedly said to Mr Vanara: ‘Who does this Bongo think he is? He is a small boy and we will deal with that small boy’. That incident allegedly happened in the presence of Mr Vanara, one Ms Miller (Ms Lagkar’s sister), and one Mr Desai. This assertion was presumably proffered to show that there had been a conspiracy to falsely implicate the respondent. Mr Vanara also denied this allegation. [22] Messrs Xaso and Phindela corroborated Mr Vanara’s version regarding the report he made at the meeting of 10 October 2017. They confirmed that Mr Vanara had told them that he had been approached by the respondent with a request that he should feign illness to delay the inquiry in return for which he could name his price. [23] Ms Tyawa also confirmed that Mr Vanara had told her that he had been requested by the respondent to feign illness in order to delay or collapse the Inquiry. 8 Although she did not initially mention during her evidence-in-chief or under cross-examination that Mr Vanara also said that the respondent had offered him a bribe to do so, during questioning by the trial court she confirmed that Mr Vanara had made such a report. When she was asked by the presiding judge to explain her failure to mention the bribe earlier, she said that it had slipped her mind because of the passage of time but that she did mention it in her statement to the police. [24] Although Mr Mocumi corroborated Mr Vanara’s testimony regarding their discussion on their way from the airport, his evidence did not really take the matter any further. He testified mainly regarding the inquiry conducted by the Ethics Committee into allegations of impropriety against the respondent. [25] Lt. Col. Mokhoema testified that a criminal docket was registered on 22 November 2017 after the leader of the Democratic Party, Mr Steenhuisen, had raised the matter in parliament. He thereafter interviewed Mr Vanara who told him that the respondent had asked him to feign illness in order to collapse the Inquiry and that he could name his price. During the course of his testimony, a statement made by the respondent on 14 March 2018 (Exhibit F) for the purposes of the proceedings before the Parliamentary Ethics Committee, was handed in and referred to by counsel for the respondent. Findings by the trial court [26] In considering the application for the respondent’s discharge at the close of the state’s case in terms of s 174 of the CPA, the trial court subjected Mr Vanara’s testimony to the cautionary scrutiny applicable to single witnesses. It found that his testimony was not credible in material respects, and being a single witness, the court was of the view that ‘his evidence must be clear and satisfactory in all material respects.’ [27] The following findings appear to have been critical to the trial court’s rejection of Mr Vanara’s evidence: (a) Mr Vanara had failed to report the incident to the police despite the statutory injunction for him to do so. The trial court reasoned that if he had believed that the respondent had committed the offence of corruption, he would have reported the incident to the police; (b) the respondent did not offer Mr Vanara a ‘blank 9 cheque’ or a fixed amount and no arrangements were made for payment or to obtain Mr Vanara’s banking details; (c) Mr Vanara admitted that he did not have the power to stop the Inquiry, and ‘it then becomes difficult to accept a senseless and futile act of bribing someone to act beyond the scope of their power, as the truth’; (d) an affidavit made by the respondent in respect of the proceedings before the Parliamentary Ethics Committee (in respect of which he was found not guilty) constituted a previous consistent statement which was consistent with the respondent’s version regarding the nature of the discussions between him and Vanara; and (e) there were material contradictions between Mr Xaso’s, Mr Phindela’s and Ms Tyawa’s testimonies regarding what Mr Vanara had reported to them. His testimony was therefore not corroborated by the other state witnesses. [28] The trial court consequently found that there was insufficient evidence on which a reasonable court, acting carefully, may convict, and that it would be wrong to refuse the s 174 application in the hope that the respondent would incriminate himself. It accordingly ordered the respondent’s discharge. Application for leave to appeal [29] In an application before the trial court for the reservation of issues in terms of s 319 of the CPA, that court is only required to decide whether the issues sought to be reserved are questions of law. When, however, an application for leave to appeal against a decision of the trial court refusing to reserve a question of law comes before this Court, it will only exercise its discretion in favour of the state if there is a reasonable prospect that a mistake of law was made. In addition, there must at least be a reasonable prospect that, if the mistake of law had not been made, the accused would have been convicted.’1 [30] The trial court, in refusing leave to appeal, was of the view that if its decision were to be set aside on appeal and remitted for trial de novo, the respondent would be entitled to raise a plea of autrefois acquit.2 That finding is with respect patently wrong and ignores the explicit provisions of ss 322(4) and 324 of the CPA. Section 1 S v Basson 2003 (2) SACR 373 (SCA) paras 10-11. 2 The plea by an accused that he or she had previously been acquitted for the same offence and should therefore not be tried again. 10 322(4) provides that where a question of law has been reserved for consideration by an appeal court in the case of an acquittal and is decided in favour of the state, ‘the court of appeal may order that such of the steps referred to in s 324 be taken as the court may direct.’ [31] Section 324 of the CPA in turn provides that a court of appeal may order that ‘proceedings in respect of the same offence to which the conviction and sentence referred may again be instituted either on the original charge, suitably amended where necessary, or upon any other charge as if the accused had not previously been arraigned, tried and convicted: Provided that no judge or assessor before whom the original trial took place shall take part in such proceedings.’ [32] In terms of s 322(1)(a) of the CPA, the court of appeal may, in the case of any reserved question of law, allow an appeal if it is of the view that the judgment of the trial court should be set aside on the ground of any wrong decision regarding the question of law. The court of appeal may in those circumstances remit the matter for trial de novo before another presiding officer without the issue of double jeopardy arising.3 [33] For the reasons discussed below, I am of the view that the trial court made several mistakes of law. I am also satisfied that there are reasonable prospects that the respondent would have been convicted of either the main or alternative charges mentioned in the indictment if the mistakes of law had not been made. As I explain below, the evidence led by the state, at the very least, constituted prima facie evidence that the respondent had committed the crime of corruption. Mr Vanara’s testimony established that the respondent had offered him gratification to induce him to commit a proscribed act, namely, to feign illness in order to delay or collapse a parliamentary committee inquiry. In my view, there are reasonable prospects that the evidence led by the state was evidence on which a reasonable court could convict the respondent. 3 Director of Public Prosecutions, Transvaal v Mtshweni 2007 (2) SACR 217 (SCA), para 29. 11 [34] I am accordingly of the view that the state should be granted leave to appeal the trial court’s refusal to reserve the questions of law mentioned in the state’s founding affidavit. Those questions should therefore be reserved for consideration by this Court. The legal principles [35] The application for the reservation of the questions of law must be considered in the light of the following legal principles. Section 319 of the CPA provides that a High Court may, either of its own accord or on the application of the prosecution or the accused, reserve a question of law for consideration by the Supreme Court of Appeal. It is trite that the section does not allow the reservation of an issue which is a question of fact. The question as to ‘whether the proven facts in a particular case constitute the commission of a crime’ is a question of law. But ‘a question of law is not raised by asking whether the evidence establishes one or more of the factual ingredients of a particular crime, where there is no doubt or dispute as to what those ingredients are.’4 [36] The following requirements must be met before a question of law may be reserved: (a) the question must be framed accurately so that there is no doubt as to what the legal point is; (b) the facts upon which the point is based must be clearly set out; and (c) all of this must be clearly set out in the record.5 In addition, questions of law should not be reserved where they will have no practical effect on the acquittal of the accused.6 [37] The legal principles which underpin the consideration of an application for discharge in terms of s 174 of the CPA are as follows. The starting point is the section itself, which reads as follows: ‘If, at the close of the case for the prosecution at any trial, the court is of the opinion that there is no evidence that the accused committed the offence referred to in the charge or any other offence of which he may be convicted on the charge, it may return a verdict of not guilty.’ 4 Magmoed v Janse Van Rensburg and Others 1993 (1) SACR 67 (A) at 94 a-c. 5 Director of Public Prosecutions, Western Cape v Schoeman and Another 2020 (1) SACR 449 (SCA) para [39]. 6 Attorney General, Transvaal v Flats Milling Company (Pty) Limited and Others 1958 (3) SA 360 (A) 373 to 374. 12 [38] The phrase ‘no evidence’ has been interpreted by our courts in a long line of cases as involving the test whether there is evidence upon which a reasonable court, acting carefully, may convict.7 Although credibility of witnesses may be considered, it plays a very limited role at this stage of the proceedings. It is only in exceptional cases where the credibility of a witness has been so ‘utterly destroyed’ that no part of his or her material evidence can possibly be believed. Before credibility can play a role at all a very high degree of untrustworthiness must therefore be shown.8 The questions of law sought to be reserved [39] The state applies for the following questions of law to be reserved for consideration by this Court in terms of s 319 of the CPA: (a) Question 1: Whether the trial court applied the correct test and legal principles when assessing the credibility of witnesses in an application in terms of s 174 of the CPA. (b) Question 2: Whether the trial court correctly applied the elements of the offence of corruption when the court indicated that it had difficulty in accepting Vanara’s evidence as he lacked the power to stop the enquiry. (c) Question 3: Whether the trial court correctly applied the elements of the offence of corruption when it found that the state had not proved the offence of corruption as a result of no arrangements having been made with Vanara for payment. (d) Question 4: Whether the trial court applied the legal principles relating to the evaluation of evidence correctly when drawing an adverse inference against the state for electing not to call a witness where the evidence relevant to the state’s case was common cause and the witness was made available to the defence. (e) Question 5: Whether the trial court correctly applied the provisions of s 34 of the PRECCA, when it found that there had been a duty on Vanara to report the incident to the South African Police Service and/or the HAWKS in terms of s 34(1) of the PRECCA. (f) Question 6: Whether the trial court properly used what it found to be the respondent’s previous consistent statement to accept that the uncontested version of 7 S v Khanyapa 1978 (1) SA 824 (A) at 838F; S v Mpetha 1983 (4) SA 262 (C) at 263H; S v Agiotti 2011 (2) SACR 437 (GSJ). 8 S v Mpetha and Others 1983 (4) 262 (C) at 263H. 13 respondent was credible and the state’s version lacked credibility, for the purposes of the s 174 application. [40] For reasons which will be clarified below, I choose not to deal with all of the questions posed by the state. Question 3 relates to the issue whether the trial court correctly applied the elements of the crime of corruption in evaluating whether Mr Vanara’s evidence passed muster for the purposes of the s 174 enquiry. Question 6 raises the issue as to whether the trial court properly relied on the respondent’s previous consistent statement as corroboration for the version put to the state witnesses during cross-examination. These questions manifestly raise issues of law, and if resolved in favour of the state, they may well be dispositive of the matter. They consequently warrant thorough consideration. I now turn to consider those questions, bearing in mind the aforementioned legal principles. Question 3: Whether the trial court correctly applied the elements of the offence of corruption when it found that the state did not prove the offence of corruption as a result of no arrangements having been made with Vanara for payment. [41] The trial court found that Mr Vanara had confirmed that neither the respondent, nor anybody else acting on his behalf, had asked him for his bank details, that there had been no offer of a specified amount or any arrangements to get the money to him, and there had not been any ‘follow-up meetings’ between them. Those findings must be understood in the context of the preceding paragraph of the judgment [para 23] where the trial court commented that ‘[the] difficulty with Mr Vanara’s evidence is that having a discussion about delaying or collapsing a parliamentary process is not unlawful in terms of the Act. The Act is very clear that only when an offer of gratification is made in exchange for a prescribed act, i.e. the delay or collapse of the Inquiry Committee, in favour of Mr Vanara or any other person, only then it becomes a crime.’ [42] The state contends that the trial court has in effect found that since there had been no arrangements for the payment of a bribe, no offer was made to Mr Vanara to commit a proscribed act, and the crime of corruption had therefore not been committed. Counsel for the state argued that the trial court fundamentally misunderstood the applicable legal principles. He submitted that the crime of corruption is complete once an offer is made to an official to perform a proscribed act 14 for gratification even though there was no agreement to perform and no quid pro quo had been paid or agreed upon. He relied in this regard on the finding by this Court in S v Selebi where the Court said that: ‘Section 4, in my view, does not require an agreement between the corruptor and the corruptee, nor does it require a quid pro quo from the corruptee. It must be plainly understood that the conviction in this case on the evidence that established an agreement and the giving of a quid pro quo, is not the low water mark of the section.’9 This finding is another material misdirection committed by the trial court, or so counsel for the state argued. [43] Counsel for the respondent submitted that the trial court’s comments should be understood in the context of its assessment of the probabilities that a bribe was offered in the absence of an agreed amount, no bank details having been provided, and there having been no follow-up meetings to discuss the offer. In the circumstances the trial court concluded that it was improbable that a bribe had been offered in the absence of those arrangements. The trial court was therefore merely making credibility findings and did not purport to make any findings regarding the elements of the offence or whether they had been proved by the state. He argued that no matter how flawed the trial court’s reasoning might have been, it remains a factual enquiry and can hence not be regarded as a question of law that should be reserved for determination by this Court. [44] In my view, those factual findings arose from a misconstruction of the elements of the offence. It will frame the enquiry if the following excerpts from Mr Vanara’s transcribed testimony are set out followed by the way in which the court a quo dealt with it and other state evidence: ‘EXAMINATION BY MS DU TOIT-SMIT [continued]: Thank you, M’Lord. Advocate Vanara, before the adjournment we just started on your conversation that you had in your office with the accused. You may continue. MR VANARA: ‘So when the accused made reference to assistance that the acting chairperson of the Eskom Board wanted from myself regarding the Public Enterprises oversight enquiry, I then asked the accused what … the nature of the assistance that was required from myself. 9 S v Selebi 2012 (1) SA 487 (SCA), para 97; See also: South African Criminal Law and Procedure Vol 3 (Statutory Offences) (2nd Edition); Milton and Cowling, at D3-D13. 15 Then the accused responded that the people of Eskom were worried. They were worried about them being called or invited into the committee proceedings; enough incriminating evidence would be led against them; there would be police officials waiting to arrest them as they walked out of the committee proceedings. That is why they needed my assistance. I couldn’t figure it out again what … this kind of assistance that was required of me. I then again asked the accused what he meant by “assistance”. What is exactly that was required of me? And the accused then again responded to the same question, but differently this time. The accused then says the inquiry is Pravin Gordhan’s brainchild, and that he, Pravin Gordhan was conflicted. He further alluded to the – he said the inquiry was affecting a number of campaigns. I had been left confused, because I didn’t understand what then the relevance of the brainchild of the inquiry … I was not understanding how the conflict of one of the members had anything to do with the Eskom people. Then I asked the accused again what he meant by “assistance”, what is it that is required of me? I even offered a proposal in respect of the board members. I said, if in the board members’ view there was enough evidence incriminating them then the board must resign. Then I said I don’t know, I’m sorry, I can’t be of assistance. And the accused then said to me but the inquiry cannot proceed next week Tuesday and that I should help them – by “them”, I took it was reference to the Eskom people, people from Eskom – to stop the inquiry from proceeding. I then asked the accused why should I assist stopping the inquiry? Further, how does he propose that I stop the inquiry? He then did not answer the question of why. I guess it was for the reasons that we had already discussed. He did respond to the “how” part. He then said I could fake illness and take sick leave the following week, which was when the inquiry would have started, because he said in my absence the committee will not proceed. I then said I am not going to assist with that plan.’ [45] There then ensued a discussion between Mr Vanara and the respondent regarding the political nature of the Inquiry. Mr Vanara said that the respondent had told him about his alternative plan, which was to petition the caucus of the ruling party to stop the Inquiry but that he [Mr Vanara] could still assist ‘to stop or at least delay the inquiry.’ [46] Mr Vanara’s testimony then continued as follows: ‘MR VANARA: I then said I am not going to be part of interfering in a political process. Mine was an insignificant role in this inquiry. And he differed. I remember him saying: Without … or in your absence, the committee is dysfunctional. COURT: Without the Evidence Leader. 16 MR VANARA: Yes. And I then said sorry, there is just no way that I could assist with what you are asking me to do. If, as politicians, you want to stop the inquiry, do it yourself. Then Mr Bongo says: Just name the price. COURT: Just name the price. Yes? MR VANARA: And tell me how you’re going to assist them – which I took to be the people of Eskom – to stop the inquiry. I – meaning Bongo – would go to the Eskom people and tell them your plan of stopping the inquiry. COURT: The plan? MR VANARA: Yes, my plan, presumably if I accede to the proposal. He would then take the plan to the people of Eskom, and he would then tell them how much, or the price that I want to be paid for the assistance. He would then receive the money, and would then hand over the money to me.’ [47] It is manifest from the quoted excerpts that the element of gratification had been established, at least on Mr Vanara’s version. The respondent had allegedly offered money to Mr Vanara, albeit in the form of ‘a blank cheque’, namely that he was asked to name his price. Mr Vanara had refused the offer of gratification and there were accordingly no arrangements for follow-up meetings. [48] There can, in my view, hardly be a more straightforward and unambiguous account of the unlawful offering of gratification to a public officer in order to induce him to perform a proscribed act. That the trial court was oblivious to this unequivocal and overt evidence of the commission of the crime of corruption can only be ascribed to its fundamentally erroneous understanding of the elements of that crime. This emerges from paras 22 and 23 of the judgment. At para 22 of the judgment, the trial court said that Mr Vanara confirmed that when Bongo made the gratification offer to him, ‘there was no blank cheque offered or a fixed amount that was proposed. Mr Bongo or anyone else on his behalf never tried to make any arrangements for payment or obtaining Mr Vanara’s bank details. After this incident, Mr Bongo never called Mr Vanara again or met up with him. There was no contact between Mr Vanara and Mr Bongo after 10 October 2017’. [49] Those observations then led to the crucial finding at para 23 of the judgment, namely that: ‘[T]he difficulty with Mr Vanara’s evidence is that having a discussion about delaying or collapsing a parliamentary process is not unlawful in terms of the Act. The Act is very clear 17 that only when an offer of gratification is made in exchange for a pr[o]scribed act i.e. the delay or collapse of the Inquiry Committee in favour of Mr Vanara or any other person, only then does it become a crime.’ [50] The trial court’s reasoning in paras 22 and 23 of the judgment were thus clearly intended to underpin its finding that ‘having a discussion about delaying or collapsing a parliamentary process is not unlawful.’ This is what the trial court found to be ‘the difficulty with Mr Vanara’s evidence.’ The findings regarding the absence of a ‘blank cheque’ or a fixed amount offered to Vanara and the absence of evidence that the respondent attempted to obtain Mr Vanara’s bank details, were clearly intended to support the conclusion that, as a matter of law, no offer of gratification had been made to Mr Vanara. [51] This much is also evident from the trial court’s comments when challenging Ms Tyawa regarding her failure to mention the bribe, as is demonstrated by the following excerpt from the record: ‘COURT: I will tell you why this is important, ma’am. My understanding of the law is this. If Advocate Bongo or anyone else had approached the evidence leader to collapse the inquiry or to express his views that I don’t like this inquiry, I wish it could go away, that’s not a crime. That’s not crime. He is merely expressing his views or his wish. It becomes a crime, however, when Advocate Bongo or anybody else offers a bribe. There’s a huge difference between wishing the inquiry to go away for whatever reasons, right, which is not a crime and will never be a crime. And going further than that and making a definite offer and say I want to pay you so much in order for you to end this inquiry.’ [52] It is thus clear that the trial court was of the erroneous view that the respondent’s request for Mr Vanara to collapse the inquiry could only constitute the crime of corruption if the latter had been offered a specific sum of money as gratification. Apart from it conflicting with established legal principles, that understanding was oblivious of the purposely wide definition accorded to ‘gratification’ in terms of s 1 of the PRECCA. In my view the finding is manifestly wrong. [53] Moreover, the trial court’s error was not confined to an analysis of the evidence to determine whether the elements of the crime of corruption had been established – 18 in which event it would have been an error of fact – but extended to an assessment of the evidence based on an erroneous understanding of the legal elements of the crimes with which the respondent had been charged. That finding was therefore a material misdirection by the trial court on a question of law and the question must consequently be decided in favour of the state. Question 6: Whether the trial court properly used, what it found to be the respondent’s previous consistent statement, to accept that the uncontested version of respondent was credible and the state’s version lacked credibility, for the purposes of the s 174 application. [54] The trial court found that an affidavit made by the respondent in respect of the proceedings before the Parliamentary Ethics Committee was a previous consistent statement which establishes that: (a) the respondent and Mr Vanara had begun interacting on a collegial basis during February 2017; (b) as advocates they interacted on issues of mutual interests, particularly issues that may ‘have a bearing on the execution of our duties in Parliament’; and (c) their meeting revolved around the issue of ‘possible legal dead-lock on the parallel establishment of the State Capture Inquiry by both parliament and the Executive Head.’ The trial court found that the statement is consistent with the respondent’s version regarding the nature of the discussions between him and Mr Vanara which had been put to the State witnesses. [55] Counsel for the state argued that the finding by the trial court that the statement was a previous consistent statement which corroborates the respondent’s version and had probative value, was a material misdirection of law. He submitted that first, the statement was inconsistent, in material respects, with what had been put to State witnesses during cross-examination and could therefore not be regarded as a previous consistent statement. And second, even if it could be regarded as a previous consistent statement, the trial court committed a serious misdirection in attaching probative value to the statement since the respondent did not adduce any evidence under oath. Counsel for the respondent submitted that the trial court, although finding that the statement was a previous consistent statement, did not refer to it in order to admit it as a previous consistent statement but merely to demonstrate that it was not a previous inconsistent statement as contended for by the state. 19 [56] To my mind, the latter submission is at odds with the trial court’s unambiguous statements. At para 44 of the judgment, it made the following finding: ‘This is, with respect, a previous consistent statement. It is consistent with Mr Bongo’s version relating with the purpose of the lawyer to lawyer discussions that he had with Mr Vanara regarding the parallel processes of inquiry.’ [57] There can therefore be little doubt that the trial court had found corroboration in the statement for the version put to the state witnesses on the respondent’s behalf. The respondent did not adduce any evidence under oath and the trial court therefore committed a material misdirection by holding that the statement had probative value. [58] This Court, in S v Mkohle10, held that a witness’s previous consistent statement has no probative value except where it is alleged that his or her version is a recent fabrication. There has not been any suggestion of recent fabrication in this matter and the statement accordingly has no probative value. Even more importantly, it was not consistent with any other statement since the respondent did not adduce any evidence at the trial. It was simply a version put to the state witnesses. Even a previous consistent statement can only be consistent with actual evidence. After all, one would expect that what is put to opposing witnesses is consistent with other aspects which have been put. That has no bearing on the acceptability or otherwise of the ‘previous’ statement. [59] Counsel for the state thus correctly submitted that the trial court committed a material misdirection by characterising the statement as a previous consistent statement and according it probative value. This question of law must therefore also be resolved in favour of the State. Order [60] In the light of my findings in respect of the abovementioned questions it is unnecessary to determine the remainder of the questions sought to be reserved. The other questions, particularly those that relate to whether the trial court correctly applied the cautionary rule applicable to the testimony of a single witness at the stage of the 10 S v Mkohle 1990 (1) SACR 95 (A) at 99d: See also: S v Scott-Crossley 2008 (1) SACR 223 (SCA) para [17]. 20 s 174 application and whether it had properly drawn an adverse inference from the fact that a state witness was not called, raise interesting legal questions that are best left for decision on another occasion. [61] As I said earlier, if the mistakes of law had not been made, the trial court would have found that there was sufficient evidence upon which a court, acting reasonably, may have convicted the respondent of the main or alternative counts. I am therefore of the view that: (a) the third and sixth questions of law must be determined in favour of the state; (b) the respondent’s discharge in terms of s 174 of the CPA must be set aside; and (c) the matter must be remitted for trial de novo before a differently constituted court. [62] In the result the following order issues: 1. The state is hereby granted leave to appeal against the refusal by the trial court to reserve the questions of law for determination by this Court. 2. The questions of law mentioned in the state’s founding affidavit are referred to this Court for consideration. 3. The third and sixth questions of law are determined in favour of the state. 4. The order of the trial court discharging the respondent in terms of s 174 of the Criminal Procedure Act 51 of 1977, at the close of the state’s case, is hereby set aside and the matter is remitted for trial de novo before a differently constituted court. ________________________ J E SMITH ACTING JUDGE OF APPEAL 21 Appearances For the appellant: C Webster SC with C Tsegarie and D Combrink Instructed by: State Attorney, Cape Town State Attorney, Bloemfontein. For the respondent: MR Hellens SC Instructed by: De Jager De Klerk Attorneys Inc, Cape Town Honey Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 6 May 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 The DPP Western Cape v Bongo (990/2022) [2024] ZASCA 70 (6 May 2024) Today the Supreme Court of Appeal (SCA) handed down judgment setting aside and remitting for trial de novo, an appeal against the decision of the Western Cape Division of the High Court, Cape Town (the high court). The respondent was arraigned in the high court on one count and two alternative counts of corruption. The State alleged that the respondent had committed the crime of ‘corrupt activities relating to public officers’ under the Prevention and Combating of Corrupt Activities Act 12 of 2004 (PRECCA). Specifically, the State alleged that on 10 October 2017, the respondent wrongfully and intentionally, either directly or indirectly, offered gratification to a Senior Manager of Legal and Constitutional Services in the Office of the Speaker of Parliament. The State claimed that the respondent’s intention was to induce the Senior Manager to fake illness, take sick leave, or otherwise assist the respondent in delaying or stopping a parliamentary inquiry into the affairs of Eskom. The respondent pleaded not guilty to all charges and submitted a written plea explanation denying the allegations. At the close of the State's case, the respondent applied for a discharge in terms of section 174 of the Criminal Procedure Act 51 of 1977 (CPA). The high court granted the respondent's application and discharged him. The State then filed an application to reserve six questions of law for consideration by this Court under section 319 of the CPA. The high court dismissed the State's application without providing reasons. 2 The State appealed the high court's refusal to reserve the questions of law. The SCA granted the State leave to appeal and considered the merits of the reserved questions of law. The SCA found that the high court made several material misdirections on questions of law. Specifically, the SCA found that the high court erred in its assessment of the evidence presented by the State, which this Court found could have led a reasonable court to convict the respondent. Further, the SCA found that the high court misconstrued the elements of the offences of the respondent which he was charged with, particularly the crime of ‘corrupt activities relating to public officers’ under PRECCA. The SCA emphasised that the question of ‘whether the proven facts in a particular case constitute the commission of a crime’ is a question of law, not a factual inquiry. The high court's findings on the probabilities of a bribe being offered were based on a misunderstanding of the legal elements of the offences. The SCA also found that the high court erred in its use of the respondent's previous consistent statement, made in separate parliamentary ethics proceedings, to accept his version and reject the State's case. The SCA held that the high court's reliance on this previous statement was a material misdirection on a question of law. The SCA emphasised that the admissibility and weight to be given to a previous consistent statement is a legal issue, not a factual one. The SCA found that the high court made several mistakes of law that warranted the reversal of the discharge order and a retrial. The SCA determined the reserved questions of law in favour of the State. As a result, the SCA set aside the discharge order, and remitted the matter for trial de novo before a differently constituted court. ~~~~ends~~~~

4298

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 400/2023 In the matter between: RUANDA SNYMAN APPELLANT and BRENDAN CHRISTIAAN DE KOOKER N O FIRST RESPONDENT ROBERT WESSEL ROBERTSE N O SECOND RESPONDENT LOUIS THEODORE ADENDORFF N O THIRD RESPONDENT Neutral citation: Snyman v De Kooker N O and Others (400/2023) [2024] ZASCA 119 (2 August 2024) Coram: MOCUMIE, MAKGOKA, GOOSEN and MOLEFE JJA, and KOEN AJA Heard: 16 May 2024 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 August 2024, at 11h00. Summary: Trust Property Control Act 57 of 1988 – duty of trustees to account – sufficiency of accounting – termination of a trust pursuant to s 13 – distinct from removal of trustees in terms of s 20 – the two provisions not interdependent and serve distinct and unrelated purposes. 2 ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Senyatsi, Crutchfield and Dlamini JJ, sitting as a court of appeal): 1 The appeal is upheld with costs to be paid by the respondents de bonis propriis jointly and severally. 2 Paragraphs 3 to 7 of the order of the full court are set aside and replaced with the following: ‘3 No order is made in respect of the costs of the application for reinstatement of the appeal and condonation, and the appellants are not allowed to recover their costs from Stapelberg Investment Trust (the Trust). 4 Save to the extent set out below, the appeal is dismissed with costs to be paid by the first, second and third appellants de bonis propriis, jointly and severally. 5 The order of the court of first instance is replaced with the following: ‘1 The first, second and third respondents are directed to account to the applicant fully, with each entry in the account duly supported by vouchers, for their administration of the Trust for the period from 15 July 2015 to 31 August 2018, within 30 days of this order. 2 The account shall include: (a) full information regarding the financial position of the trust, as required to be contained in a proper balance sheet and profit and loss statement of the Trust; (b) a record of all funds received into the accounts of the trust, including which inflows are to be attributed to the initial capital amount, interest, costs of action, medical refunds from the Road Accident Fund (the RAF) in terms of the undertaking provided by it, and administration costs received from the RAF (including the costs associated with the creation of the Trust); (c) a record of all amounts owed to the trust by the Road Accident Fund by virtue of the court order of 27 February 2015, which will include medical expenses incurred by the Trust, administration costs of the funds and any outstanding amounts owing in terms of the court order; 3 (d) A record of all other expenses incurred by the Trust, specifying the nature of the expenses. 3 The applicant shall be entitled to apply to this court for appropriate relief in the event of the account not being furnished, or having been furnished, being incomplete or not properly vouched, setting out the respects in which she contends the account is incomplete. 4 The applicant shall forthwith advise the respondents when satisfied that the account is complete, whereafter the parties shall informally debate the complete account within 30 days, identifying any items that may remain in dispute. 5 In respect of any disputed items, the applicant is directed to file a declaration within 20 days after the debatement, setting out her contentions, and the respondents shall plead thereto within a further 20 days, whereafter these disputes may be enrolled for hearing. 6 The applicant’s attorney is directed to forthwith prepare a proposed deed of trust for the creation of a new inter vivos trust (the new trust), in compliance with the objects of this court’s order given on 27 February 2015, to replace the Stapelberg Investment Trust, and to submit a copy thereof to: (i) the Master of the High Court for comment and approval and (ii) a Judge of this Court in Chambers, for consideration and approval. 7 Upon approval of such deed of trust by the Master and a Judge in Chambers, the applicant’s attorney shall create and register the new trust. 8 Upon the registration of the new trust and letters of administration being issued by the Master of the High Court to its trustees, this order shall serve as an order terminating the Trust in terms of s 13 of the Trust Property Control Act 57 of 1988. 9 Upon such termination of the Trust, the first, second and third respondents shall within ten (10) days, transfer its assets to the trustees of the new trust. 10 The respondents shall, in the event of the new trust not yet being registered, pay any amount due as a result of the accounting referred to in paragraphs 1 and 2 above, 4 into a trust account held by the applicant’s attorney, or if the new trust has by then been registered, to the trustees of the new trust. 11 This order does not detract from the respondents’ obligation to account fully to the applicant, or the trustees of the new trust once registered, for their further administration of the Stapelberg Investments Trust’s assets, liabilities, income and expenses for the period after 31 August 2018 until the date of its termination. 12 The first, second and third respondents are ordered to pay the costs of this application de bonis propriis, jointly and severally.’ JUDGMENT Makgoka JA (Mocumie and Goosen, Molefe JJA and Koen AJA concurring): [1] The appellant, Mrs Ruanda Snyman, appeals against the judgment and order of the full court of the Gauteng Division of the High Court, Johannesburg (the full court). That court overturned an order of a single Judge of that Division (Mali J), who had ordered: (a) the first, second and third respondents, as trustees of a Trust to account to the appellant; (b) the Trust to be terminated and for the transfer of the proceeds of the Trust to a new Trust to be established; (c) that the appellant was permitted to claim relief consequential on the outcome of accounting to her by the respondents; and (d) the respondents to pay the costs of the application de bonis propriis. The appellant appeals with the special leave of this Court and seeks an order restoring the order of the court of first instance. Background facts [2] The appellant sustained bodily injuries in a motor vehicle accident. On her instruction, Ms Tonya Nadine Ehlers of Ehlers Attorneys (Ms Ehlers) instituted an action for damages against the Road Accident Fund (the RAF) pursuant to the provisions of the Road Accident Fund Act (the RAF Act).1 During the course of the litigation, a curator ad litem was appointed on behalf of the appellant. The action was 1 Road Accident Fund Act 56 of 1996. 5 eventually settled. The curator recommended that the capital amount due to the appellant be paid to a Trust and be managed by trustees on behalf of the appellant. He further recommended that the respondents be appointed as its trustees. [3] A draft order was made an order of court on 27 February 2015,2 in terms of which the RAF was ordered to pay the appellant R4 973 922.00 as capital, and costs of the action. The RAF was ordered to furnish the appellant with an undertaking in terms of s 17(4)(a) the RAF Act for future medical expenses. Ms Ehlers was ordered to create an inter vivos trust ‘in order to protect the awarded funds to the exclusive benefit of the [appellant]’, and to pay over the capital to the Trust once the Master of the high court had issued the trustees with letters of authority. The RAF was ordered to pay the costs for setting up the trust, as well as its administration fees. These included the trustees’ fees, amounts of security to be provided by the trustees, and the appellant’s medical expenses for the accident-related injuries. [4] In compliance with the court order, Ms Ehlers, as the court–appointed founder, created the Stapelberg Investment Trust (the Trust) in terms of a ‘Deed of Donation in Trust’ (the deed of trust) dated 15 July 2015 in terms of Trust Property Control Act3 (the Act). The respondents are its trustees, and the appellant is its sole income beneficiary. Clause 13.2 provides that the trust capital shall be administered on behalf of the appellant until her death or ‘until directed otherwise by a competent court.’ After the creation of the trust, the court–appointed founder paid R3 300 000 and R111 281.65 to the Trust.4 The funds were invested by the trustees in a portfolio Glacier Investment managed by Sanlam. [5] Shortly after the creation of the Trust, the appellant expressed some disquiet to the trustees about several issues relating to its income and expenditure, the management thereof, including the trustees’ duty to account to her. The appellant also proposed that the trust deed be amended to make provision for appointment of a 2 There is a draft order dated 19 November 2014. However, unlike the one dated 27 February 2015, it does not appear that it was endorsed by the court. It also does not bear the Registrar’s signature. This is an aspect the trustees must clarify. 3 Trust Property Control Act 57 of 1988. 4 The difference of R1 673 922 between the capital and what was paid into the Trust is not explained in the papers, but it appears that it represents Ms Ehlers’ fees in terms of a contingency agreement. 6 further trustee of her choice. In response to the complaint about accounting, the trustees furnished the appellant with bank statements of the Trust for the period August 2015–July 2016. In addition, the trustees provided the appellant with the trust’s ‘Multiple Investment Report’ [6] On 23 May 2017 the appellant’s attorneys wrote to the trustees and opined that the bank statements and the investment report were insufficient for the appellant to draw any meaningful conclusions from them. Accordingly, the attorneys requested from the trustees, the following: (a) financial statements of the trust, including a balance sheet and an income and loss statement; (b) a record of all funds received into the trust account stipulating: (i) which inflows are to be attributed to the initial capital amount; (ii) interest; (iii) cost of the action against the RAF; (iv) medical refunds from the RAF; and (v) administration costs received from the RAF; (c) a record of all the amounts owed to the trust by the RAF in terms of the court order; (d) a record of all the expenses incurred by the trust’s creation specifying the nature of the expenses. [7] In response, the trustees insisted that the bank statements and the investment report provided the exact financial position of the trust. As regards the financial statements, the trustees pointed out that this was a new request, and that they would instruct an auditor to prepare them, at the trust’s cost, which would take some time. In the court of first instance [8] Shortly thereafter, the appellant launched an application in the high court in which she sought an order that: (a) the trustees should account to her in the manner set out in her attorneys’ letter dated 23 May 2017, referred to above; (b) the Trust is terminated and replaced with a new trust with new trustees and matters incidental thereto; (c) alternatively, two additional trustees of the appellant’s choice be appointed and the trust deed be amended; and (d) she be granted leave to seek consequential relief upon the accounting by the trustees. 7 [9] In support of the relief sought, the appellant broadly complained about the administration of the Trust and the trustees’ alleged failure to keep a proper record of the trust’s income, expenses, debtors and creditors; and to account to her for all the amounts due to her in terms of the court order, including costs and interest and the claiming of the administration and medical expenses from the RAF on a regular basis. The appellant also averred that the trust deed: (a) is defective and undermined the goal for which the trust was created; (b) conflicts with the court order; and (c) prejudices her interests in several respects. She also alluded to possible conflict of interest of the trustees. [10] In their answering affidavit, the trustees reiterated their stance that the bank statements and the investment report furnished earlier, represented a full and complete accounting to the appellant. In addition, they attached the trust’s Profit and Loss per month statement since its inception to 2 August 2017, as well as its Balance Sheet from inception to 31 July 2017. The Profit and Loss statement reflects expenses paid for and on behalf of the appellant for the relevant period. The Balance Sheet reflects medical expenses, motor vehicle expenses and monthly payments to the appellant from 25 August 2015 to August 2017. [11] In its judgment, the court of first instance found that the trustees had failed to account to either the appellant or the founder about the interest payable to her, ‘due to differing court orders.’5 The high court considered this issue to be ‘imperative’. The court stated that ‘the respondents’ oblivious conduct in respect of the . . . interest amount alone imperils the trust property and its proper administration and prejudices the interest of the beneficiary.’ Accordingly, concluded the court, the application was necessitated by the negligent conduct of the [trustees]’, which had resulted in a ‘breakdown of trust’ and ‘not just a mere friction . . .’. [12] Consequently, the court on 31 August 2018 ordered the trustees to account to the appellant within 30 days of the order and on the terms prayed for in the appellant’s notice of motion. It also ordered the termination of the Trust in terms of s 13 of the Act. It further ordered that the proceeds of the Trust be paid into the trust account of the 5 The court was referring to the two draft orders alluded to in fn 2 above. 8 appellant’s attorney’s, pending the creation of a new inter vivos trust. The court further granted the appellant leave to claim relief, if any, consequential on the outcome of the accounting by the trustees. Regarding costs, it ordered the trustees to pay the costs of the application de bonis propriis. The court reasoned that the trustees had ‘conducted themselves with gross negligence fully knowing the status of the [appellant’s] finances.’ Subsequently, the court of first instance granted the trustees leave to appeal against its order to the full court. In the full court [13] The full court found that the termination of the Trust would potentially be financially prejudicial to the appellant. About accounting, the court was satisfied that the trustees had fully accounted to the appellant. As a result, the full court upheld the appeal with costs, set aside the order of the court of first instance and replaced it with one dismissing the application with costs. The remedies of termination of a trust and removal of trustees [14] Before I consider the issues on appeal, it is necessary to clarify an aspect that arises from both judgments of the court of first instance and the full court. The two courts conflated the termination of a trust and the removal of trustees. Termination of a trust is embedded in s 13 of the Act, while the removal of trustees is governed by the common law and s 20 of the Act. The two courts viewed the two provisions as being interrelated and interdependent. This is a misconception. [15] Section 13 is headed ‘Power of court to vary trust provisions.’ In relevant part, it provides: ‘If a trust instrument contains any provision which brings about consequences which in the opinion of the court the founder of a trust did not contemplate or foresee and which – (a) hampers the achievement of the objects of the founder; or (b) prejudices the interests of beneficiaries; or (c) is in conflict with the public interest, the court may, on the application of the trustee or any person who in the opinion of the court has a sufficient interest in the trust property, delete or vary any such provision or make in respect thereof any order which such court deems just, including an order whereby particular trust property is substituted for particular other trust property or an order terminating the trust.’ 9 [16] Section 20(1) of the Act reads: ‘A trustee, may on application of the Master or any person having an interest in the Trust property, at any time be removed from his office by the court if the court is satisfied that his removal will be in the interests of the Trust and its beneficiaries.’ [17] In the present case, the appellant sought only the relief in terms of s 13 (termination of the trust or alternatively, the amendment of the trust deed). She never sought the removal of the trustees, nor canvassed it in her founding or replying affidavits. Despite this, both courts devoted considerable attention to it. Under the heading ‘Law’, the court of first instance quoted the provisions of s 13 of the Act, immediately thereafter, quoted extensively from this Court’s judgment in Gowar v Gowar,6 the leading authority on the removal of trustees. It concluded as follows: ‘It is concluded that the application is necessitated by the negligent conduct of the respondents. The breakdown of trust as experienced by the applicant is not just a mere friction referred to in Gowar supra. As alluded above the respondents’ conduct imperils the trust property.’7 (Emphasis added.) [18] The concepts of ‘the breakdown of trust’ and ‘conduct which imperils the trust property’ are both associated with removal of trustees. They are not relevant when termination of a trust is sought. Viewed in this light, the conclusion by the court of first instance was clearly influenced by its conflation of the two concepts of termination of trust and removal of trustees. [19] The full court did not fare any better. It identified as one of the issues for determination ‘the court a quo’s termination of the Trust and the consequent dismissal/replacement of the [respondents] as trustees.’ After discussing Gowar and related authorities such as Volkwyn v Clarke,8 it concluded as follows: ‘No facts were advanced . . . that the [trustees] . . . or any one of them was dishonest, grossly inefficient or untrustworthy. Nor was there evidence that the trustees’ future conduct might imperil the estate and risk actual loss, or of administering the Trust in a way not contemplated 6 Gowar & Another v Gowar & Others [2016] ZASCA 101; [2016] 3 All SA 382 (SCA); 2016 (5) SA 225 (SCA). 7 Para 35 of the court of first instance’s judgment. 8 Volkwyn N O v Clarke and Damant 1946 WLD 456. 10 by the Trust deed, or in a manner that did not further the interests of the beneficiary or the Trust fund.9 ‘The court a quo ordered the termination of the Trust in terms of s 13 of [the Act], (effectively dismissing the appellants as trustees in terms of s 20 of [the Act] . . .’10 (Emphasis added.) [20] From these excerpts, the full court was also apparently of the view that when it considered the termination of the trust, it was enjoined to also consider whether the trustees ought to be removed in terms of s 20. In other words, the full court approached the issue on the footing that when a court is minded terminating a trust in terms of s 13, it is enjoined to also consider whether the trustees should be removed in terms of s 20. [21] If that is what the full court sought to convey in the quoted passage, it was clearly wrong, and conflated the two provisions. There is no textual or contextual indication on the plain reading of the two provisions to support such a conclusion. The fact that the termination of a trust would result in the loss of office for the trustees does not implicate their removal in terms of s 20. The loss of office by a trustee pursuant to s 13 is a natural consequence of an order terminating a trust. It does not amount to a removal as envisaged in s 20, as suggested by the full court. [22] The termination of a trust in terms of s 13 is premised on the provisions of the trust deed itself, which the founder did not contemplate or foresee. The removal of trustees in terms of s 20, on the other hand, is informed by the conduct of the trustees and their relationship with beneficiaries. In sum, the remedies provided for in ss 13 and 20 must not be conflated. The one has nothing to do with the other. They are distinct stand-alone provisions with different requisites and outcomes, which may be asserted in the alternative, but never together. [23] In the present case, the appellant sought an order for the termination of the Trust, alternatively, for the amendment of the trust deed, based on the provisions of the trust deed itself. The removal of trustees simply did not arise, and therefore, none 9 Para 51 of the full court’s judgment. 10 Para 16 of the Full Court’s judgment. 11 of the lower courts were without more, at large to consider it. This Court has on more than one occasion, emphasised that the adjudication of a case is confined to the issues before a court, as defined by the parties in the pleadings.11 It appears that the lower courts might have been influenced by the trustees’ answering affidavit, in which they took a view that the application was really about their removal. [24] That was erroneous, and as the lower courts were supposed to ignore the trustees’ view. As this Court cautioned in De Wet v Khammissa,12 a court plays a central role in identifying the correct basis on which a matter must be decided. Thus, a court should not decide a matter based on a wrong basis simply because the parties had relied on it. ‘[I]t is only after careful thought has been given to a matter that the true issue for determination can be properly identified. That task should never be left solely to the parties or their legal representatives . . .’.13 In this Court [25] With the aspect out of the way, there are two issues for determination on appeal, namely: (a) the trustees’ accounting to the appellant; and (b) the termination/amendment of the trust deed. I consider them in turn. Accounting [26] In our law, a plaintiff is not entitled to an account unless he or she can show that the defendant stands in a fiduciary relationship to them, or that some statute or contract imposes a duty to render the account.14 As explained in 11 See, for example, Minister of Safety and Security v Slabbert [2009] ZASCA 163; [2010] 2 All SA 474 (SCA) paras 11-13; Fischer and Another v Ramahlele and Others [2014] ZASCA 88; 2014 (4) SA 614 (SCA); [2014] 3 All SA 395 (SCA) paras 13 and 14. This was affirmed by the Constitutional Court in Public Protector v South African Reserve Bank [2019] ZACC 29; 2019 (6) SA 253 (CC) para 234. See also National Commissioner of Police and Another v Gun Owners of South Africa [2020] ZASCA 88; [2020] 4 All SA 1 (SCA); 2020 (6) SA 69 (SCA); 2021 (1) SACR 44 (SCA) para 26; Sobrany v UAB Transtira [2016] EWCA Civ 28 paras 33 and 51. 12 De Wet and Another v Khammissa and Others [2021] ZASCA 70 (SCA); 2021 JDR 1070 (SCA). 13 Ibid para 14. 14 Video Parktown (North) (Pty) Ltd v Paramount Pictures Corporation; Video Parktown North (Pty) Ltd v Shelburne Associates and Others; Video Parktown North (Pty) Ltd v Century Associates and Others 1986 (2) SA 623 (T) at 640E. 12 Doyle v Board of Executors,15 a trustee owes a duty of good faith akin to that owed by an agent. He or she must keep regular accounts of all his or her transactions on behalf of the beneficiary, not only of disbursements, but also the receipts, and to render such accounts to the beneficiary at all reasonable times ‘without any suppression, concealment, or overcharge; keep accounts up to date and allow for the inspection of his or her books.’16 [27] In the present case, there is no dispute that the trustees stand in a fiduciary relationship to the appellant as both an income and capital beneficiary. The appellant averred that the trustees’ accounting to her was inadequate for her to have a full understanding of the trust’s financial position. In Doyle v Fleet Motors17 it was held that if it appeared from the pleadings that a plaintiff who is entitled to an account had already received an account which he averred was insufficient, he or she is entitled to press his or her claim for a due and proper account. Therefore, this Court is entitled to enquire into and determine the issue of sufficiency, to decide whether to order the rendering of a proper account. It is to that issue I now turn. [28] In her replying affidavit, the appellant pointed to several difficulties she had with the financial statements.18 Amongst other things, she questioned the following transactions, for which there are no supporting vouchers: consulting fees for R102 462.85; Glacier administration fees for R23 594.31; ‘portfolio management’ fee for R33 426,66 which was managed by the second respondent in his capacity as a broker; R102 760.44 for financial intermediary fees; an insurance payment of R102 064.89; investment costs of R150 000 to invest the part of the awarded capital, which she considered to be inflated; administration costs of R387 883.21 over a period of two years, during which period, in contrast, only R536 773.38 was paid to her. The appellant also complained that there was neither a tax computation of the capital amount, nor was there any indication whether the dividends were taxed. 15 Doyle v Board of Executors 1999 (2) SA 805 (C). 16 Ibid at 814C-G. 17 Doyle and Another v Fleet Motors PE (Pty) Ltd 1971 (3) SA 760 (A) at 762E-763D. 18 It must be said here that the appellant cannot be faulted for raising these only in her replying affidavit, since the trustees furnished them only in their answering affidavit. 13 [29] The appellant challenged the trustees to indicate the following in respect of the financial position of the Trust: (a) the amount payable to the trust in terms of the court order; (b) the amount payable to the Trust in terms of the administration and medical expenses; (c) the amounts recouped from the RAF for medical expenses and administration of the Trust; and (d) the amounts paid to the trustees in their professional capacity. [30] The full court brushed aside the appellant’s concerns. It held that the bank statements and the investment statements constituted adequate accounting. I disagree. Those statements were furnished to the appellant without any explanatory notes regarding any of the transactions. This is exactly what the court set its face against in Doyle v Board of Executors. It is not enough, the court held, for a trustee to say: ‘Here are my books and vouchers – you are free to use them to make up your own accounts.’19 The appellant is a lay person in financial matters. It took the assistance of a person learned in finances to wade through the reports to identify the queries raised in her answering affidavit. The full court considered neither the contents of those statements, nor the appellant’s specific complaints about them. [31] The full court also erred by stating that the appellant requested audited financial statements from the trustees. Nowhere in their letter of 23 May 2017 did the appellants’ attorneys call for audited financial statements. Their request was for ordinary, unaudited financial statements, which is how the trustees also understood the request. This is fortified by the fact that in their answering affidavit, they furnished unaudited financial statements with which the appellant took no issue. [32] The request for financial statements by the appellant revealed a concerning aspect. Since the creation of the trust in July 2015 until the appellant requested the financial statements of the Trust, the trustees had not prepared those statements. The statements were prepared only because the appellant had requested them. This constitutes a period of almost two years during which the trustees did not keep proper accounting records of the Trust. Thus, the trustees had failed to fulfil at least two of their obligations, namely, to ‘keep regular accounts’ of their transactions; and to ‘keep 19 Fn 15 above at 813A. 14 accounts up to date.’ Viewed in this light, the appellant was understandably alarmed, and thus perfectly entitled to launch the application for better and fuller accounting. [33] It follows that the accounting rendered by the trustees falls short of the required standards set out in the authorities. This can only be addressed by the trustees furnishing a full and proper account. What constitutes proper accounting in the circumstances, depends on the fact of the case, as explained in Doyle v Fleet Motors20 where this Court developed broad guidelines as to how accounting should be rendered. Among them, the Court explained: ‘[I]n some instances it might be appropriate that vouchers or explanations be included. As to books or records, it may well be sufficient, depending on the circumstances, that they be made available for inspection by the plaintiff. The Court may define the nature of the account. The court may find it convenient to prescribe the time and procedure of the debate, with the leave to the parties to approach it for further directions if need be. Ordinarily the parties should debate the account between themselves. If they are unable to agree upon the outcome, they should, whether by pre-trial conference or otherwise, formulate a list of disputed items and issues. These could be set down for debate in court. Judgment would be according to the court’s finding on the facts.’ [34] The appeal on this issue must therefore succeed. Based on the facts of the case, I am of the view that the envisaged accounting should, among others, address the following: (a) an explanation, supported by the primary source documents, for the difference between the capital paid out by the RAF and what was received by the trustees; (b) explanatory notes, and supporting vouchers, for all the transactions identified by the appellant in her replying affidavit and summarized above; (c) a schedule of all the amounts payable by the RAF in respect of medical expenses and administrative costs, indicating which have been submitted to the RAF and which have been paid; (d) the amount of tax payable on the capital amount and any tax on the dividends; and (e) a declaration by all the trustees whether any of them has a financial interest in the investments of the Trust, other than their remuneration as trustees. Termination of the Trust/amendment of the trust deed 20 Doyle and Another v Fleet Motors PE at 762H-763A. 15 [35] The full court made two observations in this regard. First, that some clauses of the trust deed were better suited to a commercial trust than a trust established to preserve an award in the circumstances of the present case. Second, that the appellant’s interests will be better protected by certain amendments to the trust deed. Despite these findings, the full court did not make a consequential order because the appellant had not placed a proposed draft of an amended trust deed before it for consideration. Instead, the court dismissed the application but at the same time, ordered that the parties’ legal representatives should draft a proposed amended trust deed and place it before it within 15 days of the date of delivery of the judgment for its consideration. [36] This, the court was not competent to do. Once it dismissed the application, its jurisdiction in the case was fully exercised, and its authority over the subject matter had ceased.21 It was not open to the court to make further orders in terms of which it could determine any issue in the matter. Court orders ought to be unambiguous and must be capable of being enforced, in the event of non-compliance.22 The order of the full court offended against this principle in that whereas it dismissed the application, in the same breath it ordered parties to submit to it a proposed amended trust deed for its consideration. The full court’s order in this regard is a nullity. Should the Trust be terminated, or the trust deed be amended? [37] I preface this discussion with this observation. The appellant was not declared by the court to be incapable of managing her affairs. In fact, a contrary finding was made by a neuropsychologist, who opined to the curator that the appellant was ‘definitely capable of managing her own financial affairs on a day-to-day basis but would need assistance with large amounts.’ Despite this finding, the trust deed treats the appellant as if she is unable to manage her affairs. The trust deed makes no provision for the trustees to consult her on any decision of the Trust. This is clearly at odds with what was contemplated in the court order, regard being had to the neuropsychological report. 21 See for example, Retail Motor Industry Organisation and Another v Minister of Water and Environmental Affairs and Another [2013] ZASCA 70; [2013] 3 All SA 435 (SCA); 2014 (3) SA 251 (SCA) para 23. 22 Eke v Parsons [2015] ZACC 30; 2016 (3) SA 37 (CC); 2015 (11) BCLR 1319 (CC) para 73. 16 [38] It is unfortunate that the court order did not require the court–appointed founder to lay the trust deed before courts for its approval prior to its registration. The result is a Trust the provisions of which do not reflect the purpose for its creation. As explained in Dube NO v Road Accident Fund,23 when a court orders the creation of a Trust it is inadvisable for an order to be made in the absence of a proposed trust deed. If the final terms of the trust deed are not circumscribed by a court order, a possibility exists that the object of the court order could be defeated.24 In the present case, had the court seen the draft trust deed prior to its registration, it would unlikely have given its imprimatur to it in its current form. [39] With this preface, I consider the specific provisions of the trust below. Clause 13.1 of the trust deed provides that the Trust shall be terminated ‘when the trustees unanimously decide that the objectives of the trust can no longer be fulfilled and can terminate at a time as determined by the trustees in their sole and absolute discretion and the Trust assets will vest in the beneficiary on that date.’ Self-evidently, the appellant could not rely on the above clause. Instead, she called in aid s 13 of the Act, which is available to a trustee, ‘or any person who in the opinion of the court has a sufficient interest in the trust property.’ There is no doubt that the appellant falls within the latter category, and thus has the necessary locus standi. [40] In the main, s 13 of the Act provides for variation of trust provisions by a court, and in certain instances, for termination of a Trust. For a court to exercise its powers provided in s 13, a trust deed must contain a provision ‘which brings about consequences which in the opinion of the court the founder of a trust did not contemplate or foresee’ and which: (a) hampers the achievement of the objects of the founder; or (b) prejudices the interests of beneficiaries; or (c) is in conflict with the public interest. [41] The provision has thus two components. The first requires the presence of a provision which results in unforeseen or contemplated consequences. I refer to this as 23 Dube NO v Road Accident Fund 2014 (1) SA 577 (GSJ). 24 Ibid para 25. 17 the anchor jurisdictional factor. The second requires, in addition, that such a provision must have any of the results contemplated in s 13(a) – (c). Thus, an applicant who relies on this provision must satisfy the court of the presence of the anchor jurisdictional factor and any of the requisites of s 13(a) – (c). Logically, it is only if the anchor jurisdictional factor is established, that an enquiry into any of the three requisites would ensue. In other words, the section requires a causal link between the anchor jurisdictional factor and the results referred to in s 13(a) – (c). [42] The enquiry in terms of s 13 of the Act is a factual one, in which relevant factors will include the background to the creation of the Trust, the intention of its founder, its purpose, and the relevant provisions of the trust deed. Although s 13 has two components, the enquiry into the presence of the anchor jurisdictional factor is intertwined with the requisites in s 13(a) – (c). In other words, it could well be that a finding on the anchor jurisdictional factor indicates the presence of one or more of the requisites in s 13(a) – (c). Even among the requisites in s 13(a) – (c), there might be factors which satisfy one or more of the requisites. For example, a provision might prejudice the interests of the beneficiary such that it also offends public interest. As a result, it might not always be practical, nor desirable, to have a discrete and isolated enquiry into each factor. [43] I consider the provisions of s 13 under three rubrics: (a) the subject matter of the Trust; (b) the role of the court–appointed founder in the trust deed; and (c) the trustees’ powers. The subject matter of the Trust [44] The trust was established pursuant to a court order to protect the capital received from the RAF, ‘to the exclusive benefit’ of the appellant. But there is no reference in the trust deed to the court order, or to the capital amount received from the RAF. Instead, the Trust’s ‘initial subject matter’ is stated to be a donation of R100 by the court–appointed founder. This is plainly not what was contemplated in the court order. The role of the court–appointed founder 18 [45] The court order does not envisage any other role for the court–appointed founder, beyond the creation of the Trust and the payment of the capital to the trustees. This finds expression in clause 3 of the trust deed, which reads: ‘Upon the founder ceding or transferring any assets, investments or other property to the trustees, [she] shall be excluded from any right, title and interest therein and the control thereof and all right, title and interest therein shall vest in the trustees in their fiduciary capacities and also every right of negotiation, subject to the undermentioned terms, provisions, conditions and trust instructions . . .’. [46] Despite this clear provision, the trust deed, in several instances, accords the court–appointed founder roles contrary to the court order and clause 3 of the trust deed. Here are some of those provisions. Clause 4.2 subjects the power of the trustees to appoint new trustees, to her approval. Clause 4.3 gives her the power to vet or approve an appointment of a trustee nominated in a current trustee's will. In terms of clause 4.4, she retains a lifelong right to oversee the appointment of trustees. Apart from the fact that clauses 4.2 – 4.4 contradict the court order and clause 3, there is no rational basis for the court–appointed founder to retain such power over the Trust which she is supposed to have no interest in. [47] The trust deed does not oblige the trustees to account to the appellant. In terms of clause 6, they must annually account to the court–appointed founder. This provision is unsatisfactory, given that: (a) the funds are to be administered for the appellant’s exclusive benefit, (b) the court–appointed founder has no vested interest in the trust assets; and (c) the accounting is not on a regular basis, but only annually. What is more, the appellant, as both the capital and income beneficiary of the Trust, is at common law entitled to accounting by the trustees in their fiduciary capacity. Clause 6 is contrary to that common law position, and thus in conflict with the public interest. [48] Clause 7.28 gives the trustees the right to acquire an insurance policy against the life of the court–appointed founder. Given that she is not supposed to have any vested or other interest in the trust assets, there is no reason for this provision. Clause 8.4 gives the court–appointed founder a deciding vote should the trustees be equally divided on a decision regarding the trust. It was clearly never the intention of the court 19 to give the court–appointed founder such rights over the administration of the Trust. There is no reason why this power should not be deferred to the appellant. [49] Clause 18.7 postulates a situation where the court–appointed founder could be a trustee. This contradicts both the court order and clause 3 of the trust deed. Lastly, clause 21 gives the court–appointed founder the authority, along with the trustees, to amend the trust deed. All these clauses stand in contrast to the express provision of paragraph 7 of the court order and clause 3 of the trust deed. This could never have been contemplated by the court when it ordered the creation of the Trust. Powers of the trustees [50] Clause 7 of the trust deed provides for the trustees’ powers. In terms of clause 7.4 the trustees are afforded the right to ‘hold any part of the trust assets in the name of the trust, or on their names; or in the names of any other persons nominated by them for that purpose.’ Potentially, this provision gives the trustees the authority to deal with trust assets in their own name or capacity, as opposed to their official capacity. This is contrary to the Act, and by extension is against the public interest, as well as the spirit and object of the trust. [51] Perhaps one of the most worrying provisions are those in clauses 7.15 and 11. The former gives the trustees authority to give unsecured, interest free loans to themselves and third parties, and to companies in which the trustees have interest. Should any losses occur because of this, the trustees are indemnified. Clause 11 provides: ‘No trustee shall be answerable for or liable to make good any loss sustained by the trust or the beneficiary save and except such loss as may arise from or be caused by his own dishonesty. In particular, the trustees shall not be answerable for or liable to make good any loss sustained by the trust or the beneficiary by reason of their advancing monies on loan without security or with inadequate security where such money has been loaned on a businesslike basis. Furthermore, the trustees shall be indemnified by and from the trust or the beneficiary against any loss or damage or claim whatsoever which might arise against them or any of them out of the bona fide administration by them of the trust.’ This clearly prejudices the interests of the appellant. 20 [52] Clause 12 gives the trustees the right to decide on the appellant’s income from the Trust in their own discretion and allows them to withhold such income and keep it un-invested without responsibility for any loss. Once more, the trustees may do this without considering any input by the appellant. This may result in hardship to the appellant, and is without doubt, prejudicial to her interests and at odds with the object of the Trust to administer the funds for the exclusive benefit of the appellant. [53] In terms of clause 7.19 the trustees have the right to reimburse themselves out of the income of the Trust with regards to all powers exercised in terms of the trust deed, and in execution of the Trust. This contrasts with the court order, in terms of which the costs of the administration of the trust must be claimed from the RAF, and not from the income of the Trust. The same goes for the costs of secretarial services, which in terms of clause 7.20, are to be carried out at the cost of the Trust. They too, must be claimed from the RAF as they fall within the scope of administration costs of the trust. [54] The trustees are empowered by clause 7.26 to ‘. . . perform all acts, alienations, hypothecation and other acts of ownership over the trust assets to the same extent and with the same effect as the founder may have done if this trust had not been created; and the trustee's decision and actions, whether expressly made or given in writing or implied from their acts, shall be conclusive and binding on the beneficiary.’ [55] There are two difficulties with this provision. The first is the inherent assumption that the court–appointed founder was the owner of the ‘trust assets’ ie the capital amount, paid from the RAF, and as such, could give the trustees the power to make decisions which bind the appellant. While this may be a standard provision in a typical inter vivos trust, where the founder is the donor of the trust assets, this Trust is different. The court–appointed founder was never a ‘donor’ in the typical sense, as she was never the owner of the funds received from the RAF. [56] Thus, when she paid the funds to the trustees, she did not ‘donate’ such funds but did so on the direction of the court. Second, in terms of this provision, the appellant is bound by the trustees’ decision without her consent, about funds meant for her 21 exclusive benefit. Clause 7.34.1 permits the trustees to create further trusts to the benefit of the appellant’s spouse or future children. Apart from the fact that the trust deed accords the appellant no say in this, the provision contrasts with the trust’s purpose to manage the funds for the exclusive benefit of the appellant. [57] What is more, some of the trustees’ powers create potential conflict of interest. Clause 9 gives the trustees sole discretion to determine remuneration payable to them. Clause 10 of the trust deed allows the trustees to charge, for their own benefit, professional fees for services rendered to the trust, creating another clear conflict of interests. In this regard it must be mentioned that the second trustee has already proposed to the appellant to take up a medical aid package from which the second trustee stands to benefit. He clearly has a conflict of interest. [58] Clause 19 empowers the trustees to conclude contracts with the Trust for their personal benefit. In doing so, the trustees shall not be liable to account to the Trust for any profit realized by any such contract. The only form of accountability in this regard is that a trustee ‘shall have disclosed the nature of his interest on or before making of the contract or provided that such interest shall already have been known to his co-trustees.’ Given that the Trust was created to administer its assets for the exclusive benefit of the appellant, this provision clearly creates a conflict of interest for the trustees. [59] In my view, when it ordered the creation of the Trust, the court could not have contemplated or foreseen any of the problematic provisions identified above. This meets the anchor jurisdictional factor in s 13. As to the trio of the requisites in s 13(a)-(c), I have identified several provisions in the trust deed which prejudice the interests of the appellant, as envisaged in terms of s 13(c). Some create a potential for conflict of interest for the trustees. This has the potential to hamper the administration of the trust as envisaged in s 13(a). A few of the provisions conflict with the public interest as envisaged in s 13(b). The factors in s 13(a)–(c) have thus been satisfied. The upshot thereof is that the provisions of s 13 have been established. The appeal on this issue must therefore also succeed. 22 [60] I turn now to the remedy. Once the provisions of s 13 are satisfied, the court has a wide discretion. It may ‘delete or vary any such provision or make in respect thereof any order which such court deems just, including an order whereby particular trust property is substituted for particular other property, or terminating the trust.’ Given the multiplicity of the offending provisions, their materiality and impact, I am of the view that the appropriate remedy is to terminate the trust as soon as possible and create a new one. The appellant will be ordered to place the new proposed trust deed before the court and the Master for approval. Obviously, the creation of the new trust must be preceded by a full, proper accounting by the trustees to the appellant from the date of the establishment of the trust. The trustees also bore a responsibility to make a proper hand-over to the new trustees, should they not be the trustees in the new trust. Costs [61] Costs must follow the result. What remains is to determine whether the trustees should be allowed to pay the costs from the Trust’s funds or de bonis propriis. Costs de bonis propriis are normally ordered as a penalty for some improper conduct, for example, if he or she acted negligently or unreasonably. Whether a person acted negligently or unreasonably must be decided in the light of the circumstances of each case.25 [62] In the present case, the application was occasioned by, among other things, the trustees’ failure to account adequately to the appellant as they were in law obliged to do. The appellant was constrained to approach the court to enforce her right. While the facts in this case may not establish wilfulness or mala fides, it is clear that the trustees grossly disregarded their fiduciary responsibilities to account to the appellant. In these circumstances, it seems to me inappropriate for the trustees to be allowed to pay the costs utilising the funds of the trust.26 They must be ordered to pay the costs out of their own pockets. 25 Pheko and Others v Ekurhuleni Metropolitan Municipality (No 2) [2015] ZACC 10; 2015 (5) SA 600 (CC); 2015 (6) BCLR 711 (CC) para 51. 26 Compare Mia v Cachalia 1934 AD 102. 23 [63] The same considerations apply with equal force to the costs occasioned by the trustees’ failure to apply for a date for the hearing of the appeal timeously in the full court. This resulted in the lapsing of the appeal. The trustees sought condonation for such failure, and for the reinstatement of the lapsed appeal, which the appellant opposed. The full court condoned the trustees’ failure to timeously apply for a date for the hearing of the appeal and reinstated the lapsed appeal. It ordered the trustees ‘to pay the costs of the application for reinstatement and condonation’ and ordered the appellant ‘to pay the costs of [her] opposition to the application for reinstatement and condonation.’ The appellant’s opposition to the application might have been unnecessary in view of the trustees’ explanation for their failure. Despite that, there is no reason why any of the costs occasioned by the trustees’ procedural lapse should be recovered from the Trust. That part of the full court’s order should be set aside and replaced with one in terms of which there is no order as to costs. To be clear, the trustees are not entitled to recover those costs from Trust. Order [64] In the result the following order is made: 1 The appeal is upheld with costs to be paid by the respondents de bonis propriis jointly and severally. 2 Paragraphs 3 to 7 of the order of the full court are set aside and replaced with the following: ‘3 No order is made in respect of the costs of the application for reinstatement of the appeal and condonation, and the appellants are not allowed to recover their costs from Stapelberg Investment Trust (the Trust). 4 Save to the extent set out below, the appeal is dismissed with costs to be paid by the first, second and third appellants de bonis propriis, jointly and severally. 5 The order of the court of first instance is replaced with the following: ‘1 The first, second and third respondents are directed to account to the applicant fully, with each entry in the account duly supported by vouchers, for their administration of the Trust for the period from 15 July 2015 to 31 August 2018, within 30 days of this order. 24 2 The account shall include: (a) full information regarding the financial position of the trust, as required to be contained in a proper balance sheet and profit and loss statement of the Trust; (b) a record of all funds received into the accounts of the trust, including which inflows are to be attributed to the initial capital amount, interest, costs of action, medical refunds from the Road Accident Fund (the RAF) in terms of the undertaking provided by it, and administration costs received from the RAF (including the costs associated with the creation of the Trust); (c) a record of all amounts owed to the trust by the Road Accident Fund by virtue of the court order of 27 February 2015, which will include medical expenses incurred by the Trust, administration costs of the funds and any outstanding amounts owing in terms of the court order; (d) A record of all other expenses incurred by the Trust, specifying the nature of the expenses. 3 The applicant shall be entitled to apply to this court for appropriate relief in the event of the account not being furnished, or having been furnished, being incomplete or not properly vouched, setting out the respects in which she contends the account is incomplete. 4 The applicant shall forthwith advise the respondents when satisfied that the account is complete, whereafter the parties shall informally debate the complete account within 30 days, identifying any items that may remain in dispute. 5 In respect of any disputed items, the applicant is directed to file a declaration within 20 days after the debatement, setting out her contentions, and the respondents shall plead thereto within a further 20 days, whereafter these disputes may be enrolled for hearing. 6 The applicant’s attorney is directed to forthwith prepare a proposed deed of trust for the creation of a new inter vivos trust (the new trust), in compliance with the objects of this court’s order given on 27 February 2015, to replace the Stapelberg Investment Trust, and to submit a copy thereof to: (i) the Master of the High Court for comment and approval and (ii) a Judge of this Court in Chambers, for consideration and approval. 25 7 Upon approval of such deed of trust by the Master and a Judge in Chambers, the applicant’s attorney shall create and register the new trust. 8 Upon the registration of the new trust and letters of administration being issued by the Master of the High Court to its trustees, this order shall serve as an order terminating the Trust in terms of s 13 of the Trust Property Control Act 57 of 1988. 9 Upon such termination of the Trust, the first, second and third respondents shall within ten (10) days, transfer its assets to the trustees of the new trust. 10 The respondents shall, in the event of the new trust not yet being registered, pay any amount due as a result of the accounting referred to in paragraphs 1 and 2 above, into a trust account held by the applicant’s attorney, or if the new trust has by then been registered, to the trustees of the new trust. 11 This order does not detract from the respondents’ obligation to account fully to the applicant, or the trustees of the new trust once registered, for their further administration of the Stapelberg Investments Trust’s assets, liabilities, income and expenses for the period after 31 August 2018 until the date of its termination. 12 The first, second and third respondents are ordered to pay the costs of this application de bonis propriis, jointly and severally.’ __________________ T MAKGOKA JUDGE OF APPEAL 26 APPEARANCES: For appellant: A C Diamond Instructed by: Diamond Inc., Polokwane Honey Attorneys, Bloemfontein For respondents: A J R Booysen (with him K T Kgole) Instructed by: De Kooker Attorneys, Roodepoort Phatshoane Henney, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY FROM The Registrar, Supreme Court of Appeal DATE 2 August 2024 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. SNYMAN v DE KOOKER NO & OTHERS (400/2023) [2024] ZASCA 119 (2 August 2024). Today the Supreme Court of Appeal upheld an appeal against the judgment and order of the Full Court of the Gauteng Division of the High Court, Johannesburg (the Full Court). The dispute was about a Trust established in terms of a court order to preserve and manage funds received by the appellant because of injuries she had sustained in a road accident, for her exclusive benefit. The three respondents are the trustees of the Trust. Shortly after the creation of the Trust, the appellant expressed some disquiet to the trustees about several issues relating to its income and expenditure, the management thereof, including the trustees’ duty to account to her. Despite negotiations, no amicable solution was found. Consequently, the appellant launched an application in Gauteng Division of the High Court (the High Court) in which she sought an order that: (a) the trustees should account to her; (b) the Trust be terminated and replaced with a new trust and new trustees, and matters incidental thereto; (c) alternatively, two additional trustees of her choice be appointed and the trust deed be amended; and (d) she be granted leave to seek consequential relief upon the accounting by the trustees. The High Court granted the orders as prayed for. The trustees appealed against that order to the Full Court, which upheld the appeal with costs. It reasoned that there was no basis for the termination of the Trust, and that the trustees had adequately accounted to the appellants. With its special leave, the appellant appealed to the Supreme Court of Appeal, seeking to restore the order of the court of the High Court. 2 Before it considered the merits of the appeal before it, the Supreme Court of Appeal (the Court) observed that both lower courts, ie the High Court and the Full Court, had conflated two concepts, ie the termination of a trust and the removal of trustees. The Court explained that the termination of a trust is embedded in section 13 of the Trust Property Control Act 57 of 1988 (the Act), while the removal of trustees is governed by the common law and section 20 of the Act. It was evident from their respective judgments that the two lower courts viewed the two provisions as being interrelated and interdependent. Despite the appellant’s reliance on section 13 for the termination of the Trust or for its amendment, the lower courts devoted attention to the removal of trustees in terms of section 20, and by extensive reference to authorities on removal of trustees, such as Gowar & Another v Gowar & Others [2016] ZASCA 101; [2016] 3 All SA 382 (SCA); 2016 (5) SA 225 (SCA), which is the leading authority of the Court on the removal of trustees. The lower courts were of an erroneous view that when a court is minded terminating a Trust in terms of section 13, it is enjoined to also consider whether the trustees should be removed in terms of section 20. The Court rejected this reasoning and held that is no textual or contextual indication on the plain reading of the two provisions to support such a conclusion. The fact that the termination of a Trust would result in the loss of office for the trustees does not implicate their removal in terms of section 20. The loss of office by a trustee pursuant to section 13 is a natural consequence of an order terminating a Trust. It does not amount to a removal as envisaged in section 20, as suggested by the lower courts. The Court further explained the distinction between the two provisions as follows. Termination of a trust in terms of section 13 is premised on the provisions of the trust deed itself, which the founder did not contemplate or foresee. The removal of trustees in terms of section 20, on the other hand, is informed by the conduct of the trustees and their relationship with beneficiaries. In sum, the remedies provided for in sections 13 and 20 must not be conflated. The one has nothing to do with the other, as they are distinct stand-alone provisions with different requisites and outcomes. They may be asserted in the alternative, but never together. The Court further noted that the conflation might have arisen in the heads of argument of one of the parties, or during oral submissions. The Court repeated the caution it sounded in De Wet and Another v Khammissa and Others [2021] ZASCA 70 (SCA); 2021 JDR 1070 (SCA), that a court should not decide a matter based on a wrong basis simply because the parties had relied on it. It remains the task of a court to identify the true issue for determination, which task should never be left solely to the parties or their legal representatives. 3 The Court then turned to the two issues for determination on appeal, namely: (a) the trustees’ accounting to the appellant; and (b) the termination/amendment of the trust deed. With regard to the accounting, the Court considered the common law jurisprudential basis for accounting by the trustees to beneficiaries, with reference to authorities such as Mia v Cachalia 1934 AD 102; Doyle v Board of Executors 1999 (2) SA 805 (C); Doyle and Another v Fleet Motors PE (Pty) Ltd 1971 (3) SA 760 (A). It determined that the trustees stood in a fiduciary relationship with the appellant as both the capital and income beneficiary. Thus, they were obliged to account to her. After considering the facts of the case, the Court concluded that the accounting made by the trustees fell short of the standard set out in the above authorities. It thus held that the appeal on this ground should succeed. About the termination of the Trust, the Court considered the appellant’s assertion that the trust deed establishing the Trust did not advance the purpose of the court order in terms of which it was created. To consider this submission, the Court embarked on an extensive examination of the provisions of the trust deed within the prism of section 13, under three rubrics: (a) the subject matter of the Trust; (b) the role of the court–appointed founder in the trust deed; and (c) the trustees’ powers. The Court found several problematic provisions in the trust deed, which, it concluded, could not have been contemplated or foreseen by the court when it ordered the creation of the Trust. This met the anchor jurisdictional factor in section 13, which requires that the trust instrument must contain any provision which brings about consequences which the founder of a trust did not contemplate or foresee. Furthermore, such a provision must have the effect that it: (a) hampers the achievement of the objects of the founder; or (b) prejudices the interests of beneficiaries; or(c) is in conflict with the public interest. As to these requisites the Court identified several provisions in the trust deed which, it held, met the requisites of section 13(a) – (c). The upshot was therefore that the combined jurisdictional factors of section 13 had been established. The appeal on this issue, too, had to succeed. Turning to the remedy, the Court considered the alternative forms of relief provided for in section 13. It concluded that given the multiplicity of the offending provisions, their materiality and impact, the appropriate remedy is to terminate the trust as soon as possible and create a new one. Finally, as regards costs, the Court considered that the litigation was occasioned by, among other things, the trustees’ failure to account adequately to the appellant as they were in law obliged to do. The appellant was constrained to approach the court to enforce her right. While 4 the facts in this case may not establish wilfulness or mala fides on the part of the trustees, they grossly disregarded their fiduciary responsibilities to account to the appellant. In the circumstances, it would be inappropriate for the trustees to be allowed to pay the costs utilising the funds of the Trust. Consequently, the Court concluded that the trustees should pay the costs of the appeal de bonis propriis. Accordingly, the Court upheld the appeal with costs de bonis propriis to be paid by the trustees. It set aside the order of the Full Court and replaced it with an order dismissing the appeal and restoring the order of the High Court, but amended it extensively to make provision for, among other things: (a) the accounting by the trustees to the appellant, (b) the debatement of such accounting, if necessary; (c) the approval of a draft trust deed for a new Trust by a Judge in Chambers and by the Master of the High Court; (d) the termination of the Trust and the creation of a new one; and the transfer of the Trust assets from the trustees to the new trustees. ****END****

4296

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 284/2023 In the matter between: LEON DE KOCK APPELLANT and WANDA LUUS DU PLESSIS FIRST RESPONDENT ANDRE DU PLESSIS SECOND RESPONDENT DU PLESSIS (BOLAND) WELLINGTON ATTORNEYS THIRD RESPONDENT CITY OF CAPE TOWN MUNICIPALITY FOURTH RESPONDENT Neutral citation: De Kock v Du Plessis and Others (284/2023) [2024] ZASCA 117 (24 July 2024) Coram: MAKGOKA, MABINDLA-BOQWANA and GOOSEN JJA and BAARTMAN and SEEGOBIN AJJA Heard: 6 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal 2 website, and release to SAFLII. The date and time for hand-down is deemed to be 11h00 on 24 July 2024. Summary: Eviction – Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (the PIE Act) – defence – right to occupation in terms of oral agreement – alleged agreement cancelled in action proceedings – aggrieved party not permitted to approbrate and reprobate – contractual defence extinguished by cancellation – just and equitable order considered. 3 ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Dolamo, Kusevitsky and Nziweni JJ sitting as court of appeal): 1 The appeal is upheld. 2 The order of the full court is set aside and replaced with the following: ‘1. The appeal is upheld. 2. The order of the court of first instance under case number 6374/2020 is set aside and replaced with the following order: ‘1. The applicant’s supplementary replying affidavit is admitted. 2. The first and second respondents (respondents) and all those claiming occupation through and under them are evicted from erf 4629, Wellington, with street address 9 Muscadel Street, Wellington (the property), subject to the conditions set out below. 2.1 The applicant shall lease a residential unit at a retirement home, which provides frail-care facilities and/or otherwise provides and/or contracts in medical services for ailing residents, for occupation by the respondents (a unit). 2.2 The monthly rental of the unit shall not exceed R20 000 per month, exclusive of any additional costs levied by the retirement home in respect of frail care or medical treatment actually afforded to the second respondent, which are not included in the monthly rental of the unit and which are not covered by the existing medical aid scheme(s) of the respondents, provided that: 4 (a) The applicant shall pay such additional costs which are not so included or covered. (b) If the respondents select a unit which exceeds R20 000 per month in rental, they shall reimburse the applicant any amount exceeding R20 000, immediately upon the applicant’s written demand. 2.3 The respondents shall within 30 calendar days of this order select a unit which is available to be occupied by them on or before the date on which they are obliged to vacate the property for a monthly rental not exceeding R20 000 and notify the applicant of its particulars, whereupon the applicant shall lease that unit for residential occupation by the respondents: Provided that in the event that the respondents fail to select a unit as contemplated above and/or inform the applicant, the applicant may either: 2.3.1 pay an amount of R20 000 per month to the respondents, jointly and severally, as a contribution to such residential accommodation as they may wish themselves to hire, which payments shall be a complete discharge of the applicant’s obligations to the respondents; or 2.3.2 call upon the respondents within 10 calendar days thereafter, to rank the retirement homes mentioned below, in descending order of their preference: (a) Huis Vergenoeg (in Main Road, Paarl); (b) Rusthof Old Age Home (in Klein Nederburg Street, Paarl); (c) Huis Perelberg (in Botha Street, Paarl); (d) Rusoord Old Age Home (in Divine Street, Paarl); (e) Sherwood Nursing Home (in Kenilworth, Cape Town); (f) Libertas Retirement Home (in Goodwood, Cape Town); (g) Oasis Retirement Home (in Century City, Cape Town); 5 (h) Pineland Place (in Pinelands, Cape Town); (i) Trianon Care Centre (in Plumstead, Cape Town); (j) Eureka Retirement Village (in Oakdale, Cape Town); (k) La Recolte Retirement Village (in Richworth, Cape Town); (l) De Plattekloof Lifestyle Estate (in Plattekloof, Cape Town). 2.4 In the event the applicant selects the option in 2.3.2 above, he shall lease an available unit not exceeding R20 000 per month at the highest-ranking retirement home in the above list for occupation by the respondents on or before the date of which the respondents are obliged to vacate the property. 2.5 The respondents and all those claiming occupation through and under them shall vacate the property by no later than 90 calendar days of this court’s order. 2.6 In the event that the respondents and all those claiming occupation through and under them fail to vacate the property on the date appointed in the preceding paragraph or to which that date has been postponed by the applicant, the sheriff with jurisdiction or his/her lawful deputy is authorised and directed to carry out the eviction on the court day immediately following the date to vacate the property or the postponement date by the applicant. 2.7 The respondents shall in good faith give all reasonable cooperation to the applicant in securing a unit for residential occupation by them, including, without limitation, attending any interviews appointed for them at retirement homes. 2.8 In the event that a unit has been secured for residential occupation by the respondents and it is for any reason not reasonably practicable for the respondents to occupy that unit on the date on which they are obliged to vacate the property, the applicant may by written notice postpone the date on 6 which the respondents are obliged to vacate the property, to a specified or determinable later date, without further legal process. Such a notice shall be prima facie proof that the specified or determinable later date has been appointed by the applicant. 2.9 In the event that the respondents should wish to store any of their household furniture and effects upon vacating the property, the applicant shall pay the reasonable cost of such storage for a period of two months, reckoned from the date on which the respondents are obliged to vacate the property or from the specified or determinable later date to which the applicant has postponed the date on which the respondents are obliged to vacate the property. 2.10 All communications which may be necessary between the parties shall be effected by email exchange between themselves or their legal representatives, as the case may be, which emails shall be deemed to have been received at 08:00 on the Court day following the day on which they were dispatched. 2.11 These obligations on the applicant shall be effective and enforceable for a period of one year from the date of this order. 3. There is no order as to costs’. 7 JUDGMENT Mabindla-Boqwana JA (Makgoka and Goosen JJA and Baartman and Seegobin AJJA concurring): Introduction [1] The appellant, Mr Leon de Kock, appeals with the special leave of this Court, against an order of the full court of the Western Cape Division of the High Court, Cape Town (the full court). That court had dismissed his appeal against an order of a single judge, which had dismissed Mr de Kock’s eviction application against the first and second respondents. [2] On 4 June 2020, Mr de Kock launched an application in the Western Cape Division of the High Court, Cape Town (the high court), for the eviction of the first and second respondents from the residential property situated at erf 4629, 9 Muscadel Street, Wellington (the property), in terms of s 4(6) alternatively s 4(7) of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (the PIE Act). [3] Mr de Kock is a businessman and the current owner of the property. The first respondent, Mrs Wanda Luus du Plessis and the second respondent, Mr Andre du Plessis are retired. They are married and reside in the property. The property was previously owned by Mrs du Plessis until she sold it to Mr de Kock. Mr du Plessis practised as an attorney at the property until he ceased to practice. 8 [4] Mr de Kock was married to Mr and Mrs du Plessis’ daughter, Nicquelette de Kock (Nicquelette) in 2006, until her passing on 26 September 2018. Mr de Kock and Nicquelette had twins born of their marriage, a boy and a girl, who are currently 11 years old (the minor children). The relationship between Mr de Kock and his in- laws was initially very warm, caring and loving. For all intents and purposes Mr and Mrs du Plessis regarded Mr de Kock as their own son. [5] During 2015 Mr de Kock and Mrs du Plessis started discussing the possibility of Mr de Kock purchasing the property. At the time, the property was subject to a mortgage bond of about R1 000 000 in favour of ABSA Bank. The parties differ as to what led to these discussions. Mr de Kock’s version is that his in-laws were experiencing financial difficulties and the property had become a financial burden that the couple increasingly could no longer afford. Mrs du Plessis, on the other hand, alleges that it was Mr de Kock, who proposed buying the property so he could obtain finance for his business as he did not own immovable property. [6] On 6 May 2016, the parties concluded a deed of sale in terms of which Mrs du Plessis agreed to sell the property to Mr de Kock at the purchase price of R4 500 000. Mr de Kock secured a loan of R3 375 000 from ABSA Bank against the registration of a mortgage bond over the property, which is 75% of the R4 500 000 purchase price. The property was registered in Mr de Kock’s name on 5 September 2016. Mrs du Plessis was paid an amount of R3 500 000 as consideration for the sale. [7] From the proceeds of the sale Mrs du Plessis paid R1 000 000 to ABSA Bank to discharge the existing mortgage bond over the property. She then by agreement 9 with Mr de Kock, advanced the remaining balance of R2 500 000 to him. It was agreed that Mr de Kock would repay the loaned amount, in monthly instalments of R52 085, over a period of 48 months (loan agreement). Mr de Kock also agreed to pay 48 instalments of R25 000 per month, which he alleges represented a fixed interest of 10% per month on the loan capital. Mrs du Plessis, on the other hand, understood the amount to have been a contribution towards hers and Mr du Plessis’ living expenses, since Mr de Kock enjoyed the benefit of the full proceeds of her property. [8] After the sale and transfer, Mr and Mrs du Plessis remained in occupation of the property with Mr de Kock’s consent. According to Mrs du Plessis the agreement was that she and Mr du Plessis could continue to reside at the property rent-free until the full amount was paid; namely, repayments for the R2 500 000, 48 monthly payments of R25 000 and the R1 000 000 shortfall outstanding in terms of the agreement. In mid-2019, Mr de Kock’s relationship with his in-laws started to deteriorate. The source of the fall-out was Nicquelette’s estate and access to the minor children. The detail of that dispute is however not relevant to the determination of this appeal. [9] Mr de Kock engaged the services of an attorney who advised him that the loan agreement between him and Mrs du Plessis was a credit transaction as contemplated in s 8(4)(f) of the National Credit Act 34 of 2005 (the NCA) and thus a credit agreement as defined in s 1 read with s 8(1) of the NCA. The loan agreement was, accordingly, unlawful because Mrs du Plessis was not registered as a credit provider. On that advice, Mr de Kock ceased to make payments. 10 [10] As at the end of October 2019, of the R52 085 monthly instalments, Mr de Kock had paid R1 927 145. In respect of the R25 000 monthly payments, his version is that he had paid R925 000 while Mrs du Plessis alleges that he had only paid R875 000. [11] On 14 October 2019 and 23 October 2019, Mr de Kock’s attorneys sent letters to Mr and Mrs du Plessis notifying them of Mr de Kock’s intention to sell the property and required them to vacate the property by 31 January 2020. A further notice was sent on 21 February 2020. [12] Mr and Mrs du Plessis refused to vacate the property resulting in Mr de Kock filing the PIE application in the high court on 4 June 2020. Mr de Kock alleged that the parties had entered into two distinct oral agreements. The first agreement was that, after acquiring the property, Mr and Mrs du Plessis would remain in occupation of the property, indefinitely and rent free, subject to them paying for the amenities used and the necessary maintenance. He was advised that the arrangement was not a proper lease and was therefore terminable at reasonable notice. [13] The second agreement was the loan agreement discussed above. ABSA Bank was prepared to advance a loan of 75% of the purchase price of the property to him. The R4 500 000 that was stipulated in the deed of sale was a simulated purchase price, which at 75% would yield a mortgage loan of R3 375 000. He would be required to only invest R125 000 of his own capital in the property. [14] In defence to the PIE application, Mrs du Plessis alleged that the parties entered into a single oral agreement constituted of two parts (composite agreement). 11 According to her, because ABSA Bank was only prepared to offer mortgage financing of only R3 375 000, she agreed to accommodate Mr de Kock by allowing the property to be transferred to his name against the payment of R3 500 000. The balance of R1 000 000 of the purchase price would, upon transfer, remain due by Mr de Kock to her. Mrs du Plessis therefore agreed to lend Mr de Kock R2 500 000 of the balance of the proceeds of sale actually paid upon transfer. The remaining balance of R1 000 000, making up R3 500 000, was due by Mr de Kock. As already stated, the R2 500 000 would be repaid in 48 monthly instalments of R52 085 per month and the R1 000 000 would be repayable after the first component of R2 500 000 was fully paid. [15] Accordingly, until such time the R3 500 000 had been repaid in full, Mr and Mrs du Plessis would remain in the property free of rent. Mr de Kock could not freely deal with the property. Full payment of the money and the restoration of the property, according to Mrs du Plessis, were reciprocal. Because the full loan account had not been fully redeemed, she retained the right to remain in occupation of the property in terms of the composite agreement. She regarded the attempt to evict her and Mr du Plessis from the property as a repudiation of the agreement, which she refused to accept and elected to approbate and enforce it. [16] The eviction application served before De Villiers AJ on 9 March 2021. At the hearing of the matter, Mr de Kock’s counsel sought to introduce a supplementary replying affidavit (the affidavit). The purpose of the affidavit was to draw to the courts’ attention that Mrs du Plessis had, on 4 November 2020, instituted action in the high court, against Mr de Kock in which she averred that she had cancelled the oral agreement between her and Mr de Kock. Mr de Kock’s counsel assumed that 12 the affidavit was part of the record. Upon becoming aware that it was not, he made an application to introduce it to the record. [17] The high court ruled against admitting the affidavit on the strength of the submissions made by Mr and Mrs du Plessis’ counsel and ordered the expungement of the affidavit from the record. The submissions advanced in support of the refusal were, firstly, that no leave was sought from the court to admit the affidavit nor was any agreement obtained from the other party to introduce the affidavit, it was simply slipped into the court file. This being done without allowing Mr and Mrs du Plessis an opportunity to deal with the affidavit. Secondly, the affidavit introduced a new cause of action with no amendment sought to the notice of motion. Thirdly, ‘the new cause of action’ was entirely unsustainable on the facts and the law. In this regard, counsel for Mr de Kock delved into the merits, which was not necessary in determining whether the affidavit should be admitted. [18] The high court proceeded to deal with the PIE application and accepted Mr and Mrs du Plessis’ version and dismissed the application. It found, inter alia, as follows: ‘As a result, I find that the sale agreement of the property, the loan and the agreement in terms of which the first and second respondents occupy the property, are inseverable and constitute one agreement.’ [19] It further found that the agreement was fraudulent void ab initio as the deed of sale was inflated by R1 000 000. On Mr de Kock’s version this was done to maximise the amount of the mortgage bond that he could obtain from ABSA Bank. The court also found the loan agreement to be in breach of s 89(2) read with s 90 of the NCA, as it was not an arm’s length transaction. It subsequently dismissed an 13 application for leave to appeal, which was granted by this Court to the full court of the Western Cape Division of the High Court, Cape Town. [20] The full court dismissed the appeal. As the court of first instance, it dismissed the application to introduce the affidavit. Prior to the hearing of the appeal, the parties’ attorneys had agreed on documents that would form part of the appeal record. Mr de Kock’s counsel discovered that the affidavit was not included. Upon becoming aware of this omission, he made an application, at the hearing of the appeal, to introduce the affidavit to the record. He explained to the court that when preparing the index and the bundle for the hearing, Mr de Kock’s attorneys inadvertently omitted to include the affidavit as part of the documents. [21] The full court remarked that ‘[o]n appeal, the appellant is bound by the four corners of the record and must argue thereon’. It regarded Mr de Kock’s application to supplement the appeal record as ‘tantamount to an application to receive further evidence but without meeting the requirements for such an application’. It further found that the agreement by the parties as to which parts of the record should be included in the record of appeal was binding. The full court proceeded to deal with the appeal without the affidavit. [22] In dealing with the merits of the appeal, the full court applied the Plascon-Evans rule1 and accepted Mrs du Plessis’ version that it was Mr de Kock, who approached them and requested a loan through a scheme that he had hatched. In the court’s view, Mrs du Plessis’ version was easy to explain, and not unusual. It found 1 As formulated in Plascon-Evans Paints (Pty) Ltd v Van Riebeeck Paints 1984 (3) SA 623 (A) at 634-635. The rule is to the effect that where there are disputes of fact, the matter must be decided on the respondent’s version unless it is so far-fetched or uncreditworthy that it can be rejected out of hand. 14 that the property was sold for R4 500 000 and not R3 500 000 as contended by Mr de Kock. Further, that the loan agreement was valid and would endure until the amount owed was fully paid. It concluded that the ‘purported’ cancellation by Mr de Kock did not bring the agreement to occupy the property to an end. Aggrieved by the full court’s judgment, Mr de Kock approached this Court for special leave to appeal, which was granted on 6 March 2023. Issues on appeal [23] The first issue to determine is whether the court of first instance and the full court erred by refusing to admit the affidavit. Secondly, if the affidavit ought to have been allowed, what would be its impact on the defence given by Mr and Mrs du Plessis in the PIE application. Thirdly, if it is found that their right to occupy the property terminated by virtue of Mrs du Plessis’ cancellation of the oral agreement in the particulars of claim, whether it is just and equitable to evict them in terms of the PIE Act. Admission of the supplementary replying affidavit [24] It is settled that a court has a discretion whether to permit the filing of further affidavits, which discretion must be exercised ‘against the backdrop of the fundamental consideration that a matter should be adjudicated upon all the facts relevant to the issues in dispute’.2 This Court in Dickinson v South African General Electric Co (Pty) Ltd,3 said: ‘The application had to be approached in the light of all the issues raised and, at least in respect of the beneficia, a proper adjudication would require an answer by the appellant to the matters raised 2 Van Loggerenberg Erasmus Superior Court Practice (2d ed 2022), Vol 2, D1-68. 3 Dickinson v South African General Electric Co (Pty) Ltd 1973 (2) 620 (A) at 628F-G. 15 by the respondent. In my view the filing of the further affidavit should have been allowed, and the present enquiry will proceed upon the assumption that it has been admitted.’ [25] In considering whether to admit a further affidavit, the court would ask the following questions: firstly, whether a proper and satisfactory explanation as to why the new information in the affidavit was not placed before the court at an earlier stage, had been given; secondly, whether any prejudice will be caused by the admission of the affidavit, which could not be limited by an appropriate costs order; and thirdly, the relevance and importance of the evidence to the issues it has to determine. [26] It is so, that a party may not simply file an additional affidavit without first applying for permission from the court. The form the application should take depends on the circumstances and the nature of the application. Nothing is amiss, in appropriate cases, with bringing an application from the bar. The kernel of the procedure is that an application should be brought to the court. The determining factor being whether the other party would suffer prejudice and how that prejudice is to be ameliorated. [27] In this instance, it is common cause that the affidavit was not filed by way of the long form prior to the hearing of the matter. It was served and filed without a notice of motion on 17 November 2020. That is three months before the hearing of the PIE application. [28] Mr de Kock’s legal representatives may be criticised for proceeding on the basis that the filing of the affidavit was sufficient. His counsel, however, informed the court that he was not aware that the affidavit did not form part of the record. He 16 moved for leave to introduce it from the bar. The court ought not to have elevated form over substance. It should have considered the application against the principles discussed above. Fundamentally, it should have looked at the allegations in the affidavit, their purpose and relevance to the issues before it, and whether Mr and Mrs du Plessis would be prejudiced by its introduction, if so, how that potential prejudice could be cured. [29] The affidavit simply sought to place the fact that Mrs du Plessis had instituted action, which had an impact on the application before it. This allegation could not have been made in the founding affidavit because it occurred after the filing of the PIE application. That fact was important and central to the issue in dispute. There would be no prejudice suffered by Mr and Mrs du Plessis that could not be dealt with, as the affidavit simply sought to bring to the attention of the court an existing fact. What the court makes of what was contained in the affidavit is a different matter. [30] The affidavit did not introduce a new cause of action. Mr de Kock’s case was that Mr and Mrs du Plessis had no right to occupy the property. He had sent them notice to terminate the right to occupy and having refused to vacate the property, Mr and Mrs du Plessis became unlawful occupiers in terms of the PIE Act. The issue of whether there was a valid agreement as alleged in Mrs du Plessis’ defence, which gave her and Mr du Plessis the right to occupy the property, until the amount allegedly owed was fully paid, remained the issue in dispute. Accordingly, the court of first instance should have admitted the affidavit. 17 [31] The full court did not adequately deal with this issue. It ought to have considered whether the affidavit was properly excluded by the court of first instance, from the record. It erred in how it approached the matter. The affidavit simply sought to place all the facts before the court. [32] Given the fact that Mrs du Plessis was aware of the affidavit a few months before the hearing, its omission was clearly erroneous. The agreement by the attorneys did not bar the court from admitting the affidavit. The attorneys clearly committed an error. Despite their agreement, the full court was permitted by rule 49(9) to call for the whole record to be placed before it. With these considerations, the affidavit ought to have been admitted and I proceed on that basis. The impact of the averments in the action proceedings [33] In the affidavit, Mr de Kock referred to paragraph 21 of the particulars of claim where Mrs du Plessis made the following averment: ‘21. The Defendant’s breach and repudiation has been ongoing and in the circumstances, the Plaintiff has elected to accept the Defendant’s repudiation, and has cancelled the Loan Agreement, alternatively hereby cancels same.’ [34] In contract law, an innocent party is entitled to cancel an agreement on grounds of misrepresentation or breach of contract. Such party must exercise an election between two inconsistent remedies, whether to cancel or to abide by the contract.4 An election to cancel necessarily involves an abandonment of the right of enforcement. A party can therefore not both approbate and reprobate.5 She may cancel and sue for damages or abide by the contract and claim performance. Once 4 Thomas v Henry and Another 1985 (3) SA 889 (A) at 896A. 5 Spheris v Flamingo Sweet (Pty) Ltd and Another [2008] 1 All SA 304 (W) at 309. 18 cancelled, a contract may not be unilaterally revived. In Thomas v Henry and Another,6 this Court held: ‘Once the innocent party has decided to cancel - and has communicated his decision to the other party - he has, of course, exercised his election. He then no longer has a choice of remedies and may not, without the consent of the other party, undo his decision. The concept of election is therefore not appropriate in regard to conduct which appears to be in conflict with an intention to rely on the chosen remedy.’ [35] When the aggrieved party, however, decides to abide by the contract, but the other party persists with the breach, the aggrieved party may change their mind and cancel, in terms of the repentance principle. ‘Persistence should be understood as a further indication of intention to repudiate after having been given an opportunity to reconsider.’7 [36] In the present matter, Mrs du Plessis relied upon the composite agreement that she would lend money to Mr de Kock, which Mr de Kock agreed to repay, as stated above. Mr de Kock agreed to let her occupy the property, until the money was repaid in full. In other words, the property would only be restored to him once he had paid all the money loaned to him by Mrs du Plessis. [37] In the PIE application, Mrs du Plessis decided to abide by the contract to preserve her right to occupation and enforce it. Later, in her particulars of claim, she elected to cancel the contract as she was entitled to do. This means Mrs du Plessis’ right to receive payments in the manner prescribed in the agreement with the reciprocal obligation on Mr de Kock to allow her to occupy the property until 6 Thomas fn 4 at 896D-E. 7 Primat Construction CC v Nelson Mandela Bay Municipality [2017] ZASCA 73; 2017 (5) SA 420 (SCA) para 25. 19 payment was made in full, were extinguished. Her right, resulting from the cancellation of the contract, is to receive damages as she may be able to prove. [38] Mrs du Plessis’ counsel submitted that reliance should not only be placed on paragraph 21 of the particulars of claim where Mrs du Plessis avers cancellation of the agreement but also to paragraph 22.3 which states: ‘The Defendant tenders vacant occupation of the property against payment of the amount of R1 897 935 …together with interest…a tempore morae.’ [39] From this paragraph, he argued, Mrs du Plessis’ claim was one of restitution and not damages. As a result, until Mr de Kock tenders the return of the total amount loaned to him, he cannot claim the return of what she had delivered, as the rights and the concomitant obligation are reciprocal in terms of the agreement. Therefore, in the absence of that tender, Mr and Mrs du Plessis are not in unlawful occupation of the property. [40] Apart for there being no authority for this proposition, it is untenable. Mrs du Plessis cannot insist on retaining occupation of the property in terms of the agreement, having cancelled the contract, which entitles her to sue for damages. Had Mrs du Plessis’ claim been for restitution upon cancellation, she would have been obliged to tender restitution of what she had herself received. Considering these principles, it is evident that, had the court of first instance and the full court considered the affidavit, the outcome might have been different. They both erred in how they approached the matter. [41] By virtue of her cancelling the contract, Mr and Mrs du Plessis, unfortunately, no longer enjoyed the contractual right to remain in occupation of the property. This 20 finding disposes of the defence of lawful occupation. Having come to that conclusion, the next question to determine is whether it is just and equitable to grant an eviction order. Just and Equitable order [42] In terms of s 4(7) of the PIE Act, a court may grant an eviction order: ‘if it is of the opinion that it is just and equitable to do so, after considering all the relevant circumstances, including, except where the land is sold in a sale of execution pursuant to a mortgage, whether land has been made available or can reasonably be made available by municipality or other organ of state or another land owner for the relocation of the unlawful occupier, and including the rights and needs of the elderly, children, disabled persons and households headed by women.’ (Emphasis added.) [43] Mr and Mrs du Plessis are an elderly couple. Mr du Plessis is an octogenarian who is sickly. He was diagnosed with a hospital bacterium in 2007, following which he underwent numerous medical procedures. In 2015 he was diagnosed with cancer and his health has since deteriorated. Given his ill-health, he had to retire from practise at the age of 67 due to the stress associated with it. His poor state of health requires continuous care, including intensive medical care. Recently, it has been indicated that Mrs du Plessis is also of poor health, although the nature of her illness has not been specified. It is also alleged that the couple’s financial position has deteriorated since Mr de Kock discontinued all the payments in 2019. [44] Mr and Mrs du Plessis also allege that eviction would leave them without a home, or the means to buy a home, or to finance its purchase, while Mr de Kock would have had five years free credit with the bonus of evicting his parents-in-law. They allege that they trusted Mr de Kock as family and had it not been for that 21 reason, Mrs du Plessis would have sold the property in a normal sale and invested the money for hers and Mr du Plessis’ benefit. She would not have loaned the money to anyone. The loan made them dependent on Mr de Kock as they used the repayments to finance their expenses. [45] This is an unfortunate case involving people who once regarded each other as family and enjoyed a loving relationship. The arrangement they made is evidence of that. The reality however is that Mrs du Plessis sold the property and Mr de Kock is the owner. She cancelled the agreement as indicated above and can no longer enforce the alleged right to occupation on the basis of the agreement. [46] Mr de Kock alleges that he still owed ABSA Bank R3 100 000 for the property. He pays regular monthly instalments of R32 403.34 to service the loan by ABSA Bank. He is desirous of realising his investment in the property by selling it. He made various offers to settle the matter including paying for alternative accommodation. His counsel advised the Court that some of these offers still stand. Since the offers made, were contained in different parts of Mr de Kock’s papers, the Court requested that a consolidated document be filed detailing the terms of the offer. [47] On 16 May 2024, Mr de Kock filed a ‘with prejudice’ offer to settle, comprising two alternative parts ‘with the view to satisfying [this Court] that it is just and equitable . . . to evict [Mr and Mrs du Plessis]’. Mr and Mrs du Plessis responded to these with a counteroffer. 22 [48] From the two alternative offers made by Mr de Kock, one that appears relevant to the just and equitable enquiry is the second alternative offer. In it, Mr de Kock offers to ‘hire a residential unit at a retirement home, which provides frail-care facilities and/or otherwise provides and/or contracts in medical services for ailing residents, for occupation by [Mr and Mrs du Plessis] at R20 000 per month, plus additional costs levied for medical treatment or frail care’. [49] In their counteroffer, Mr and Mrs du Plessis state that any resolution of the dispute should involve a clean break and absent any continued connection or interdependence between the parties. They submit that it would be just and equitable for them to be paid R1 897 935 to secure alternative housing and care. They and the other people that claim occupation through them would vacate no later than six months of the order of this Court. They however state that Mr de Kock should pay all the expenses, charges, levies, water and taxes. [50] The parties did not settle the matter. The court cannot force a contract on the parties. Fundamentally, no duty rests on Mr de Kock as a private land owner to provide alternative accommodation to Mr and Mrs du Plessis. In Grobler v Phillips and Others,8 the Constitutional Court emphasised that in determining what is just and equitable, the rights of both parties must be balanced and ‘compromises have to be made by both parties’.9 Mr de Kock is the owner of the property, which is mortgaged, and he continues to make loan repayments to ABSA Bank. He is trying to sell the property but cannot do so with Mr and Mrs du Plessis in occupation. He has offered to pay for alternative accommodation and any additional costs levied for 8 Grobler v Phillips and Others [2022] ZACC 32; 2023 (1) SA 321 (CC); 2024 (1) BCLR 115 (CC). 9 Ibid para 40. See also para 44. 23 frail or medical care. The tender will be made an order of court to the extent that is just and equitable. [51] Mr de Kock also offered to pay for the relocation costs. It is important to note that Mr and Mrs du Plessis will not be rendered homeless should an order granting their eviction be made. Taking into account and balancing the interests of all the parties, an eviction order will be just and equitable. [52] As to the eviction date, while the parties have given their own preferences based on their offer and counteroffer, the court retains the discretion, weighing all the circumstances. A period of three months is reasonable, in my view. It will provide Mr and Mrs du Plessis with an opportunity to select a unit at a retirement home which provides frail care facilities, they so prefer or from the list provided by Mr de Kock, subject to the amount offered by Mr de Kock’s for payment of the unit. Given the circumstances of this case and these being eviction proceedings, it seems unjust to award costs against Mr and Mrs du Plessis. [53] The following order is, accordingly, made: 1 The appeal is upheld. 2 The order of the full court is set aside and replaced with the following: ‘1. The appeal is upheld. 2. The order of the court of first instance under case number 6374/2020 is set aside and replaced with the following order: ‘1. The applicant’s supplementary replying affidavit is admitted. 2. The first and second respondents (respondents) and all those claiming occupation through and under them are evicted from erf 4629, Wellington, 24 with street address 9 Muscadel Street, Wellington (the property), subject to the conditions set out below. 2.1 The applicant shall lease a residential unit at a retirement home, which provides frail-care facilities and/or otherwise provides and/or contracts in medical services for ailing residents, for occupation by the respondents (a unit). 2.2 The monthly rental of the unit shall not exceed R20 000 per month, exclusive of any additional costs levied by the retirement home in respect of frail care or medical treatment actually afforded to the second respondent, which are not included in the monthly rental of the unit and which are not covered by the existing medical aid scheme(s) of the respondents, provided that: (a) The applicant shall pay such additional costs which are not so included or covered. (b) If the respondents select a unit which exceeds R20 000 per month in rental, they shall reimburse the applicant any amount exceeding R20 000, immediately upon the applicant’s written demand. 2.3 The respondents shall within 30 calendar days of this order select a unit which is available to be occupied by them on or before the date on which they are obliged to vacate the property for a monthly rental not exceeding R20 000 and notify the applicant of its particulars, whereupon the applicant shall lease that unit for residential occupation by the respondents: Provided that in the event that the respondents fail to select a unit as contemplated above and/or inform the applicant, the applicant may either: 2.3.1 pay an amount of R20 000 per month to the respondents, jointly and severally, as a contribution to such residential accommodation as they may 25 wish themselves to hire, which payments shall be a complete discharge of the applicant’s obligations to the respondents; or 2.3.2 call upon the respondents within 10 calendar days thereafter, to rank the retirement homes mentioned below, in descending order of their preference: (a) Huis Vergenoeg (in Main Road, Paarl); (b) Rusthof Old Age Home (in Klein Nederburg Street, Paarl); (c) Huis Perelberg (in Botha Street, Paarl); (d) Rusoord Old Age Home (in Divine Street, Paarl); (e) Sherwood Nursing Home (in Kenilworth, Cape Town); (f) Libertas Retirement Home (in Goodwood, Cape Town); (g) Oasis Retirement Home (in Century City, Cape Town); (h) Pineland Place (in Pinelands, Cape Town); (i) Trianon Care Centre (in Plumstead, Cape Town); (j) Eureka Retirement Village (in Oakdale, Cape Town); (k) La Recolte Retirement Village (in Richworth, Cape Town); (l) De Plattekloof Lifestyle Estate (in Plattekloof, Cape Town). 2.4 In the event the applicant selects the option in 2.3.2 above, he shall lease an available unit not exceeding R20 000 per month at the highest-ranking retirement home in the above list for occupation by the respondents on or before the date of which the respondents are obliged to vacate the property. 2.5 The respondents and all those claiming occupation through and under them shall vacate the property by no later than 90 calendar days of this court’s order. 2.6 In the event that the respondents and all those claiming occupation through and under them fail to vacate the property on the date appointed in 26 the preceding paragraph or to which that date has been postponed by the applicant, the sheriff with jurisdiction or his/her lawful deputy is authorised and directed to carry out the eviction on the court day immediately following the date to vacate the property or the postponement date by the applicant. 2.7 The respondents shall in good faith give all reasonable cooperation to the applicant in securing a unit for residential occupation by them, including, without limitation, attending any interviews appointed for them at retirement homes. 2.8 In the event that a unit has been secured for residential occupation by the respondents and it is for any reason not reasonably practicable for the respondents to occupy that unit on the date on which they are obliged to vacate the property, the applicant may by written notice postpone the date on which the respondents are obliged to vacate the property, to a specified or determinable later date, without further legal process. Such a notice shall be prima facie proof that the specified or determinable later date has been appointed by the applicant. 2.9 In the event that the respondents should wish to store any of their household furniture and effects upon vacating the property, the applicant shall pay the reasonable cost of such storage for a period of two months, reckoned from the date on which the respondents are obliged to vacate the property or from the specified or determinable later date to which the applicant has postponed the date on which the respondents are obliged to vacate the property. 2.10 All communications which may be necessary between the parties shall be effected by email exchange between themselves or their legal representatives, as the case may be, which emails shall be deemed to have 27 been received at 08:00 on the Court day following the day on which they were dispatched. 2.11 These obligations on the applicant shall be effective and enforceable for a period of one year from the date of this order. 3. There is no order as to costs’. __________________________ N P MABINDLA-BOQWANA JUDGE OF APPEAL 28 Appearances For appellant: S P Rosenberg SC with T Tyler Instructed by: Snijmann & Associates Inc, Cape Town Honey Attorneys, Bloemfontein For first and second respondents: R W F MacWilliam SC with A J van Aswegen (heads of argument prepared by G Walters and A J van Aswegen) Instructed by: Spamer Triebel Inc, Bellville Symington De Kok Inc, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 24 July 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 De Kock v Du Plessis and Others (284/2023) [2024] ZASCA 117 (24 July 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal against the decision of the of the full court of the Western Cape Division of the High Court, Cape Town (the full court). The facts underpinning the appeal are as follows. On 4 June 2020, the appellant, Mr Leon de Kock launched an application in the Western Cape Division of the High Court, Cape Town (the high court), for the eviction of the first respondent, Mrs Wanda Luus du Plessis and the second respondent, Mr Andre du Plessis, from the residential property situated at erf 4629, 9 Muscadel Street, Wellington (the property), in terms of s 4(6) alternatively s 4(7) of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (the PIE Act). Mr de Kock is a businessman and the current owner of the property. Mr and Mrs du Plessis are retired. They are married and reside in the property. The property was previously owned by Mrs du Plessis until she sold it to Mr de Kock. Mr du Plessis practised as an attorney at the property until he ceased to practice. Mr de Kock was married to Mr and Mrs du Plessis’ daughter, Nicquelette de Kock (Nicquelette) in 2006, until her passing on 26 September 2018. The relationship between Mr de Kock and his in- laws was initially very warm, caring and loving. During 2015 Mr de Kock and Mrs du Plessis started discussing the possibility of Mr de Kock purchasing the property. At the time, the property was subject to a mortgage bond of about R1 000 000 in favour of ABSA Bank. On 6 May 2016, the parties concluded a deed of sale in terms of which Mrs du Plessis agreed to sell the property to Mr de Kock at the purchase price of R4 500 000. Mr de Kock secured a loan of R3 375 000 from ABSA Bank against the registration of a mortgage bond over the property, which is 75% of the R4 500 000 purchase price. The property was registered in Mr de Kock’s name on 5 September 2016. Mrs du Plessis was paid an amount of R3 500 000 as consideration for the sale. From the proceeds of the sale Mrs du Plessis paid R1 000 000 to ABSA Bank to discharge the existing mortgage bond over the property. She then by agreement with Mr de Kock, advanced the remaining balance of R2 500 000 to him. It was agreed that Mr de Kock would repay the loaned amount, in monthly instalments of R52 085 over a period of 48 months (loan agreement). Mr de Kock also agreed to pay 48 instalments of R25 000 per month, which he alleged represented a fixed interest of 10% per month on the loan capital. Mrs du Plessis, on the other hand, understood the amount to have been a contribution towards hers and Mr du Plessis’ living expenses, since Mr de Kock enjoyed the benefit of the full proceeds of her property. After the sale and transfer, Mr and Mrs du Plessis remained in occupation of the property with Mr de Kock’s consent. According to Mrs du Plessis the agreement was that she and Mr du Plessis could continue to reside at the property rent-free until the full amount was paid. In mid-2019 Mr de Kock’s relationship with his in-laws started to deteriorate. Mr de Kock engaged the services of an attorney who advised him that the loan agreement between him and Mrs du Plessis was a credit transaction as contemplated in s 8(4)(f) of the National Credit Act 34 of 2005 (the NCA) and thus a credit agreement as defined in s 1 read with s 8(1) of the NCA. The loan agreement was, accordingly, unlawful because Mrs du Plessis was not registered as a credit provider. On that advice, Mr de Kock ceased to make payments. On 14 October 2019 and 23 October 2019 Mr de Kock’s attorneys sent letters to Mr and Mrs du Plessis notifying them of Mr de Kock’s intention to sell the property and required them to vacate the property by 31 January 2020. A further notice was sent on 21 February 2020. Mr and Mrs du Plessis refused to vacate the property resulting in Mr de Kock filing the PIE application in the high court on 4 June 2020. Mr de Kock alleged that the parties had entered into two distinct oral agreements. The 2 first agreement was that, after acquiring the property, Mr and Mrs du Plessis would remain in occupation of the property, indefinitely and rent free, subject to them paying for the amenities used and the necessary maintenance. He was advised that the arrangement was not a proper lease and was therefore terminable at reasonable notice. The second agreement was the loan agreement discussed above. ABSA Bank was prepared to advance a loan of 75% of the purchase price of the property to him. The R4 500 000 that was stipulated in the deed of sale was a simulated purchase price, which at 75% would yield a mortgage loan of R3 375 000. He would be required to only invest R125 000 of his own capital in the property. In defence to the PIE application, Mrs du Plessis alleged that the parties entered into a single oral agreement constituted of two parts (composite agreement). According to her, because ABSA Bank was only prepared to offer mortgage financing of only R3 375 000, she agreed to accommodate Mr de Kock by allowing the property to be transferred to his name against the payment of R3 500 000. The balance of R1 000 000 of the purchase price would, upon transfer, remain due by Mr de Kock to her. Mrs du Plessis therefore agreed to lend Mr de Kock R2 500 000 of the balance of the proceeds of sale actually paid upon transfer. The remaining balance of R1 000 000, making up R3 500 000, was due by Mr de Kock. Accordingly, until such time the R3 500 000 had been repaid in full, Mr and Mrs du Plessis would remain in the property free of rent. Because the full loan account had not been fully redeemed, she retained the right to remain in occupation of the property in terms of the composite agreement. She regarded the attempt to evict her and Mr du Plessis from the property as a repudiation of the agreement, which she refused to accept and elected to approbate and enforce it. The eviction application served before De Villiers AJ on 9 March 2021. At the hearing of the matter, Mr de Kock’s counsel sought to introduce a supplementary replying affidavit (the affidavit). The purpose of the affidavit was to draw to the court’s attention that Mrs du Plessis had, on 4 November 2020, instituted action in the high court, against Mr de Kock in which she averred that she had cancelled the oral agreement between her and Mr de Kock. The high court ruled against admitting the affidavit on the strength of the submissions made by Mr and Mrs du Plessis’ counsel. It proceeded to deal with the PIE application and accepted Mr and Mrs du Plessis’ version and dismissed the application. It subsequently dismissed an application for leave to appeal, which was granted by the SCA to the full court. As the court of first instance, the full court dismissed the application to introduce the affidavit and proceeded to deal with the appeal without the affidavit. In dealing with the merits of the appeal, the full court accepted Mrs du Plessis’ version that it was Mr de Kock who approached them and requested a loan through a scheme that he had hatched. It found that the property was sold for R4 500 000 and not R3 500 000 as contended by Mr de Kock. Further, that the loan agreement was valid and would endure until the amount owed was fully paid. It concluded that the ‘purported’ cancellation by Mr de Kock did not bring the agreement to occupy the property to an end. Aggrieved by the full court’s judgment, Mr de Kock approached the SCA for special leave to appeal, which was granted on 6 March 2023. On appeal, the SCA had to firstly determine whether the court of first instance and the full court erred by refusing to admit the affidavit. Secondly, if the affidavit ought to have been allowed, what would be its impact on the defence given by Mr and Mrs du Plessis in the PIE application. Thirdly, if the Court found that Mr and Mrs du Plessis’ right to occupy the property terminated by virtue of Mrs du Plessis’ cancellation of the oral agreement in the particulars of claim, whether it was just and equitable to evict them in terms of the PIE Act. The SCA found that the affidavit simply sought to place the fact that Mrs du Plessis had instituted action, in which she averred her cancellation of the agreement. That fact was important and central to the issue in dispute. It had an impact on the application before the court. This allegation could not have been made in the founding affidavit because it occurred after the filing of the PIE application. There would be no prejudice suffered by Mr and Mrs du Plessis that could not be dealt with, as the affidavit simply sought to bring to the attention of the court an existing fact. The full court did not adequately deal with this issue. As a result, it erred in how it approached the matter. The SCA held that Mrs du Plessis could not insist on retaining occupation of the property in terms of the agreement, having cancelled the contract. She was now entitled to sue for damages. She could not both approbate and reprobate. She may cancel and sue for damages or abide by the contract and claim performance. According to the Court, in considering these principles, it was evident that, had the court of first instance and the full court considered the affidavit, the outcome might have been different. They both erred in how they approached the matter. By virtue of her cancelling the contract, Mr and Mrs du Plessis, unfortunately, no longer enjoyed the contractual right to remain in occupation of the property. Having come to that conclusion, the next question for the Court to determine was whether it was just and equitable to grant an eviction order. 3 Mr de Kock filed a ‘with prejudice’ offer to settle, comprising two alternative parts with the view to satisfying the Court that it is just and equitable to evict the Mr and Mrs du Plessis. In one of the offers, Mr de Kock offered to hire a residential unit at a retirement home, which provides frail-care or medical facilities for ailing residents, for occupation by Mr and Mrs du Plessis, at R20 000 per month, plus additional costs levied for medical treatment or frail care. He also tendered to pay for relocation costs. In their counteroffer, Mr and Mrs du Plessis submitted that it would be just and equitable for them to be paid R1 897 935 to secure alternative housing and care. Additionally, that they would vacate no later than six months of the order of the Court and Mr de Kock should pay all the expenses, charges, levies, water and taxes. The parties did not settle. The SCA reiterated that no duty rested on Mr de Kock as a private landowner to provide alternative accommodation to Mr and Mrs du Plessis. However, Mr de Kock had made an offer. It was important to note that Mr and Mrs du Plessis would not be rendered homeless should an order granting their eviction be made. Taking into account and balancing the interests of all the parties, the SCA concluded that an eviction order would be just and equitable. It granted an order incorporating the offer of alternative accommodation made by Mr de Kock and as to the eviction date, it found a period of three months from the date of the order, reasonable. ~~~~ends~~~~

4314

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 397/2023 In the matter between: ADV W S COUGHLAN N O APPELLANT and THE HEALTH PROFESSIONS COUNCIL OF SOUTH AFRICA FIRST RESPONDENT THE REGISTRAR OF THE HEALTH PROFESSIONS COUNCIL OF SOUTH AFRICA SECOND RESPONDENT THE ROAD ACCIDENT FUND THIRD RESPONDENT PROFESSOR S RATAEMANE FOURTH RESPONDENT DR M L MATHEY FIFTH RESPONDENT DR H LEKALAKALA SIXTH RESPONDENT PROFESSOR BASIL J PILLAY SEVENTH RESPONDENT Neutral citation: Coughlan N O v Health Professions Council of South Africa & Others (397/2023) [2024] ZASCA 135 (8 October 2024) Coram: MOCUMIE and WEINER JJA and HENDRICKS, BAARTMAN and MASIPA AJJA Heard: 29 August 2024 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 ## 2024. 2 Summary: Road Accident Fund Tribunal (the Tribunal) – whether the powers conferred on the Tribunal are limited to determining the seriousness of the injury or extend to the issue of causation – whether in determining the seriousness of the injury, the Tribunal can consider the nexus between the accident and the resultant injury. 3 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Kusevitsky J, sitting as court of first instance): 1 The appeal succeeds with costs. 2 The order of the high court is set aside and substituted with the following: ‘(a) The decision of the Tribunal that Mr Daniels’ injuries were not serious and do not qualify in terms of the narrative test is reviewed and set aside. (b) The matter is referred back to the Tribunal which must comprise three psychiatrists and/or three psychiatrists and a clinical neuropsychologist for a decision on the seriousness of the injury. (c) The issue of the nexus between the Applicant’s injuries and the accident is to be determined in the action proceedings already instituted under case number 4183/12. (d) The first, second and third respondents are to pay the applicant’s costs jointly and severally, the one paying the other to be absolved.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Masipa AJA (Mocumie and Weiner JJA and Hendricks and Baartman AJJA concurring): [1] The appellant, acting as a curator on behalf of Mr Justin Rothney Daniels (Mr Daniels) instituted a claim for damages for injuries allegedly sustained from a motor vehicle accident. The action is defended by the third respondent in this appeal. In the course of the action, the appellant filed an interlocutory application for the review and setting aside of a decision by the fourth to seventh respondents under the auspices of the first respondent which was unopposed and was heard by Kusevitsky J in the Western Cape Division of the High Court, Cape Town (the high court). The high court granted an order which was unclear and unfavourable to the appellant. It is this order which the appellant appeals against with the leave of the high court. 4 [2] Mr Daniels allegedly sustained injuries from a motor vehicle collision on 19 November 2009. The first respondent, the Health Professions Council of South Africa (the HPCSA), is a juristic person established in terms of s 2(1) of the Health Professions Act 56 of 1974 (the HPA). It is the body responsible for the registration and regulation of health professionals in South Africa.1 The second respondent is the registrar of the HPCSA, who serves as its accounting officer and secretary (the registrar).2 The third respondent, the Road Accident Fund (the RAF), is a juristic person established in terms of s 2 of the Road Accident Fund Act 56 of 1997 (the RAF Act) to compensate claimants for any loss or damages wrongfully caused by the driving of motor vehicles.3 [3] The fourth to seventh respondents are members of the HPCSA due to their professional registration. The fourth respondent is a professor of psychology at Sefako Makgatho Heath Science University and the seventh respondent is a professor in clinical and neuropsychology at the University of KwaZulu-Natal. The fifth and sixth respondents are psychiatrists in private practice, in Pretoria. Together, these professionals form the Tribunal, appointed by the HPCSA under s 26 of the RAF Act and Regulation 3(8)(b) of the RAF Regulations, 2008, (the Regulations). [4] Mr Daniels was a pedestrian when he was hit by a motor vehicle in a hit-and-run incident on 19 November 2009. He was able to walk to a police station afterwards but complained of lower back injury and a sore foot. He later presented himself at Tygerberg Hospital, where he was diagnosed with a mild head injury and noted for aggressive and irrational behaviour, which a doctor, Dr J Fourie concluded was attributed to substance abuse. The appellant claims that the bodily injuries sustained by Mr Daniels entitle him to compensation from the RAF in terms of s 17(1)(b)4 of the RAF Act. 1 Section 3 of the Health Professions Act 56 of 1974 (the HPA). 2 Section 12(2) of the HPA. 3 Section 3 of the Road Accident Fund Act (the RAF Act). 4 Section 17(1)(b) of the RAF Act provides: ‘(1) The Fund or an agent shall— . . . (b) subject to any regulation made under section 26, in the case of a claim for compensation under this section arising from the driving of a motor vehicle where the identity of neither the owner nor the driver thereof has been established, be obliged to compensate any person (the third party) for any loss or 5 [5] The appellant’s claim on behalf of Mr Daniels includes compensation for non- pecuniary loss (general damages). For the claim to be successful, his injuries must be classified as ‘serious’ in terms of s 17 of the RAF Act. This requires an assessment by a medical practitioner registered in terms of the HPA, as prescribed in s 17(1A)(b)5 of the RAF Act and Regulation 3(1). The criteria for assessment, as stated in s 17(1A)(a)6 and Regulation 3 (1), include a whole person impairment (WPI) rating of above 30% before applying the narrative test. The assessment must comply with the American Medical Association Guides (the AMA Guides). [6] Mr Daniels was assessed by Dr K Le Févre, a psychiatrist who completed the relevant RAF4 form and reported that Mr Daniels suffered a WPI of 35%, indicating a severe long-term mental and behavioural disturbance. On 24 October 2011, Mr Daniels lodged his claim with the RAF. The RAF then required additional assessment by its own a psychiatrist, Professor T Zabow who also found that Mr Daniels had a WPI exceeding 30% and suffered from severe long-term mental or behavioural disturbance. Professor Zabow noted that the head injury triggered a chronic psychotic illness not previously evident. Both assessments confirmed that Mr Daniels’ injuries were classified as serious. [7] The RAF called for a further assessment by Dr CF Kieck, a neurosurgeon, who disagreed with Dr Le Févre and Professor Zabow. Dr Kieck found that Mr Daniels had not suffered a brain injury from the collision but experienced severe psychotic episodes due to substance abuse involving cannabis and methamphetamine (tik). This conclusion was supported by Mr Daniels’ medical history including the hospital psychiatric conclusion by Dr J Fourie who identified substance abuse psychosis and damage which the third party has suffered as a result of any bodily injury to himself or herself or the death of or any bodily injury to any other person, caused by or arising from the driving of a motor vehicle by any person at any place within the Republic, if the injury or death is due to the negligence or other wrongful act of the driver or of the owner of the motor vehicle or of his or her employee in the performance of the employee’s duties as employee: Provided that the obligation of the Fund to compensate a third party for non-pecuniary loss shall be limited to compensation for a serious injury. . . shall be paid by way of a lump sum.’ 5 Section 17(1A)(b) of the RAF Act provides: ‘(b) The assessment shall be carried out by a medical practitioner registered as such under the Health Professions Act, 1974 (Act No. 56 of 1974).’ 6 Section 17(1A)(a) of the RAF Act provides: ‘(1A)(a) Assessment of a serious injury shall be based on a prescribed method adopted after consultation with medical service providers and shall be reasonable in ensuring that injuries are assessed in relation to the circumstances of the third party.’ 6 schizophrenia, which, he determined, was unrelated to the alleged minor head injury. On 17 July 2013, attorneys for the RAF notified Mr Daniels’ attorneys that the RAF rejected Dr Le Févre’s RAF4 assessment. [8] The appellant disputed Dr Kieck’s assessment, arguing that it was based on a neurosurgeon’s report rather than that of a psychiatrist. He lodged a dispute with the HPCSA registrar as provided in Regulation 3(4) and relied on the assessments by Dr Le Févre and Professor Zabow. Additionally, the appellant obtained a medico-legal report from a clinical psychologist, Ms Mignon Coetzee, who concluded that Mr Daniels’ pre-accident drug use did not trigger any psychotic symptoms. She found that the accident marked the sudden onset of a psychotic disorder, with no evidence of major pre-morbid neurocognitive deficit. She concluded that there was no reason to suggest a pre-morbid condition such as schizophrenia. Industrial psychologist Mr Gregory Shapiro also provided a report, indicating that Mr Daniels suffered primary cognitive injuries that restricted his cognitive functioning. [9] A tribunal was constituted comprising three orthopaedic surgeons and a neurosurgeon to determine whether the injury could be classified as ‘serious’ (the first tribunal). The appellant was unhappy with its decision. On review, the high court, found that the HPCSA constituted the tribunal irregularly. A second tribunal was established, consisting of two orthopaedic surgeons and a neurologist. It concluded that Mr Daniels’ psychosis was due to substance abuse, with no nexus to the accident and a minor head trauma. It also found that Mr Daniels’ injuries were not serious and did not qualify for general damages. [10] Another review was launched with the high court citing that the second tribunal lacked appropriate medical expertise and failed to consider the reports of Dr Le Févre, Professor Zabow, and Ms Coetzee. The review application was unopposed, resulting in a consent order that set aside the second tribunal findings. In terms of this order, the matter was then remitted to the HPCSA to be heard by a new tribunal comprising three psychiatrists and/or three psychiatrists and a clinical neuropsychologist. The order interdicted the Tribunal from making a finding on the causal nexus of Mr Daniels’ injury and the accident. 7 [11] Contrary to the court order, the third tribunal comprised two psychiatrists, a neuropsychologist and a psychologist. After considering all available evidence, the Tribunal concluded that Mr Daniels’ injuries were non-serious according to the narrative test. This conclusion was largely based on the compelling opinion of Dr Kieck. [12] A third review application was launched in the high court. The grounds of review were that: (a) the third tribunal committed a patent error which rendered the process procedurally unfair; (b) the tribunal failed to consider the most relevant considerations in arriving at their conclusion; (c) the totality of the tribunal’s findings seems to be based on the opinion of Dr Kieck, a neurosurgeon who is not an expert in the field of psychiatry and therefore lacked the requisite qualifications to express any psychiatric conclusion; and (d) the third tribunal committed the same error as the second Tribunal by making findings or decisions on the issue of nexus. [13] Little was said about the procedural irregularity when the matter was presented before the high court. According to the appellant, the Tribunal failed to consider Ms Coetzee's comprehensive report. In her report, Ms Coetzee, having assessed Mr Daniels' head injury and psychological functioning, confirmed that while Dr Kieck ruled out a traumatic brain injury, it is noteworthy that Mr Daniels presented with symptoms such as dizziness, headaches, and sleepiness following the accident. These symptoms were subsequently followed by the acute onset of psychosis. She concluded that the head injury was of a mild concussive nature exacerbated by an Acute Stress Reaction from the trauma of the accident. Although rare, it was well documented in medical literature. She noted no trace of psychosis prior to the accident. [14] The appellant contended that although the Tribunal mentioned that it considered Ms Coetzee’s report, its reasons suggested otherwise. The Tribunal concluded that Mr Daniels’ behaviour was attributed to withdrawal symptoms from substance abuse and that the accident did not cause any serious head injury. The 8 appellant contended further that the tribunal failed to consider the history, which demonstrated that the accident was the underlying cause of Mr Daniels’ fallout. [15] Significantly, the Tribunal found that Dr Le Févre and Professor Zabow’s reports were superficial and ignored the history of cannabis and methamphetamine abuse, which caused the hospital admission. According to the appellant, the Tribunal ignored the collateral history that everything arose post-accident. The appellant contended that the Tribunal relied on Dr Kieck’s report to arrive at its conclusion and fell into the trap of addressing the issue of causality and/or nexus, which it was not empowered to do, as interdicted by the high court, such conclusion being beyond the Tribunal’s powers. [16] The appellant contended further that the Tribunal’s task was to determine whether the effects of the injury were serious concerning the WPI assessment or the narrative test. It was not called upon to decide on the cause of the injury. By addressing the causality issue, the Tribunal acted ultra vires its powers as prescribed in Regulation 3(11). [17] Arising from the decision of the Tribunal, the appellant launched a third review application. It is pivotal to set out the relief sought by the appellant before the high court. It was as follows: ‘1. Reviewing and/or correcting and/or setting aside the decision of the Health Professions Council of South Africa Appeal Tribunal, which Tribunal consisted of the Fourth to Seventh Respondents, which decision was made on 19 August 2020, declaring in terms of Regulations (1)(b)(i)(aa), 3(11)(g) and (i) and 3(13) of the Road Accident Fund Regulations, of 2008, that the injuries sustained by the Applicant was classified as non-serious in terms of the Narrative Test. 2. Directing that the issue of the Applicant’s psychosis and the nexus thereof to the accident he was involved in, be determined by this Honourable Court in a trial in the event of the Third Respondent disputing this issue. 3. Directing further that in the event of this Honourable Court finding that a causal link exists between the Applicant’s psychosis and the accident in question, that the Applicant’s injuries are indeed serious, as contemplated in Section 8(1)(c)(ii) of the Promotion of Administrative Justice Act 3 of 2000 (“PAJA”). 4. Directing that the Respondent’s pay the costs of this application including the costs of two counsel. 9 5. Granting [the] Applicant such and/or alternative relief as this Honourable Court may deem fit.’ [18] The high court directed its analysis towards whether the Tribunal had failed to consider, or had insufficiently evaluated, the report submitted by Ms. Coetzee. It reasoned that Tribunal’s unfavourable ruling did not mean that medical experts overlooked relevant information. The high court further noted that the Tribunal found the reports by Dr Le Févre and Professor Zabow unreliable, specifically highlighting that Dr Le Févre did not consider Mr Daniels' history of substance abuse as the cause of his condition. Consequently, the high court concluded that this ground of review lacked merit. [19] The high court then addressed what it termed the ‘nexus issue’. It correctly stated that the Tribunal's role is to determine whether an injury is serious using the prescribed method. It relied on Road Accident Appeal Tribunal v Gouws and Another (Gouws),7 which confirmed that the Tribunal's powers under the legislation are narrowly circumscribed meaning that the Tribunal does not have the final say on causation issues. Relying on Road Accident Fund v Duma and Three Similar Cases (Duma),8 it concluded that the decision on whether an injury meets the threshold of an award for general damages lies within the purview of the RAF, not the court. [20] The high court acknowledged that it was accepted that Mr Daniels had suffered a mild traumatic brain injury, referring to this as ‘medical causation’. It viewed this as a nexus finding that linked the injury to the motor vehicle collision. The Tribunal had concluded that the mild brain injury from the collision did not cause the psychosis, which was deemed substance-induced, with Mr Daniels’ symptoms likely stemming from drug withdrawal. The high court regarded this conclusion as merely an expert opinion on the probable cause of Mr Daniels' condition, typical in personal injury claims. It emphasised that while medical practitioners may express opinions on the relationship between the injury and a collision, courts are not bound by these opinions and will make independent decisions. The high court found it was unnecessary for the 7 Road Accident Appeal Tribunal and Others v Gouws and Another [2017] ZASCA 188; [2018] 1 All SA 701 (SCA); 2018 (3) SA 413 (SCA) para 36. 8 Road Accident Fund v Duma and Three Similar Cases (Health Professions Council of South Africa as Amicus Curiae) [2012] ZASCA 169; [2013] 1 ALL SA 543 (SCA); 2013 (6) SA 9 (SCA) para 19. 10 Tribunal to determine the applicability of the narrative test and concluded that the Tribunal’s explanation did not constitute a nexus finding on causation, nor did it exceed its powers. Consequently, the high court dismissed the 'nexus' argument. [21] Regarding Dr Kieck’s suitability as an expert to address the causality of the head injury, the high court found that the Tribunal had determined that Mr Daniels suffered a mild injury and did not base this conclusion solely on Dr Kieck’s report. It found that the Tribunal reviewed medical literature to support its findings. It concluded that the appellant’s challenge lacked merit. Having found no valid grounds for review, the high court concluded that it lacked the requisite basis to remit the matter back to the HPCSA. Furthermore, the high court, in accordance with the principles articulated in Duma,9 determined that adjudicating the seriousness of the injuries fell outside the scope of its authority. [22] Consequent upon these findings, the high court made the following order: ‘1. The issue of the Applicant’s psychosis and nexus thereof to the accident he was involved in is to be determined in the action proceedings already instituted under case number 4183/12. 2. Costs to stand over for later determination.’ It is this order that the appellant now appeals. [23] The principal issue before us for determination is whether the Tribunal exceeded its authority by addressing the causality between Mr Daniels' psychosis and the accident. The appellant argues that this was beyond the Tribunal’s mandate and that the Tribunal’s reliance on the report from Dr Kieck, a neurosurgeon, rather than those of Dr Le Févre and Professor Zabow both psychiatrists, was erroneous. [24] The Tribunal’s role is narrowly circumscribed to assessing the seriousness of injuries. It is not tasked with determining the cause of the injury, which is a matter reserved for judicial determination. Duma makes it clear that causality is a question for the courts, and the Tribunal’s findings should be confined to medical assessments regarding the seriousness of the injury, irrespective of the cause. 9 Ibid para 19. 11 [25] Notably, both Dr Le Févre and Professor Zabow, experts in psychiatry, assessed Mr Daniels as having sustained a serious injury with a WPI exceeding 30%. However, the Tribunal relied on the assessment of Dr Kieck, a neurosurgeon, whose expertise in psychiatric matters is contested by the appellant. Regulation 3(8)(b) prescribes the composition of the Tribunal as three independent medical practitioners with expertise in the relevant medical field. While we are not placed in a position to definitively determine whether the Tribunal members met these requirements, there is no evidence to suggest that they did. It remains unclear whether the court order of 19 November 2019 was communicated to the registrar as it was evidently not complied with. [26] In defiance of the court order, the registrar appointed two psychiatrists, a neuropsychologist, and a psychologist failing to ensure that the Tribunal was constituted as was agreed. One of the challenges raised by the appellant was the Tribunal's reliance on a neurosurgeon over psychiatrists, especially considering that one of those psychiatrists was the RAF’s expert. Two psychiatrists agreed on the seriousness of Mr Daniels’ injuries, making it logical that experts in the relevant field of psychiatry should have been appointed. Importantly, the Tribunal relied on the neurosurgeon’s report which focused heavily on causality, an issue beyond the Tribunal’s authority. [27] While it is within the purview of the Tribunal to determine the seriousness of the injury, they must consider relevant factors and not exceed their authority. The Tribunal's decision appears to pivot on a misapprehension of its powers by delving into the causal link between the accident and Mr Daniels’ psychosis. While Dr Kieck’s report may have been relevant for assessing the physical aspects of Mr Daniels’ injury, his conclusion regarding the causality and psychiatric implications overstepped and should not have been determinative. [28] It follows that, the Tribunal exceeded its powers by making findings on causality, a matter reserved for the courts. Its reliance on an expert outside the relevant field of psychiatry may have compromised the legitimacy of its decision. However, I am not in a position to determine this issue which should be left to the 12 medical professionals. In my view, had the Tribunal been constituted as agreed, it would likely have reached an appropriate decision. That said, I am mindful that an appeal lies against the decision of the court and not its reasoning.10 [29] What the high court was called upon to determine was whether to review, correct, or set aside the decision of the Tribunal, which classified Mr Daniels’ injury as non-serious under the narrative Test. However, the high court did not determine this issue, as is discernible from its order, despite repeatedly mentioning it in its reasoning. It accordingly failed to resolve all the issues which were placed before it for determination. [30] In Spilhaus Property Holdings (Pty) Limited and Others v Mobile Telephone Networks (Pty) Ltd and Another11 the Constitutional Court held that it is desirable for lower courts to decide all issues raised in a matter before it. Litigants are entitled to a decision on all issues, particularly where they have an option to further appeal, as this benefits the appellate court by providing reasoning on all issues. The high court’s failure to pronounce on the whether the Tribunal exceeded its authority in its order constituted a misdirection especially given the significant consequences for the appellant. This issue is crucial given the wording of s 17(1A) of the RAF Act. Without a finding on this issue, the appellant is effectively barred from pursuing a claim for general damages. The Tribunal’s finding has effectively closed the door on Mr Daniels’ claim for non-pecuniary loss. [31] Citing Gouws,12 the high court reasoned that the Tribunal’s findings on the issue of causation constituted an expression of opinion, which it deemed permissible. In Gouws, this Court held that the determination of causation lies solely within the authority of the court and not the Tribunal. The position was encapsulated as follows: ‘The medical practitioner who conducts the initial assessment of the seriousness of the injury is not, in making that assessment, precluded from expressing a view on whether the injury was caused by or arose from the driving of a motor vehicle. In the event of the medical practitioner casting doubt on whether there was a link between the alleged injury and the 10 Tavakoli and Another v Bantry Hills (Pty) Ltd [2018] ZASCA159; 2019 (3) SA 163 (SCA) at para 3. 11 Spilhaus Property Holdings (Pty) Ltd and Others v Mobile Telephone Networks (Pty) Ltd and Another [2019] ZACC 16; 2019 BCLR 772 (CC0; 2019 (4) SA 406 (CC) paras 44-45. 12 Gouws fn 7 para 33. 13 driving of a motor vehicle, the Fund can decide whether to contest causation or to concede it. In adopting a position on whether to contest causation, the Fund is not limited to the views expressed by the medical practitioner, but may have or acquire other information to inform its decision. In the ordinary course causation is an issue that is ultimately decided by the courts. A dispute between the Fund and a claimant in relation to causation has to be referred to a court for adjudication. When that issue is decided by a court, it does not follow that medical practitioners are necessarily the only experts upon whom reliance may be placed. Courts are not bound by the view of any expert. They make the ultimate decision on issues on which experts provide an opinion.’ [32] This Court went further to say: ‘If, after the initial assessment by the medical practitioner, the Fund exercises the option of a rejection of the report, a dispute arises in relation to the correctness of the assessment of the seriousness of the injury by the medical practitioner and where, as far as the Fund is concerned, causation is not in issue, that dispute is left to be dealt with by the Tribunal, which will have the last say on the matter, subject of course to whether that decision is susceptible to judicial review.’13 [33] As mentioned earlier, the contestation before the Tribunal is limited to the assessment of the seriousness of the injury by the medical practitioner, and the tribunal's decision is final only in that regard. In Gouws, this Court concluded that: ‘. . . the power given to the Tribunal in terms of the legislation is narrowly circumscribed. It is not of a broad, discretionary nature, which would allow for further powers to be implied. The Tribunal cannot have the final say in relation to causation. That power is not provided for.’14 [34] It further held that if the tribunal were allowed to exercise such powers, it would be oppressive to claimants, effectively denying them access to the courts on an issue that has traditionally been reserved for judicial adjudication.15 Therefore, what the high court failed to recognise is that s 17A referred to a medical practitioner assessing a patient, not the Tribunal. The roles of the Tribunal and the initial medical practitioner who assessed Mr Daniels are distinct. The Tribunal's mandate is confined to determining the seriousness of the injury, relying on various reports to inform its limited 13 Ibid para 34. 14 Ibid para 36. 15 Ibid para 37. 14 jurisdiction. However, in this instance, the Tribunal placed undue emphasis on Dr Kieck's report, which improperly conflated the assessment of injury seriousness with causation. Dr Kieck repeatedly attributed Mr Daniels' brain injury to substance abuse or schizophrenia, leading to the conclusion that the injuries were not serious. This approach constitutes an overreach by medical professionals into matters properly within the purview of the courts. By conflating the issue, the Tribunal exceeded its powers and reached an erroneous conclusion which was ultra vires and thus cannot be sustained. [35] On the issue of costs, this appeal is unopposed, as was the high court hearing, though none of the respondents filed a notice to abide. It is important to note that the appellant was compelled to challenge the Tribunal's decision to avoid being non-suited in his claim for non-patrimonial loss. There was a court order outlining the Tribunal's constitution and powers, which was not followed and influenced the outcome of the case. The high court indicated that the costs of the review application would be determined later. This was probably due to its view that the nexus issue was crucial for the Tribunal's determination. Given the lack of opposition, the successful party is entitled to the costs of both the review and the appeal. However, I see no grounds for a cost order against the fourth to seventh respondents, who acted under the auspices of the HPCSA. [36] In the result, the following order is made: 1 The appeal succeeds with costs. 2 The order of the high court is set aside and substituted with the following: ‘(a) The decision of the Tribunal that Mr Daniels’ injuries were not serious and do not qualify in terms of the narrative test is reviewed and set aside. (b) The matter is referred back to the Tribunal which must comprise three psychiatrists and/or three psychiatrists and a clinical neuropsychologist for a decision on the seriousness of the injury. (c) The issue of the nexus between the Applicant’s injuries and the accident is to be determined in the action proceedings already instituted under case number 4183/12. (d) The first, second and third respondents are to pay the applicant’s costs jointly and severally, the one paying the other to be absolved.’ 15 __________________ M B S MASIPA ACTING JUDGE OF APPEAL 16 Appearances For the appellant: M A Crowe SC Instructed by: Jonathan Cohen & Associates, Cape Town Matsepes Inc, Bloemfontein For the respondent: Instructed by:

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 8 October 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 Coughlan N O v Health Professions Council of South Africa & others (397/2023) [2024] ZASCA 135 (8 October 2024) Today the Supreme Court of Appeal (SCA) handed down judgment in which it upheld the appeal against an order of the Western Cape Division of the High Court, Cape Town (the high court). The appellant, acting as the curator for Mr. Daniels, lodged a claim for general damages related to injuries allegedly sustained in a motor vehicle accident on 19 November 2009. Mr Daniels was assessed by both his own psychiatrist and a psychiatrist appointed by the Road Accident Fund (RAF). Both psychiatrists confirmed that Mr Daniels injuries were serious, exceeding a 30% whole person impairment and that he suffered from severe long-term mental or behavioural disturbance. The RAF called for a further assessment by a neurosurgeon. The neurosurgeon disagreed with the psychiatrists and found, instead, that Mr Daniels had suffered a minor head injury. The neurosurgeon concluded that the severe psychotic episodes experienced by Mr Daniels after the accident were not related to the collision but were due to substance abuse. This conclusion was supported by Mr Daniels medical history. The appellant disputed the neurosurgeon’s assessment, arguing that it was based on a neurosurgeon’s report as opposed to that of a psychiatrist, and filed a dispute with the Health Professions Council of South Africa (the HPCSA). In addition, the appellant obtained a medico-legal report from a clinical psychologist, who concluded that Mr Daniels’ pre-accident drug use did not trigger psychotic symptoms. However, that it was the accident that marked the sudden onset of a psychotic disorder. A report was also obtained from an industrial psychologist who concluded that Mr Daniels suffered primary cognitive injuries that restricted his cognitive functioning. The dispute went through multiple tribunals and review applications. The first Tribunal consisted of three orthopaedic surgeons and a neurosurgeon, who confirmed the first neurosurgeon’s findings. Unhappy with this, the appellant lodged a review application in the high court. The high court found that the Tribunal was inadequately constituted. A second Tribunal consisting of two orthopaedic surgeons and a neurologist was appointed. Their findings did not differ from that of the first Tribunal. Another review application was lodged with the high court, unopposed. The appellant argued that the second Tribunal lacked medical expertise and failed to consider the report of the psychologists. The high court made a consent order that the matter must be heard by a new Tribunal consisting of three psychiatrists and/or three psychiatrists and a clinical neuropsychologist. The order interdicted the Tribunal from making a finding on the causal nexus of Mr Daniels’ injury and the accident. Contrary to the high court order, the third Tribunal comprised of two psychiatrists, a neuropsychologist and a psychologist who found that Mr Daniels’ injuries were non-serious according to the narrative test. The third Tribunal found that the 2 first psychiatrists reports were superficial and ignored the history of substance abuse. The Tribunal concluded that Mr Daniels’ behaviour was attributed to withdrawal symptoms from substance abuse and that the accident had not caused any serious head injury. A third review application was lodged with the high court. The appellant argued that the third Tribunal fell into the trap of addressing the issue of causality and/or nexus, which it was not empowered to do, as interdicted by the high court. The appellant argued further that the Tribunal was called to determine whether the effects of the injury were serious concerning the whole person impairment assessment or the narrative test, not to decide on the cause of the injury. By doing so, the Tribunal acted ultra vires its powers. The high court dismissed the appellant’s application, finding that the tribunal did not exceed its authority by addressing the issue of causality between Mr. Daniels’ psychosis and the accident. The high court also found that the Tribunal’s decision was based on the available evidence and that there were no valid grounds for review. The high court, however, did not decide whether in addressing the issue of causality, the Tribunal exceeded its authority. The principal issue before the SCA is whether the Tribunal exceeded its authority by addressing the causality between Mr Daniels’ psychosis and the accident. The SCA found that Tribunal’s role was narrowly circumscribed to assessing the seriousness of injuries. It was not tasked with determining the cause of the injury. The SCA emphasised that causality is a question for the courts, and that the Tribunal’s findings should be confined to medical assessments regarding the seriousness of the injury. The SCA found that the composition of the Tribunal, as per the consent order, was informed by necessity and that there was no rational basis for deviation from this. The SCA held further that the Tribunal erroneously relied on the neurosurgeon’s report, which focused heavily on causality, an issue beyond the Tribunal’s authority, as opposed the two psychiatrists’ reports, one of which was an expert for the RAF. The SCA held further that high court’s failure to decide whether in addressing the issue of causality, the Tribunal exceeded its authority constituted a misdirection, which effectively barred the appellant from pursuing a claim for general damages. The finding by the Tribunal had closed the door on the appellant’s claim. As a result, the SCA held that the tribunal conflated the issue it was supposed to determine with causation, thereby exceeding its powers and arriving at an incorrect conclusion. Consequently, it acted ultra vires, and its decision cannot stand. The SCA upheld the appeal with costs. ~~~~ends~~~~

4290

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1307/2022 In the matter between: CHRISTOFFEL HENDRIK WIESE FIRST APPELLANT ISAK HENDRIK JOHANNES VISAGIE SECOND APPELLANT GERT CHRISTIAAN VILJOEN THIRD APPELLANT FREDERICK RAUTEN HOFMEYR FOURTH APPELLANT and THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE RESPONDENT Neutral citation: Christoffel Hendrik Wiese and Others v CSARS (1307/2022) [2024] ZASCA 111 (12 July 2024) Coram: MOCUMIE ADP, MOTHLE and GOOSEN JJA and TOLMAY and SEEGOBIN AJJA Heard: 8 March 2024 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 12 July 2024 at 11h00. 2 Summary: Taxation – recovery of tax debt from third party in terms of s 183 of Tax Administration Act, 28 of 2011 (the TAA) – whether term ‘tax debt’ envisages existence of assessed tax indebtedness at the time of dissipation of assets to obstruct the collection of tax debt – admissibility of transcript of evidence at inquiry in subsequent proceedings in terms of s 56 of the TAA. ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Le Grange J, sitting as court of first instance): The appeal is dismissed with costs, including the costs of two counsel. JUDGMENT Goosen JA and Tolmay AJA (Mocumie ADP, Mothle JA and Seegobin AJA concurring): Introduction [1] The Commissioner for the South African Revenue Services (SARS) instituted action against the appellants , in terms of s 183 of the Tax Administration Act 28 of 2011 (the TAA) for payment of R216.6 million. SARS claimed that the appellants caused, or assisted in causing, Energy Africa Propriety Limited, (Energy Africa or the taxpayer) to dissipate its assets in order to obstruct the collection of a tax debt owed by it to SARS. The dissipation was alleged to have occurred by transferring a loan account claim Energy Africa held in Titan Share Dealers Proprietary Limited (TSD) as a dividend in specie to Elandspad Investments Proprietary Limited (Elandspad), its holding company. 3 [2] The trial proceeded in the Western Cape High Court, Cape Town (the high court) upon an agreed separation of issues. The high court was required to decide: (a) Whether the transcript of evidence presented by the appellants at an inquiry held in terms of s 50 of the TAA during 2015 and 2016, is admissible in the trial proceedings and, if so, for what purpose. (b) Whether the assessments raised by SARS against Energy Africa for secondary tax on companies (STC) and capital gains tax (CGT) constitute ‘tax debts’ for purposes of s 183 of the TAA. [3] The high court found that the transcript was admissible. It held that the purpose for which the evidence could be used should be determined by the trial court. The high court also found that the STC and CGT tax assessments constitute tax debts for purposes of s 183 of the TAA. The appeal, with the leave of the high court, is against these findings. Factual background [4] Tullow Oil Pic and its subsidiaries (the Tullow Group) undertook a restructuring of its African operations (the restructure) during January 2007. Prior to the restructure, Energy Africa formed part of the Tullow Group. The taxpayer sold its shares and claims in Energy Africa Holdings (Pty) Ltd (EAH) to Tullow Overseas Holdings BV (TOH) (the EAH disposal) on 25 January 2007. The tax return submitted for that period did not raise any liability for CGT. [5] SARS conducted an audit on the Tullow transaction and based on this audit, on 16 November 2012, it delivered a notice to Energy Africa in terms of s 80J(1) of the TAA. SARS notified Energy Africa that it intended to make certain adjustments to the 2007 income tax assessment. This would result in the inclusion of CGT of 4 R453 126 518 on the disposal of a subsidiary in terms the Income Tax Act 58 of 1962 (ITA). SARS would also raise an assessment for STC in the amount of R487 205 316, deemed to have arisen in terms of s 64C(2)(a) of the ITA. [6] On 15 April 2013, the appellants disputed SARS’s audit findings. On 19 April 2013, Energy Africa disposed of its sole asset which consisted of a loan account credit held by it in TSD by declaring a dividend in specie to the value of the loan account in favour of Elandspad. [7] On 21 August 2013, SARS communicated its finalisation of the audit. It issued an additional assessment of income tax for CGT and an original assessment of STC in the amounts of R453 126 518, together with understatement penalties of 150% (the CGT assessment) and R488 282 886 together with interest and understatement penalties of 150% (the STC assessment) respectively. [8] On 11 September 2013, Energy Africa’s attorneys disputed its liability for any tax and informed SARS that it would lodge a formal objection to the assessments. SARS was also informed that Energy Africa had no cash or assets and was therefore not able to pay the disputed tax. On 1 November 2013, Energy Africa filed its objections to both the STC and CGT assessments. On 3 February 2014, SARS afforded Energy Africa an opportunity to also object to the understatement penalties levied. These were filed on 20 March 2014. [9] On 3 April 2014, SARS allowed Energy Africa’s objections in part. It accepted an adjustment based on the foreign exchange translation rate used in the assessment of income tax and reduced the understatement penalties to 100% of the capital of tax due. Apart from this, the objections were dismissed. On 29 May 2014, 5 SARS was informed that Energy Africa would not appeal the disallowance of the objections. [10] In the absence of an appeal SARS issued a final demand in respect of both the STC and CGT assessments. On 30 July 2014, SARS obtained a certified statement in terms of s 172(1) of the TAA in respect of both the STC and the CGT liability. The third appellant informed SARS on 24 October 2014, that Energy Africa was dormant. [11] On 10 July 2015, SARS applied for the designation by a judge for purposes of an inquiry in terms of Part C of Chapter 5 of the TAA. An inquiry was conducted during which the appellants testified. On 25 October 2016, notices of personal liability were sent in terms of s 183 of the TAA, by SARS to the appellants. These notices stated that first and second appellants had knowingly assisted the taxpayer in dissipating its only asset of value to obstruct the collection of a tax debt. During April 2016, the taxpayer was liquidated by order of court. On 16 January 2017, written representations were addressed to SARS on behalf of the appellants in terms of s 184 of the TAA. They maintained that, because the dissipation of Energy Africa’s assets occurred prior to the raising of the STC and the CGT assessments, there existed no tax debt as defined in the TAA at the time. Proceedings in the high court [12] As indicated, the trial before the high court proceeded only upon the agreed separated issues. SARS called one witness Mr Kane (Kane). He was the lead auditor who had been auditing the taxpayer’s affairs since 2010. He confirmed the facts set out above. He testified that the EAH disposal to TOH during 2007 was a disposal to a connected person not at market value. He said that the difference in price between 6 what was paid and the market value was the deemed dividend, if the disposal was at market value a deemed dividend would not have occurred, as it would have been regarded as a distribution. He explained how the CGT and the STC were calculated. He testified that the adjustment assessments were related to the EAH disposal during January 2007. [13] SARS’s view was premised upon the fact that the true consideration for the disposal was USD 1.2 million and to the extent that it is contended to be USD 543.76 million or USD 544.96 million, these amounts are simulated. The substance of the transaction was that Energy Africa disposed of its subsidiary Energy Africa Holdings to a connected person at a value that did not reflect an arms-length transaction. [14] The high court found that s 56(4) of the TAA entitles SARS to use evidence given at the inquiry in the action brought by SARS against the appellants and that the trial court is best positioned to determine for which purpose the evidence may be used and decided the separated issues in favour of SARS. In relation to the term ‘tax debt’, the high court found that s 183 of the TAA did not contemplate that the debt be assessed at the time of dissipation. It found that the indebtedness in respect of both CGT and STC existed prior to its subsequent assessment. The issues on appeal [15] The same issues as served before the high court now serve before this Court, namely whether the term ‘tax debt’ as used in s 183 of the TAA envisages that an assessed tax debt should exist at the time that the dissipation of assets occurs, and whether the transcript of proceedings at an inquiry is admissible upon production in subsequent civil proceedings in terms of s 56 of the TAA. 7 The meaning of ‘tax debt’ for the purposes of s 183 of the TAA [16] It is important to highlight that it was common cause that Energy Africa disposed of its sole asset, being a loan claim against TPI, on 19 April 2013. On 21 August 2013, SARS issued notices of assessment to tax of CGT and STC against Energy Africa for the 2007 tax year. [17] Section 183 of the TAA provides that: ‘If a person knowingly assists in dissipating a taxpayer’s assets in order to obstruct the collection of a tax debt of the taxpayer, the person is jointly and severally liable with the taxpayer for the tax debt to the extent that the person’s assistance reduces the assets available to pay the taxpayer’s debt.’ [18] In its present form, s 1 of the TAA defines a ‘tax debt’ to mean an amount referred to in s 169(1) of the TAA. The latter section in turn provides that: ‘An amount of tax due or payable in terms of a tax Act is a tax debt due to SARS for the benefit of the National Revenue Fund.’ [19] The present definition of ‘tax debt’ was substituted by s 30 (d) of the Tax Administration Laws Amendment Act, 39 of 2013. It came into operation on 16 January 2014. The amendment, however, took effect retrospectively from 1 October 2012, which was the date of commencement of the TAA. [20] On 19 April 2013, when the dissipation at issue in this matter occurred, the term ‘tax debt’ was defined to mean ‘an amount of tax due by a person in terms of a tax Act.’ In order to avoid a challenge to the lawfulness of the retrospective amendment of the definition, SARS agreed that for the purposes of this matter the definition should be read as if no amendment had occurred. Section 169 (1) of the TAA at all times read as it now does. 8 [21] The argument advanced by counsel for the appellants before this Court, as before the high court, was to the following effect. In order to establish liability under s 183, the person concerned must have knowingly assisted in the dissipation of assets ‘in order to obstruct the collection of a tax debt’. A ‘tax debt’ must necessarily exist at the time of the alleged dissipation and the person concerned must know that the tax debt exists. A tax debt is an amount which is due and payable, as the ordinary meaning of the term suggests. In this instance the tax debt only arose upon notice of assessment. The particular assessments to tax, in this case, do not constitute tax debts as contemplated by s 183 of the TAA. [22] Counsel for SARS contended that the term ‘tax debt’, as used in s 183, must be read in the light of s 169(1) which provides a specified definition of the term for the purposes of the recovery of tax as contemplated by chapter 11, of which s 183 forms part. The opening passage of s 1 of the TAA provides that the terms there defined have the assigned meaning ‘unless the context otherwise provides’. The starting point is therefore that chapter 11, and therefore s 183, envisages a debt that is either due, in the ordinary sense, or payable. The use of the alternatives coincides with the meaning ascribed to the terms by this Court in Singh v Commissioner, South African Revenue Service (Singh).1 In that matter it was accepted that a tax debt may be payable even if the obligation to pay is under legal challenge and, therefore, that the tax is not ‘due’. On this basis it was submitted that s 183 contemplates that which may become due. Since the purpose of s 183 is to permit SARS to recover tax due and payable by a taxpayer from a third party who assists or facilitates the dissipation of a taxpayer’s assets in order obstruct the collection of a tax debt, it is sufficient if, at the time of the dissipation a tax debt is anticipated. 1 Singh v Commissioner, South African Revenue Service [2003] ZASCA 31; 2003 (4) SA 520 (SCA). 9 [23] It is important to bear in mind the ambit of the issue that required separate determination. Section 183 establishes a set of requirements to render a third party jointly and severally liable for the recovery of a tax debt which is due by a taxpayer. There are three obvious requirements. They are: (a) that the third person should ‘knowingly assist in the dissipation of a taxpayer’s assets’; (b) that the dissipation should be undertaken ‘in order to obstruct the collection of a tax debt’; and (c) that the assistance should have rendered the taxpayer unable to discharge the tax debt. We are not required to interpret these requirements or to provide an exposition of what test(s) should be applied in determining whether they are met. The separated question was confined to an interpretation of the term ‘tax debt’ and whether it contemplates an existing liability for tax though not yet assessed at the time that the dissipation occurs. [24] To answer that question requires an analysis of the purpose of s 183, the language employed in its formulation and the context within which the language is employed.2 We begin with the debate about the definition as provided in s 1 of the TAA. It is true that the introductory portion of s 1 refers to context of the use of the defined terms. However, what it states is that unless the context otherwise indicates, the defined terms have the meaning assigned to them in other tax Acts. In other words the defined terms, if defined in other tax Acts carry the meaning ascribed in those tax Acts unless the context indicates to the contrary. In that event, they have the meaning ascribed by the TAA. This formulation of the definitions therefore seeks 2 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 18; Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC) para 28; Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) para 25. 10 to ensure consistency of meaning between tax Acts. In the light of the overall object and purpose of the TAA, this is understandable. [25] The introductory portion of s 1 does not mean that the term tax debt has the meaning ascribed unless the context of its use in the TAA differs. What then is the meaning of the definition prior to its amendment? Counsel for the appellants suggested the ordinary meaning of the term ‘due’, when used to describe a debt, is that the amount is liquidated and is immediately claimable as being due and payable by the creditor.3 But that ignores the nature of the debt which is said to be due. It also ignores multiple meanings for both a ‘debt’ and what is ‘due’. [26] A taxpayer is a person or entity which is chargeable to tax.4 Tax, which is broadly defined to include several different forms of impost, is levied or imposed by operation of law.5 A taxpayer is chargeable to tax upon the occurrence of a taxable event, a term defined to refer to the occurrence of an event that may affect the liability of a taxpayer for tax.6 Thus, a taxpayer who earns income in excess of a certain threshold incurs liability for the payment of tax upon such earnings at a stipulated percentage. The occurrence of the event gives rise to a liability for the payment of tax. The amount of tax payable to SARS, ie the extent of the tax indebtedness of the taxpayer, is subject to calculation in which allowable deductions 3 Singh para 25: ‘The ordinary meaning of “due” is that “. . . there must be a liquidated money obligation presently claimable by the creditor for which an action could presently be brought against the debtor. Stated another way, the debt must be one in respect of which the debtor is under an obligation to pay immediately.” (Per D Galgut AJA in The Master v I L Back and Co Ltd and Others 1983 (1) SA 986 (A) at 1004G; see also Western Bank Ltd v S J van Vuuren Transport (Pty) Ltd and Others 1980 (2) SA 348 (T) at 351; HMBMP Properties (Pty) Ltd v King 1981 (1) SA 906 (N) at 909; Whatmore v Murray 1908 TS 969 per Innes CJ at 970; Banque Paribas v The Fund Comprising the Proceeds of Sale of the MV Emerald Transporter 1985 (2) SA 452 (D) at 463C E; Commissioner for Inland Revenue v People's Stores (Walvis Bay) (Pty) Ltd 1990 (2) SA 353 (A) at 366G per Hefer JA).’ 4 Section 151 of the TAA. 5 Section 152 of the TAA provides that: ‘A person chargeable to tax is a person upon whom the liability for tax due under a tax Act is imposed and who is personally liable for the tax.’ 6 Section 1 of the TAA defines a “taxable event” to mean an occurrence which affects or may affect the liability of a person to tax. 11 are deducted from the gross earnings to arrive at an amount of income upon which tax is payable. This accounting and calculation process occurs within defined tax periods. The determination of the amount of tax which is due to SARS occurs by way of assessment. In the case of tax payable by an ‘ordinary’ taxpayer liable for the payment of income tax, the assessment by SARS is in the form of an original assessment based upon the information submitted by the taxpayer in their return. [27] CGT is a tax impost which arises upon the occurrence of the sale or disposal of a capital asset subject to tax. The taxable event, being the sale or disposal of the capital asset, gives rise to the liability for the payment of an amount of tax due to SARS. Since the capital gain is deemed to be income accrued within a tax period, the determination of the amount occurs by way of assessment based upon the taxpayer’s return. [28] Other forms of tax are subject to self-assessment. In that event, the determination of the amount of tax due, in the sense of being owed to SARS is made by the taxpayer. Value added tax (VAT) involves such self-assessment which is in the form of the submission of mandatory bi-monthly returns together with payment. Secondary Tax on Companies (STC) is another. In the case of the latter, where a taxpayer company declares a dividend payable to its shareholders the declaration of the dividend is a taxable event. The company is liable for the payment of the tax on the dividend and, upon submission of the return to SARS, the company is self-assessed to payment of the amount due, by law, to SARS. [29] In this sense, a ‘tax debt’ is that amount of tax for which the taxpayer is chargeable to tax which is payable by a taxpayer to SARS. The determination of the amount of tax due to SARS occurs by way of assessment. An assessment, however, 12 does not establish or impose liability. The liability exists, by operation of law, whether or not there has been an assessment. The definition of the terms ‘tax debt’ and ‘assessment’ bear this out. An ‘assessment’ means ‘a determination of the amount of tax liability or refund, by way of self-assessment by the taxpayer or assessment by SARS.’ If the definition of ‘tax debt’ is substituted, then an ‘assessment’ means ‘a determination of a tax debt’ which a taxpayer is obliged to pay to SARS. The tax debt exists, with or without an assessment. An assessment merely determines it and renders it recoverable in accordance with the recovery mechanisms provided by the TAA. [30] In Singh, this Court dealt with s 40 of the Value Added Tax Act, 89 of 1984. It held that the section is a recovery provision and that it did not determine when a tax was due or payable.7 The Court held that: ‘An amount may be due but not yet payable, for example additional tax (see the judgment of the Court a quo at 100G 101C). Conversely, an amount which is payable may not be due. This may be the case with an assessed amount prior to the final determination of a dispute: to the extent that the assessment is finally found to be correct, that amount was due (and payable) when the return was rendered; to the extent that the assessment was not correct, that assessment was not due at any time, but it was payable in terms of s 31(1), which provides that, where, in the circumstances contemplated in the section, the Commissioner has made an assessment of the tax payable by the person liable for the payment of such amount of tax, “the amount of tax so assessed shall be paid by the person concerned to the Commissioner”.’8 [31] This formulation of the underlying or pre-existing indebtedness versus the assessment of the amount of indebtedness was also set out in a judgment of this Court, namely Namex (Edms) Bpk v Kommisaris van Binnelandse Inkomste 7 Singh para 9. 8 Singh para 11. 13 (Namex).9 One of the questions in that case was whether SARS was to be characterised as a contingent creditor in relation to an additional assessment raised in the context of a compromise entered into in terms of s 311 of the Companies Act 61 of 1973. This Court held (per our translation): ‘Was the respondent in fact a contingent creditor? Relying on precedent, the appellant’s counsel argued that a tax liability arises at the latest at the end of a tax year, that is, prior to an assessment being issued. This argument has merit. From the case law referred to it transpires that the issuance of an assessment may be a requirement for the enforcement of a tax debt, but the debt as such exists prior to that event.’10 (Emphasis added) [32] In Commissioner for the South African Revenue Service v Medtronic International Trading S.A.R.L (Medtronic International),11 the minority judgment dealt with the interplay between the existence of a tax liability and the process of assessment, as follows: ‘The contextual starting point is at the source of the liability for the payment of a tax debt. “Tax”, is defined by the TAA to include a tax, duty, levy, royalty, fee, contribution, penalty, interest and any other moneys imposed under a tax Act. A “tax debt”, as provided in s 169(1) of the TAA, is “an amount of tax due or payable in terms of a tax Act”. The determination of a “tax debt” occurs by way of an assessment. This is a fundamental feature of the tax administration system. An “assessment” means “the determination of the amount of a tax liability or refund, by way of self-assessment by the taxpayer or assessment by SARS”. . . . The liability to pay a tax debt does not arise except by assessment of the liability by SARS or by the taxpayer, in the form of self-assessment. In the absence of such an assessment, liability, and 9 Namex (Edms) Bpk v Kommisaris van Binnelandse Inkomste [1993] ZASCA 181; [1994] 2 All SA 111 (A); 1994 (2) SA 265 (A). 10 Ibid at 289F. The original test reads as follows: ‘Was die respondent wel 'n voorwaardelike skuldeiser? Met 'n beroep op 'n aantal beslissings het die appellant se advokaat betoog dat inkomstebelastingpligtigheid laasstens aan die einde van 'n belastingjaar ontstaan, dws nog voordat 'n aanslag uitgereik is. Dié betoog is gegrond. Uit bedoelde beslissings blyk dit dat hoewel die uitreiking van 'n aanslag 'n vereiste vir die afdwingbaarheid van 'n belastingskuld mag wees, die skuld as sulks reeds voor daardie gebeurlikheid bestaan.’ (Emphasis added). 11 Commissioner for the South African Revenue Service v Medtronic International Trading S.A.R.L (Medtronic International) [2023] ZASCA 20; [2023] 2 All SA 297 (SCA); 2023 (3) SA 423 (SCA) para 67 and 69. 14 the concomitant duty to pay, do not arise, even though at law the underlying tax obligation subsists. This applies also in respect of interest which may be levied upon overdue amounts, or penalties for non-compliance with statutory obligations.’ [33] In the context of that case, the minority judgment pointed out that the determination of the amount of tax (which includes interest deemed or assessed to be due and payable) permits enforcement of the obligation to pay. Since, in that case, the taxpayer had agreed to the amount of tax due, it was not open to the taxpayer to seek a reduction of the interest payable. The minority judgment in Medtronic International, did not differ in any respects with the established authority of this Court as set out in Namex. An indebtedness to SARS for the payment of tax is not dependent upon an assessment to tax. [34] The architecture of the tax administration system is based upon this distinction. SARS may raise an original assessment based upon the information disclosed by a taxpayer in a mandatory return. Such assessment is subject to an objection and appeal process and may be subjected to judicial review or appeal.12 It is also open to re-assessment within specified time periods, which may result in an additional assessment being issued. SARS enjoys extensive powers of investigation by which it is entitled to make determinations of the tax indebtedness of a taxpayer retrospectively. In such cases the assessment to additional tax does not originate the liability. It determines that which was, by virtue of the tax impost, due by the taxpayer. [35] As we have already stated, s 183 imposes liability upon a third party whose conduct has, deliberately, resulted in obstructing SARS from collecting a tax debt from a taxpayer. The section occurs within chapter 11 which deals with the recovery 12 This is dealt with in ss 104 -107 of the TAA located in Part B of chapter 9 which deals with ‘Dispute Resolution’. 15 of tax. The chapter is divided into six parts. The first part concerns general provisions which are applicable in relation to recovery proceedings. It commences with s 169. As indicated earlier, subsection (1) refers to the amount of tax due or payable to SARS being a tax debt due to the fiscus. The section goes further to state that a tax debt may be recovered from a representative taxpayer who is personally liable for the payment of taxpayer’s debts or the taxpayer. [36] Section 170 deals with the probative value of an assessment. Section 172 provides for recovery by way of judgment. When s 172 is read with s 164 of the TAA, the distinction between a debt due or payable, as elucidated in Singh, is apparent. SARS is entitled to obtain judgment even if the underlying indebtedness is subject to objection. This is so because a taxpayer is obliged to pay the amount assessed to tax, notwithstanding an objection against the assessment. Section 172 envisages a process of amending the judgment or withdrawing it in the light of the outcome of the objection process. [37] SARS is also entitled to recover tax due to it by process of sequestration or the liquidation of corporate entities. It is worth noting that, as this Court held in Namex, SARS recovers in insolvency not as a contingent creditor but as a creditor accorded its usual statutory preference.13 [38] The further sections of chapter 11 cater for specified instances of recovery of tax debts due by a taxpayer from third parties. Section 179 envisages the appointment of a so-called agent. The section allows SARS to recover payment from a person who holds or will hold money due to the taxpayer. In effect, the ‘agent’ is notified 13 Namex fn 9 above. 16 to pay that money to SARS to satisfy a taxpayer’s ‘outstanding tax debt’.14 This form of recovery plainly does not require that the ‘tax debt’ be anything other than ‘payable’, in the sense that a date for payment of an amount owed to SARS has been set. Recovery from an appointed agent can occur even if the underlying indebtedness is subject to challenge. [39] In s 180, personal liability is imposed upon a financial administrator in charge of the financial affairs of a taxpayer who, by virtue of negligence or fraud, causes payment of tax not to be made. In both s 179 and s 180 the term tax debt is qualified by the word ‘outstanding’. An ‘outstanding tax debt’ is defined in s 1 of the TAA to mean a tax debt in respect of which a final demand for payment has been made. A final demand for payment can be made only in circumstances where the date for payment of the amount of tax due to SARS has been stipulated and it remains unpaid.15 Recovery for the payment of tax (whether or not it is legally due) can only occur if the taxpayer is in default of the obligation to pay a determined amount. Since the date for payment is ordinarily stipulated in the notice of assessment, these recovery processes require the existence of an assessment of the amount of tax due to SARS. [40] Sections 181 and 182 stand upon a slightly different footing. The former envisages recovery of a tax debt from shareholders of a company in liquidation. They must have received assets of the company within a specified period in circumstances 14 Section 179 (1) provides that: ‘A senior SARS official may authorise the issue of a notice to a person who holds or owes or will hold or owe any money, including a pension, salary, wage or other remuneration, for or to a taxpayer, requiring the person to pay the money to SARS in satisfaction of the taxpayer’s outstanding tax debt.’ An outstanding tax debt is defined to mean a tax debt not paid by the date set in s 162. Such date is set either by proclamation or in the notice of assessment. 15 See s 164 of the TAA. 17 where the company had an ‘existing tax debt’ or ‘would have had an existing tax debt’ if the taxpayer had complied with its obligations.16 [41] The latter section applies where a transferee receives assets of a taxpayer in relation to which it is a connected person for no consideration or consideration less than the fair market value of the assets.17 It also draws the distinction between ‘existing tax debt’ or one that would have existed. Neither s 181 nor s 182 appears, at face value, to require that the shareholders have any knowledge of the circumstances in which they acquired the assets or that they knew of the taxpayer’s default. [42] The phrase ‘existing tax debt’ and reference to a tax debt ‘would have existed’, suggests that the term ‘tax debt’ in this instance means ‘a determined amount of tax due’. In other words, that there was an existing assessment to tax or that there would have been such assessment but for the failure to comply with the taxpayer’s obligations. Sections 181 and 182 therefore contemplate recovery of a tax debt even if, at the time that the third party received the assets of a taxpayer, the amount of tax due (the tax debt) by the taxpayer had not yet been determined by assessment. In this context therefore, the term tax debt is used to connote its general description of the taxpayer’s liability to pay tax as is imposed by operation of law. 16 Section 181(2) reads as follows: ‘The persons who are shareholders of the company within one year prior to its winding up are jointly and severally liable to pay the tax debt to the extent that – (a) they receive assets of the company in their capacity as shareholders within one year prior to its winding up; and (b) the tax debt existed at the time of the receipt of the assets or would have existed had the company complied with its obligations under a tax Act.’ 17 Section 182(1) reads as follows: ‘A person (referred to as a transferee) who receives an asset from a taxpayer who is a connected person in relation to the transferee without consideration or for consideration below the fair market value of the asset is liable for the outstanding tax debt of the taxpayer.’ 18 [43] The purpose of s 183 is to establish the liability of a third party to pay a tax debt of a taxpayer when the culpable conduct of the third-party results in the obstruction of the collection of tax from the taxpayer. It strikes at the evasion of the payment of tax. Since the section is intended to enable recovery of a tax debt, it follows that the tax debt must be recoverable. The tax debt that SARS seeks to recover must be one that is determined, by assessment, and is therefore due or payable at the time that the recovery process as envisaged by s 183 occurs. [44] The term ‘tax debt’ in s 183 undoubtedly refers to a recoverable tax debt, in the sense of a determined tax debt, insofar as it permits recovery from the third party. But that is not its exclusive meaning. The term also encompasses the amount of tax a taxpayer is liable to pay to SARS. If a taxpayer is chargeable to tax the taxpayer is indebted notwithstanding that the amount of the indebtedness has not yet been determined. A tax debt exists, irrespective of the absence of an assessment of the tax debt. [45] It must be emphasised that we are not concerned with what the third party knew or with what constitutes knowing assistance in the dissipation of assets in order to obstruct the collection of a tax debt. That was not the subject of the separated issue. The separated issue was whether ‘tax debt’ was envisaged to refer to an assessed indebtedness at the time of the dissipation. Section 169 (1) refers to a debt due to SARS as being and amount due or payable. Section 169 (3) describes SARS as a creditor for the purposes of recovery as envisaged by chapter 11. In our view, the language of s 183, construed within its context, does not require that the taxpayer’s liability to pay tax due to SARS should have been determined by assessment at the time that the dissipation of assets occurs. 19 [46] To hold that the section requires that, at the time of the dissipation, the taxpayer’s obligation to pay tax due to SARS should be liquidated and immediately claimable by action, would defeat the purpose of the section. It would also give rise to absurdity, in that a culpable third party who intentionally assists a taxpayer to dissipate assets so that payment of a yet to be assessed tax debt cannot be made, would escape liability despite culpable conduct to evade tax, simply on the basis that an anticipated assessment had not yet been issued. [47] Upon the separated issue as framed, therefore, the high court order was correct. A final word needs be said in relation to the nature of the assessed tax and the circumstances in which the assessment to tax occurred. There was considerable argument both before the high court and this Court about the fact that the taxpayer’s assessment to tax flowed from an investigation and audit process in which SARS relied upon deeming provisions and upon its treatment of the substance over form of transactions which constituted taxable events. It was argued that this treatment of the tax position of the taxpayer could not, because of the inherent uncertainty, prejudice the third party by imposing liability in the absence of a determined tax debt. To do so, it was suggested, would expose a third party to significant uncertainty and almost indeterminate risk. [48] The argument was misplaced for two reasons. First, it loses sight of the onerous requirements which s 183 sets for third party liability. The third party must knowingly have assisted in a dissipation for the purpose of obstructing the collection of a tax debt. Whether that requirement and the requisite intention is established will be a matter dependent upon the facts in each case. So too, what the relevant parties knew or ought to have known at the time that the dissipation occurred. These aspects 20 are not before us. No doubt they will feature in the continuation of the trial of the matter in due course. [49] Secondly, the argument ignores the fact that the assessment to tax for CGT and STC in respect of the 2007 tax period related to a legal liability for the payment of tax which arose in consequence of taxable events in that tax period. Following the issue of the assessments, the taxpayer pursued an objection. The objection was partially allowed, in relation to the obligation to pay certain interest charged and in relation to the quantification of the amount payable. The liability to pay the tax was confirmed. No appeal was noted and the assessments became final. The consequence is that the tax indebtedness of the taxpayer, as it existed in the 2007 tax period, was finally established. Contentions regarding the basis of assessment are therefore irrelevant for present purposes. In the circumstances the appeal against the high court order on this question must fail. Admissibility of the transcript [50] The appellants testified at an inquiry during 2015 and 2016 as envisaged in s 50 of the TAA.18 SARS wishes to rely upon the evidence obtained during this inquiry at the trial. The appellants contended that the evidence is inadmissible. Their stance is in essence that the evidence is inadmissible, because relying on it will conflict with s 69 of the TAA. And that s 56 (4) does not allow for the admissibility of evidence procured in a s 50 inquiry in subsequent civil proceedings. 18 Section 50 of the TAA reads as follows: ‘(1) A judge may, on application made ex parte and authorised by a senior SARS official grant an order in terms of which a person described in s 51(3) is designated to act as presiding officer at the inquiry referred to in this section. (2) An application under subsection (1) must be supported by information supplied under oath or solemn declaration, establishing the facts on which the application is based. (3) A senior SARS official may authorise a person to conduct an inquiry for the purposes of the administration of a tax Act.’ 21 [51] To sustain the argument appellants relied, inter alia, on s 56 (1) of the TAA which provides that an inquiry under s 50 is private and confidential. Section 56 (4) however provides as follows: ‘Subject to s 57 (2), SARS may use evidence given by a person under oath or solemn declaration at an inquiry in a subsequent proceeding involving the person or another person.’ [52] Section 57 (2) reads as follows: ‘(2) Incriminating evidence obtained under this section is not admissible in criminal proceedings against the person giving the evidence, unless the proceedings relate to – (a) the administering or taking of an oath or the administering or making of a solemn declaration; (b) the giving of false evidence or the making of a false statement; or (c) the failure to answer questions lawfully put to the person, fully and satisfactorily.’ [53] Section 56 (3) provides that s 69 applies with the necessary changes to persons present at the questioning of a person, including persons being questioned during the inquiry. Section 69 (2) (a) authorises the disclosure of a taxpayer’s information in certain circumstances, including by a SARS official as a witness in civil proceedings. [54] The appellants relied upon Commissioner for South African Revenue Services v Sassin and Others (Sassin) 19 where the court stated that the transcript of an inquiry under s 50 of the TAA was inadmissible in subsequent civil proceedings. The high court, however, did not follow Sassin and pointed out that the view expressed was obiter. In the Sassin matter SARS had brought an application against Mr Sassin and Mr Badenhorst in relation to an alleged fraudulent VAT scheme. Mr Badenhorst was insolvent and SARS alleged that Mr Sassin received ill-gotten gains from Mr Badenhorst. A variety of declaratory orders were sought against Mr Sassin for payment of damages that SARS allegedly suffered as a result of the scheme. The 19 Commissioner for South African Revenue Services v Sassin and Others [2015] ZAKZDHC 82; [2015] 4 All SA 756 (KZD). 22 court referred the matter to trial, based on the finding that there was a bona fide dispute of fact and made no finding on the merits. [55] In Commissioner for the South African Revenue Service v Badenhorst t/a SA Global Trading and/or Global Trading and Others, Commissioner of the South African Revenue Service v Vermaak and Others (Vermaak),20 the same transcript featured as in Sassin. In that matter SARS obtained a provisional preservation order against Mr Badenhorst and Mr Sassin. The court considered the affidavits and transcript of the inquiry.21 In Vermaak, the court also considered whether Sassin was authority for the proposition that a s 50 transcript is inadmissible in subsequent proceedings and found, correctly in our view, that it was not. The remark about the admissibility of the transcript in Sassin was indeed obiter as the court was not called upon to determine the issue. [56] Section 56 is to be found in chapter 5 of the TAA, which concerns ‘Information Gathering’. The purpose of the chapter is to facilitate the execution of SARS’ statutory mandate to collect tax.22 The TAA recognises the fact that SARS stands as a stranger to transactions between taxpayers. For this reason there is a need to enable SARS to obtain information it would otherwise not be able to acquire, in order to perform its statutory function.23 [57] The high court expressed itself as follows in relation to the interpretation of the words ‘proceedings’ in Sassin : 20 Commissioner for the South African Revenue Service v Badenhorst t/a SA Global Trading and/or Global Trading and Others, Commissioner of the South African Revenue Service v Vermaak and Others [2015] ZAGPPHC 1085. 21 Ibid para 50. 22 Section 2 of the TAA. 23 Commissioner South African Revenue Services v A (Pty) Ltd and Others (unreported judgment of Keightley J Gauteng Local Division Case no 17418/20160) para 88. 23 ‘The Court’s approach by attributing a meaning to the word “proceeding” that excludes judicial proceedings in court, whether civil or criminal, cannot be supported. Section 56 (4) clearly empower the use of the evidence in a subsequent proceeding, subject to the qualification in s 57 (2), which excludes the use of incriminating evidence in criminal proceedings. It will also be at odds with the context and plain wording of the provision itself to exclude judicial proceedings, whether civil or criminal, from the word “proceeding.” There is also no textual reason to interpret “proceeding” where it appears in s 56 (4) as meaning something different from where the plural of the same word appears in the introductory part of s 56 and in s 57 (2).’ [58] The appellants’ construction of the section would require a reading in of the words ‘tax proceeding’. In National Director of Public Prosecutions v Mohamed NO and Others,24 the Constitutional Court says the following in relation to the reading in of words into a statute: ‘Furthermore, the issue is not whether the audi principle is to be implied in s 38 but, on the contrary, whether – “it is clear that Parliament has expressly or by necessary implication enacted that it should not apply or that there are exceptional circumstances which would justify the Court's not giving effect to it.” We have adopted the view, consistently enunciated over the years by the courts, that – “words cannot be read into a statute by implication unless the implication is a necessary one in the sense that without it effect cannot be given to the statute as it stands” and that such implication must be necessary in order “to realise the ostensible legislative intention or to make the Act workable”.’ (Footnotes omitted) [59] In this instance reading in of the words ‘tax proceedings’ is not necessary to realise the legislative intention, nor to make the TAA workable. On the contrary, if SARS is constrained to only use information obtained during an inquiry in 24 National Director of Public Prosecutions v Mohamed NO and Others [2003] ZACC 4; 2003 (1) SACR 561; 2003 (5) BCLR 476; 2003 (4) SA 1 (CC) para 48. 24 subsequent proceedings under the TAA, the purpose of an inquiry would be frustrated. Such an interpretation would render these sections nugatory. [60] The appellants argued that, if subsequent proceedings were to include civil proceedings, it would imply a contradiction between s 56 (1) and (3) read with s 69 and s 56 (4). The argument was that it is not possible for an inquiry to be both private and confidential on the one hand, and for the evidence obtained during the inquiry to be used in a subsequent court action. The argument went further to say that it is not possible to ensure the secrecy of a taxpayer’s information and not to disclose such information to a person who is not a SARS official. [61] The wording of s 56 (4) points to the fallacy of the argument. The section provides specifically that the evidence may be used against another person. In any event, s 69 (1) is qualified by s 69 (2) which makes provision for the disclosure of a taxpayer’s information under specified circumstances.25 The confidentiality of such information is therefore not without restriction. Section 69 (2) (a) specifically authorises the disclosure of a taxpayer’s information in a variety of circumstances, including by a SARS official as a witness in civil proceedings. Additionally, s 56 (3) provides for restrictions on the application of s 69 to the extent necessary, depending 25 Section 69 (1) and s (2) of the TAA reads as follows: ‘(1) A person who is a current or former SARS official must preserve the secrecy of taxpayer information and may not disclose taxpayer information to a person who is not a SARS official. (2) Subsection (1) does not prohibit the disclosure of taxpayer information by a person who is a current or former SARS official – (a) in the course of performance of duties under a tax Act or customs and excise legislation, such as – (i) to the South African Police Service or the National Prosecuting Authority, if the information relates to, and constitutes material information for the proving of, a tax offence; (ii) as a witness in civil or criminal proceedings under a tax Act; or (iii) the taxpayer information necessary to enable a person to provide such information as may be required by SARS from that person; (b) under any other Act which expressly provides for the disclosure of the information despite the provisions in this Chapter; (c) by order of a High Court; or (d) if the information is public information.’ 25 upon the circumstances of the case. There is accordingly no contradiction between these sections. [62] Counsel for the appellants relied, in argument, on what was said to be analogous provisions in s 417 and s 418 of the Companies Act.26 These sections of the Companies Act permit the holding of inquiries into the affairs of a company in liquidation. The sections provide that the person testifying at an inquiry is obliged to answer any question put, even if it may be incriminating. The Companies Act, however, provides that the evidence given is admissible only against the person giving the evidence in civil proceedings and in certain criminal proceedings relating to the offences as set out in s 417 (2) (c) of the Companies Act. The text of s 57 of the TAA, however, differs. It provides that the evidence obtained may also be used against another person. The Companies Act provisions are, therefore, of no assistance. [63] In Bernstein and Others v Bester NO and Others (Bernstein),27 it was held with reference to the Companies Act that the use of compelled testimony in civil proceedings is not prohibited or unconstitutional in other open and democratic societies. This applies equally to inquiries provided for in s 64 and s 65 of the Insolvency Act.28 In Pitsiladi v Van Rensburg and Others NNO (Pitsiladi),29 the applicants sought to set aside a subpoena duces tecum on the basis that it was an abuse of process. The court held that the purpose of the inquiry was for the trustees to gather information and held that its use in future civil litigation is a legitimate purpose of the provision.30 26 Companies Act 61 of 1973. 27 Bernstein and Others v Bester NO and Others [1996] ZACC 2; 1996 (4) BCLR 449; 1996 (2) SA 751 para 120. See also Benson, In re: Tait NO and Others v Jason and Others [2012] ZAWCHC 377 para 13. 28 Insolvency Act 24 of 1936. 29 Pitsiladi v Van Rensburg NO and Others [2001] JOL 8442 (SE); 2002 (2) SA 160 (SECLD) at 161 F-G. 30 Ibid at 161 G-J. 26 [64] In light of the text of the relevant sections of the TAA and the approach to comparable provisions in the Companies Act and the Insolvency Act, the transcript of the evidence given at the s 50 inquiry, is admissible in the litigation between the parties. The evidence obtained pursuant to s 50 of the TAA serves a legitimate purpose, which is to enable SARS to execute its statutory duty, inter alia, to recover tax debts due to the fiscus. [65] The appellants’ reliance upon their right to a fair hearing, as envisaged in s 34 of the Constitution, does not avail them. The argument was that the high court erred in relying on Constitutional Court cases that were decided under the 1993 Constitution which did not expressly provide for a fair trial. However, Ferreira v Levin No and Others; Vryenhoek and Others v Powell NO and Others (Ferreira),31 and Bernstein, which were decided under the 1993 Constitution, enunciated principles which have been consistently applied under the 1996 Constitution.32 [66] The high court was alive to these considerations. It referred to Benson: In re Tait N.O. and Others v Jason and Others,33 where it was held that the provisions of s 417 and 418 do not cause an unjustifiable infringement of constitutional rights. It was also pointed out that whether any constitutional rights were infringed will depend on the manner in which the inquiry is conducted. It is the primary responsibility of a trial court to ensure the fairness of a trial. It does so by careful consideration of the circumstances in which evidence sought to be admitted was obtained and the purpose for which it is to be admitted. The high court was therefore 31 Ferreira v Levin NO and Others; Vryenhoek and Others v Powell NO and Others [1995] ZACC 13; 1996 (1) SA 984 (CC); 1996 (1) BCLR 1. 32 In Ferreira, the Constitutional Court dealt with the constitutionality of s 417(2)(b) of the Companies Act. It invalidated only the part of the section permitted the use of incriminating evidence in subsequent criminal proceedings. In Bernstein, the Constitutional Court rejected an application to invalidate ss 417 and 418 of the Companies Act. It held that the use of compelled testimony in civil proceedings is constitutional. 33 Benson: In re Tait N.O. and Others v Jason and Others [2012] ZAWCHC 377 para 13. 27 correct to find that the trial court is best placed to determine the latter question and the probative value and weight that should be given to the evidence, if any. [67] In the result we make the following order: The appeal is dismissed with costs, including the costs of two counsel. ___________________________ G GOOSEN JUDGE OF APPEAL ___________________________ R G TOLMAY ACTING JUDGE OF APPEAL 28 Appearances For the first and second appellants: L S Kuschke SC and M O’Sullivan Instructed by: Edward Nathan Sonnenbergs Inc., Cape Town Webbers Attorneys, Bloemfontein For the third and fourth appellants: E W Fagan SC and G M Quixley Instructed by: Edward Nathan Sonnenbergs Inc., Cape Town Webbers Attorneys, Bloemfontein For the respondent: A Sholto-Douglas SC and P Myburgh and S Mahommed Instructed by: Norton Rose Fulbright South Africa, Cape Town Phatshoane Henney Inc., Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 12 July 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 judgment of the Supreme Court of Appeal Christoffel Hendrik Wiese and Others v CSARS (1307/2022) [2024] ZASCA 111 (12 July 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing with costs, including that of two counsel, an appeal against the decision of the Western Cape Division of the High Court, Cape Town. The Commissioner for the South African Revenue Services (SARS) instituted action against the appellants, in terms of s 183 of the Tax Administration Act 28 of 2011 (the TAA) for payment of R216.6 million. SARS claimed that the appellants caused, or assisted in causing, Energy Africa Propriety Limited, (Energy Africa or the taxpayer) to dissipate its assets in order to obstruct the collection of a tax debt owed by it to SARS. The dissipation was alleged to have occurred by transferring a loan account claim Energy Africa held in Titan Share Dealers Proprietary Limited (TSD) as a dividend in specie to Elandspad Investments Proprietary Limited (Elandspad), its holding company. The trial proceeded in the Western Cape High Court, Cape Town (the high court) upon an agreed separation of issues. The high court was required to decide: (a) Whether the transcript of evidence presented by the appellants at an inquiry held in terms of s 50 of the TAA during 2015 and 2016, was admissible in the trial proceedings and, if so, for what purpose. (b) Whether the assessments raised by SARS against Energy Africa for secondary tax on companies (STC) and capital gains tax (CGT) constituted ‘tax debts’ for purposes of s 183 of the TAA. The high court found that the transcript was admissible. The high court also found that the STC and CGT tax assessments constituted tax debts for purposes of s 183 of the TAA. Aggrieved by these findings, the appellants with leave of the high court, brought an appeal before this Court on similar issues. Namely (a) whether the term ‘tax debt’ as used in s 183 of the TAA envisaged that an assessed tax debt should have existed at the time that the dissipation of assets occurred, and (b) whether the transcript of proceedings at an inquiry was admissible upon production in subsequent civil proceedings in terms of s 56 of the TAA. Before the SCA, the appellants argued that in order to establish liability under s 183, the person concerned must have knowingly assisted in the dissipation of assets ‘in order to obstruct the collection of a tax debt’. A ‘tax debt’ must have necessarily existed at the time of the alleged dissipation and the person concerned must have known that the tax debt existed. A tax debt is an amount which is due and payable, as the ordinary meaning of the term suggests. In this instance, the tax debt only arose upon notice of assessment. The particular assessments to tax, in this case, did not constitute tax debts as contemplated by s 183 of the TAA. In its findings, the SCA, was of a different view and held that the concern was not what the third party knew or with what constituted known assistance in the dissipation of assets in order to obstruct the collection of a tax debt. That was not the subject of the separated issue. The separated issue was whether ‘tax debt’ was envisaged to refer to an assessed indebtedness at the time of the dissipation. The SCA further held that s 169(1) referred to a debt due to SARS as being an amount due or payable. Section 169(3) described SARS as a creditor for the purposes of recovery as envisaged by Chapter 11. The language of s 183, construed within its context, did not 2 require that the taxpayer’s liability to pay tax due to SARS should have been determined by assessment at the time that the dissipation of assets occurred. To hold otherwise would defeat the purpose of the section. It would also give rise to absurdity, in that a culpable third party who intentionally assisted a taxpayer to dissipate assets to evade tax would escape liability on the basis that an anticipated assessment had not yet been issued. Upon the separated issue as framed, the SCA held that the high court order was correct. On the issue of admissibility of the transcript, the appellants testified at an inquiry during 2015 and 2016 as envisaged in s 50 of the TAA. SARS wished to rely upon the evidence obtained during that inquiry at the trial. The appellants contended that the evidence was inadmissible. Their stance, in essence, was that the evidence was inadmissible because relying on it would conflict with s 69 of the TAA and that s 56(4) did not allow for the admissibility of evidence procured in a s 50 inquiry in subsequent civil proceedings. The appellants relied upon Commissioner for South African Revenue Services v Sassin and Others (Sassin) where the court stated that the transcript of an inquiry under s 50 of the TAA was inadmissible in subsequent civil proceedings. The high court, however, did not follow Sassin and pointed out that the view expressed was obiter. The SCA agreed with the high court. The purpose of chapter 5 of the TAA, in which s 56 occurs, was to facilitate the execution of SARS’ statutory mandate to collect tax. The TAA recognised the fact that SARS stood as a stranger to transactions between taxpayers. For that reason SARS was empowered to obtain information it would otherwise not be able to acquire, in order to perform its statutory functions. Section 56(4) provided specifically that the evidence may be used against another person. Section 69(1) was qualified by s 69(2) which made provision for the disclosure of a taxpayer’s information under specified circumstances. The confidentiality of such information was therefore not without restriction. Section 69(2)(a) specifically authorised the disclosure of a taxpayer’s information in a variety of circumstances, including by a SARS official as a witness in civil proceedings. Additionally, s 56(3) provided for restrictions on the application of s 69 to the extent necessary, depending upon the circumstances of the case. There was accordingly no contradiction between these sections. As a result, the SCA agreed with the high court and held that the transcripts were indeed admissible and ordered that the appeal be dismissed with costs, including the costs of two counsel. ~~~~ends~~~

4175

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not reportable Case no: 579/2022 In the matter between: ABEL SEKOALA APPELLANT and THE STATE RESPONDENT Neutral citation: Sekoala v The State (579/2022) [2024] ZASCA 18 (21 February 2024) Coram: MBATHA, CARELSE and MABINDLA-BOQWANA JJA and NHLANGULELA and SIWENDU AJJA Heard: 18 September 2023 Delivered: 21 February 2024 Summary: Criminal law and procedure – appeal against rape conviction – whether the evidence of the complainant, a single witness, was correctly accepted as credible – whether the appellant’s version is reasonably possibly true – whether the State proved the guilt of the appellant beyond reasonable doubt. 2 ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Baloyi-Mere AJ with Davis J concurring, sitting as a court of appeal): 1 The appeal is upheld against the convictions and sentences. 2 The order of the high court is set aside to the extent indicated below and replaced with the following: ‘The first appellant’s appeal succeeds. The convictions and resultant sentences in respect of accused 1 are set aside and replaced by the following order: Accused 1 is found not guilty of all 11 counts of rape.’ JUDGMENT Mbatha JA (Nhlangulela AJA concurring): Introduction [1] The appellant, Mr Abel Sekoala, and his erstwhile co-accused, Mr Ramasa Johannes Rathebe, were arraigned in the Regional Court, Pretoria North, Gauteng (the trial court) as accused 1 and accused 2 respectively. They were charged with 11 counts of rape, in contravention of s 3 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 20071 (the Sexual Offences Amendment Act). They pleaded not guilty to all charges, but, were nonetheless 1 Section 3 provides: ‘Any person (“A”) who unlawfully and intentionally commits an act of sexual penetration with a complainant (“B”), without the consent of B, is guilty of the offence of rape.’ 3 convicted. Each accused was sentenced to 10 years’ imprisonment, three (3) of which were suspended for a period of three years on condition that they were not convicted of any offence involving violence committed during the period of suspension. They were effectively sentenced to 7 years’ imprisonment. In addition, the trial court, in terms of s 103(1)(g) of the Firearms Control Act 60 of 2000, declared them unfit to possess a firearm. [2] Mr Sekoala, (who was accused 1 in the regional court) together with Mr Rathebe, sought leave to appeal against their convictions from the trial court, which was dismissed by the trial court. On 3 November 2016, they petitioned the Judge President of the Gauteng Division of the High Court, Pretoria (the high court) in terms of s 309C of the Criminal Procedure Act 51 of 1977 (the CPA) for leave to appeal only against their convictions on all counts. On 31 May 2017, De Vos J and Van der Westhuizen AJ granted them leave to appeal against their convictions and sentences. [3] Subsequently, Neukircher J gave notice to Mr Sekoala and Mr Rathebe that the sentences imposed may possibly be increased in the event the appeal against the convictions were not upheld in terms of s 309(3) of the CPA. This led to the postponement of the hearing to 23 August 2021. The appeal served before Davis J and Baloyi-Mere AJ (the high court) on 17 February 2022. The appeal against convictions were dismissed and albeit there was no leave sought on sentence, the high court nevertheless set aside the sentence and increased the sentence to 20 years. [4] Dissatisfied with the outcome of the appeal before the high court, only Mr Sekoala petitioned this Court for special leave to appeal against both his convictions and sentences. This Court granted him special leave to appeal on 29 April 2022. 4 Background facts [5] Mr Sekoala and the complainant were in an intimate relationship for a few years. Mr Rathebe, who was a friend of Mr Sekoala, was well known to the complainant. At the time of the alleged incident the complainant and Mr Sekoala were no longer in a relationship. They last saw each other in December 2009. On 20 February 2010 a telephonic conversation took place between the complainant and Mr Rathebe. It was disputed as to who called who and who invited the complainant to Mr Sekoala’s house. It was also in dispute whether later on that day Mr Sekoala called the complainant or whether she called him. Nonetheless, in the early evening on the day of the incident, the complainant arrived at the place of residence of Mr Sekoala. Evidence adduced by the State [6] The complainant’s evidence was that she had been invited by Mr Sekoala to discuss the state of their relationship. She testified that upon her arrival, Mr Sekoala requested her to cook mealie meal porridge as the main dish, as the accompaniments had already been cooked. Thereafter Mr Sekoala, who had been socialising outside with his friends, entered the house and borrowed money from her. She showed him the only R100 she had in her possession. In response, Mr Sekoala said that if she wanted to remain in a relationship with him she should have brought more money with her. Mr Sekoala then grabbed her by both arms, and pushed her out of the house. She cried in pain. Upon hearing her screams Mr Rathebe intervened and discouraged Mr Sekoala from chasing the complainant away, as it was late at night. Later, the complainant and Mr Rathebe accompanied Mr Sekoala to drop off his friends at their homes with his motor vehicle. According to the complainant the main reason for Mr Sekoala’s aggression was that she did not have sufficient money on her to give Mr Sekoala. 5 [7] Upon their return to Mr Sekoala’s house, he told her that he no longer wanted a relationship with her, the person who was interested in her was Mr Rathebe. Mr Sekoala then went to his bedroom and left her and Mr Rathebe in the sitting room watching television. A few minutes later, Mr Sekoala invited Mr Rathebe to his bedroom, where they chatted surreptitiously. Mr Rathebe returned to the lounge where they all watched television. Later on, Mr Sekoala said that he was retiring to bed. About five minutes later, Mr Sekoala emerged from his bedroom naked and took the complainant to another bedroom where he ordered her to take off her clothes, when she refused, he grabbed her, tore the buttons from the ‘overall’ she was wearing, pushed her onto the bed, and undressed her. When she screamed, he covered her mouth with his hand, overpowered her and continued to undress her. He then forcefully had sexual intercourse with her without her consent until he ejaculated. [8] When he finished raping her, he grabbed her and called Mr Rathebe who at his invitation entered the bedroom. Mr Sekoala then held the complainant down so that Mr Rathebe could also rape her. Both men took turns in raping her using a condom, whilst the other held her down. The complainant estimated that she was raped by each one of them for about five or six times. At the end of her ordeal, which lasted until sunrise, Mr Sekoala took her to his bedroom where he continued to rape her without a condom. Thereafter, Mr Sekoala admonished her not to tell anyone about what they did to her. The admonishment was repeated again in the presence of Mr Rathebe. She said that she had no choice but to agree not to tell anyone, because she was locked in, as the keys were hidden in the house. The following morning when the housekeeper arrived she managed to escape. [9] Mr Sekoala pointed out which taxi she should take. She believed that he wanted to ensure that she took the taxi that was going to town, and not a local taxi 6 that would take her to the local police station. She did not tell anyone about what had happened to her. She cried a lot because she loved Mr Sekoala. Later that day, Mr Sekoala called her to tell her that she had showed him genuine love by participating in the sexual intercourse with his friend. The following day, she felt she could not live with what had happened because it would hurt her for the rest of her life. She decided to open a case of rape against Mr Sekoala and Mr Rathebe which led to their arrest. The complainant was examined by a medical doctor on 22 February 2020, who completed a J88 medical form. [10] In cross-examination she admitted that when she visited Mr Sekoala, they were no longer on good terms. According to her, Mr Sekoala requested her to come to his house so they could talk things over. When she arrived at his place he told her that he had another girlfriend. She was heartbroken because she loved him but accepted it. She testified further that, while at Mr Sekoala’s house, she called her neighbour Ms Susan Baloyi (Ms Baloyi), who was aware of her relationship with Mr Sekoala. This call happened before Mr Sekoala took away her cell phone. She told Ms Baloyi that they were not on good terms but did not inform her that Mr Sekoala was chasing her away. [11] Ms Baloyi confirmed that she was the complainant’s neighbour. The complainant called her at approximately 19h00 on 20 February 2010 and informed her that she was going to visit her boyfriend. She called her again at about 21h00 and reported that she and Mr Sekoala were fighting and he was chasing her away. The following morning at about 08h00 she received another call from the complainant. The complainant was crying, accusing Mr Sekoala and his friend of raping her. Ms Baloyi asked the complainant where she was and requested Mr Sekoala’s home address because she (Ms Baloyi) wanted to direct the police to where the complainant was kept. The complainant said she would call again. The complainant called Ms Baloyi again at 10h00 and told her that Mr 7 Sekoala allowed her to leave. The complainant asked her to come to her place so she could explain what transpired but she could not make it. During re-examination, she testified that when the complainant visited Mr Sekoala, they had already broken up. [12] The J88 medical report was handed in by agreement between the parties. The injuries recorded were: ‘1. Bruises purplish in colour measuring 1.5 diamet[re] right arm (biceps area)’ and ‘2. Bruises x 3 on the left upper bicep[s] region, fading and purple in colour, measuring 1.5/3 cm width respective.’ The medical doctor who completed the J88 medical report was not called as a witness either by the State or the defence. I will deal with this evidence at a later stage. Evidence adduced by the defence [13] Mr Sekoala denied raping the complainant and asserted that the two of them had consensual sexual intercourse. He further denied that he took turns with Mr Rathebe to rape the complainant. His version was that the complainant called around 17h00 and informed him that she was in a taxi on her way to his residence, which baffled him, since they were no longer in a relationship. The uninvited complainant arrived at his residence and found him in the company of his two friends and Mr Rathebe. They were all sitting outside his house. The complainant, did not greet them but went straight into the house. He immediately followed her into the house and asked what she wanted. She told him that she wanted to talk about their relationship as they could not end it the way they did. [14] Upon entering the house Mr Sekoala unequivocally told the complainant that she was not welcome and instructed her to leave his house. The complainant fell on her knees, crying, grabbed his hand and told him how much she loved him. 8 He grabbed her by the elbows and tried to push her out of the house. She held onto the stove and other pieces of furniture as Mr Sekoala pulled her in an attempt to shove her out of the house. The complainant screamed, which caught the attention of Mr Rathebe and his friends. Mr Rathebe came in and enquired what was going on. Upon seeing the complainant crying Mr Rathebe reprimanded him. He pleaded with him not to chase the complainant away at night. [15] Mr Sekoala testified that later on that evening he, Mr Rathebe and the complainant drove one of his friends to his place of residence. On their return home, Mr Sekoala proceeded to his bedroom, whereupon he summoned Mr Rathebe and the complainant to his bedroom. He called Mr Rathebe to be his witness as to what he intended to convey to the complainant. He then informed the complainant that the intimate relationship between them was over. The complainant asked Mr Rathebe to talk to Mr Sekoala as she did not want the relationship to end. The complainant cried and told him that she loved him. Mr Sekoala then requested Mr Rathebe and the complainant to leave his bedroom, which they did. [16] It was Mr Sekoala’s evidence that the complainant kept on crying. He then went to the dining room and found the complainant crying. He showed her where she had to sleep, ushered her to the spare bedroom and left for his bedroom. The complainant called out to him. He returned and entered through the open door of the room where the complainant was. The complainant requested to have further discussions with him about their relationship. [17] The complainant told him that she understood that it was better to separate but requested ‘one thing’, and that was to have sexual intercourse with her one last time. The complainant, now in her underwear, grabbed his hand, gave him a hug and whispered to him ‘make love to me now’. He responded by saying he 9 had ended the relationship. She said ‘that is not yet a problem, we are enjoying having sex. . .’. She said it was the last time they would be having sexual intercourse together and that she wanted them to enjoy the moment. He then took out a condom from the wardrobe and they had sexual intercourse. [18] Thereafter they cuddled. She searched for more condoms and asked if they could have sexual intercourse again with her on top of him. She took out a condom and fitted it herself and they made love again. She asked him why he wanted to stop such a ‘romantic thing’. She did not mind being his mistress as she enjoyed being intimate with him. She begged him to give her ‘one last round’ that she would remember him with. [19] They had sexual intercourse for the third time and he kissed her on the forehead, left for his bedroom and fell asleep. He then felt someone touching him. When he opened his eyes he saw the complainant who professed her love ‘for his private parts’. He told her that he wanted to make love to her but she said she was satisfied. [20] The following day, a Sunday, Mr Sekoala testified that he woke up at about 10h00. The complainant, who was awake, enquired if there were any chores that she could do for him as she had finished other household chores. He asked her for the R60 she had, which she gave him. He then asked if she could help him with R100, as he was short of petrol money. The complainant offered to bring the money to his place of employment the following day. She left in the early afternoon, and he assisted her to board the correct taxi to her place of residence. It was his testimony that when the complainant arrived at her flat, she called him and promised to bring the money to his place of employment the following day. To his surprise, the complainant instead came with the police. He was informed that the complainant had laid a charge of rape and he was arrested. 10 [21] Mr Rathebe testified that the complainant sent him a text message while he was at work. When he called her back, she told him that she wanted him (Mr Rathebe) to talk to Mr Sekoala not to terminate their relationship. Mr Rathebe told her that he could not, because Mr Sekoala did not like talking about his personal issues. On the day of the alleged incident, the complainant called him to say she was going to Mr Sekoala’s place of residence. Corroborating Mr Sekoala, Mr Rathebe said that the complainant arrived at approximately 17h00 while Mr Rathebe and Mr Sekoala sat outside with two of their friends. The complainant walked past them without greeting and entered Mr Sekoala’s house. Mr Sekoala, immediately followed her into the house. After a short while he heard a noise coming from the house. Upon inspection he found Mr Sekoala holding the complainant’s upper arm, and telling her to get out of the house. He intervened and reprimanded Mr Sekoala. [22] Mr Sekoala left the house and joined his friends again. The complainant sat next to him. They then took one of his friend’s home in Mr Sekoala’s vehicle. When they returned, Mr Sekoala called him to his bedroom and spoke to him in the presence of the complainant. Mr Sekoala asked him to be a witness to the effect that he and the complainant were no longer in a love relationship. The complainant was crying, stating that she did not want to end the relationship. Mr Sekoala then requested him and the complainant to leave his bedroom. Mr Rathebe left to go to the sitting room and watched television. The complainant came to sit next to him on the couch, crying, stating how much she loved Mr Sekoala and that she did not want to lose him. She asked him to plead with Mr Sekoala on her behalf. Mr Rathebe fell asleep on the couch while the complainant was still crying and talking. [23] When he woke up the next morning he found himself alone in the sitting room. He left to buy beer and when he returned, he found the complainant inside 11 Mr Sekoala’s bedroom ironing. She was also cooking in the kitchen. The complainant left in the afternoon and was accompanied by Mr Sekoala to board a taxi. He denied raping the complainant. The trial court and the high court’s findings [24] In convicting Mr Sekoala and Mr Rathebe, the trial court accepted the version of the complainant against their versions. It also accepted the evidence of Ms Baloyi, as corroboration of the complainant’s version. In addition, it found that the medical evidence confirmed that the complainant had been raped. Submissions by Mr Sekoala on appeal [25] It was submitted on behalf of Mr Sekoala, that his guilt was not proven beyond a reasonable doubt because the trial court misdirected itself by: (a) finding that the first report witness’ evidence was not contradicted; (b) failing to approach the evidence of the complainant with caution, as it was the evidence of a single witness; (c) finding that the injuries were consistent with the evidence which indicated absence of consent; (d) not considering Mr Sekoala’s version; (e) not giving reasons for preferring the evidence of the complainant over that of Mr Sekoala; and (f) failing to state why they found Mr Sekoala’s version to be so improbable that it could not have been reasonably possibly true. Submissions by the State on appeal [26] On the other hand, the State contended, inter alia, that although the trial court did not pronounce on the word ‘caution’ in its judgment, it approached the complainant's evidence with caution and that the absence of fresh injuries could not rule out recent penetration. In that regard, it should be taken into account that the complainant was examined by a doctor two days after the incident and that she already had four pregnancies and deliveries. The State therefore submitted 12 that both the trial court and high court were correct in finding that the State had proved Mr Sekoala’s guilt beyond a reasonable doubt. Evaluation [27] The question is whether the guilt of Mr Sekoala was proven beyond a reasonable doubt. In doing so, it has to be determined whether the trial court committed any irregularities during the trial, and whether those irregularities undermined Mr Sekoala’s right to a fair trial. In criminal proceedings the State bears the onus to prove the accused’s guilt beyond a reasonable doubt. Furthermore, the accused’s version cannot be rejected solely on the basis that it is improbable, but only once the trial court has found on credible evidence that the accused’s explanation is false beyond a reasonable doubt. The corollary is that if the accused’s version is reasonably possibly true, the accused is entitled to an acquittal. It is also trite that in an appeal, the accused’s conviction can only be sustained after consideration of all the evidence including the accused’s version of events. [28] At the heart of this appeal, is the determination of the correct approach to the evaluation of evidence by the courts below. It is trite that an appeal court can only interfere with the factual findings of the trial court where there has been a material misdirection. In the evaluation of the elements of the offence in the crime of rape, the onus rests on the State to prove all the elements of the crime, including the absence of consent and intention. This is so even where the version put to the complainant is a denial of any sexual contact with the complainant. In Vilakazi v The State, 2 this Court quoted with approval what was said in S v York in relation to the absence of consent that: 2 Vilakazi v The State [2008] ZASCA 87; [2008] 4 All SA 396 (SCA); 2009 (1) SACR 552 (SCA) para 47. 13 ‘It is always, of course, for the prosecution to prove the absence of consent. This entails that even if the defence, as here, is that no intercourse took place, the court must, in the adjudicative process, be alive to the possibility that there might have been consent nonetheless.’ In casu the only issue in dispute is whether the complainant was raped by Mr Sekoala or whether the sexual intercourse was consensual. [29] It is common cause that the evidence of the complainant is evidence of a single witness and needs to be treated with caution. In terms of s 208 of the CPA, an accused may be convicted on any offence on the single evidence of a competent witness. In S v Mafaladiso en Andere,3 this Court held that where there are material differences between the witness’ evidence and their prior statement, the final task for the judge is to weigh up the previous statement against viva voce evidence, to put all the evidence together and to decide which is reliable and whether the truth has been told despite any shortcomings. This means that the court is enjoined to consider the totality of the evidence to ascertain if the truth has been told. [30] It is clear from the record that there are two conflicting versions on how the events unfolded on the day in question. Therefore, the question which needed to be considered by the court a quo was whether on the totality of evidence it can be said that the State proved its case beyond reasonable doubt. The test to be applied as set out in S v Van Der Meyden4 is as follows: ‘The onus of proof in a criminal case is discharged by the State if the evidence establishes the guilt of the accused beyond reasonable doubt. The corollary is that he is entitled to be acquitted if it is reasonably possible that he might be innocent (see, for example, R v Difford 1937 AD 370 at 373 and 383...’ 3 S v Mafaladiso en Andere 2003 (1) SACR 583 (SCA) at 584. 4 S v Van Der Meyden 1999 (1) SACR 447 (W) at 448. 14 [31] The trial court accepted the version of events as described by the complainant, without giving reasons for such a preference. The high court followed in the same path. In doing so, both courts accepted facts which are irreconcilable with the version of Mr Sekoala. His version shows that from the time of the complainant’s arrival, he could not stand the sight of her. This is shown by his harsh reaction to her arrival at his home. This reaction is not consistent with a person who had telephoned the complainant to visit him to discuss the status of their almost non-existent relationship. Furthermore, the complainant testified that when she got to his house, Mr Sekoala was initially receptive, he even asked her to cook, but things only took a turn when he asked for the money she did not have. This version should be considered in relation to the kind of physical hostility exhibited towards the complainant, coupled with him telling her that he no longer wanted to be in a relationship with her but Mr Rathebe was the one interested in her. The complainant’s own witness, Ms Baloyi, testified that the complainant called her on the same night and told her that Mr Sekoala was chasing her away and that things were not fine between them. It is not clear why the trial court rejected his version. [32] Additionally, the probabilities indicate that the complainant could not have received an invitation from Mr Sekoala, because Mr Sekoala did not move in with her in December 2009 as agreed between the two of them. Also, the complainant knew that he had a new girlfriend and for almost three months he had not contacted her. The trial court gave no reason as to why it rejected the undisputed evidence of Mr Rathebe that the complainant would call and request him to intervene on her behalf with Mr Sekoala. And that his response to her had always been that Mr Sekoala resented friends who interfered in his personal affairs, hence he refused to assist. The aforementioned uncontested fact confirms that she could not have been at Mr Sekoala’s place at his invitation. 15 [33] The court below also failed to appreciate that the complainant’s visit was planned as she arrived uninvited. She testified that she arrived at about 19h00 because in the past she used to visit Mr Sekoala at night. The only inference to be drawn is that she did not expect to be chased away by Mr Sekoala, as she was keen to resolve the issues between the two of them. Mr Sekoala’s version that when he chased her away, she cried and asked him not to end the relationship is supported by both the complainant’s and Mr Rathebe’s evidence. Furthermore, his version as to how they ended up having sexual intercourse cannot be rejected as being unreasonable. [34] It is important that I should highlight this part of the evidence, where the complainant upon being questioned by Mr Sekoala’s counsel, said the following: ‘[The complainant]: …and he earlier phoned me and asked me money, he requested money and I said I do not have it. [Mr Moruwa]: Did accused 1 attempt to chase you from his house? 10 --- [The complainant]: [I did not get that] [Mr Moruwa]: Did he try to chase you away from his house? --- [the complainant]: No. [Mr Moruwa]: Did he assault you in any manner whatsoever? --- [the complainant]: He was just talking to me in a harsh manner. [Mr Moruwa]: Did he touch you or grab you? --- [the complainant]: Yes, he grabbed me when he requested money from me. [Mr Moruwa]: Where on your body? --- [the complainant]: on my arm. [Mr Moruwa]: Arm or arms? --- [the complainant]: He was just pulling me around, I cannot say where, he was just pulling me. 16 Mr [Moruwa]: I see, and you said accused 1 took away your phone? [the complainant]: 20 -- Yes, he took it. Mr [Moruwa]: at what time was your phone taken away? --- [the complainant]: I cannot remember what time. [Mr Moruwa]: When was the phone returned back to you? --- [the complainant]: in the morning [Mr Moruwa]: So you did not have the phone for the whole night? --- [the complainant]: before he took it, I phoned Susan, my neighbour.’ This is significant because her version was that she was deprived of communication with the outside world before being raped, but again in the morning she was given the phone back just to do that. This version is in direct conflict with the reason given by the complainant as to why she was deprived of her phone. [35] Had the trial court been alive to the fact that it was dealing with the evidence of a single witness and had treated the complainant’s evidence with caution, it would have noted that she gave different versions as to what exactly happened on the night in question. One version was that after Mr Sekoala had finished having sexual intercourse with her, he invited Mr Rathebe, who also had sexual intercourse with her whilst Mr Sekoala was holding her down. She proffered another version that Mr Sekoala after raping her, left her in the bedroom and returned later on. These versions are materially different. These glaring inconsistencies and contradictions in her version were ignored by the courts below, though they found her evidence to be reliable. Had the trial court applied the necessary caution, it would have led to the rejection of the complainant’s evidence on the grounds that it was not clear and satisfactory in all respects as required in terms of s 208 of the CPA. 17 [36] I am not persuaded, as the State suggests, that the trial court treated the evidence of the complainant with caution. The fact that the trial court did not allude to this trite principle nor evaluated the evidence in line with the principle, confirms that it was not applied. In fact, the trial court failed to assess the factual evidence. This was a material misdirection. The trial court restated the evidence in great detail but failed to evaluate it. It also failed even to establish if the complainant might have any bias adverse to Mr Sekoala and his erstwhile co-accused, Mr Rathebe. The trial court should not have ignored the fact that Mr Sekoala and the complainant were in a love relationship and that the complainant was not ready to part ways with him. The evidence shows that the complainant was a jilted lover who still had very strong feelings for Mr Sekoala. [37] It behoves me to restate the trite principles applicable in a criminal case when evaluating evidence. This Court in S v Chabalala,5 set out the approach the court should adopt in the evaluation of the evidence in a criminal case. It held that the approach is to weigh up all the elements that point towards the guilt of the accused against all those that are indicative of his innocence; taking proper account of inherent strengths and weaknesses; weighing probabilities and improbabilities on both sides; and, having done so, decide whether the balance weighs so heavily in favour of the State as to exclude any reasonable doubt about the accused’s guilt. [38] The trial court and the high court ignored the principles set out in S v Trainor6 where this Court held that a conspectus of all the evidence is required; that evidence which is reliable is to be weighed alongside such evidence as may be found to be false; that independently verifiable evidence, if any, should be weighed to see if it will support any of the evidence tendered; that in considering 5 S v Chabalala 2003 (1) SACR 134 (SCA) para 15. 6 S v Trainor [2002] ZASCA 125; [2003] 1 All SA 435 (SCA) para 9. 18 whether the evidence is reliable the quality of that evidence must of necessity be evaluated, as must corroborative evidence, if any; that evidence must be evaluated against the onus on any particular issue or in respect of the case in its entirety; and that a compartmentalised and fragmented approach by the trial court is illogical and wrong. [39] The unchallenged evidence of Mr Rathebe, which materially corroborated the version of Mr Sekoala, was completely ignored by the courts below. Mr Rathebe’s unchallenged evidence that he did not participate in the rape was also not considered by the trial court. His evidence was that he did not know why the complainant implicated him on the alleged rape. The State Prosecutor, in addressing the trial court, also submitted that there was nothing that he could challenge on the credibility of Mr Rathebe as a witness. Though the court is not bound by the concessions made by the State Prosecutor, it could also not point out any shortcomings in the evidence of Mr Rathebe. [40] At the risk of repeating what has been alluded to, I am constrained to highlight the following discrepancies in the State case: (a) Regarding what transpired upon the complainant’s arrival at Mr Sekoala’s home, their versions are diametrically opposed. Mr Sekoala’s version was that he was not happy to see her and he physically pushed her out of his house. The complainant did not dispute that she was manhandled. However, her evidence was that she was manhandled for not having brought sufficient money with her. (b) In her evidence-in-chief the complainant testified that she had shown the appellant the R100 note, but in cross-examination she testified that Mr Sekoala grabbed her hand and proceeded to find the R100 note in her pocket, where after she was asked why she did not bring sufficient money. Mr Sekoala grabbed her by both arms and she screamed in pain. This completely contradicts her later testimony that the appellant requested R100 from her and she promised to deliver 19 it at his place of employment. Logic dictates that Mr Sekoala would not have asked for the same amount of money which she claimed had been grabbed from her hand by Mr Sekoala for which he had chased the complainant out of his home, after having taken it forcefully from her. (c) That when Mr Sekoala pushed her out it is common cause that Mr Rathebe intervened on her behalf. It is difficult to reconcile this attitude and behaviour with the complainant’s allegation that Mr Rathebe then later participated in her alleged gang rape. [41] The complainant’s version was that she was raped by the two men for the whole night until sunrise, approximately 11 times allowing her no break except when they were switching roles. This could not have been humanly possible, the exaggeration of her evidence became apparent when she was interviewed for a pre-sentencing report where for the first time she proffered that condoms were stuffed in her vagina. This never appeared in her statement to the police, in her report to the doctor, evidence-in-chief nor under cross-examination. The appeal court is not precluded in having regard to the totality of the evidence as it considers the entire record of the proceedings. This was the case in Y v S7 where this Court took into account the evidence communicated by the complainant to her foster care parent after the conclusion of the trial. That evidence was adduced at the sentencing stage. [42] I am mindful of the trauma attendant on victims of sexual assault. I have taken great care to assess the evidence adduced during the trial, however, the inconsistencies, the contradictions and the overall unsatisfactory nature of the evidence by the complainant had to be carefully examined. In that regard the trial court erred in convicting Mr Sekoala on evidence that was unsatisfactory in so 7 Y v S (537/2018) [2020] ZASCA 42 para 66. 20 many respects and ultimately unreliable. Equally, the high court, in finding that the complainant was consistent and frank and in dismissing the appeal, erred. [43] The high court found that the medical form (J88) corroborated the evidence of the complainant as a single witness. It erred in this regard because such evidence is non-existent and neutral. The bruises on the complainant’s arm did not exclude the reasonable inference that they could have been caused by the manhandling of the complainant by Mr Sekoala at the time of her arrival at his place. It could not be, as found by the trial court, that the only inference that could be drawn was that she sustained the bruises during the alleged rape. In MM v S8 this Court stated that ‘it is trite that wherever the implications of the doctor’s observations are unclear the doctor should be called to explain those observations and to guide the court in the correct inferences to be drawn from them’. In that regard the trial court was at liberty to have called the medical doctor as a witness. This would have assisted the court in comprehending the conclusions reached by the medical doctor, in particular as she sustained no vaginal injuries and the implications of the complainant of having given birth to four children. The J88 refers to the scarring of the vagina and there was no explanation as to the cause and nature thereof. [44] In conclusion I find that the high court failed to appreciate that an accused person’s version can only be rejected if the court is satisfied that it is false beyond reasonable doubt. A court is entitled to test an accused person’s version against improbabilities. An accused person is entitled to an acquittal if there is a reasonable possibility that his or her version is reasonably possibly true. The trial court failed to point out any improbabilities in Mr Sekoala’s version. In that regard, it cannot be said that the State proved its case beyond a reasonable doubt against him. He was therefore entitled to an acquittal. 8 MM v S [2012] 2 All SA 401 SCA para 24. 21 [45] For reasons unknown to us, Mr Rathebe did not bring an application for special leave to appeal against his conviction and sentence before this Court. However, due to the positive outcome of Mr Sekoala’s appeal, it is imperative that this judgment be urgently brought to his attention. It will be in the interest of justice that the legal aid counsel be appointed for Mr Rathebe to bring an application for special leave to appeal on an expedited basis to this Court for the consideration of his appeal. This matter will be brought to the attention of the Registrar and the President of this Court. [46] In the light of the aforesaid, I therefore make the following order: 1 The appeal is upheld against the convictions and sentences. 2 The order of the high court is set aside to the extent indicated below and replaced with the following: ‘The first appellant’s appeal succeeds. The convictions and resultant sentences in respect of accused 1 are set aside and replaced by the following order: Accused 1 is found not guilty of all 11 counts of rape.’ ______________________ Y T MBATHA JUDGE OF APPEAL 22 Mabindla-Boqwana JA (Carelse JA and Siwendu AJA concurring): [46] I have read the judgment of my colleague, Mbatha JA (the first judgment). I agree with the order but take a different approach to how the evidence in this matter should be approached. I am grateful for the summary of the evidence set out and would need only repeat it to the extent that it differs with the approach I propose. [47] I do not quarrel with the legal principles set out as applicable. I, however, wish to highlight those relevant to my assessment. There are conflicting facts on the material aspect of rape. It is not in issue whether sexual intercourse took place. The issue is whether it occurred with or without consent. Both versions have strengths and weaknesses. In my assessment of the evidence, on balance, the complainant’s version was not materially shaken and could hardly be said to have been discredited and similarly in relation to Mr Sekoala’s version. [48] As to how the complainant got to visit Mr Sekoala’s home is neutral to the question of whether she consented to sexual intercourse with Mr Sekoala. If anything, the evidence points to puzzling and inconsistent behaviour by both. When Mr Sekoala chased her away, she left but was persuaded by Mr Rathebe to stay because it was late. Her version that they had later travelled together in Mr Sekoala’s vehicle to drop off his friends is difficult to reconcile with what was alleged to have occurred before. It was never disputed. [49] The discrepancies noted in her evidence were not material. One related to whether the complainant showed Mr Sekoala a R100 note she had in her possession, or whether he grabbed it out of her hand. The point is, Mr Sekoala confirmed that at some point he had asked the complainant for money. Although this concession by Mr Sekoala is incongruent with someone who no longer wished to pursue a relationship with the complaint, it seems consistent with her 23 testimony that Mr Rathebe called her to invite her over, at Mr Sekoala’s behest. Her testimony was that she had insisted Mr Sekoala be the one who calls her. According to her, he indeed called and asked her to bring money with her. This was never disputed or challenged. Equally odd in her version is Mr Sekoala chasing her away on her arrival for only having R100 in her possession, when she had already told him while in the taxi that, that was the amount she had. [50] Her evidence relating to how the interchange between the two men occurred during the alleged rape, was not properly examined. She stated that the ordeal was a continuous event, the two men may each have had sexual intercourse with her five to six times each, the whole night but she did not count. In my view, it may be unfair to draw an inference of exaggeration against the complainant when she was not asked to clarify how this occurred or challenged on whether this was humanly possible. [51] The statement in the pre-sentencing report about the alleged stuffing of condoms in the complainant’s vagina appeared after the conviction. The trial court cannot be criticised for failing to take this into account as a discrepancy in convicting the accused persons. Moreso, this would obviously not have been put to the complainant to deal with at the trial. [52] I differ with the first judgment as regards the several inferences drawn against the complainant as they are, in my view, not supported by the evidence. There is no evidence that Mr Sekoala could not stand the sight of the complainant. His version is that he chased her away because he no longer wanted to be in a relationship with her. Nevertheless, he still allowed her to stay at his home, showed her where to sleep, and later agreed to have sexual intercourse with her. He allowed her to cook a meal for him in the morning, borrowed money from her and took her to a taxi. This may raise questions as to why Mr Sekoala would change from being a person who wanted nothing to do with the complainant to 24 end up having consensual sexual intercourse with her. Indeed, both versions have weaknesses and strengths. [53] As regards the complainant’s version, it is surprising that a person who allegedly called her to discuss their relationship, suddenly chased her away so aggressively. Relationships may be complex. Caution should therefore be exercised, and inferences should be drawn from the proven facts. The reality is that rape can take place even between people who are in an intimate relationship. Extraneous conduct of the parties aside, the key question in this case is whether sexual intercourse was consensual or not on the night in question. [54] While I have reservations about the criticisms levelled against the complainant as stated above, the State’s version was that of a single witness, which should be treated with the exercise of caution. Although this is hardly the reason not to cross examine the complainant fully, it is clear from the record of the proceedings that she was distressed as she recounted the events. Proceedings had to be adjourned. An application in terms of s 158 of the CPA was launched and granted by consent to enable her to testify via closed circuit means. That, however, is not a determining factor to the question of whether rape was proved, beyond reasonable doubt. [55] In S v Singh9 the court discussed the approach to be followed when there is a conflict of fact in a criminal matter. It said the following: ‘. . . it would perhaps be wise to repeat once again how a court ought to approach a criminal case on fact where there is a conflict of fact between the evidence of the State witnesses and that of an accused. It is quite impermissible to approach such a case thus: because the court is satisfied as to the reliability and the credibility of the State witnesses that, therefore, the defence witnesses, including the accused, must be rejected. The proper approach in a case such as this is for the court to apply its mind not only to the merits and demerits of the State and the defence 9 S v Singh 1975 (1) SA 227 (N) at 228E-H. 25 witnesses but also to the probabilities of the case. It is only after so applying its mind that a court would be justified in reaching a conclusion as to whether the guilt of an accused has been established beyond all reasonable doubt.’ (Emphasis added.) [56] What the court said in S v Radebe10 is also useful: ‘A criminal court does not judge an accused’s version in vacuum as if only a charge-sheet has been presented. The State case, taking account of its strengths and weaknesses, must be put into the scale together with the defence case and its strengths and weaknesses. ... Taking into account the State case, once again it must be established whether the defence case does not establish a reasonable alternative hypothesis. That alternative hypothesis does not have to be the strongest of the various possibilities (that is, the most probable) as that would amount to ignoring the degree and content of the State’s onus. The State’s case must also not be weighed up as an independent entity against the defence case as that is not how facts are to be evaluated. Merely because the State presents its case first does not mean that a criminal court has two separates cases which must be weighed up against one another on opposite sides of the scale. … The correct approach is that the criminal court must not be blinded by where the various components come from but rather attempt to arrange the facts, properly evaluated, particularly with regard to the burden of proof, in a mosaic in order to determine whether the alleged proof indeed goes beyond reasonable doubt or whether it falls short and thus falls within the area of a reasonable alternative hypothesis. In so doing, the criminal court does not weigh one “case” against another but strives for a conclusion (whether the guilt of the accused has been proved beyond reasonable doubt) during which process it is obliged, depending on the circumstances, to determine at the end of the case: (1) where the defence has not presented any evidence, whether the State, taking into account the onus, has presented a prima facie case which supports conclusively the State’s proffered conclusions; (2) where the defence has presented evidence, whether the totality of the evidentiary material, taking into account the onus, supports the State’s proffered conclusion. Where there is a direct dispute in respect of the facts essential for a conclusion of guilt it must not be approached: (a) by finding that the State’s version is acceptable and that therefore the defence version must be rejected; (b) by weighing up the State case against the defence case as independent masses of evidence; or (c) by ignoring the State case and looking at the defence case in isolation.’ (Emphasis added.). 10 S v Radebe 1991 (2) SACR 166 (T) at 167I-J and 168A-H. 26 [57] Further, in S v Mbuli,11 the Court made the following important remarks: ‘It is trite that the State bears the onus of establishing the guilt of the appellant beyond reasonable doubt, and the converse is that he is entitled to be acquitted if there is a reasonable possibility that he might be innocent... [I]n whichever form the test is applied it must be satisfied upon a consideration of all the evidence. Just as a court does not look at the evidence implicating the accused in isolation to determine whether there is proof beyond reasonable doubt, so too does not look at the exculpatory evidence in isolation to determine whether it is reasonably possible that it might be true. 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 abroad 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”.’ (Emphasis added.). [58] Against these principles, on the evidence presented, it is common cause that the complainant went to Mr Sekoala’s house on the day(s) of the alleged incident. She spent the night and left the following morning. [59] It is common cause that, at that stage, their relationship was in a troubled state. The complainant’s evidence was ambivalent as to whether it had terminated before she went to visit Mr Sekoala or they simply had problems. Her neighbour, Ms Baloyi, however, testified that before the complainant’s visit to Mr Sekoala’s house, the relationship between the complainant and Mr Sekoala had ended. It is also common cause that not too long after her arrival, Mr Sekoala chased the complainant away, and aggressively so. According to her, she surmised that it was because she only had R100 in her possession, which angered him. 11 S v Mbuli 2003 (1) SACR 97 (SCA) at 110C-E and G-H. 27 [60] The events that unfolded on the night in question are in dispute. It must be remembered that ‘no onus rests on the accused to convince the court of the truth and of any explanation he gives. If he gives an explanation, even if that explanation is improbable, the court is not entitled to convict unless it is satisfied, not only that the explanation is improbable; but that beyond any reasonable doubt it is false. If there is any reasonable possibility of his explanation being true, then he is entitled to his acquittal.’12 (Emphasis added.). [61] It is common cause that sexual intercourse took place between Mr Sekoala and the complainant, the issue in dispute is consent. Mr Sekoala told her that he had another girlfriend in the presence of Mr Rathebe. The complainant was hurt by the fact that Mr Sekoala wanted to end the relationship. She still wanted the relationship to continue because she loved him. Based on the version of Mr Sekoala, she cried and pleaded with him not to end it. Mr Sekoala told her and Mr Rathebe to leave his bedroom and they went to sit in the lounge. [62] Although the complainant testified that she had been prepared to sleep on the couch, in the context of the facts relayed above, Mr Sekoala’s version that he went to the lounge where the complainant was and took her to the bedroom in which she would be sleeping and left, contradicted the complainant’s materially. His evidence was that she called him stating that she still wanted to talk about their relationship, whilst crying. She pleaded with him to have sexual intercourse with her one last time, to which he acceded. According to him, consensual sexual intercourse occurred several times until the morning. [63] The complainant’s evidence that she was raped by both Mr Sekoala and Mr Rathebe must be considered along with the explanation given by both accused. Mr Rathebe’s version is wholly exculpatory. He denied any sexual 12 R v Difford 1937 AD 370 at 373. 28 intercourse with the complainant. He confirmed his knowledge about the troubled relationship Mr Sekoala and the complainant had. This was also confirmed by Ms Baloyi. His version was that the complainant asked him to talk to Mr Sekoala on several occasions about their relationship, prior to the night in question, which he refused to do. On the night in question, he intervened when Mr Sekoala manhandled the complainant, trying to chase her out of his house. He was present when Mr Sekoala told the complainant he wanted to end their relationship. After Mr Sekoala told them to leave his bedroom, he and the complainant went to the sitting room, where she was sobbing. He fell asleep and when he woke up the next morning, the complainant was not there. He later saw her doing some chores in Mr Sekoala’s bedroom. [64] The evidence of Mr Rathebe, is important in the scheme of how events unfolded on the night in question. The trial court considered the complainant’s evidence in isolation. When the strengths and weaknesses of both the State and Mr Sekoala’s version are considered, Mr Sekoala’s version does not strike as one that could be viewed as being false beyond reasonable doubt. If there is a reasonable possibility of his version being true, he is entitled to an acquittal. The court does not need to be convinced that he is telling the truth. Mr Sekoala’s evidence is supported by Mr Rathebe’s, whose evidence was hardly disturbed in cross examination. [65] As regards the bruises found on the arms of the complainant, the trial court concluded that they were sustained during the rape incidents when the two accused held her down. This was not the only reasonable inference that could be drawn from the proven facts. The bruises could equally have resulted from the aggressive manhandling by Mr Sekoala when she was being chased out of the house. Unfortunately, this was neither explored with any witness during the trial, nor was the doctor who examined the complainant called to explain which 29 scenario would be consistent with the bruises. Whether the bruises could only have been sustained when the complainant’s arms were held to the ground whilst she was being raped was not tested. The trial court erred by finding that they were consistent only with her version of rape by the two men. Since the holding down of the hands while being raped was not the only reasonable inference to be drawn from the bruises on the arms, the trial court materially misdirected itself. The accused ought to have been given the benefit of the doubt. [66] Apart from the failure to examine the evidence of the witnesses properly by both the legal representatives, the quality of the record as well as the level of interpretation leaves much to be desired. The transcribed record was indistinct on crucial aspects of the witnesses’ answers. A few times the interpreter had to be reprimanded by the court about the standard of interpretation of the evidence. It is apparent in some instances that the interpreter was not as proficient as to be expected. This is something that should be looked into as it is frequently observed in a number of trial records in criminal matters. This does compromise the effective administration of justice, with grave consequences for both the State and the defence. [67] I echo my colleague’s view that this judgment be brought to the urgent attention of Mr Rathebe for an expedited process to be considered and attended to, in view of the outcome of this appeal. __________________________ N P MABINDLA-BOQWANA JUDGE OF APPEAL 30 Appearances For the appellant: K J Masutha Instructed by: Popela Maake Attorneys, Johannesburg Symington De Kok, Bloemfontein For the respondent: J P Krause 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: 21 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 Sekoala v The State (579/2022) [2024] ZASCA 18 (21 February 2024) Today the Supreme Court of Appeal (SCA) handed down judgment upholding an appeal against the decision of the Gauteng Division of the High Court, Pretoria (the high court). Mr Abel Sekoala (accused 1) and the complainant were in an intimate relationship for a few years. Mr Ramasa Johannes Rathebe (accused 2), who was a friend of Mr Sekoala, was well known to the complainant. In the early evening on the day of the incident, the complainant arrived at the place of residence of Mr Sekoala. She testified that upon her arrival, Mr Sekoala had demanded money from her and got upset when she informed him that she did not have the money which resulted in Mr Sekoala aggressively chasing her out of his house. Mr Rathebe, however, intervened and managed to convince Mr Sekoala to let her stay as it was already late. She further testified that later that night, she was raped by both men until the early hours of the following day. She later managed to escape the house and call the police which resulted to their arrest. They were arraigned in the Regional Court, Pretoria North, Gauteng (the trial court) and charged with 11 counts of rape, in contravention of s 3 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007 (the Sexual Offences Amendment Act).They pleaded not guilty to all charges, but, were nonetheless convicted on all charges and each accused was sentenced to 10 years’ imprisonment, three (3) of which were suspended for a period of three years on condition that they were not convicted of any offence involving violence committed during the period of suspension. They were effectively sentenced to 7 years’ imprisonment. Mr Sekoala together with Mr Rathebe, sought leave to appeal against their convictions from the trial court, which was dismissed by the trial court. On 3 November 2016, they petitioned the Judge President of the Gauteng Division of the High Court, Pretoria (the high court) in terms of s 309C of the Criminal Procedure Act 51 of 1977 (the CPA) for leave to appeal only against their convictions on all counts. On 31 May 2017 the high court granted them leave to appeal against their convictions and sentences. The appeal against convictions were dismissed and albeit there was no leave sought on sentence, the high court nevertheless set aside the sentence and increased the sentence to 20 years in terms of s 309(3) of the CPA. Dissatisfied with the outcome of the appeal before the high court, only Mr Sekoala petitioned this Court for special leave to appeal against both his convictions and sentences. This Court granted him special leave to appeal on 29 April 2022. On appeal before this Court It was submitted on behalf of Mr Sekoala, that his guilt was not proven beyond a reasonable doubt because the trial court misdirected itself by: (a) finding that the first report witness’ evidence was not contradicted; (b) failing to approach the evidence of the complainant with caution, as it was the evidence of a single witness; (c) finding that the injuries were consistent with the evidence which indicated absence of consent; (d) not considering Mr Sekoala’s version; (e) not giving reasons for preferring the evidence of the complainant over that of Mr Sekoala; and (f) failing to state why they found Mr Sekoala’s version to be so improbable that it could not have been reasonably possibly true. On the other hand, the State contended, that both the trial court and high court were correct in finding that the State had proved Mr Sekoala’s guilt beyond a reasonable doubt. The question before this Court was whether the guilt of Mr Sekoala was proven beyond a reasonable doubt. In doing so, it had to be determined whether the trial court committed any irregularities during the trial, and whether those irregularities undermined Mr Sekoala’s right to a fair trial. 2 The SCA held that an appeal court could only interfere with the factual findings of the trial court where there had been a material misdirection. It further held that it was clear from the record that there were two conflicting versions on how the events unfolded on the day in question. Therefore, the question which needed to be considered by the court a quo was whether on the totality of evidence it could have been said that the State proved its case beyond reasonable doubt. The SCA found that both the trial court and the high court erred in accepting the version of events as described by the complainant, without giving reasons for such a preference. In doing so, both courts accepted facts which were irreconcilable with the version of Mr Sekoala. Furthermore, the courts below erred in its failure to deal with the evidence of a single witness and treat the complainant’s evidence with caution, and in turn failed to notice that she gave different versions as to what exactly happened on the night in question. These glaring inconsistencies and contradictions in her version were ignored by the courts below, though they found her evidence to be reliable. Had the trial court applied the necessary caution, it would have led to the rejection of the complainant’s evidence on the grounds that it was not clear and satisfactory in all respects as required in terms of s 208 of the CPA. It also failed to establish if the complainant might have any bias adverse to Mr Sekoala and his erstwhile co-accused, Mr Rathebe. In conclusion the SCA found that the high court failed to appreciate that an accused person’s version could only be rejected if the court was satisfied that it was false beyond reasonable doubt. A court, according to the SCA, was entitled to test an accused person’s version against improbabilities. An accused person was entitled to an acquittal if there was a reasonable possibility that his or her version was reasonably possibly true. The SCA further held that, the trial court failed to point out any improbabilities in Mr Sekoala’s version. In that regard, it could not be said that the State proved its case beyond a reasonable doubt against him. He was therefore entitled to an acquittal. And based on that finding, the appeal was upheld against the convictions and sentences. In a separate concurrence the Court, agreed with the order of the first judgment but took a different approach to how the evidence in this matter should have been approached. It held that the issue was not whether sexual intercourse took place. The issue was whether it occurred with or without consent. The Court found that both versions had strengths and weaknesses. However, according to the Court, the evidence of Mr Rathebe, was important in the scheme of how events unfolded on the night in question. The Court found that the trial court had erred by considering the complainant’s evidence in isolation. When the strengths and weaknesses of both the State and Mr Sekoala’s version were considered, Mr Sekoala’s version did not strike as one that could be viewed as being false beyond reasonable doubt. If there was a reasonable possibility of his version being true, the Court held that he was entitled to an acquittal. The court does not need to be convinced that he was telling the truth. Mr Sekoala’s evidence was supported by Mr Rathebe’s, whose evidence was hardly disturbed in cross examination and on that basis, the appeal had to be upheld against both conviction and sentence. The Court further ordered that that this judgment be brought to the urgent attention of Mr Rathebe for an expedited process to be considered and attended to in respect of Mr Rathebe, in view of the judgment in relation to Mr Sekoala, his co-accused. ~~~~ends~~~~

4257

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 58/2023 71/2023 351/2023 In the matter between: MINISTER OF MINERAL RESOURCES AND ENERGY FIRST APPELLANT SHELL EXPLORATION AND PRODUCTION SOUTH AFRICA B.V. SECOND APPELLANT IMPACT AFRICA LIMITED THIRD APPELLANT BG INTERNATIONAL LIMITED FOURTH APPELLANT and SUSTAINING THE WILD COAST NPC FIRST RESPONDENT MASHONA WETU DLAMINI SECOND RESPONDENT DWESA-CWEBE COMMUNAL PROPERTY ASSOCIATION THIRD RESPONDENT NTSHINDISO NONGCAVU FOURTH RESPONDENT SAZISE MAXWELL PEKAYO FIFTH RESPONDENT CAMERON THORPE SIXTH RESPONDENT ALL RISE ATTORNEYS FOR CLIMATE AND THE ENVIRONMENT NPC SEVENTH RESPONDENT 2 NATURAL JUSTICE EIGHTH RESPONDENT GREENPEACE ENVIRONMENTAL ORGANISATION NPC NINTH RESPONDENT Neutral citation: Minister of Mineral Resources and Energy and Others v Sustaining the Wild Coast NPC and Others (Case no 58/2023; 71/2023; 351/2023) [2024] ZASCA 84 (3 June 2024) Coram: PONNAN, MOCUMIE and MATOJANE JJA and SMITH and SEEGOBIN AJJA Heard: 17 May 2024 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 3 June 2024 at 11h00. Summary: Review – failure by court to consider question of just and equitable relief under s 172 of the Constitution when setting aside grant and renewals of exploration right – court on appeal – empowered to do so – suspending order setting aside decisions. 3 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Eastern Cape Division of the High Court, Makhanda (Mbenenge JP, Nhlangulela DJP and Norman J, sitting as court of first instance): a Save to the extent set out hereunder, the appeal is dismissed with costs, including those of two counsel to be paid jointly and severally by the appellants. b The order of the court below is amended by the addition of the following: ‘5. Paragraphs 1, 2 and 3 hereof are suspended pending determination of the application submitted on 21 July 2023 pursuant to s 81 of the Mineral and Petroleum Resources Development Act 28 of 2002 for the renewal of exploration right 12/3/252.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Ponnan JA (Mocumie and Matojane JJA and Smith and Seegobin AJJA concurring): [1] This appeal has its genesis in the grant, on 29 April 2014, of an exploration right by the first appellant, the Minister of Mineral Resources and Energy (the Minister), to the third appellant, Impact Africa Limited (Impact), to be exercised by the second appellant, Shell Exploration and Production South Africa B.V. and the fourth appellant, BG International Limited (BG) (the second and fourth appellants are collectively referred to as Shell). On 17 May 2017, Impact applied for a renewal of the exploration right, which was granted on 20 December 2017. On 13 March 2020, Impact applied for a second renewal of the exploration right, which was granted on 30 July 2021. [2] When Impact and Shell sought to exercise the exploration right by conducting seismic surveys off the Wild Coast of South Africa, the first to seventh respondents approached the Eastern Cape Division of the High Court, Makhanda for urgent interdictory relief on 2 December 2021. Relief was sought in two parts. Part A served before Bloem J, who, on 28 December 2021, interdicted Impact and Shell from 4 undertaking seismic survey operations under the exploration right, pending the finalisation of Part B. The eighth respondent, Natural Justice and the ninth respondent, Greenpeace Environmental Organisation NPC, thereafter sought and obtained leave to join as the eighth and ninth applicants in the proceedings. [3] Part B was heard on 30 and 31 May 2022 by a specially constituted court of three judges consisting of Mbenenge JP, Nhlangulela DJP and Norman J (the high court). In a written judgment delivered on 1 September 2022 the high court held: ‘1. The decision taken by the first respondent on 29 April 2014 granting exploration right 12/3/252 to the fourth respondent for the exploration of oil and gas in the Transkei and Algoa exploration areas is reviewed and set aside. 2. The decision taken by the first respondent on 20 December 2021 to grant a renewal of the exploration right is reviewed and set aside. 3. The decision taken by the first respondent on 26 August 2021 to grant a further renewal of the exploration right is reviewed and set aside. 4. The first, fourth and fifth respondents shall pay [the] costs of this application, jointly and severally, the one paying the other to be absolved, such costs to include, in the case of the first to seventh applicants, the costs of three counsel and, in the case of the eighth and ninth applicants, the costs of two counsel.’ [4] In arriving at that conclusion, the high court declined the invitation by the respondents to declare that Shell and Impact were not entitled to commence any exploration activity without first seeking and obtaining an environmental authorisation in terms of the National Environmental Management Act 107 of 1998 (NEMA). The high court took the view that the success of the review would render the relief sought under NEMA, which had been raised in the alternative to the main relief, redundant. With the leave of the high court, the Minister, Shell and Impact appeal, as the first to third appellants respectively, against the judgment and order of the high court and the respondents challenge by way of a cross appeal the refusal of the high court to consider and determine the relief sought under NEMA. At the bar, it came to be accepted that the cross appeal was, in truth, in the nature of a conditional cross appeal, and that the need to enter into it would only arise were we to uphold the main appeal. 5 [5] The judgment of the high court has been reported sub nom Sustaining the Wild Coast NPC and Others v Minister of Mineral Resources and Energy and Others 2022 (6) SA 589 (ECMk), it is accordingly not necessary for the facts or litigation history, which has been set out therein, to be repeated here. [6] Before turning to the substantive merits of the appeal, it is necessary to consider two preliminary issues raised by the appellants before the high court and persisted in on appeal. It is contended that: (i) the review application should have been dismissed on the ground that the respondents unreasonably delayed in launching their challenge, thus falling foul of the 180-day time limit under s 7(1) of the Promotion of Administrative Justice Act 3 of 2000 (PAJA); and, (ii) the appellants failed to exhaust their internal remedies, namely an appeal in terms of s 96 of the Mineral and Petroleum Resources Development Act 28 of 2002 (the MPRDA) against the grant of the exploration right and the renewals, prior to bringing their review application. As to (i): [7] The respondents maintain that they became aware of the grant of the exploration right in late October and early November 2021. The review application was initiated, by way of an amendment to the notice of motion in January 2022, after the grant of the interim interdict by Bloem J, well within the 180-day limit, according to the respondents. [8] Shell asserts that it does not matter when the individual persons or communities became aware of the impugned decisions and their reasons, because, so the assertion proceeds, the decisions affected the public at large and (relying on the OUTA decision)1 the clock started ticking when the public at large might reasonably have been expected to have become aware of the decisions and the reasons for them, regardless of when the concerned individuals had themselves become aware. Shell maintains that this occurred on 20 May 2020, when an Environmental Compliance Notice was sent to interested and affected persons [IA&Ps], and to the general public, allegedly alerting them to the grant of the exploration right. 1 Opposition to Urban Tolling Alliance v South African National Roads Agency Ltd [2013] ZASCA 148; [2013] 4 All SA 639 (SCA) para 27. 6 [9] Impact adopts a similar approach to Shell, claiming that the applicable test is when the public at large could reasonably be expected to have become aware of the decisions and their reasons. Impact maintains that this occurred in 2013, when it notified the public of its application for an exploration right. The Minister adopts the same stance as Impact, stating that the public at large would reasonably have been expected to have become aware of the grant of the exploration right around 29 April 2014, some seven years before the institution of the review. [10] The appellants accordingly contend that the high court erred in applying the test under s 3 of PAJA (which relates to administrative action affecting a person) as opposed to s 4 (which relates to administrative action affecting the public). As a result, so the contention proceeds, the high court focused on the fact of when the individual applicants actually obtained knowledge of the decisions sought to be reviewed rather than the question of when the public at large might reasonably be expected to have knowledge of the administrative action. But, even if it is assumed in the appellants’ favour that the high court should have applied s 4, instead of s 3, of PAJA, it makes no difference. There is no evidence that the Minister (or his delegate) gave the public notice of the decisions prior to October 2021. [11] Under s 3(2)(b) of PAJA, an administrator is required to afford all persons whose rights are materially and adversely affected by administrative action: ‘(i) adequate notice of the nature and purpose of the proposed administrative action; (ii) a reasonable opportunity to make representations; (iii) a clear statement of the administrative action; (iv) adequate notice of any right of review or internal appeal, where applicable; and (v) adequate notice of the right to request reasons in terms of section 5.’ [12] No evidence has been adduced that the Minister or his delegates gave the public notice that the exploration right had initially been granted or later renewed. The Minister does not point to any notice or publication. It is simply asserted that the public would have become aware of the grant of the exploration right around April 2014. Nor, does Impact specify how the public became aware of the relevant decisions prior to October 2021. Impact contends that the general public would have ‘become aware of the exploration right in 2013, when there was public notification of the exploration right 7 application by means of: notices in four newspapers on 22 March 2013; emails to stakeholders on 22 March 2013 . . . ; emails to all IA&Ps on 17 and 24 May 2013 notifying of the draft EMPr’s [environmental management programme’s] availability for review and comment; and three public meetings in Port Elizabeth, East London and Port St Johns on 3, 4 and 5 June 2013’. [13] However, these processes gave notice of Impact’s application for an exploration right, not of the grant of the exploration right or the renewals thereof. In any event, the grant of Impact’s exploration right occurred on 29 April 2014, after the above notices were given and meetings held. Both the Minister and Impact attempt to skirt around this problem by focusing on the applicability of ss 3 and 4 of PAJA. However, the argument misses the point. The point is that the Minister should have given clear notice of his decision to grant the exploration right and its renewals and informed all affected persons (being individuals and the public) of their right to appeal the decisions or request reasons. The Minister failed to do so. In the absence of a clear announcement of the decisions, the public could not reasonably have known of their existence. It was only after 29 October 2021, when SLR Consulting (at the instance of Shell) gave notice of Shell’s intention to commence with the seismic survey and the issue was picked up in the media, that the public at large might reasonably have become aware of the decisions. It could thus never be that the general public could reasonably be expected to have knowledge that a right had been granted merely because the general public had knowledge that a right had been applied for. [14] There is thus no basis for the appellants to claim that the public might reasonably have been expected to become aware of the decisions prior to late October 2021. As such, the 180-day time period only began running in October 2021 and there was no delay in launching the review proceedings. As to (ii): [15] According to the respondents, they did not pursue an internal appeal for four reasons: First, they only found out about the grant and the renewals in November 2021, almost seven years after the exploration right was granted. Second, the initial approach to the Court was for urgent interdictory relief, in circumstances where the commencement of the seismic survey was imminent and would likely have been 8 concluded prior to the resolution of any appeal thereby rendering nugatory any internal appeal process. Third, there existed a reasonable apprehension of bias against them on the part of the Minister, which was based on the Minister’s opposition to part A of their application despite no relief being sought against him, as well as his application for leave to appeal the judgment and order granted under part A. The apprehension was fortified by several public statements made by the Minister, criticising public interest groups for challenging the seismic surveys and maintaining his refusal to review the exploration right. The Minister was quoted as saying: ‘We consider the objections to these developments as apartheid and colonialism of a special type, masqueraded as a great interest for environmental protection.’ The Minister did not engage at all with the reasons advanced by the first to seventh respondents for not pursuing an internal appeal. [16] It is suggested that the respondents cannot rely on the conduct and public statements of the Minister after the litigation commenced to justify their failure to exhaust internal remedies prior to applying for the review and the setting aside of the Minister’s decisions. What this ignores, however, is that the grounds giving rise to the perception of bias all arose before the notice of motion was amended to include the review of the Minister’s decisions. The obligation to exhaust internal remedies, and the realisation that this would be fruitless, was not an issue at the time of the launch of the application and the hearing of part A. This perception of bias only arose after part A of the application had been finalised, when the review relief was introduced by way of the amendment to the notice of motion. [17] It is not in dispute that neither the public nor the IA&Ps was given notice of the decisions or informed of their right to appeal or to ask for reasons. The failure to do so, which is unexplained on the papers, is subversive of the procedural entitlements of the appellants. What is more, after learning of the existence of the exploration right, the Minister and the Petroleum Agency of South Africa (PASA) was approached on behalf of Natural Justice and Greenpeace Africa with a request for copies of the exploration right and the other impugned decisions as well as reasons for those decisions and for an extension of the period within which to bring an appeal. The request was ignored. Thus, details of the impugned decisions came to be seen for the first time when the rule 53 record in the review was furnished. In the circumstances, 9 the high court can hardly be faulted for its finding that: ‘[t]his is a classic case of an internal remedy that would not have been objectively implemented and which would have rendered nugatory the values of administrative justice enshrined in the Constitution and upheld by PAJA’. [18] Moreover, the test for interference with the exercise of a discretion of this nature has not been satisfied. The high court had a wide discretion to exempt the respondents from the relevant internal remedy provisions. This was a permissible option available to it in terms of s 7(2)(c) of PAJA.2 When it did so, it exercised a true discretion. The test for interference with such a discretion on appeal is that this Court would have to be satisfied that the discretion was not exercised judicially or was influenced by wrong principles or wrong facts.3 The appellants have not come close to satisfying this test. [19] Turning to the merits: The right to procedurally fair administrative action is entrenched in s 33 of the Bill of Rights. The grant of an exploration right constitutes administrative action.4 When administrative action materially and adversely affects the rights of any person, their right to procedural fairness is triggered. It can hardly be in dispute that Impact was required to meaningfully consult with the communities and individuals that would be affected by the seismic blasting. The duty to do so derives from: (i) the obligations imposed upon it, as an applicant for an exploration right, by the MPRDA; and, (ii) the self-standing duty under PAJA to consult with the communities as holders of existing customary rights (particularly customary fishing rights) that would be adversely affected by the seismic blasting. [20] Section 3 of PAJA sets out the requirements for procedural fairness. These include that persons, whose rights are impacted, must be given adequate notice of the nature and purpose of the proposed administrative action and a reasonable opportunity to make representations.5 In the context of exploration and mining, PAJA 2 S 7(2)(c) of PAJA provides: ‘A court or tribunal may, in exceptional circumstances and on application by the person concerned, exempt such person from the obligation to exhaust any internal remedy if the court or tribunal deems it in the interest of justice’. 3 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) paras 83 and 88. 4 Bengwenyama Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd and Others [2010] ZACC 26; 2011 (4) SA 113 (CC); 2011 (3) BCLR 229 (CC) (Bengwenyama). 5 S 3(2)(b)(i) and (ii) of PAJA. 10 must be read together with the MPRDA. When an application for an exploration right is made, the MPRDA imposes obligations on an applicant to consult with any affected party.6 [21] The general principles that are applicable to consultation of communities in relation to applications under the MPRDA were set out by the Constitutional Court in Bengwenyama Minerals (Pty) Ltd and Others v Genorah Resources (Pty) Ltd and Others (Bengwenyama). Two bear emphasis: First, interested and affected persons must be informed in sufficient detail of the proposed mining activities and what those will entail, so that they can properly assess its impact. The provision of the necessary information will allow such persons to make an informed decision in relation to the representations that they will submit to the decision-maker.7 Second, a meaningful consultation process is integral to ensuring procedural fairness. The Constitutional Court stated that ‘any administrative process conducted or decision taken in terms of the [MPRDA] must be taken in accordance with the principles of lawfulness, reasonableness and procedural fairness. The prescripts of the [MPRDA] in this regard are subject to the provisions of PAJA’.8 Although Bengwenyama dealt with consultation in relation to prospecting right applications, the reasoning applies with equal force to the applications encountered here. [22] The adequacy of the consultation process adopted in this case has been subjected to wide-ranging criticism by the respondents, including that: (i) the language used is technical and inaccessible – by way of example, the work programme is described as including the following steps: ‘Phase 1: Airborne geophysics acquisition (gravity and magnetics) to define existing structural trends, identify additional features and to address depth to basement/magnetic source. Phase 2: 2D and 3D seismic surveys followed by processing and interpretation . . .’; and, 6 These are derived from s 79(4) of the MPRDA, which deals with applications for exploration rights. At the time that the exploration right was granted, this section provided that: ‘(4) If the designated agency accepts the application, the designated agency must, within 14 days of the receipt of the application, notify the applicant in writing – (a) to notify and consult with any affected party; and (b) to submit an environmental management programme in terms of section 39 within a period of 120 days from the date of the notice.’ 7 Bengwenyama paras 66–67. 8 Bengwenyama para 61. 11 (ii) the geographic location that will be affected is described in vague and overbroad terms as the ‘Transkei/Algoa area off the Eastern Cape Coast of South Africa’ and ‘the proposed Exploration area (45 838km2) extends from the coast out to a maximum water depth of approximately 4000m’, making it impossible for communities to know if the notice was applicable to them. [23] However, by far the most trenchant criticism – one from which there appears to be no escape for the appellants – is that the notices that were published in the four newspapers were inaccessible to many members of the respondent communities. Three of the newspapers are in the English language and one in Afrikaans. Few people in the respondent communities (particularly the Amadiba community) read English, and virtually nobody speaks Afrikaans. The majority of residents along the Wild Coast speak isiXhosa or isiMpondo. If Impact wanted to meaningfully engage with them, it should have prepared notices in their language. In addition, there is no newspaper circulating in Amadiba or in the communities of Dwesa-Cwebe. Newspapers are not delivered to these communities. Newspaper advertisements would simply not reach them, even if in a language of their choice. [24] As is the case with many communities along the Wild Coast, the people of Amadiba mostly get their news from the radio. They mainly listen to Ukhozi FM and Umhlobo Wenene. The respondents say that had there been notice or discussion of Shell’s proposed seismic blasting on the radio, they would certainly have commented. The adverts in the four newspapers were intended to notify the public about the proposed project and provide details of the consultation process and information as to how members of the public could provide input in respect of the forthcoming survey. In the circumstances, the choice of print media was plainly ill-advised. This was exacerbated by the choice of English and Afrikaans language newspapers. The process, which was more illusory than real, was thus manifestly inadequate. [25] It follows, and this is the logical corollary to the inadequacy of the consultation process, that when assessing (and ultimately granting) Impact’s application for an exploration right, a number of relevant factors were not considered, including but not limited to: the detrimental impact that the surveying activities would have on the spiritual and cultural practices of the affected communities; the livelihood of the 12 members of the communities along the Wild Coast, inasmuch as the sea is the primary – and in many cases the only – source of nutrition and income for them; and, the requirements of the National Environmental Management: Integrated Coastal Management Act 24 of 2008 (ICMA), which creates specific measures for the protection of the coastal zone. [26] It is thus clear that there was a failure to take relevant considerations into account and as such the decision is reviewable under s 6(2)(e)(iii) of PAJA.9 Once a ground of review under PAJA has been established, s 172(1)(a) of the Constitution requires the decision to be declared unlawful, but that is not the end of the matter. The consequence of a declaration of unlawfulness is that it must then be dealt with under s 172(1)(b) of the Constitution.10 Not only did the high court fail to consider the question of just and equitable relief under section 172 of the Constitution, but it went so far as to hold that: ‘[a]uthorising new oil and gas exploration, with its goal of finding exploitable oil and/or gas reserves and consequently leading to production, is not consistent with South Africa complying with its international climate change commitments.’ On any reckoning such a far-reaching finding, which has a sterilising effect and for which there can be no warrant, cannot be endorsed. [27] In exercising powers under s 172(1)(b), courts have the widest possible remedial discretion.11 The appellants submit that our courts have been cognisant of ensuring that innocent parties are not unduly prejudiced,12 and that it is thus necessary for this Court to revisit the aspect of remedy. The Constitutional Court in Electoral Commission v Mhlope & others,13 emphasised the need for courts to be pragmatic in crafting just and equitable remedies in the exercise of its wide remedial powers. A just 9 In terms of s 6(2)(e)(iii) of PAJA, a court or tribunal has the power to judicially review an administrative action if the action was taken because irrelevant considerations were taken into account or relevant considerations were not considered. 10 Allpay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of the South African Social Security Agency and Others [2013] ZACC 42; 2014 (1) SA 604 (CC); 2014 (1) BCLR 1 (CC) para 25. 11 Economic Freedom Fighters v Speaker of the National Assembly and Others; Democratic Alliance v Speaker of the National Assembly and Others [2016] ZACC 11; 2016 (5) BCLR 618 (CC); 2016 (3) SA 580 (CC) para 132. 12 Millennium Waste Management (Pty) Ltd v Chairperson of the Tender Board: Limpopo Province and Others [2007] ZASCA 165; [2007] SCA 165 (RSA); [2008] 2 All SA 145; 2008 (2) SA 481; 2008 (5) BCLR 508; 2008 (2) SA 481 (SCA) para 23. 13 Electoral Commission v Mhlope & others [2016] ZACC 15; 2016 (8) BCLR 987 (CC); 2016 (5) SA 1 (CC) para 132. 13 and equitable remedy must be: proportionate (the Constitutional Court has found that it is disproportionate to set aside an entire project as a consequence of an imperfect process);14 fair and just in the context of the particular dispute;15 ample and flexible and should place substance above form.16 [28] Seeing as the high court ered in not weighing up the relevant factors, this Court is empowered to do so. There has been an almost eight-year delay between the granting of the exploration right and the review and, acting in reliance on the validity of the decisions, there has been significant financial expenditure in the region of R1.1 billion, dating back to 2012 when Impact applied for its technical co-operation permit (which preceded the exploration right). Two renewals of the exploration right have been granted, accordingly there will be only one more opportunity to renew the exploration right. A moratorium has since been placed on exploration rights over the entire South African coast,17 thus Shell and Impact may never get the opportunity to exercise the right. [29] The appellants also argue that the high court failed to consider the adverse consequences for the public in whose interests the decision-maker purportedly acts. Shell and Impact provided evidence of the economic and social benefits that will fail to materialise without the exploration being undertaken. Sight cannot also be lost of the public interest in the finality of administrative decision-making and the degree or materiality of the irregularity or that the long delay and lack of legal certainty may well have a chilling effect on foreign investment. The appellants contend that all of these can be mitigated by the possibility of directing that measures be implemented, including that a further public participation process be undertaken. In the circumstances, so the contention goes, considerations of justice, equity and the 14 Mazibuko and Others v City of Johannesburg and Others [2009] ZACC 28; 2010 (3) BCLR 239 (CC); 2010 (4) SA 1 (CC) para 134. 15 Head of Department: Mpumalanga Department of Education and Another v Hoërskool Ermelo and Another [2009] ZACC 32; 2010 (2) SA 415 (CC); 2010 (3) BCLR 177 (CC) para 96. 16 Ibid para 97. 17 See GN 657 in GG 41743 of 28 June 2918; GN 1664 of GG 42915 of 20 December 2019. See further GN 71 in GG 37294 of 3 February 2014; and GN 932 in GG 35866 of 16 November 2012. 14 principles of finality and certainty, dictate that the harshness of the exploration right being set aside, can and should be ameliorated.18 [30] In Joubert Galpin Searle Inc, Plasket J thought it necessary ‘to temper the setting aside . . . in a way that minimises the negative effects’. He accordingly decided to ‘suspend the order reviewing and setting aside . . . so that something remains in place, imperfect as it may be’.19 There is much to commend that approach in a matter such as this, particularly in the light of what follows. Shortly before the hearing of the appeal, we raised the following with the parties: ‘Inasmuch as each of the first and second renewal of the exploration right, which issued on 20 December 2017 and 26 August 2021 respectively, was not to exceed two years, the parties will be required at the hearing of the matter to address whether the decision sought in the appeal will have any practical effect or result within the meaning of s 16(2)(a)(i) of the Superior Courts Act 10 of 2013.’ [31] We were informed, in response, that prior to the end of the second renewal period of the exploration right and, pursuant to exercising their exclusive right to do so in accordance with s 82(1)(b) of the MPRDA, Impact and BG timeously submitted an application to PASA on 21 July 2023, to enter into a third renewal period as permitted by s 81(4) of the MPRDA. In terms of s 81(5) of the MPRDA, an exploration right in respect of which an application for renewal has been lodged shall, notwithstanding its expiry date, remain in force until such time as the application has been granted or refused. Thus, despite the current expiration date of 26 August 2023, the exploration right remains in force until the third renewal application has been granted or refused. It would thus be entirely within the power of this Court to direct that as part and parcel of a proper consideration of the third renewal application, a further public participation process be conducted to cure the identified defects in the process already undertaken, especially as the parties who claim to have an interest in the matter have now been identified and the matters warranting consideration have been fully canvassed in a 19-volume record consisting of some 4000 pages. Consequently, save for suspending 18 See: Khumalo and Another v Member of the Executive Council for Education: KwaZulu-Natal [2013] ZACC 49; 2014 (3) BCLR 333 (CC); (2014) 35 ILJ 613 (CC); 2014 (5) SA 579 (CC) at para 53. And more specifically in relation to the MPRDA and/or NEMA; 19 Joubert Galpin Searle Inc and Others v Road Accident Fund [2014] ZAECPEHC 19; [2014] 2 All SA 604 (ECP) 2014 (4) SA 148 (ECP) paras 105 and 106. 15 the orders setting aside the granting of exploration right 12/3/252 and each of the two renewals dated 20 December 2017 and 26 August 2021 respectively, the appeal is otherwise dismissed. [32] In the result: a. Save to the extent set out hereunder, the appeal is dismissed with costs, including those of two counsel to be paid jointly and severally by the appellants. b. The order of the court below is amended by the addition of the following: ‘5. Paragraphs 1, 2 and 3 hereof are suspended pending determination of the application submitted on 21 July 2023 pursuant to s 81 of the Mineral and Petroleum Resources Development Act 28 of 2002 for the renewal of exploration right 12/3/252.’ ________________ V M PONNAN JUDGE OF APPEAL 16 Appearances For the first appellant: A Beyleveld SC and AC Barnett Instructed by: The State Attorney, Gqeberha The State Attorney, Bloemfontein For the second appellant: A Friedman Instructed by: Shepstone & Wylie, Durban McIntyre van der Post, Bloemfontein For the third appellant: C Loxton SC, A Nacerodien and P Schoeman Instructed by: Cliffe Dekker Hofmeyr Inc., Cape Town Honey Attorneys, Bloemfontein For the first to seventh respondents: E Webber and N Stein Instructed by: Richard Spoor Inc., Cape Town Matsepes Inc., Bloemfontein For the eighth & ninth respondents: N Ferreira and L Moela Instructed by: Cullinan and Associates Inc., Cape Town CWA 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: 3 June 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 Minister of Mineral Resources and Energy and Others v Sustaining the Wild Coast NPC and Others (58/2023; 71/2023; 351/2023) [2024] ZASCA 84 (3 June 2024) Today the Supreme Court of Appeal (SCA), save for suspending the orders setting aside the granting of the exploration right and each of the two renewals, dismissed with costs, including those of two counsel to be paid jointly and severally by the appellants, an appeal against a decision of the Eastern Cape Division of the High Court, Makhanda (the high court). On 29 April 2014, an exploration right was granted by the first appellant, the Minister of Mineral Resources and Energy (the Minister), to the third appellant, Impact Africa Limited (Impact), to be exercised by the second appellant, Shell Exploration and Production South Africa B.V. and the fourth appellant, BG International Limited (BG) (the second and fourth appellants are collectively referred to as Shell). On 17 May 2017 and 13 March 2020 respectively, Impact applied for a renewal of the exploration right, which was granted in both instances. On 2 December 2021, the first to seventh respondents approached the high court for an urgent interdict because Impact and Shell sought to exercise the exploration right by conducting seismic surveys off the Wild Coast of South Africa. Relief was sought in two parts. Under Part A, on 28 December 2021, Bloem J interdicted Impact and Shell from undertaking seismic survey operations, pending the finalisation of Part B. Under Part B, on 1 September 2022, the high court held that the decisions to grant the exploration right as well as the renewals be reviewed and set aside. The first to third appellants appealed against the judgment and order of the high court. The SCA agreed with the high court that there was a failure on the part of the decision-maker to take relevant considerations into account and as such the decision was reviewable. However, according to the SCA, the consequence of a declaration of unlawfulness is that the matter must then be dealt with under s 172(1)(b) of the Constitution, which the high court had failed to do. Seeing as the high court erred in not weighing up the relevant factors, the SCA held that it is empowered to do so. It took into account that there has been almost an eight-year delay between the granting of the exploration right and the review and there has been significant financial expenditure in the region of R1.1 billion by the appellants. There will be only be one more opportunity to renew the exploration right. A moratorium has since been placed on exploration rights over the entire South African coast, thus Shell and Impact may never get the opportunity to exercise the right. 2 The high court had also failed to consider the adverse consequences for the public in whose interests the decision-maker purportedly acts. Shell and Impact provided evidence of the economic and social benefits that will fail to materialise without the exploration being undertaken. According to the SCA, sight cannot be lost of the public interest in the finality of administrative decision-making and the degree or materiality of the irregularity or that the long delay and lack of legal certainty may well have a chilling effect on foreign investment. These could be mitigated by the possibility of directing that measures be implemented, including that a further public participation process be undertaken. In the circumstances, considerations of justice, equity and the principles of finality and certainty, dictated that the harshness of the exploration right being set aside, can and should be ameliorated. The SCA was informed that prior to the end of the second renewal period of the exploration right and, pursuant to exercising their exclusive right to do so in accordance with s 82(1)(b) of the MPRDA, Impact and BG timeously submitted an application on 21 July 2023, to enter into a third renewal period as permitted by s 81(4) of the MPRDA. In terms of s 81(5) of the MPRDA, an exploration right in respect of which an application for renewal has been lodged shall, notwithstanding its expiry date, remain in force until such time as such application has been granted or refused. Thus, despite the current expiration date of 26 August 2023, the exploration right remains in force until the third renewal application has been granted or refused. The SCA thus took the view that it would be entirely within its power to direct that as part and parcel of a proper consideration of the third renewal application, a further public participation process be conducted to cure the identified defects in the process already undertaken, especially as the parties who claim to have an interest in the matter have now been identified and the matters warranting consideration have been fully canvassed. Consequently, the SCA suspended the orders setting aside the granting of exploration right 12/3/252 and each of the two renewals dated 20 December 2017 and 26 August 2021 respectively, pending finalisation of the third renewal. The appeal was otherwise dismissed. --------oOo--------

4182

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 729/2022 In the matter between: CLOETE MURRAY N O FIRST APPELLANT GERT LOUWRENS STEYN DE WET N O SECOND APPELLANT MAGDA WILMA KETS N O THIRD APPELLANT (In their capacities as joint liquidators of Phehla Umsebenzi Trading 48 CC (in liquidation)) and MADALA LOUIS DAVID NTOMBELA FIRST RESPONDENT SEFORA HIXSONIA NTOMBELA SECOND RESPONDENT HUGO & TERBLANCHE AUCTIONEERS THIRD RESPONDENT Neutral citation: Murray and Others NNO v Ntombela and Others (729/2022) [2024] ZASCA 24 (14 March 2024) Coram: PETSE DP and MABINDLA-BOQWANA and MOLEFE JJA and KATHREE-SETILOANE and KEIGHTLEY AJJA Heard: 24 August 2023 Delivered: 14 March 2024 2 Summary: Review – whether it is competent for a court to compel delivery of a rule 53 record before determining whether what is before it is a review as contemplated in rule 53 when this is placed in issue in limine by the adversary. 3 ORDER On appeal from: Free State Division of the High Court, Bloemfontein (Opperman J, sitting as court of first instance): The appeal is dismissed with costs. JUDGMENT Petse DP (Mabindla-Boqwana and Molefe JJA concurring): [1] The issue in this appeal is whether the Free State Division of the High Court, Bloemfontein (the high court) was correct in compelling delivery of a rule 53 record at the instance of the applicants in a review application (the respondents in this appeal) in the face of an assertion by the appellants who were the respondents in the high court, that the proceedings before it were not a proper review as contemplated in rule 53, before deciding the anterior question of whether what served before it were in truth review proceedings. [2] The facts in this case are largely common cause and can be briefly stated. The three appellants, Mr Cloete Murray N O, Mr Gert Louwrens Steyn De Wet N O and Ms Magda Wilma Kets N O, (the first to third appellants respectively) are joint liquidators (the liquidators) of Phehla Umsebenzi Trading 48 CC (in liquidation) (Phehla Umsebenzi). The first and second respondents, Mr Madala Louis David Ntombela and Ms Sefora Hixsonia Ntombela, (the respondents) are married to each 4 other in community of property. The third respondent, Hugo & Terblanche Auctioneers, did not take part in the litigation both in the high court and this Court. On 6 August 2015, the respondents allegedly purchased immovable property (the property) from Phehla Umsebenzi for a purchase price of R2 500 000. This amount was alleged to have been paid to the members of Phehla Umsebenzi, even before the agreement was signed. The property was, however, not transferred to the respondents’ names and still remains in Phehla Umsebenzi's name. [3] A couple of years went by without the transfer being effected. From 2015 to 2019, the respondents made relentless enquiries from Phehla Umsebenzi concerning the inordinate delay in transferring the property to them. They were informed by the transferring attorneys that the seller had not signed the transfer papers. In addition, the transferring attorneys indicated that they were experiencing problems in obtaining clearance figures from the Mangaung Metropolitan Municipality, due to a debt owed to the latter by Phehla Umsebenzi. The transferring attorneys nevertheless assured the respondents that transfer would take place as soon as those issues were resolved. [4] In 2019, the first respondent decided to engage his own attorneys and instructed them to follow up with the transferring attorneys as to the causes of the delay in passing transfer. This intervention failed to bear fruit. On 21 November 2019, the respondents' attorneys were informed that Phehla Umsebenzi was in business rescue. It, however, later transpired that Phehla Umsebenzi had been placed in liquidation since 6 June 2018. This occurred whilst the property was still registered in its name, thus placing the property firmly in the hands of the liquidators. 5 [5] The liquidators elected not to transfer the property into the respondents' names but, instead, sought to sell it on auction. This then prompted the respondents to apply to court for an order staying the sale (on auction) pending an application to review and set aside the liquidators’ decision, which stay was granted. The respondents thereafter brought an application to review and set aside the liquidators’ decision. They also sought an order directing the liquidators to sign all transfer papers necessary, to enable the Deeds Offices to transfer the property to them. [6] In reaction to the review application, the liquidators delivered a rule 6(5)(d)(iii)1 notice, simultaneously with their answering affidavit, questioning the legal competence of the respondents’ review application. This was firstly on the basis that the liquidators had neither exercised a public power nor performed a public function in terms of any empowering statutory provision, when making their decision. Secondly, the liquidators asserted that in terms of the prevailing legal position, specific performance could not be ordered against a liquidator – which is the substance of the relief sought by the respondents – in circumstances where that would have the effect of negating the fundamental purpose of a concursus creditorum. [7] The respondents riposted by lodging a rule 30/30A interlocutory application, seeking the setting aside of the liquidators’ rule 6(5)(d)(iii) notice on the grounds that such notice constitutes an irregular step. They also sought an order compelling the liquidators to file the record of the proceedings relating to the impugned decision in terms of rule 53(1)(b). 1 Rule 6(5)(d)(iii) of the Uniform Rules reads: '[I]f such person intends to raise any question of law only, such person shall deliver notice of intention to do so, within the time stated in the preceding subparagraph, setting forth such question.' 6 [8] The high court determined that the only matter before it was the interlocutory application brought by the respondents. Having heard argument, it found in the respondents' favour, stating that the full record of the proceedings was fundamental to the full ventilation of the issues raised in the review proceedings as contemplated in rule 53. It referred to rule 53(4), which states that, upon the record being made available, an applicant may amend, add to or vary its notice of motion and supplement the founding affidavit. Therefore, the high court reasoned, it was not open to the liquidators to invoke rule 6(5)(d)(iii), as the review proceedings had not reached a stage where the applicants in the review application (ie the respondents in this appeal) have been afforded the opportunity to exercise their procedural right to supplement their founding affidavit in the review application in terms of rule 53. In its view, the question whether the rule 53 application was the correct and appropriate way to challenge the decision of the liquidators can competently be determined only in the main application once the required record has been produced. Accordingly, it concluded that the delivery of the rule 6(5)(d)(iii) notice by the appellants was premature. [9] In this Court, the liquidators submitted that the respondents' entitlement, if any, to receive a record in terms of rule 53(1)(b) only arises once it is established, as a jurisdictional fact, that the proceedings sought to be reviewed and in respect of which the production of a record relates, are reviewable. In support of this submission, they initially pinned their faith on the decision of the Constitutional Court in Competition Commission of South Africa v Standard Bank of South Africa Limited.2 2 Competition Commission of South Africa v Standard Bank of South Africa Limited; Competition Commission of South Africa v Standard Bank of South Africa Limited; Competition Commission of South Africa v Waco Africa (Pty) Limited and Others [2020] ZACC 2; 2020 (4) BCLR 429 (CC) paras 114-121 and 201-203 (Standard Bank). 7 [10] On this score, the liquidators contended that the right to demand the production of a record as envisaged and provided for in rule 53(1)(b) would arise only upon the determination by the high court that the appellants’ election not to render performance in terms of the contract concluded by Phehla Umsebenzi prior to its liquidation, constitutes administrative action and therefore susceptible to review. [11] Secondly, they asserted that the high court was enjoined to adjudicate and pronounce upon the competency of the relief claimed by the respondents in the review application, namely, whether the respondents’ claim for specific performance against the appellants as liquidators is legally competent, before any decision could be made to compel the production of a record in terms of rule 53. [12] In Standard Bank3, the Constitutional Court held that a court ought not to order the production of a rule 53 record prior to the court first determining the question whether it has the requisite jurisdiction to entertain the claim asserted by an applicant in the first place. In this regard, the Court reasoned thus: ‘. . . Where the jurisdiction of the court before which a review application is brought is contested, a ruling on this issue must precede all other orders. This is because a court must be competent to make whatever orders it issues. If a court lacks authority to make an order it grants, that order constitutes a nullity. . . . By its very nature, rule 53 of the Uniform Rules finds application where review proceedings are instituted before a competent court. . . . Therefore, the rule enables an applicant to raise relevant grounds of review, and the court adjudicating the matter to properly perform its review function. However, for a court to perform this function, it must have the necessary authority. It is not prudent for a court whose authority to 3 Standard Bank fn 2 above. 8 adjudicate a review application is challenged to proceed to enforce rule 53 and order that disclosure should be made, before the issue of jurisdiction is settled. The object of rule 53 may not be achieved in a court that lacks jurisdiction.’4 [13] However, before us counsel for the liquidators disavowed any reliance on Standard Bank and conceded that that decision could not avail the liquidators in the context of the facts of this case. In my view, counsel acted wisely in so doing for reasons that will become apparent later. [14] In the view I take of the matter, this Court – as was the high court – is not at this stage called upon to enter into the substantive merits of the review proceedings. Rather, what this Court is seized with is the interlocutory application brought by the respondents (as applicants) for an order directing the liquidators (as respondents) to provide them with the record of their decision not to implement the executory contract concluded between Phehla Umsebenzi and the respondents in relation to certain immovable property prior to the winding-up of the former. On this score, my line of thinking is relatively straightforward and will be made plain in the paragraphs that follow. [15] In electing not to perform in terms of the sale agreement, the liquidators invoked the decision of this Court in Bryant & Flanagan (Pty) Ltd v Muller and Another NNO5 in which the following was stated: '[A] liquidator of a company in liquidation (see s 339 of the Companies Act 61 of 1973) is invested with a discretion to abide by or terminate an executory agreement not specifically provided for in the Insolvency Act, which had been concluded by the company in liquidation before its liquidation. Such agreement does not terminate automatically on the company being placed in liquidation... 4 Paras paras 200-202. 5 Bryant & Flanagan (Pty) Ltd v Muller and Another NNO 1978 (2) SA 807; [1978] 3All SA 438 (A). 9 The liquidator must make his election within what, regard being had to the circumstances of the case, is a reasonable time. Should he elect to abide by the agreement the liquidator steps into the shoes of the company in liquidation and is obliged to the other party to the agreement to [tender] whatever counter-prestation is required of the company in terms of the agreement.6 [16] Against the foregoing backdrop, the liquidators contended that in deciding to resile from the relevant agreement, they were not exercising a public power or performing a public function. Rather, so they asserted, they were performing a private law function and that their powers to do so derived from s 386 of the Companies Act.7 Therefore, it was argued, the election of the liquidators – not to carry on with the relative agreement – is not reviewable because if this were permissible that would 'result in the interference [with] the rights of creditors after [the] date of institution of the concursus creditorium, contrary to the prevailing legal position.' And, since the liquidators' election entails that review proceedings are not competent, no obligation arises to produce a record under rule 53 of the Uniform Rules because such an obligation 'arises only once review jurisdiction has been established by the party seeking to compel the production of a record under Uniform Rule 53(1)(b).' [17] Differently put, the main thrust of the liquidators' defence in the review application is that as a consequence of the crystallisation of the estate of the seller (ie Phehla Umsebenzi), the relief sought in the respondents' (qua applicants) review application is legally incompetent. And insofar as the respondents' interlocutory application to compel delivery of the record is concerned, the liquidators further contended that in any event none exists and, consequently, there is nothing to produce. I pause here to observe that having accepted that their powers in the course 6 At 812G-H. 7 This is a reference to the Companies Act 61 of 1973. 10 of the winding-up process derive from s 386 of the Companies Act, the liquidators' contentions are to my mind plainly unsustainable principally because they contain seeds of their own destruction. I shall elaborate on this later. [18] I agree with some of the contentions advanced by the liquidators to a point. However, on balance I consider that their overall thrust in seeking to have their grounds of opposition to the relief sought in the review application determined before the rule 53 record is provided, cannot, in the context of the facts of this case and indeed what is at the core of this appeal, be upheld. The reasons that impel the conclusion reached in this judgment will become apparent in a moment. [19] As I see it, the logical starting point is rule 53 itself, which provides for a procedure that follows as a matter of course after the issuance and service of a review application except in limited circumstances where the court's jurisdiction to hear the review application has to be determined first.8 To the extent here relevant, rule 53 provides: '53 Reviews (1) Save where any law otherwise provides, all proceedings to bring under review the decision or proceedings of any inferior court and of any tribunal, board or officer performing judicial, quasijudicial or administrative functions shall be by way of notice of motion directed and delivered by the party seeking to review such decision or proceedings to the magistrate, presiding officer or chairperson of the court, tribunal or board or to the officer, as the case may be, and to all other parties affected— (a) calling upon such persons to show cause why such decision or proceedings should not be reviewed and corrected or set aside, and (b) calling upon the magistrate, presiding officer, chairperson or officer, as the case may be, to despatch, within 15 days after receipt of the notice of motion, to the 8 Compare: Standard Bank fn 2 above paras 119-121 and paras 201-204. 11 registrar the record of such proceedings sought to be corrected or set aside, together with such reasons as the magistrate, presiding officer, chairperson or officer, as the case may be is by law required or desires to give or make, and to notify the applicant that such magistrate, presiding officer, chairperson or officer, as the case may be has done so. (2) The notice of motion shall set out the decision or proceedings sought to be reviewed and shall be supported by affidavit setting out the grounds and the facts and circumstances upon which applicant relies to have the decision or proceedings set aside or corrected. (3) The registrar shall make available to the applicant the record despatched as aforesaid upon such terms as the registrar thinks appropriate to ensure its safety, and the applicant shall thereupon cause copies of such portions of the record as may be necessary for the purposes of the review to be made and shall furnish the registrar with two copies and each of the other parties with one copy thereof, in each case certified by the applicant as true copies. The costs of transcription, if any, shall be borne by the applicant and shall be costs in the cause. . . .' [20] Dealing with a situation comparable to what obtains in this case, this Court made the following pertinent remarks in Competition Commission v Computicket (Pty) Ltd:9 '...Moreover, upholding the Commission's argument would give rise to a two stage enquiry on the merits of the case: first, without the record to determine whether the applicant had made out a prima facie case. If the applicant clears that hurdle, the second stage enquiry then follows to finally determine the merits, this time with the benefit of the record which had now been made available. Finally, the argument under consideration is not supported by Rule 53. In terms of this rule, the obligation to produce the record automatically follows upon the launch of the application, however ill-founded that application may later turn out to be.' (Emphasis added.) As to the first issue, it suffices for now to observe that the essence of the liquidators' case in this appeal is that the merits of the review application must, in the light of 9 Competition Commission v Computicket (Pty) Ltd [2014] ZASCA 185 (Computicket) para 20. 12 the contentions advanced in their rule 6(5)(d)(iii) notice, be determined upfront without the benefit of the record required by the respondents. [21] The passage quoted from Computicket in the preceding paragraph was referred to with approval and endorsed by Theron J in Standard Bank.10 The learned Justice stated the following: 'This finding11 is entirely consistent with what the Supreme Court of Appeal and this Court have said about the importance of the rule 53 record and its availability to litigants. This is because a distinction must be made between the jurisdiction of the forum to hear the review application and the merits of the review application. If a review application is launched in a forum that enjoys jurisdiction, then a party is entitled to the record even if their grounds of review are meritless. As the Supreme Court of Appeal put it, "the obligation to produce the record automatically follows upon the launch of the application, however ill-founded that application may later turn out to be". This is because, as recognised by the majority decision in Helen Suzman, rule 53 envisages the grounds of review changing after the record has been furnished. The record is essential to a party’s ability to make out a case for review. It is for this reason that a prima facie case on the merits need not be made out prior to the filing of [the] record. I accept that there are good reasons for the obligation to produce the record following automatically upon the launching of a review application. Delaying the production of the record is inimical to the exercise of the courts’ constitutionally mandated review function. A lengthy delay may impede the courts’ ability to assess the lawfulness, reasonableness and procedural fairness of the decision in question and undermine the purpose of judicial review. One reason for this is that documents and evidence, which should be included within the rule 53 record, may be lost if there is a considerable delay in the production of the review record. This does not, however, imply that a court should order production of a rule 53 record without first determining its competence to hear the review application. '12 (Emphasis added.) 10 Standard Bank fn 2 above. 11 This was a reference to paragraph 20 in Computicket, fn 8 above. 12 Standard Bank fn 2 paras 120-121. 13 Although Theron J was writing for the minority, her remarks resonated with those of the majority in the same case. [22] In Van Zyl and Others v Government of Republic of South Africa and Others13 it was stated that review proceedings must, in the ordinary course, be brought under rule 53 unless they otherwise fall within the purview of the Promotion of Administrative Justice Act.14 It is well settled that the primary purpose of the rule is to facilitate and regulate applications for review.15 And what this Court said in Jockey Club some three decades ago is instructive. The Court there said the following: 'Not infrequently the private citizen is faced with an administrative or quasi-judicial decision adversely affecting his rights, but has no access to the record of the relevant proceedings nor any knowledge of the reasons founding such decision. Were it not for rule 53 he would be obliged to launch review proceedings in the dark and, depending on the answering affidavit(s) of the respondent(s), he could then apply to amend his notice of motion and to supplement his founding affidavit. Manifestly the procedure created by the rule is to his advantage in that it obviates the delay and expense of an application to amend and provides him with access to the record...'16 [23] In Johannesburg City Council v The Administrator Transvaal and Another17 a record for purposes of rule 53 was described thus: 'The words "record of proceedings" cannot be otherwise construed, in my view, than as a loose description of the documents, evidence, arguments and other information before the tribunal relating to the matter under review, at the time of the making of the decision in question. It may be a formal record and dossier of what has happened before the tribunal, but it may also be a disjointed indication of the material that was at the tribunal's disposal. In the latter case it would, 13 Van Zyl and Others v Government of Republic of South Africa and Others 2008 (3) SA 294 (SCA) at 305G. 14 Promotion of Administrative Justice Act 1 of 2000 (PAJA). 15 Jockey Club of South Africa v Forbes 1993 (1) SA 649 (AD) at 661E (Jockey Club). 16 Ibid at 660E-F. And compare: Democratic Alliance and Others v Acting National Director of Public Prosecutions and Others 2012 (3) SA 486 (SCA). 17 Johannesburg City Council v The Administrator Transvaal and Another 1970 (2) SA 89 (T) at 91G-92A (Johannesburg City Council). 14 I venture to think, include every scrap of paper throwing light, however indirectly, on what the proceedings were, both procedurally and evidentially. A record of proceedings is analogous to the record of proceedings in a court of law which quite clearly does not include a record of the deliberations subsequent to the receiving of the evidence and preceding the announcement of the court's decision. Thus the deliberations of the Executive Committee are as little part of the record of proceedings as the private deliberations of the jury or of the Court in a case before it.' (Emphasis added.) [24] It is apposite at this juncture to mention that the liquidators delivered their answering affidavit on 30 November 2020 simultaneously with a rule 6(5)(d)(iii) notice. To do justice to the appellants, I consider it necessary to quote their notice in its entirety in the footnote below.18 The notice then concludes by asserting the following: 18 'TAKE NOTICE THAT the first to third and fifth respondents intend to raise the following point in law at the hearing of the application: 1. 1.1 Phehla Umsebenzi Trading 48 CC (in liquidation) ("Phehla"): - 1.1.1 was wound up with effect from 06 June 2018, as contemplated by section 66 of the Close Corporations Act 69 of 1984 ("the Close Corporations Act") as read with Item 9 of Schedule 5 of the Companies Act 71 of 2008 ("the 2008 Companies Act") as further read with section 348 of the Companies Act 61 of 1973 ("the Companies Act"); 1.1.2 was wound up due to its inability to pay its debts, as contemplated by section 66 of the Close Corporations Act, read with the 2008 Companies Act and as further read with section 339 of the Companies Act; 1.1.3 is unable to pay its debts and therefore, by virtue of section 339 of the Companies Act, the law relating to insolvency, including the provisions of the Insolvency Act 24 of 1936 ("the Insolvency Act") and the common law relating to insolvency, apply in respect of any matter not specifically provided for in the Companies Act. 2. 2.1 The first to third respondents were appointed as the joint liquidators of Phehla on 23 July 2018. 3. 3.1 The applicants seek an order whereby the liquidators' election to terminate an executory contract which was concluded by Phehla on 6 August 2015 before its liquidation in relation to certain immovable property owned by it ("the subject property"), is reviewed and set aside. 3.2 The applicants furthermore seek an order for specific performance that the subject property be transferred and registered in the name of the applicants. 4. 4.1 Extant contracts that have not been properly fulfilled and are not brought to the whole fruition are executory contracts. 4.2 A liquidator is vested with a discretion whether to abide by or resile from an executory contract. 4.3 The discretion exercised by a liquidator to abide by or resile from an executory contract is exercised by virtue of the obligations and duties imposed on the liquidator by the Insolvency Act and the Companies Act, where applicable. 15 'It follows that the applicants are enjoined from claiming specific performance against the liquidators.' [25] It will be helpful to quote rule 6(5)(d). It reads, to the extent here relevant, as follows: '... (ii) within 15 days of notifying the applicant of intention to oppose the application, deliver such person's answering affidavit, if any, together with any relevant documents; and (iii) if such person intends to raise any question of law only, such person shall deliver notice of intention to do so, within the time stated in the preceding subparagraph, setting forth such question.' One pertinent observation of fundamental importance may be made in relation to rule 6(5)(d)(iii). As is evident from its text, the prominent feature of rule 6(5)(d)(iii) is that it may be invoked solely when a respondent intends to raise a question of law. Thus, in effect, it temporarily dispenses with the need to deliver an answering affidavit pending the determination by a court of the question of law raised. Therefore, it is plain from the wording of this rule that where a respondent intends to traverse the averments in the applicant's founding affidavit, it should deliver an answering affidavit. In that event, the person opposing the grant of the order sought in the notice of motion may also raise any question of law in his or her answering affidavit. To my mind, it follows axiomatically that on its plain meaning this rule 4.4 No empowering provisions or statute exist in terms of which a court can review a discretionary decision taken by a liquidator. 4.5 It follows that the applicants are enjoined from making application to have the liquidators' decision reviewed and set aside. 5. 5.1 After the date of establishment of the concursus creditorum, nothing may be allowed to be done by any of the creditors to alter the rights of the other creditors. 5.2 A liquidator or company in liquidation is not bound to perform unexecuted contracts entered into by an insolvent before its insolvency. 5.3 In terms of the common law, a party cannot exact, and a court cannot order specific performance against a liquidator.' 16 does not contemplate nor countenance a situation where a respondent files an answering affidavit pari passu with a rule 6(5)(d)(iii) notice. [26] In support of their case as foreshadowed in their rule 6(5)(d)(iii) notice, the liquidators heavily relied on a long line of cases going back more than a century ago.19 I pause here to observe, as alluded to above, that before this Court counsel for the liquidators expressly disavowed any reliance on Standard Bank. Counsel's change of tack is hardly surprising because in Standard Bank the Constitutional Court was confronted with an entirely different situation. There, the central issue was whether it was legally competent for the Competition Appeal Court (CAC) to order production of a record in circumstances where its jurisdiction was contested in interlocutory proceedings before the CAC first determined upfront the question whether it had the requisite jurisdiction to entertain the main proceedings in the first place. Whilst I have derived valuable insights from the judgments upon which counsel heavily relied,20 it is not my intention to discuss them in this judgment for the simple reason that given what is truly at issue in this case they offer no assistance to the liquidators. Nevertheless, I hasten to state that the conclusion relating to the narrow compass on which this appeal falls to be decided, as will be explained later, took into account the main thrust of the argument advanced by counsel for the liquidators. 19 Walker v Syfret NO 1911 AD 141 at 160 and 166; Consolidated Agencies v Agjee 1948 (4) SA 179 (N) at 189; Bryant & Flanagan (Pty) Ltd v Muller and Another NNO 1978 (2) SA 807 (A) at 812G-813B; Du Plessis and Another NNO v Rolfes Ltd 1997 (2) SA 354 (A) at 363; Nedcor Investment Bank v Pretoria Belgrave Hotel (Pty) Ltd 2003 (5) SA 189 (SCA) para 6; Gcaba v Minister for Safety and Security and Others 2010 (1) SA 238 (CC) para 75 and Competition Commission of South Africa v Standard Bank of South Africa Limited; Competition Commission of South Africa v Standard Bank of South Africa Limited; Competition Commission of South Africa v Waco Africa (Pty) Limited and Others 2020 (4) BCLR 429 (CC) paras 114-121 and 201-202. 20 See fn 19 above. 17 [27] In my judgement, the fact that the respondents' review application may well be manifestly doomed to failure because the relief sought therein is legally untenable matters not at this stage. That issue will be ripe for determination only when the time comes for the substantive merits of the review itself to be considered. What we are concerned with at this stage of the proceedings, is solely the respondents' entitlement, as of right, to the record evidencing the decision taken by the liquidators not to implement the agreement of purchase and sale allegedly concluded between Phehla Umsebenzi and the respondents. [28] Lest I be misunderstood, this judgment does not say that in circumstances where a court patently lacks jurisdiction to even entertain the matter, it should nevertheless go through the motions, in a manner of speaking, and order a respondent to provide a record to the applicant as contemplated in rule 53(3). Far from it. Where the very jurisdiction of the court is contested, which is not the case here, the court must naturally determine that issue upfront. This, of course, is precisely what the Constitutional Court decided in Standard Bank. However, the facts of this case, are materially distinguishable from those that confronted the Constitutional Court in Standard Bank. The present case is starkly different – here the high court is indubitably empowered in terms of s 169 of the Constitution to deal with all manner of causes of action except those explicitly (or by necessary implication) excluded from its jurisdiction. 21 Tellingly, before us counsel for the liquidators expressly 21 Section 169 of the Constitution reads: '(1) The High Court of South Africa may decide --- (a) any constitutional matter except a matter that - (i) the Constitutional Court has agreed to hear directly in terms of section 167(6)(a); or (ii) is assigned by an Act of Parliament to another court of a status similar to the High Court of South Africa; and (b) any other matter not assigned to another court by an Act of Parliament. (2) The High Court of South Africa consists of the Divisions determined by an Act of Parliament, which Act must provide for-- (a) the establishing of Divisions, with one or two more seats in a Division; and (b) the assigning of jurisdiction to a Division or a seat with a Division. 18 disavowed any reliance on the Standard Bank decision. Rather, he unequivocally stated that the liquidators were no longer contending that the high court had no jurisdiction to entertain the review application. In my view, counsel's stance in disavowing reliance on Standard Bank was, in the light of what I have already said above, perfectly understandable. However, it bears mentioning that having made this concession, counsel struggled to locate the point sought to be made by the liquidators within the realm of the exception in Standard Bank. [29] Insofar as the liquidators' assertion that they do not have the record is concerned, it is difficult to accept that this is indeed the position. I say so because s 382(1) of the Companies Act22 (which is still in operation notwithstanding the repeal of the 1973 Companies Act by the current Companies Act23) provides that: 'When two or more liquidators have been appointed they shall act jointly in performing their functions as liquidators and shall be jointly and severally liable for every act performed by them jointly.' It is clear from a reading of this provision that the manifest purpose of s 382(1) is to ensure that joint liquidators act jointly in whatever is required to be done in relation to the corporate entity being wound-up. In this case, it is common cause that the liquidators were appointed as joint liquidators of Phehla Umsebenzi which was wound up by special resolution registered on 6 June 2018. [30] Moreover, it is common cause, on their own account, that the liquidators took a joint decision to not perform the contractual obligations undertaken by Phehla (3) Each Division of the High Court of South Africa-- (a) has a Judge President; (b) may have one or more Deputy Judges President; and (c) has the number of other judges determined in terms of national legislation.' 22 Companies Act 61 of 1973. 23 Companies Act 71 of 2008. 19 Umsebenzi in terms of the sale agreement. It therefore goes without saying that having regard to the fact that they are required to take decisions jointly the liquidators must have had a meeting – whether formal or informal – at which their impugned joint decision was taken in whatever way such a decision was reached. Having regard to the fact that we have here three liquidators – required by law to act jointly – it is difficult to understand how their decision not to perform Phehla Umsebenzi's contractual obligations could have been reached without at least one of them having broached the topic with the others either by way of exchange of correspondence or otherwise. [31] As Marais J rightly observed in Johannesburg City Council24, a record as contemplated in rule 53(3) can take any form or shape. Where the decision, for example, was taken after a long and drawn-out enquiry the record may well run into multiple pages. But there will no doubt be instances – not rare – where, as here, the record may comprise either a single document or a few pages. That will still constitute the record as envisaged in rule 53(3). It cannot, in these circumstances, be understood on what tenable basis can it be contended that there is not a single document in which the joint liquidators' decision to not implement the relevant agreement is recorded. If anything, all indications seem to point the other way – bearing in mind that here we have three liquidators who are in law required to act jointly in whatever decision or action they take in the winding-up process – namely, that some or other form of record exists somewhere. It is, however, neither necessary nor desirable for present purposes to come to a definitive conclusion on this issue. This must be left to the parties – should the need arise – to ventilate this issue in their affidavits and for the high court to determine it. 24 Fn 17 above at 91G-F. 20 [32] The observation by M S Blackman et al Commentary on the Companies Act is instructive and, in consequence, bears mentioning. Apropos this very topic, the learned authors have this to say: 'A person who holds an office under the Companies Act [Close Corporation Act], which office confers on him [or her] various powers to enable him [or her] to wind-up the company [close corporation]. One of these powers is the power to bind the company's [close corporation] estate; another is the power to institute or defend proceedings in the company's [close corporation] name.' [33] Furthermore, it is as well not to lose from sight that a liquidator is a creature of statute; appointed by the Master under the Companies Act or, where applicable, the Close Corporations Act; derives his or her powers from those Acts read with the Insolvency Act25 within whose parameters he or she is obliged to act. Therefore, in such capacity a liquidator administers the estate of the corporate entity in liquidation as laid down by the law26 and is also statutorily bound to act under the control of the Master27 of the relevant Division of the High Court. [34] For the sake of completeness, s 386(g) of the Companies Act which confers on a liquidator – subject to necessary changes – the same powers set out in s 3528 of the Insolvency Act also merits brief reference. 25 Insolvency Act 36 of 1924. 26 See, in this regard, M S Blackman, R.D. Jooste & G.K. Everingham vol 3 at 14-288. 27 See, in this regard, s 381 of the Companies Act. 28 Section 35 of the Insolvency Act, which is headed 'Uncompleted acquisition of immovable property before sequestration' reads as follows: 'If an insolvent, before the sequestration of his estate, entered into a contract for the acquisition of immovable property which was not transferred to him, the trustee of his insolvent estate may enforce or abandon the contract. The other party to the contract may call upon the trustee by notice in writing to elect whether he will enforce or abandon the contract, and if the trustee has after the expiration of six weeks as from the receipt of the notice, failed to make his election as aforesaid and inform the other party thereof, the other party may apply to the court by motion for cancellation of the contract and for an order directing the trustee to restore to the applicant the possession of any immovable property under the control of the trustee, of which the insolvent or the trustee gained possession or control by virtue of the contract, and the court may make such order on the application as it thinks fit: Provided that this section shall not affect any right which the other party may have to establish against the insolvent estate, a non-preferent claim for compensation for any loss suffered by him as a result of the non-fulfilment of the contract.' 21 [35] It bears emphasising that in every review proceedings contemplated in rule 53, the applicant is entitled as of right – derived from rule 53(3) itself – to a record of the decision sought to be reviewed. This, as the enduring long line of cases demonstrates, is designed to afford the applicant the opportunity to discern from a perusal of the record whether there are additional review grounds that can be deployed to prove or disprove either party's case. And, if it turns out that there is any benefit to be derived from the record or the record reveals additional grounds of review that can be relied upon to amplify the grounds of review, the applicant would, as a result, be entitled as of right, to amend his or her notice of motion and supplement the founding affidavit. And, as the Constitutional Court aptly put it,'. . . the rule enables an applicant to raise relevant grounds of review, and the court adjudicating the matter to properly perform its review function. '29 [36] Accordingly, if at this stage, even before the record is provided to the respondents (as applicants), the court enters into the substantive merits of the review itself, as the liquidators would have it, this would have the potential to disarm the applicants in the review proceedings and, most likely, put paid to their quest to review the impugned decision. The inevitable consequence of such an approach would not only be subversive of the respondents' rights (qua applicants) under rule 53(3) but also deny them their right to have the real dispute resolved by the application of law decided in a fair public hearing before, in this instance, a court, in breach of the right of access to courts entrenched in s 3430 of the Constitution. In truth, what the liquidators seek to do is, borrowing the expression used in Computicket, to 'effectively place the cart before the horse' by requiring issues that 29 Standard Bank fn 3 above para 203. 30 Section 34, which is headed 'Access to courts' reads in relevant part as follows: '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, . . .' 22 must rightly be decided in the review application itself determined in the respondents' interlocutory application. In my judgement, no court should countenance such a radical departure from a well-entrenched practice and procedure. [37] As already indicated and subsequently accepted by counsel for the liquidators, the decision of the Constitutional Court in Standard Bank upon which they pinned their faith in their heads of argument does not avail them. As I have demonstrated above, in Standard Bank the Constitutional Court dealt with an entirely different question. Pertinently, at issue in that case was whether it was competent for the CAC to entertain an application at the instance of a party who sought an order for the production of the record in circumstances where the jurisdiction of the CAC to entertain the very application was contested by the adversary. The answer to the question with which the CAC was seized was entirely dependent on the antecedent question, namely, whether the CAC had the requisite jurisdiction to entertain the main application in the first place. [38] It is trite that any order made by a court that has no jurisdiction in any given matter is a nullity.31 Therefore, absent jurisdiction, the order would amount to no more than brutum fulmen. Hence, it was necessary that this issue be determined upfront by the CAC before all else. That this is so is manifest from what the Constitutional Court said in Standard Bank when it expressed itself thus: '[f]or a court to perform its [review] function, is must have the necessary authority. It is not prudent for a court whose authority to adjudicate a review application is challenged to proceed to enforce rule 53 and order that disclosure should be made, before the issue of jurisdiction is settled. The object of rule 53 may not be achieved in a court that lacks jurisdiction. '32 (My emphasis.) 31 See, for example, Standard Bank fn 7 above para 201. 32 Para 203. 23 [39] In these circumstances the notion that there will be cases where a respondent in review proceedings can insist on the determination of the substantive merits of the review itself without the procedural requirements of rule 53 first being satisfied, as the liquidators in this case would have it, would fly in the face of abiding judicial authority and therefore untenable. [40] As to the fundamental importance and litigation utility of rule 53 in review proceedings, the remarks of the Constitutional Court in Standard Bank bear repeating. The Court expressed itself as follows: 'By its very nature, rule 53 of the Uniform Rules finds application where review proceedings are instituted before a competent court. The rule was designed to serve a dual purpose of informing both the applicant for a review and the court of what actually happened in the process of making the impugned decision . . . Most often than not, those on whom decisions had an adverse impact had no knowledge of what transpired in the process and were placed at a disadvantage when they sought to challenge the decision in question. Rule 53 became a useful tool in terms of which access to information could be achieved. '33 [41] In this case there is not even the slightest suggestion that the high court lacks jurisdiction to entertain the review application. On the contrary, its jurisdiction has been accepted without question. On this score it bears mentioning that ordinarily the high court may decide any constitutional matter except matters that reside within the exclusive domain of the Constitutional Court34 or are assigned by national legislation to another court of equivalent status to that of the high court. In addition, the high court may hear any other matter not assigned to another court by national legislation.35 That the appellants themselves desire that the high court itself deal with 33 Para 202. 34 See s 167(3)(b), (c) and s 167(4) and (5) of the Constitution. 35 See in this regard the Labour Relations Act 66 of 1995 and the Competition Commission Act 89 of 1998 that confer exclusive jurisdiction to the Labour Court and the Competition Tribunal respectively in all matters regulated by those Acts. 24 and adjudicate the liquidators' point of law set forth in their rule 6(5)(d)(iii) notice attests to the fact that its jurisdiction is not contested. In reality, the crux of the liquidators' case is that the relief sought by the respondents in their review proceedings is not only ill-conceived but also legally untenable. That may well be so. But that question must – for reasons already stated – be determined only once the review application is ripe for hearing and not before. [42] As already indicated, rule 53, which is designed specifically to regulate review proceedings, forms an integral part of the Uniform Rules regulating the way proceedings in the high court generally ought to be conducted. And, as I have demonstrated above, the high court has inherent jurisdiction to hear any dispute that can be resolved by the application of the law and decided in a fair public hearing, save only in relation to matters assigned to other courts by the Constitution or national legislation. The respondents' review application currently pending before the high court to which this appeal pertains is not one of the exclusions. Accordingly, in the context of the facts of this case, the jurisdiction of the high court can hardly be contested on any tenable legal grounds, and any order it may make ultimately – whether right or wrong – will not, as a result, constitute a nullity. [43] As I see it, the fundamental fallacy in the liquidators' case and approach has all to do with timing or, put differently, ripeness of the so-called questions of law that they have raised in resisting the respondents' review application. There can be little doubt that those questions of law are at the heart of the relief sought in the review application. Nevertheless, it is only when the review application is ripe for hearing would a court have to decide whether there is merit in the defences – including the various questions of law – advanced by the liquidators. That stage will be reached after the respondents – as applicants in the review proceedings – have 25 exercised their indisputable right under rule 53 – or elect not to avail themselves of that right – and all of the issues have crystallised would the high court be enjoined to adjudicate those issues. [44] To sum up, the substantive point made in this judgment is that once the jurisdiction of the court before which review proceedings are pending is beyond question the reach of rule 53 of the Uniform Rules becomes unavoidable. In the light of the turn of events in and the detour taken by this case, a postscript might be the appropriate point where this judgment should end. It is to say that no amount of any legalistic acrobatics or sophistries that we have witnessed in this case should prevail. However, I hasten to add that this, in no way questions counsel's probity. It is more to demonstrate that as those well versed in law are all aware, it often happens in litigation that the ingenuity of lawyers to conjure up ingenious legal points is infinite. [45] It remains to mention that I have had the advantage of reading the judgment of my colleagues, Kathree-Setiloane and Keightley AJJA. However, I remain unpersuaded by the conclusion they have reached and its underlying reasoning. Furthermore, to the extent that the liquidators' quibble about the high court's order setting aside their rule 6(5)(b)(iii) notice, their complaint amounts to a red herring. As my colleagues recognise in their minority judgment, the high court's order is provisional, implying that once the record is provided in terms of rule 53 such an order, on its own terms, will automatically fall away. To conclude, it suffices to say that the proposition in my colleagues' judgment that a decision taken by liquidators to terminate an executory contract entered into by a liquidated company or close corporation before its winding-up is immune from judicial review is, with respect, simply untenable. 26 [46] Before making the order, I am constrained to state that there is regrettably a matter for adverse comment. It is that in this case scarce judicial resources were not utilised optimally for after two court hearings both in the high court and this Court during which considerable costs must have been incurred the real dispute between the parties has yet to be adjudicated. This is undesirable and must be deprecated. [47] In the result, the following order is made: The appeal is dismissed with costs. ___________________________ X M PETSE DEPUTY PRESIDENT SUPREME COURT OF APPEAL Kathree-Setiloane and Keightley AJJA (dissenting): [48] We have had the benefit of reading the judgment of Petse DP (the main judgment) in this appeal. Regrettably, we are unable to agree with both the legal reasoning and the order made. In our view, the appeal ought to have been upheld, with an ancillary order remitting the main issue in this appeal to the high court for determination. [49] It is important to contextualise the issues that arise in the appeal against the litigation history of the matter. The respondents seek to review and set aside the 27 election by the appellants, who are the liquidators of an insolvent entity, to terminate an executory agreement for the sale of certain immovable property owned by the insolvent entity. The parties to the agreement of sale were the insolvent entity and the respondents. They also seek an order directing the appellants to sign all transfer documents necessary to enable transfer of the property to them. [50] The notice of motion was issued in terms of rule 53, with the respondents expressly relying on PAJA as the basis for their review. In response, the appellants filed their notice in terms of rule 6(5)(d)(iii) simultaneously with their answering affidavit. That notice identified two points of law they intended raising as points in limine. The first, recorded in paragraphs 1 to 4 of the notice, was that the exercise of a discretion by a liquidator to resile from an executory agreement is not subject to judicial review. The second was that, at common law, a party cannot order specific performance against a liquidator. We take the view that the appeal turns on only the first of these points of law. [51] In response, the respondents filed a notice in terms of rule 30/30A. They cited, as their complaint, that the appellants had failed to dispatch the record in compliance with rule 53(1)(b). The notice afforded the appellants ten days to emove the cause of complaint. The notice was dated 21 December 2020 but was served on 11 January 2021. The appellants did not file the record within the specified ten days. At the end of March 2021, the respondents instituted an application to set aside the appellants’ rule 6(5)(d)(iii) notice on the basis that it constituted an irregular step (the first prayer), and to order them to comply with rule 53(1)(b) within ten days from the date of the order (the second prayer). 28 [52] This interlocutory application was supported by a founding affidavit to which the appellants answered. In it, they asserted that the purpose of a rule 6(5)(d)(iii) notice is to dispose of a point of law prior to a hearing on the merits of a matter. According to the appellants, what the respondents sought to do, in the interlocutory application, was to compel the appellants to file a record in relation to a review application which was the very subject of the rule 6(5)(d)(iii) notice. The appellants, therefore, took issue with the respondents’ contention that the notice constituted an irregular step. [53] The appellants further pointed out that the complaint identified in the respondents’ rule 30/30A notice, which preceded the interlocutory application, was limited to a complaint about the failure to file a record. It did not include a complaint that the rule 6(5)(d)(iii) notice was an irregular step. For this reason, they submitted that the respondents were precluded from seeking the relief in the first prayer as it was not preceded by the necessary notice. [54] The appellants also took issue with the respondents’ failure to comply with the time periods prescribed in rule 30(2)(c). That rule requires an application to be made to court no more than 15 days after the expiry of the period afforded to a party to regularise an irregular step identified in a rule 30 notice. The appellants recorded that the interlocutory application was served well after this prescribed period. [55] The appellants submitted to the high court that, before it could order them to supply the record, in terms of prayer 2 of the interlocutory notice of motion, the court would first have to determine whether the review application was competent. In other words, the high court would have to decide the first of the two legal issues raised by the appellants in their rule 6(5)(d)(iii) notice. The high court declined to 29 do so. It opted instead to work from the premise that the respondents had a right to access the court with a review application and that it was for the review court ultimately to decide the viability of the review. [56] The high court found that the appellants’ rule 6(5)(d)(iii) notice was premature as the respondents’ founding affidavit in the review application was not ‘complete’. It held that only after the record had been supplied and the founding affidavit supplemented, would it be procedurally permissible to file a notice under rule 6(5)(d)(iii). The high court made an order provisionally setting aside the rule 6(5)(d)(iii) notice, and giving the appellants leave to file it within ten days of any supplementary founding affidavit filed by the respondents. It also ordered the appellants to make the record available to the respondents within 15 days of the date of the order. [57] The core question in this appeal is whether the high court was correct in refusing to entertain the legal question of whether the exercise of a liquidator’s discretion to resile from an executory agreement is administrative action, and hence reviewable under PAJA. Following from this, was the high court correct in setting aside the rule 6(5)(d)(iii) notice as an irregular step, and ordering the appellants to supply the record as a prerequisite for the consideration of that legal issue? The main judgment takes the view that the high court acted correctly in doing so. We do not agree. [58] The main judgment is premised on three essential pillars. First, it finds, based on Standard Bank, that the only exception to the general rule that an applicant for judicial review is automatically entitled to the record is where the court’s jurisdiction is challenged. 30 [59] Second, the main judgment highlights that the case of Standard Bank is distinguishable from this appeal. This is because that case involved a challenge to the review jurisdiction of the Competition Appeal Court. In this appeal, on the contrary, the appellant accepts that the high court has review jurisdiction, and for this reason it expressly disavows reliance on Standard Bank. The main judgment finds that this is fatal to their appeal. [60] Third, and again with reference to Standard Bank, together with Computicket, the main judgment emphasises that an applicant in review proceedings has an automatic right to the record, prior to a court’s determination on the merits of the matter, and regardless of how groundless those merits may be. The main judgment characterises the appellants’ case as subversive to this established principle by insisting that the merits of the review should be weighed without the respondent having the benefit of the record. In other words, the main judgment interprets the issue raised by appellants in their rule 6(5)(d)(iii) as requiring the court to enter the merits of the matter. [61] We take no issue with the finding in the main judgment that the case of Standard Bank is distinguishable from this matter on the basis that it concerned the issue of whether the court in question had jurisdiction to entertain the review. We agree that there is no dispute that the high court in this appeal has review jurisdiction. The appellant correctly placed no reliance on that case for this very reason. However, we disagree that this is fatal to the appeal. [62] We also take no issue with the main judgment’s exposition of the general principle that an applicant is entitled as of right to access to the record of the decision under rule 53(3) (the general principle). The main judgment correctly articulates the 31 purpose of this rule: to afford the applicant the opportunity to assess whether additional or amended grounds of review may be called in aid to support her case. This is why the rule further provides for supplementation of the founding affidavit. [63] Where we disagree with the main judgment on this score, is that it adopts the view that there is only one exception to the general principle, namely when the jurisdiction of the reviewing court is called into question. It finds that, save only in those circumstances, an applicant is entitled as of right to the record on the mere filing of an application under rule 53. In our view, this approach is too narrow. We also disagree that the main issue raised in the rule 6(5)(d)(iii) notice filed by the appellants required the court to enter into the merits of the review. Properly understood, it did not do so. As such, the main judgment is, respectfully, wrong in characterising the appellants’ case as an attempt to subvert the general principle. [64] A respondent in motion proceedings is entitled to file a notice under rule 6(5)(d)(iii) that she intends to raise a specified question of law. The rule requires this notice to be filed within 15 days of notifying the applicant of her intention to oppose. Under rule 53(4), an applicant in review proceedings may file an amended notice of motion and supplemented founding affidavit within ten days of being given access to the record of the impugned decision. These comparative time periods demonstrate that the rules presuppose that a notice under rule 6(5)(d)(iii) will precede any supplemented founding affidavit filed by an applicant for review under rule 53. [65] It follows that the rules envisage that the legal issue identified in a rule 6(5)(d)(iii) notice may be heard as a point in limine, prior to any hearing on the merits. In such cases, the court must accept the allegations in the original founding affidavit as established facts. The respondent stands or falls on her question of law 32 without the advantage of putting factual averments before the court for its consideration. It makes no difference, therefore, that a respondent, like the appellants did in this case, filed an answering affidavit simultaneously with their rule 6(5)(d)(iii) notice. It would simply be ignored by the court considering the in limine legal question identified in a rule 6(5)(d)(iii) notice. [66] Of course, much will depend on the nature of the legal question raised as to the further conduct of proceedings. In some cases, a court may entertain the question only after the rule 53 steps have been followed to completion. In other cases, such as in this appeal, the court would be enjoined to entertain the legal question as a prior step. The point is that it is permissible under the rules for a rule 6(5)(d)(iii) notice to be filed before the applicant exercises her right, post access to the record, to supplement her founding affidavit and grounds of review. [67] On a plain reading of the rules, the high court erred in granting prayer 1 of the respondents’ interlocutory application and, in finding that the rule 6(5)(d)(iii) notice was premature and thus irregular. The appellants acted in accordance with the prescribed time-period in filing their rule 6(5)(d)(iii) notice. They were entitled to file their notice when they did and there was nothing irregular in their actions. Accordingly, the high court erred in setting the notice aside, albeit provisionally. [68] However, this does not answer the question of whether the high court was correct, in granting the relief sought in prayer 2 of the interlocutory motion and, in directing the appellants to make the record accessible to the respondents at that stage, rather than first determining the legal question raised in the rule 6(5)(d)(iii) notice. The main judgment finds that the high court correctly granted that relief as the legal issue raised in the rule 6(5)(d)(iii) notice is not a challenge to the review jurisdiction 33 of the high court. On its finding, this is the only acceptable departure from an applicant’s automatic right to access to the record on the mere filing of a review application. [69] We reiterate our view that this is too narrow an approach to the question of when a departure from the general principle is competent. We accept that, to achieve the purpose of rule 53, it is inappropriate for a court to entertain the merits of a review before the applicant has been provided with the record and has been given the opportunity to amend its notice of motion and supplement its founding affidavit. However, in this case, the core legal issue raised by the appellants in their rule 6(5)(d)(iii) notice does not require the high court to enter the merits of the review. The appellants, in their notice, ask the general question whether the exercise of a liquidator’s discretion to resile from an executory agreement is administrative action and thus subject to review. That question is purely legal in nature. It does not turn on how and why the appellants in this case took their decision. [70] To put it differently, in their rule 6(5)(d)(iii) notice, the appellants do not ask the court to determine whether on the facts of this case the respondents have justifiable grounds to sustain a review of their decision under PAJA. Obviously, that is a question that goes to the merits of this review; it asks whether the review is sustainable on the merits. The rule 6(5)(d)(iii) asks a different question which is this: does a decision by any liquidator to resile from an executory agreement, rather than to elect to enforce it, constitute administrative action – and thus, is it reviewable at all? It is a question directed at the inherent legal nature of the discretion afforded all liquidators to resile from an executory agreement. It will be determined by examining the relevant statutory framework regulating insolvency, companies, the powers of liquidators and PAJA. 34 [71] That question is distinct from, and antecedent to, the court entering the merits of the review. If it is determined that the exercise of a liquidator’s discretion is not reviewable, the court simply will not embark on the merits. More fundamentally, if the legal question raised in the rule 6(5)(d)(iii) notice is determined in favour of the appellants, it would follow that the rule 53 procedure has no application, and the respondents would have no right to insist on access to the record. It is for this reason that the high court could not competently grant the relief sought in prayer 2 of the respondents’ interlocutory application, without first engaging with, and determining the legal issue raised in the appellants’ notice. In our view, the high court erred in holding that it was not called upon to enter that inquiry and in directing the appellants to give access to the record based on the assumption that the respondents were entitled to it. [72] For these reasons, we do not agree with the view expressed in the main judgment that the appellants seek to subvert the general principle that an applicant in review proceedings is as of right entitled to the record. In this case, the appellants were entitled to use rule 6(5)(d)(iii) to question, as an in limine point, whether judicial review is a competent remedy as a matter of legal principle, and hence, whether the respondents are entitled to the benefits of the rule 53 procedure. Until a determination is made on that issue, it cannot be said that the respondents have been deprived of their right to the record and that the appellants case amounts to a subversion of the general principle. 35 [73] We would have ordered that the appeal succeed with costs and that the order of the high court be set aside. We would have also remitted the legal question raised in paragraphs 1 to 4 of the appellants’ rule 6(5)(d)(iii) notice to the high court for determination as a point in limine. F KATHREE-SETILOANE ACTING JUDGE SUPREME COURT OF APPEAL R M KEIGHTLEY ACTING JUDGE SUPREME COURT OF APPEAL 36 Appearances For the appellants: J E Smit Instructed by: MacRobert Attorney, Pretoria Lovius Block Attorneys, Bloemfontein For the first and second respondents: J G Rautenbach SC Instructed by: Motlatsi Seleke Attorneys, Krugersdorp Hutchinson Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 14 March 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 Murray and Others NNO v Ntombela and Others (729/2022) [2024] ZASCA 24 (14 March 2024) Today, the Supreme Court of Appeal (SCA) dismissed with costs an appeal from a judgment of the Free State Division of the High Court, Bloemfontein (the high court) against an order directing the appellants, who are joint liquidators of Phehla Umsebenzi Trading 48 CC (in liquidation) (Phehla Umsebenzi), to file a rule 53 record and provisionally setting aside their rule 6(5)(d)(iii) notice in terms of which they, in effect, asserted that the respondents' review application was ill-conceived. The two respondents, Mr Madala Louis David Ntombela and Mrs Sefora Hixsonia Ntombela (the respondents) who are married to each other in community of property purchased certain immovable property from Phehla Umsebenzi for R2 500 000 which they allegedly paid to the members of Phehla Umsebenzi before the property was transferred to them pursuant to the parties' agreement of sale. On 6 June 2018 Phehla Umsebenzi was wound up pursuant to a resolution adopted by its members. The first to third appellants, Mr Cloete Murray, Mr Gert Louwrens Steyn De Wet and Ms Magda Wilma Kets were appointed as joint liquidators. There was a delay in effecting transfer of the property to the respondents (before Phehla Umsebenzi was wound up). Later, the appellants indicated that they were not going to transfer the property into the respondents' name. Rather, they would be selling it by way of auction to the highest bidder for the benefit of all the creditors of Phehla Umsebenzi. This then prompted the respondents to apply to court for an interdict restraining the appellants from putting the property up for auction pending the outcome of legal proceedings to be instituted by them for an order, inter alia, reviewing the appellants' decision not to implement the sale agreement and also compelling the appellants to transfer the property to them pursuant to the sale agreement concluded with Phehla Umsebenzi before its liquidation. In due course the respondents instituted the proceedings foreshadowed in their application for an interdict, reviewing the appellants' decision not to implement the sale agreement and also claiming transfer of the property to them. The appellants opposed the application on a number of grounds. The principal ground for opposing the review proceedings was that the relief sought by the respondents could not be granted in view of the seller's liquidation which had the effect that all the assets of Phehla Umsebenzi fell to be sold and the proceeds thereof distributed amongst the creditors of Phehla Umsebenzi in accordance with the ranking of their claims. In countering the appellants' contentions, the respondents instituted an interlocutory application for an order declaring the appellants' rule 6(5)(d)(iii) notice in which the crux of their opposition was concisely articulated as constituting irregular proceedings and for an order compelling the appellants to file a rule 53 record evidencing the basis of their decision not to implement the sale agreement. 2 The high court ruled that the appellants' rule 6(5)(d)(iii) notice was premature and consequently it set it aside provisionally pending the filing of the rule 53 record sought by the respondents which had to be filed immediately before the merits of the review application itself could be adjudicated. The high court further held that what was before it for adjudication was the interlocutory application and that the appellants' quest to have the main application heard at that stage would be tantamount to putting the cart before the horse. The high court proceeded to hold that in review proceedings the applicant is entitled as of right to the rule 53 record. And that the appellants' attempt to circumvent the rule had to fail. The high court subsequently granted the appellants leave to appeal to the SCA against its order. On appeal, the SCA – by a majority of three members of the Bench – held that the high court was correct in deciding the dispute in the way it did and that the appeal therefore fell to be dismissed with costs. The minority judgment – by two members of the Bench – held that the high court was wrong and that it should have entered into the merits of the rule 6(5)(d)(iii) notice filed by the appellants and determined the questions of law raised therein before all else. In the view of the minority, the appeal fell to be allowed with costs and the order of the high court set aside. ~~~~ends~~~~

4301

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 190/2023 In the matter between: SAND HAWKS (PTY) LTD FIRST APPELLANT SEACREST INVESTMENTS 129 (PTY) LTD SECOND APPELLANT and LABONTE 5 (PTY) LTD FIRST RESPONDENT THE MINISTER OF MINERAL RESOURCES AND ENERGY SECOND RESPONDENT THE DIRECTOR GENERAL: DEPARTMENT OF MINERAL RESOURCES AND ENERGY THIRD RESPONDENT THE DEPUTY DIRECTOR-GENERAL: DEPARTMENT OF MINERAL RESOURCES AND ENERGY FOURTH RESPONDENT THE REGIONAL MANAGER: MINERAL REGULATION: LIMPOPO REGION, DEPARTMENT OF MINERAL RESOURCES AND ENERGY FIFTH RESPONDENT 2 Neutral citation: Sand Hawks (Pty) Ltd and Another v Labonte 5 (Pty) Ltd and Others (190/2023) [2024] ZASCA 122 (16 August 2024) Coram: MOCUMIE, MEYER and GOOSEN JJA and KOEN and SEEGOBIN AJJA Heard: 9 May 2024 Delivered: 16 August 2024 Summary: Minerals and Petroleum Resources Development Act 28 of 2002 (MPRDA) – powers of a Regional Manager – whether functus officio when, due to error of Regional Manager, an application for a mining right in terms of s 22 read with s 23 and s 16 of the MPRDA was accepted partially. Administrative law – review – principle of legality – whether the Director-General applied his mind to the granting of condonation for the late filing of an internal appeal in terms of s 96 of the MPRDA – whether the High Court was correct to review and set aside the Director-General’s failure to decide appeal, and remit the appeal to the Director-General for determination. 3 ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Fourie J, sitting as a court of first instance): The appeal is dismissed with costs, including the costs of two counsel where so employed. JUDGMENT Mocumie JA (Meyer, Goosen JJA and Koen and Seegobin AJJA concurring): [1] This is an appeal against the judgment and order of the Gauteng Division of the High Court, Pretoria (Fourie J) with the leave of that court. The appeal is the culmination of a battle for prospecting and mining rights by the first and second appellants, Sand Hawks (Pty) Ltd and Seacrest Investments 129 (Pty) Ltd (jointly referred to as Sand Hawks), and the first respondent, Labonte 5 (Pty) Ltd (Labonte), over certain portions of the farms Ehrenbreitstein and Wonderboomhoek (the property), situated in the Limpopo Province. The high court granted an order reviewing and setting aside: a decision of the third respondent, the Director-General (the DG), Limpopo, Department of Mineral Resources and Energy (the Department); and the decision of the fifth respondent, the Regional Manager (the RM) of the same Department, who had granted Labonte mining rights over certain portions of the property. [2] Sand Hawks engages, inter alia, in the exploration for, and the exploitation of mineral resources in South Africa. Labonte is in the same industry. On 23 July 2010 Labonte lodged an application (the Labonte application) in terms of s 22 of the Mineral and Petroleum Resources Development Act 28 of 2002 (the MPRDA) for mining rights in respect of sand over various portions of a number of farms in the Limpopo region. On 20 September 2010, the Regional Manager (RM) accepted the Labonte application in part (the partial acceptance), but not in respect of the property although it had formed part of the Labonte application. The RM did not accept the application in respect of the property as he believed that a third party, Sungu Sungu Mining (Pty) Ltd, held rights in respect of the same mineral over the property. It was established subsequently that the RM’s belief was erroneous. 4 [3] During August 2011, almost a year after the partial acceptance of Labonte’s application, Sand Hawks lodged various mining permit applications in respect of sand in general over various properties, including the property as described above. On 4 August 2011, Labonte was notified that Sand Hawks’ applications had been accepted. In November 2011, based on advice from the Department after having engaged with it over some time regarding addressing the RM’s error/mistake, Labonte lodged a second application for mining rights in respect of the property. [4] At the beginning of 2013, the RM accepted Sand Hawk’s application for mining rights, including the property, in terms of s 9(1)(d) of the MPRDA. On 3 April 2013, Labonte lodged an internal appeal with the DG: (a) against the partial acceptance decision of the RM, in terms of s 96 of the MPRDA read with reg 74 of the Regulations of the MPRDA, to set aside the decision of the RM which excluded the property and to replace the decision with one accepting Labonte’s application including all the portions; and (b) to set aside the RM’s acceptance of Sand Hawk’s mining rights application in respect of the property. [5] On 6 May 2013, the RM wrote to Labonte accepting its second application ‘after thorough investigation with the proof that you submitted that there is no conflict with the prospecting right of Sungu Sungu as they are prospecting a different commodity and on land wherein you will be mining in the river. Therefore, the above mentioned two properties will therefore form part of your mining right application of reference ….’ [6] On 14 March 2017, the Deputy Director-General (DDG), granted Labonte the mining rights over the property. More than a year later, on 12 April 2018, Sand Hawks lodged an internal appeal in terms of s 96 of the MPRDA against: (a) the RM’s subsequent decision to correct his error/mistake and include the property in Labonte’s mining rights application, maintaining that the RM was functus officio after having originally not accepted the application in respect of the property; and (b) the DDG’s decision to grant Labonte’s mining rights (and a related decision to approve Labonte’ environmental management programme). [7] On 19 December 2019, the DG upheld Sand Hawk’s appeal and issued the 5 following decision: ‘APPEAL IN TERMS OF SECTION 96 OF THE MPRDA AGAINST: … The above-mentioned appeal dated the 12 April 2018 has reference. After careful consideration of the facts before me, I Adv. Thabo Mokoena, Director-General of Mineral Resources, hereby decides as follows: - Condone the late filing of the appeal; - Confirm the decision by the regional manager to partially accept a mining right application by Labonte 5 (Pty) Ltd to exclude the farms Wonderboomhoek 550 LQ and Ehrenbreitstein 525 LQ; - Set aside a decision by the regional manager to revoke his decision retrospectively insofar as certain portions of the farm Wonderboomhoek 550 LQ and Ehrenbreitstein 525 LQ are concerned; - Amend the mining right granted under LP187MR to exclude certain portions of the farms Wonderboomhoek 550 LQ and Ehrenbreitstein 525 LQ; - Amend the Power of Attorney for the execution of the mining right LP187MR to exclude certain portions of the farms Wonderboomhoek 550 LQ and Ehrenbreitstein 525 LQ; - Amend the approval of the environmental management programme under LP187MR to exclude certain portions of the Farms Wonderboomhoek 550 LQ and Ehrenbreitstein 525 LQ. The following are the reasons for the decisions: - It will be in the interest of justice that the appeal be heard; - It is common practice for the regional manager to partially accept an application; - The acceptance decision constituted a final decision by the regional manager and the latter had no legal authority to revoke it since he was functus officio.’ [8] Labonte sought to review the decision of the DG in terms of the provisions of the Promotion of Access to Justice Act 3 of 2000 (PAJA) in the high court on essentially four grounds: (a) the DG erred in finding that the RM was functus officio, because his decision is preliminary in nature and not final and was mechanical and not discretionary and in any event because the RM made a clerical error or mere slip capable of revision; (b) the DG failed to apply his mind to the issue of condonation as the Sand Hawks’ application was lodged almost 13 months after the DDG had granted Labonte its mining rights and five years after the RM had advised Labonte he would accept its application in full; (c) the Appeal decision was not justified by the documents in the Rule 53 record; and 6 (d) the DG failed to decide the Labonte appeal, which required determination in the event that he concluded that the RM was functus officio. [9] In addition Labonte sought orders; (i) exempting it, to the extent necessary, from the obligation to exercise its right of appeal in terms of s 96(1)(b) of the MPRDA; (ii) upholding the decision to grant the mining right to it; (iii) directing the Department to take all the necessary steps required to execute the mining right; and (iv) to the extent necessary, reviewing and setting aside the DG’s failure to take a decision in respect of its appeal. [10] On 11 August 2022, the high court granted the following order: ‘1. Declaring unlawful and setting aside the decision taken by the second respondent on 19 December 2019 to: 1.1. Grant condonation to the fifth and sixth respondents for the late filing of their appeal; 1.2. Confirm the decision by the Regional Manager (fourth respondent) to partially accept a mining right application by Labonte 5 (Pty) Ltd (applicant) to exclude the Farms Wonderboomhoek 550 L Q and Ehrenbreitstein 525 L Q; 1.3. Set aside a decision by the Regional Manager (fourth respondent) to revoke his decision retrospectively insofar as certain portions of the Farm Wonderboomhoek 550 L Q and Ehrenbreitstein 525 L Q are concerned; 1.4. Amend the mining right granted under LP187MR to exclude certain portions of the Farms Wonderboomhoek 550 L Q and Ehrenbreitstein 525 L Q; 1.5. Amend the power of attorney for the execution of the mining right LP187MR to exclude certain portions of the Farms Wonderboomhoek 550 L Q and Ehrenbreitstein 525 L Q; 1.6. Amend the approval of the Environmental Management Programme under LP187MR to exclude certain portions of the Farms Wonderboomhoek 550 L Q and Ehrenbreitstein 525 L Q; 2. Declaring unlawful and setting aside the second respondent's failure to consider and take a decision in respect of the applicant's internal appeal dated 3 April 2013 against the partial acceptance decision by the fourth respondent and any acceptance of the fifth and sixth respondents' mining permit application(s) as referred to in the appeal, by the fourth respondent in respect of the properties referred to above. 3. Insofar as may be necessary, exempting the applicant from any obligation to exhaust any internal remedy available to challenge any of the aforementioned decisions. 4. Remitting both the applicant's internal appeal and the internal appeal of the fifth and sixth respondents to the second respondent to properly consider and decide both the said internal appeals. 5. Ordering the second respondent (as the administrator) to comply with the following 7 directives: 5.1. The two internal appeals are interrelated and may not be separated. They should be considered and decided together by the same administrator; 5.2. The issue with regard to the functus officio doctrine has now been decided by this Court. This should be taken into account by the administrator and this issue may not be reconsidered and decided again in any of the two internal appeals; 5.3. As no decision was taken by this Court regarding the question whether or not condonation should be granted for the late filing of any of the two internal appeals, the merits of such an application have not been decided by this Court and it may and should be considered and decided by the administrator in both the internal appeals; 5.4. Subject to sub-paragraph 5.3 above, the remainder of the issues raised in both the internal appeals, which have not been finally decided by this Court, may and should be properly considered and decided by the administrator; 5.5. The administrator who will be hearing both the internal appeals must consider and finalise these appeals and make known his or her decision with regard to both the appeals, within three (3) months after this order has been served on the first, second, third and fourth respondents by the Sheriff, or within such longer period as authorised by this Court. 6. Costs of this application shall be paid by the fifth and sixth respondents, jointly and severally, including the costs of two counsel where so employed.’ [11] In granting the above order the high court held that the law regarding functus officio applies only to final decisions. When the RM made his decision to accept Labonte’s application, his decision was not final but a preliminary step of what is envisaged in ss 22 and 23 of the MPRDA, which contemplate a two-stage application process. It held that under s 22 the RM does not exercise a discretion and does no more than perform a purely mechanical duty of checking that the application has been lodged in the prescribed manner. Any decision taken by the RM is preliminary and not final. Thus, the RM was not functus officio when the decision to partially accept the Labonte application, while excluding Ehrenbreitstein and Wonderboomhoek properties, was taken. The high court found that although the RM’s decision was preliminary, it was an ‘administrative decision’ as contemplated under s 96(1)(a) of the MPRDA. [12] On the question of condonation, the high court found that the DG did not hold an inquiry into the delay by Sand Hawks to prosecute its appeal close to two years late. He also did not consider all relevant facts, more particularly, any explanation as to why the appeal was late. This was a material irregularity and a further reason why the appeal decision had 8 to be reviewed and set aside. The high court also held that if the Sand Hawks appeal was upheld, then it was indeed necessary for the Labonte appeal to be determined. The DG had failed to consider the appeal and accordingly did not comply with his statutory duty. Even if Labonte did have a right to lodge a further appeal to the Minister as the DG held, there were exceptional circumstances warranting Labonte being exempted from such further appeal. To insist on an appeal in respect of the DG’s failure to decide the Labonte appeal without also hearing the interrelated Sand Hawks ‘appeal’, would give rise to substantial delay. The high court concluded that the issue of functus officio is a complex legal question which courts are better placed to resolve. [13] The issues for determination before this Court (as before the high court) are: (a) whether the DG’s decision, taken on 19 December 2019 in relation to the internal appeal lodged by the appellant, should be declared unlawful and set aside; (b) whether the RM was functus officio once he had taken a decision to partially accept the mining right application by Labonte, but not to include the property, or whether he was able to correct that decision himself thereafter; and (c) whether the DG irrationally and unreasonably condoned the late filing of the Sand Hawks’ appeal. Other issues which arose in the high court need not be considered for the purposes of this appeal. [14] The relevant provisions governing the application process for a prospecting and mining rights under the MPRDA are set out below. Section 9 provides for the order of processing of applications as follows: ‘(1) If a Regional Manager receives more than one application for a prospecting right, a mining right or a mining permit, as the case may be, in respect of the same mineral and land, applications received on - (a) the same day must be regarded as having been received at the same time and must be dealt with in accordance with subsection (2); (b) different dates must be dealt with in order of receipt. (2) When the Minister considers applications received on the same date, he or she must give preference to applications from historically disadvantaged persons.’ [15] Section 16 provides for applications for prospecting rights, as follows: ‘(1) Any person who wishes to apply to the Minister for a prospecting right must lodge the application- (a) at the office of the Regional Manager in whose region the land is situated; (b) in the prescribed manner; and 9 (c) together with the prescribed non-refundable application fee. (2) The Regional Manager must accept an application for a prospecting right if- (a) the requirements contemplated in subsection (1) are met; and (b) no other person holds a prospecting right, mining right, mining permit or retention permit for the same mineral and land. (3) If the application does not comply with the requirements of this section, the Regional Manager must notify the applicant in writing of that fact within 14 days of receipt of the application and return the application to the applicant. (4) If the Regional Manager accepts the application, the Regional Manager must, within 14 days from the date of acceptance, notify the applicant in writing- (a) to submit an environmental management plan; and (b) to notify in writing and consult with the land owner or lawful occupier and any other affected party and submit the result of the consultation within 30 days from the date of the notice. (5) Upon receipt of the information referred to in subsection (4)(a) and (b), the Regional Manager must forward the application to the Minister for consideration. (6) The Minister may by notice in the Gazette invite applications for prospecting rights in respect of any land, and may specify in such notice the period within which any application may be lodged and the terms and conditions subject to which such rights may be granted.’ [16] Section 22 deals with the application for a mining right. It provides that: ‘(1) Any person who wishes to apply to the Minister for a mining right must lodge the application- (a) at the office of the Regional Manager in whose region the land is situated; (b) in the prescribed manner; and (c) together with the prescribed non-refundable application fee. The Regional Manager must accept an application for a mining right if- (a) the requirements contemplated in subsection (1) are met; and (b) no other person holds a prospecting right, mining right, mining permit or retention permit for the same mineral and land. (2) The Regional Manager must accept an application for a mining if- (a) the requirements contemplated in subsection (1) are met; and (b) no other person holds a prospecting right, mining right, mining permit or retention permit for the same mineral and land. (3) If the application does not comply with the requirements of this section, the Regional Manager must notify the applicant in writing of that fact within 14 days of the receipt of the application and return the application to the applicant. (4) If the Regional Manager accepts the application, the Regional Manager must, within 14 days from the date of acceptance, notify the applicant in writing- 10 (a) to conduct an environmental impact assessment and submit an environmental management programme for approval in terms of section 39, and (b) to notify and consult with interested and affected parties within 180 days from the date of the notice. (5) The Minister may by notice in the Gazette invite applications for mining rights in respect of any land, and may specify in such notice the period within which any application may be lodged and the terms and conditions subject to which such rights may be granted.’ [17] Section 23 provides for the granting and duration of a mining right. Subsection (1) states that the Minister must grant a mining right if certain conditions have been complied with. Subsection (2) provides that the Minister may, having regard to the nature of the mineral in question, take into consideration the provisions of s 26. In terms of s 23(3) the Minister must refuse to grant a mining right if the application does not meet all the requirements referred to in s 23(1). [18] Section 27 provides for the issue and duration of mining permits. Subsection (1) thereof, provides that a mining permit may only be issued if the mineral in question can be mined optimally within a period of two years and the mining area in question does not exceed 1,5 hectares in extent. Section 27(2), (3) and (4) are mutatis mutandis substantially the same as the subsections in s 22 dealing with an application for a mining right. [19] Last, s 96 regulates the internal appeal process and access to courts. It reads as follows: ‘Internal appeal process and access to courts (1) Any person whose rights or legitimate expectations have been materially and adversely affected or who is aggrieved by any administrative decision in terms of this Act may appeal in the prescribed manner to- (a) the Director-General, if it is an administrative decision by a Regional Manager or an officer; or (b) the Minister, if it is an administrative decision by the Director-General or the designated agency. (2) An appeal in terms of subsection (1) does not suspend the administrative decision, unless it is suspended by the Director-General or the Minister, as the case may be. (3) No person may apply to the court for the review of an administrative decision contemplated in subsection (1) until that person has exhausted his or her remedies in terms of that subsection. 11 (4) Sections 6, 7(1) and 8 of the Promotion of Administrative Justice Act, 2000 (Act No. 3 of 2000), apply to any court proceedings contemplated in this section.’ Ad condonation [20] An important feature of this appeal which bears highlighting, is the issue of Sand Hawk’s delay in pursuing its appeal. Although the appeal concerns the review of the decision of the DG, the DG has not participated in the proceedings in the high court and before this Court. He has not filed any affidavits, nor has he indicated that he abides by the decision of this Court. Ordinarily, a party may serve a notice to abide, and not file an affidavit. Such a party pre-empts and waives its right to appeal against the order to be made by the court. It is equally accepted that generally a party need not indicate that they will be participating in the proceedings. Their silence is taken as an indication that they are not. The reasons for the DG’s decision are gleaned from inter alia the Memorandum of 19 December 2019, and what Labonte has labelled ‘a chaotic and incomplete Rule 53 record containing mostly irrelevant documents’, comprising of letters exchanged between the legal advisors in the office of the DG and the parties; particularly Labonte and the RM in trying to resolve a patent error on the RM’s part without having to go to court. This (the Minister and his delegates’ lack of participation in the proceedings) is relevant as it has a bearing on the issue of condonation, as will become apparent in what follows. [21] Sand Hawks filed its appeal to the DG late, a year and some months after Labonte’s mining right was granted. It did not file any application for condonation for the late filing of the appeal. The high court did not deal with this issue at all. As part of the relief provided in its order, it remitted the issue to the RM. The question before this Court is more nuanced; ie, whether the DG applied his mind properly to the question whether condonation should be granted. This Court in Aurecon South Africa (Pty) Ltd v Cape Town City (Aurecon),1 stated that in determining whether condonation should be granted, the relevant factors that require consideration are the nature of the relief sought; the extent and cause of the delay; its effect on the administration of justice; the reasonableness of the explanation for the delay; the importance of the issues raised; and the prospects of success on review. [22] Section 96(1) of the MPRDA prescribes a deadline for the lodging of an internal 1 Aurecon South Africa (Pty) Ltd v Cape Town City [2015] ZASCA 209; [2016] 1 All SA 313 (SCA); 2016 (2) SA 199 (SCA) para 17. This was re-affirmed by the Constitutional Court in Cape Town v Aurecon SA Pty Ltd [2017] ZACC 5; 2017 (6) BCLR 730 (CC); 2017 4 SA 223 (CC) para 18. 12 appeal, as 30 days from ‘becoming aware of such administrative decision’. Similarly, reg 74(1) provided at the time (prior to its amendment in March 2020) that an appeal must be submitted within 30 days after an applicant became aware or should reasonably have been aware of the administrative decision concerned.2 [23] The RM initially accepted Labonte’s mining rights application, excluding the property, in May 2013. The DG granted Labonte’s mining right in March 2017. More than a year later, and five years after the RM’s initial acceptance of Labonte’s application, in April 2018, Sand Hawks lodged an internal appeal against both decisions in terms of s 96. In their answering affidavit, Sand Hawks acknowledged that they became aware of the decision to grant Labonte’s mining right in July 2017, and that at that stage it knew that the mining right covered a portion of the property. It alleges that it only became aware of the decision on the other part of the property on 5 March 2018. [24] As indicated earlier, the DG has not participated in the proceedings. The only reasons he provided in this regard is what is captured in the Memorandum of 19 December 2019, namely to ‘…condone the late filing of the appeal… in the interest of justice’. This is not sufficient for the following reasons. First, in what was produced as the Rule 53 record, there is no record where the DG during the proceedings enquired into this delay of five years (in respect of the RM’s decision) and one year (in respect of the DDG’s decision to grant Labonte’s mining rights). In fact, the DG does not make any reference to the delay, or an application for condonation by Sand Hawks. In a letter signed by both the Chief Director and a Senior Legal Administrator in the DG’s office, provided as a curt answer to a query from Labonte for reasons, they state simply: ‘[I]t therefore stands to reason that to grant condonation in this matter will be a matter of fairness to both sides and it is thus recommended that the appeal be adjudicated accordingly.’ [25] In their letter, these functionaries did not indicate whether this was in fact the view of the DG after they consulted with him. Nor does the DG clarify the position in a confirmatory affidavit later. But besides this, this reasoning is flawed on two bases. First, the reasoning is unreasonable and irrational. It does not show that the DG considered all the relevant factors. It therefore follows that the DG failed to consider each application for condonation 2 Regulation 74(1) of the MPRDA provides: ‘Any person who appeals in terms of section 96 of the Act against an administrative decision, must within 30 days after he or she has become aware of the or should reasonably become aware of the administrative decision concerned, lodge a written notice of appeal with the Director-General or the Minister, as the case may be.’ 13 on its own facts; taking into account factors such as the extent and cause of the delay, its effect, the reasonableness of the explanation, the importance of the issues raised, and the prospects of success. [26] Second, the DG failed to apply the ‘unfairness and travesty of justice’ notion which the legal division’s functionaries suggested should be the basis for his consideration of Sand Hawks’s late appeal. From a reading of the record, it is abundantly clear, considering all that was before the DG, that the DG did not consider Labonte’s appeal and its application for condonation. More importantly, the DG did not consider any of the basic factors enumerated in Aurecon which are now trite considerations in an application for condonation, when he granted Sand Hawks’s appeal. Sand Hawks did not file a substantive application for condonation in terms of s 96. Whatever Sand Hawks states (post facto), in their Heads of Argument and in their submissions before this Court, do not carry any weight as counsel correctly conceded. The DG did not participate in the proceedings from the onset. Nor did he file any affidavit. I therefore, conclude that the DG's decision, taken on 19 December 2019 in relation to the internal appeal lodged by Sand Hawks, should be declared unlawful and set aside in terms of s 6(2)(d) of PAJA as it was materially influenced by an error of law. That should be dispositive of the appeal. I however proceed to consider the merits hereafter. Ad merits Whether the RM was functus officio when he revisited his Labonte decision. [27] In Mncwabe v President of the Republic of South Africa,3 the Constitutional restated the doctrine of functus officio as follows: ‘[T]his doctrine entails that once something is done, it cannot be undone, reversed or otherwise altered by the decision-maker. This is because the decision-maker would have exhausted her authority and relinquished her jurisdiction over the matter by taking a final decision. The finality of a decision is central to the doctrine’s operation. The doctrine promotes certainty and stability and it ameliorates prejudice and injustice occasioned to those who would rely on otherwise wavering decisions. The doctrine’s relationship to the Oudekraal rule is evident from this Court’s judgment in Kirland. In Retail Motor Industry Organisation, the Supreme Court of Appeal held with regard to the doctrine— 3 Mncwabe v President of the Republic of South Africa and Others; Mathenjwa v President of the Republic of South Africa and Others [2023] ZACC 29; 2023 (11) BCLR 1342 (CC); 2024 (1) SACR 447 para 42. 14 “first, the principle applies only to final decisions; secondly, it usually applies where rights or benefits have been granted – and thus when it would be unfair to deprive a person of an entitlement that has already vested; thirdly, an administrative decision-maker may vary or revoke even such a decision if the empowering legislation authorises him or her to do so (although such a decision would be subject to procedural fairness having been observed and any other conditions) ….”’4 [28] A person who applies for a mining permit lodges same with the RM within the region where the mine is located. The RM’s duties are circumscribed by s 22, amongst others, to verify whether the preconditions of the application have been met. He plays a ‘clerical sorting’ role under s 22.5 The RM’s decision under s 22 is akin to the kind of decision which Professor Hoexter describes as purely mechanical. With reference to Nedbank Ltd v Mendelow and Another (Mendelow), she puts it as follows: ‘Unlike discretionary powers, mechanical powers involve little or no choice on the part of their holder. In fact, “purely mechanical” powers are more in the nature of duties.’6 [29] This Court in Norgold Investments Pty Ltd v The Minister of Minerals and Energy of the Republic of South Africa (Norgold), described the role of regional managers as follows: ‘Regional managers can, of course, be of assistance in verifying if the preconditions have been met, but they are not the ultimate decision maker, nor do they exercise a discretion in that regard….’7 [30] Following this judgment and others subsequent to it,8 if consideration is given to the process under s 22 juxtaposed to that in s 23, the following emerges. A two-stage process is involved: firstly there is the acceptance of the application pursuant to ss 16(2), 22(2) and 27(3); and thereafter, the application is referred to the Minister to make his decision whether to grant the mining right as provided in ss 17, 23 and 27(6), or not, based on a list of substantive requirements set out in s 23. There are no such substantive requirements in s 22. It is contextually clear from s 22 that the RM plays a clerical sorting role to ensure that an application ticks all the boxes in subsection (1) and if so, he must pass the application on to the higher official, in this instance, the Minister, who ultimately decides whether to grant, 4 Ibid fn 2 above para 43. 5 Rhino Oil and Gas Exploration South Africa Pty Ltd v Normadien Farms Pty Ltd [2019] ZASCA 88; 2019 (6) SA 400 (SCA) paras 26 and 28, as confirmed in Normadien Farms Pty Ltd v SA Agency for Promotion of Petroleum Exploration and Exploitation SOC Ltd [2020] ZACC 5; 2020 (6) BCLR 748 (CC); 2020 (4) SA 409 (CC). 6 Nedbank Ltd v Mendelow and Another NO [2013] ZASCA 98; 2013 (6) SA 130 (SCA) paras 25 and 26. 7 Norgold Investments (Pty) Ltd v Minister of Minerals and Energy, Republic of SA and others [2011] ZASCA 49; [2011] 3 All SA 610 (SCA) para 40. 8 Mendelow fn 5; Minister of Mineral Resources and Others v Mawetse (SA) Mining Corporation (Pty)Ltd [2015] ZASCA 82; [2015] 3 All SA 408 (SCA); 2016 (1) SA 306 SCA. 15 or not grant the mining right. The requirements in s 22(2) and the regulations in terms of the MPRDA are purely formal in nature and aimed at ensuring compliance with the limited requirements listed; a mechanical exercise involving no discretion. [31] As the RM does not make any substantive decision under s 22, let alone a ‘final decision’, it follows that the RM was not functus officio when he made the decision requiring the re-submission of the Labonte application. This is so because, when the RM rejects an application for a mining right, that is not the end of the road for an applicant. An applicant can correct an application and re-submit it to the RM. This is particularly so where the application was from the onset compliant with the MPRDA (as in this case) but the RM (as he later explained) wrongly dealt with the application. The high court cannot be faulted for having reached this conclusion. [32] That is however not the end of the enquiry. Section 9 (quoted above) is implicated. This calls for an interpretation thereof. This Court in Capitec Bank Holdings Limited v Coral Lagoon Investments,9 expanding on the approach set out in Natal Joint Municipal Pension Fund v Endumeni Municipality (Endumeni),10 stated as follows: ‘…It is the language used, understood in the context in which it is used, and having regard to the purpose of the provision that constitutes the unitary exercise of interpretation. I would only add that the triad of text, context and purpose should not be used in a mechanical fashion. It is the relationship between the words used, the concepts expressed by those words and the place of the contested provision within the scheme of the agreement (or instrument) as a whole that constitutes the enterprise by recourse to which a coherent and salient interpretation is determined. As Endumeni emphasised, citing well-known cases, “[t]he inevitable point of departure is the language of the provision itself”.’ [33] We must therefore proceed from analysing the words used in s 9 specifically that, ‘different dates must be dealt with in order of receipt’. These words in my view, postulates ‘a queueing system’. When an applicant submits an application, it joins the queue in an order which translates to ‘first come, first served’. If an application is received first, logically, it must have the exclusive right for the time being to have its application for that mineral in respect of the land identified considered first, ie, in the order of receipt. If it complies with s 16(2)11 9 Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) para. 10 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA). 11 Section 16 provides: The Regional Manager must accept an application for a prospecting right if- 16 or 22(2) the application must be accepted.12 Once accepted, it is processed further and considered as to whether it should be granted. Other applications remain unprocessed in the queue until the first one has either been granted or refused in terms of ss 1713 or 23. [34] Sand Hawks’ contention is for a strict queueing system, ie, if the application is not accepted, it is rejected, and is terminated, whether partially or in totality, and the applicant is faced with a choice: (a) It can accept the rejection, fix the application in its own time and submit it again, but such submission will be a new application in law and it must go to the back of the queue; or (b) If the applicant is of the view that, as in this case, the RM made a mistake, it can appeal to the DG against the failure to accept within 30 days, or such longer period as may be condoned. If the DG sets the RM’s decision aside on appeal, then the effect is that the application is re-instated as the first received application. (a) the requirements contemplated in subsection (1) are met; (b) no other person holds a prospecting right, mining right, mining permit or retention permit for the same mineral and land; and (c) no prior application for a prospecting right, mining right, mining permit or retention permit has been accepted for the same mineral on the same land and which remains to be granted or refused. 12 After a subsequent Amendment Act, only one application can be accepted at any one time (s 22(2)(c)). 13 Section 17 provides: (1) The Minister must within 30 days of receipt of the application from the Regional Manager, grant a prospecting right if- (a) the applicant has access to financial resources and has the technical ability to conduct the proposed prospecting operation optimally in accordance with the prospecting work programme; (b) the estimated expenditure is compatible with the proposed prospecting operation and duration of the prospecting work programme; (c) the prospecting will not result in unacceptable pollution, ecological degradation or damage to the environment and an environmental authorisation is issued; (d) the applicant has the ability to comply with the relevant provisions of the Mine Health and Safety Act, 1996 (Act 29 of 1996); (e) the applicant is not in contravention of any relevant provision of this Act; and (f) in respect of prescribed minerals the applicant has given effect to the objects referred to in section 2 (d). (2) The Minister must, within 30 days of receipt of the application from the Regional Manager, refuse to grant a prospecting right if- (a) the application does not meet all the requirements referred to in subsection (1); (b) the granting of such right will result in the concentration of the mineral resources in question under the control of the applicant and their associated companies with the possible limitation of equitable access to mineral resources. (3) If the Minister refuses to grant a prospecting right, the Minister must, within 30 days of the decision, in writing notify the applicant of the decision with reasons. (4) The Minister may, having regard to the type of mineral concerned and the extent of the proposed prospecting project, request the applicant to give effect to the object referred to in section 2 (d). (4A) If the application relates to land occupied by a community, the Minister may impose such conditions as are necessary to promote the rights and interests of the community, including conditions requiring the participation of the community. (5) A prospecting right granted in terms of subsection (1) comes into effect on the effective date. (6) A prospecting right is subject to this Act, any other relevant law and the terms and conditions stipulated in the right and is valid for the period specified in the right, which period may not exceed five years. 17 [35] They, therefore, contend that on a proper construction of the MPRDA a defective application, once rejected in terms of s 22(2), cannot remain at the front of the queue or pending for an undetermined period. They argue that there are no provisions in terms of which a rejected/terminated application may be resurrected and reinstated at the front queue with a corrected application. Such an interpretation would result in the potential sterilisation of the right to prospect or mine the land in question for indeterminate periods. This would be at odds with the clear objectives of the MPRDA. [36] What Sand Hawks loses sight of is that Labonte’s application was compliant with s 22 at all material times. It was the RM, as he acknowledged, who made a mistake, meaning the fault lay squarely with the RM. The RM worked on correcting the mistake, albeit after accepting Sand Hawks’ application for prospecting rights over the same properties. The subsequent acceptance of Sand Hawks’ application was clearly with a caveat, as provided in terms of s 9(1)(b), that is subject to prior rights of the Labonte application. Applying the same ‘first come, first served’ notion, and because Labonte’s application which was compliant with the MPRDA came first and should have been accepted but for the erroneous belief of the RM, the ineluctable conclusion must be that Labonte cannot be expected to commence the process afresh and lose its place in the queue. It would be unbusiness-like to conclude thus. This is all the more so when Labonte and the Department were in continuous discussions regarding this error. It is not as if Labonte abandoned the queue totally, and then years later returned and demand to jump the queue. It co-operated with the RM and acted as directed by the RM to correct a glaring mistake by the RM. [37] The application under s 22, read with s 23, is a composite one and has to be treated as such. Meaning, on these facts, that the RM’s error in respect of one part of the application, which was indeed compliant with s 16, did not nullify the whole application. The application remained ‘alive’ and could be corrected. Labonte kept its position until the RM corrected his error and added the property which was omitted due to his error. Labonte’s application thus remained an impediment to any subsequent application, such as that of Sand Hawks.14 [38] In sum, this means, the words in s 9(1)(b) in their ordinary meaning, mean that an application submitted under s 22, even if partially wrongly not accepted, but compliant with 14 Section 22 does not expressly mention the word ‘rejected’ in its current form nor did it before the amendment of the MPRDA. 18 the MPRDA, does not fall away and cannot be ignored as of no legal effect. Labonte’s application had not been rejected, and could be corrected by supplementation and variation, subject possibly only to such rights becoming prescribed. It can be supplemented in these circumstances. Any other interpretation will lead to an absurdity that the legislature did not contemplate. It certainly could not have contemplated that an applicant who satisfied all the requirements of the MPRDA would be excluded because of an error or oversight on the part of the RM, as part of the machinery of the MPDRA. [39] The high court did not address the issue raised by Labonte that it should be exempted from the obligation to appeal in terms of s 96(1)(b) of the MPRDA. Labonte conceded that it did not seek to be exempted. Section 96 read with reg 74, provides for an internal appeal to an affected applicant who is aggrieved by an administrative decision in terms of the MPRDA. The application must be made within 30 days from ‘becoming aware of such administrative decision.’ Labonte did not follow this procedure after it became aware of the RM’s approval of Sand Hawks’ application. Nonetheless, the fact of the matter is that Labonte was entitled, even on the basis of the principle of legality, to be exempted considering that the delay emanated from the interaction between it and the RM in an attempt to solve the problem which existed then.15 The problem was finally resolved in its favour by a decision which the RM was lawfully entitled to make. Is the decision of the RM an administrative decision? Is PAJA applicable? [40] The more pertinent question to answer is whether the decision of the RM is an administrative one. The high court held that it was. Labonte did not cross appeal, correctly so, because as a matter of principle what is appealed against is the order not the reasoning of the court. However, how a court reaches a particular conclusion and grants a particular order is influenced by its reasoning. It is understandable why the high court came to conclusion which it did. It concluded that the RM was not functus officio. It thus followed that the decision was not appealable except under s 96 which provides for an appeal and review under the MPRDA in respect of an administrative decision. [41] Section 1 of PAJA defines administrative action as any decision taken by an organ of 15 Minister of Education, Western Cape, and Others v Governing Body, Makro Primary School, and Another [2005] ZASCA 66; [2005] 3 All SA 436 (SCA); 2006 (1) SA 1 (SCA); 2005 (10) BCLR 973 (SCA) para 25. 19 state when inter alia exercising a public power or performing a public function in terms of any legislation which adversely affects the rights of any person and which has a direct, external legal effect. In Grey Marine Hout Bay v Minister of Public Works,16 this Court held: ‘At the core of the definition of administrative action is the idea of action (a decision) “of an administrative nature” taken by a public body or functionary. Some pointers to what that encompasses are to be had from the various qualifications that surround the definition but it also falls to be construed consistently, wherever possible, with the meaning that has been attributed to administrative action as the term is used in s 33 of the Constitution (from which PAJA originates) so as to avoid constitutional invalidity.’ While PAJA’s definition purports to restrict administrative action to decisions that, as a fact, “adversely affect the rights of any person”, I do not think that literal meaning could have been intended. For administrative action to be characterised by its effect in particular cases (either beneficial or adverse) seems to me to be paradoxical and also finds no support from the construction that has until now been placed on s 33 of the Constitution. Moreover, that literal construction would be inconsonant with s 3(1), which envisages that administrative action might or might not affect rights adversely.17 The qualification, particularly when seen in conjunction with the requirement that it must have a “direct and external legal effect”,18 was probably intended rather to convey that administrative action is action that has the capacity to affect legal rights, the two qualifications in tandem serving to emphasise that administrative action impacts directly and immediately on individuals.’ [42] In Aquilia Steel (South Africa) Ltd v Minister of Mineral Resources and Others,19 the Constitutional Court held that ‘…it is lack of compliance with the requirements of s 16 that kiboshes an application’… not whether the decision of the RM to accept the mining right application has the legal effect that once it has gone through the RM’s s 22 process, it can only be granted by the Minister or his delegate but based on the RM’s acceptance of the application. The Constitutional Court further held as follows on this: 16 Grey’s Marine Hout Bay and Others v Minister of Public Works and Others 2005 (6) SA 313 (SCA) paras 22 and 23. 17 Section 3(1) provides that ‘administrative action which materially and adversely affects the rights or legitimate expectations of any person must be procedurally fair’. 18 As to the meaning of that phrase see I Currie and J Klaaren. The Promotion of Administrative Justice Act Benchbook (2001) para 2.33. 19 Aquilia Steel (South Africa) Ltd v Minister of Mineral Resources and Others [2019] ZACC 5; 2019 (4) BCLR 429 (CC); 2019 (3) SA 621 (CC) para 87. See also Pan African Mineral Development Co (Pty) Ltd and Others v Aquila Steel (SA) (Pty) Ltd [2017] ZASCA 165; [2018] 1 All SA 414 (SCA); 2018 (5) SA 124 (SCA) where Willis JA writing for the minority held ‘it is the lack of compliance with the requirements of s 16 that makes the application … not its deathblow.’ para 50. 20 ‘As noted,20 only the Minister has the power to grant or refuse an applicant a prospecting right.21 But the statute gives the Minister that power only once the Regional Manager accepts the application. Aquila’s decision to target the erroneous acceptance of ZiZa’s application therefore put the crucial precondition to the Minister’s eventual grant or refusal of the prospecting right in the crosshairs. And, since the MPRDA itself determines the conditions under which the Minister may grant or refuse a new-order right, it cannot assist the old-order applicant that item 8(3) provides that the old-order right “remains valid” until grant or refusal of the new-order right. Differently put, the continued existence of the old-order right until grant or refusal of the new-order right does not exempt the old-order rights-holder from compliance with the requirements of the MPRDA. Nor does it permit the Regional Manager to accept applications that do not comply with the statute.’22 (Emphasis added.) [43] Undoubtedly, the action of the RM has legal consequences. Once the RM’s decision is negative (as with a rejection) in terms of s 22(3), and he informs the applicant of such rejection, the application is terminated. The MPRDA provides for a review under s 96. This means that if any party is aggrieved by the decision of the RM, they can take the decision on review. Thus, it constitutes an administrative action which is subject to review under PAJA. For that reason, the finding that the RM was functus officio has no bearing on the nature of the action. In other words, the fact that the high court found the RM’s decision not to be final and that he was not functus officio, does not detract from the fact that the RM’s decision is an administrative decision and action which is subject to review. The high court was correct. The appeal falls to be dismissed. [44] In the light of the above conclusions, it is unnecessary to decide peripheral issues raised, including whether Labonte’s appeal had been pre-empted or waived or abandoned. [45] Last, the matter of costs. Sand Hawks and Labonte have had to resort to litigation, for a determination of their respective rights, thereby incurring costs, largely as result of the error of the RM. I am equally mindful that the Minister and his functionaries, the RM, DDG and DG, did not oppose the appeal. In the Notice of Motion Labonte sought costs only against the respondents who opposed the appeal. The second respondent did not oppose. Thereafter no party has ever given notice of intention to seek costs against the second respondent. The Ministry was not given notice that costs will be sought against it in the event 20 See also Aquila Steel (SA) Ltd v Minister of Mineral Resources and Others 2017 (3) SA 301 (GP) (22 November 2016) para 78. 21 Section 17(1) of the MPRDA. 22 Aquilia fn 19 above para 88. 21 that Labonte is successful in the appeal. Although I am of the view that the Ministry should have participated in these proceedings and shed light on this important matter, the trite principle is that they should be heard before they are mulcted with any cost order as has been suggested. In their absence before this Court, the general rule as to costs in respect of the litigants who participated in the appeal must apply. [46] In the result, the following order issues: The appeal is dismissed with costs, including the costs of two counsel where so employed. B C MOCUMIE JUDGE OF APPEAL 22 Appearances: Counsel for Appellants: J L Gildenhuys SC and A Higgs Instructed by: Norton Rose Fulbright SA Inc, Johannesburg Webbers Attorneys, Bloemfontein Counsel for First Respondent: P B S Farlam SC and M B G Mbikiwa Instructed by: Edward Nathan Sonnenberg Inc, Johannesburg Lovius Block, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 16 August 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 Sand Hawks (Pty) Ltd and Another v Labonte 5 (Pty) Ltd and Others (190/2023) [2024] ZASCA 122 (16 August 2024) Today the Supreme Court of Appeal (SCA) handed down judgment, wherein it dismissed the appeal with costs, including the costs of two counsel where so employed, against the decision of the Gauteng Division of the High Court, Pretoria (the high court). This matter involved an appeal by Sand Hawks (Pty) Ltd and Seacrest Investments 129 (Pty) Ltd (collectively referred to as ‘Sand Hawks’) against Labonte 5 (Pty) Ltd (Labonte) and various governmental respondents, including the Minister of Mineral Resources and Energy, the Director-General of the Department of Mineral Resources and Energy and the Regional Manager of the same Department. The dispute arose over mining rights for sand on portions of the farms Ehrenbreitstein and Wonderboomhoek (the property) in Limpopo Province. Labonte applied for these mining rights under the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) on 23 July 2010. The Regional Manager initially accepted Labonte's application partially, excluding the contested properties based on the erroneous belief that another entity, Sungu Sungu Mining (Pty) Ltd, held rights to the same minerals over the property. In August 2011, Sand Hawks submitted their applications for mining permits over the same properties, which were accepted later that month. Following Sand Hawks’ accepted application by the Regional Manager, Labonte lodged another application at the advice of the Department to address the Regional Manager’s error. Labonte was eventually granted mining rights in March 2017 by the Deputy Director-General (DDG). More than a year later, Sand Hawks subsequently lodged an internal appeal in terms of s 96 of the MPRDA against this decision, claiming the Regional Manager was functus officio after his initial partial acceptance of Labonte's application. On 19 December 2019, the Director General upheld Sand Hawk’s appeal. Labonte then sought to review the decision of the Director General in the high court in terms of the provisions of the Promotion of Access to Justice Act 3 of 2000 (PAJA) on four grounds, including the Director General’s failure to apply their mind to the issue of condonation as the Sand Hawks’ application was lodged almost 13 months after the DDG had granted Labonte its mining rights and five years after the Regional Manager had advised Labonte he would accept its application in full The high court found in favour of Labonte and held that the law regarding functus officio applies only to final decisions. The Regional Manager's decision was not final but a preliminary step, allowing for subsequent corrections. It found that although the Regional Manager’s decision was preliminary, it was an ‘administrative decision’ as contemplated under s 96(1)(a) of the MPRDA. Further, the high court held that the Director-General failed to properly consider the circumstances surrounding the late appeal. However, the high court did not deal with the issue that Sand Hawks did not file any application for condonation for the late filing of the appeal. Rather, it remitted the issue to the Regional Manager. 2 The central issues on appeal in this Court were whether the Director-General's decision to condone the late filing of Sand Hawks' appeal was lawful; and whether the Regional Manager was functus officio regarding his prior decision to partially accept Labonte's application and therefore, the high court correctly reviewed and set aside the Director-General's decisions. In this Court, Sand Hawks argued that the Regional Manager could not revise his initial decision because it was final and conclusive. Labonte, on the other hand, contended that the Regional Manager's decision was preliminary and not final, thus allowing for correction. They argued that the Director-General failed to consider relevant facts regarding the late filing of the appeal and that the high court's order to review the Director-General's decisions was justified. The SCA upheld the high court's findings and held that the Regional Manager's decision was indeed preliminary, and he retained the authority to correct his earlier error. The SCA further found that the Director-General's decision to condone the internal appeal lodged by Sand Hawks be declared unlawful and set aside in terms of s 6(2)(d) of PAJA as it was materially influenced by an error of law. The Court reiterated the importance of fairness and justice in administrative decision-making, particularly in complex matters and interrelated appeals. As a result, the SCA dismissed the appeal with costs, including the costs of two counsel where so employed. ~~~~ends~~~~

4299

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 378/2023 In the matter between: THOLO ENERGY SERVICES CC APPELLANT and COMMISSIONER FOR THE SOUTH RESPONDENT AFRICAN REVENUE SERVICE Neutral citation: Tholo Energy Services CC v Commissioner for the South African Revenue Service (Case no 378/2023) [2024] ZASCA 120 (6 August 2024) Coram: SCHIPPERS, HUGHES, WEINER and KGOELE JJA and TOLMAY AJA Heard: 10 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The time and date for hand-down is deemed to be 11h00 on 6 August 2024. Summary: Statutory construction – Customs and Excise Act 91 of 1964 (the Act) – s 47(9)(e) appeal against tariff determination – refund claim for fuel and Road Accident Fund levy by licensed distributor of fuel – fuel not obtained from stocks of licensee of customs and excise manufacturing warehouse envisaged in s 64F(1)(b) of the Act – exported without permit – not manufactured in Republic – not wholly and directly removed to country in customs union – not delivered by licensed remover of goods – determination correct – appeal dismissed. 2 _________________________________________________________________ ORDER _________________________________________________________________ On appeal from: Gauteng Division of the High Court of South Africa, Pretoria (Molotsi AJ sitting as court of appeal in terms of s 47(9)(e) of the Customs and Excise Act 91 of 1964): The appeal is dismissed with costs, including the costs of two counsel. _________________________________________________________________ JUDGMENT ________________________________________________________________ Schippers JA (Hughes, Weiner and Kgoele JJA and Tolmay AJA concurring) Introduction [1] The appellant, Tholo Energy Services CC, is a licensed distributor of fuel (LDF) as defined in s 64F(1) of the Customs and Excise Act 91 of 1964 (the Act). In March 2017 the appellant submitted to the respondent, the Commissioner of the South African Revenue Service (the Commissioner), four claims for a refund of fuel and Road Accident Fund (RAF) levies under the Act, totalling some R4.25 million, in respect of 25 consignments of fuel (diesel) exported to the Kingdom of Lesotho (the refund claims). [2] On 20 July 2017 the Commissioner made a determination under s 47(9)(a) of the Act, in terms of which he disallowed the refund claims (the determination). They were disallowed on the basis that the appellant had not complied with the requirements for refunds prescribed by the Act and the Customs and Excise Act Rules (the Rules). 3 [3] The appellant lodged an internal administrative appeal against the determination to an internal appeal committee (the appeal committee) of the South African Revenue Service (SARS). The appeal committee disallowed the appeal and confirmed the determination. [4] The appellant then appealed the determination to the Gauteng Division of the High Court, Pretoria (the High Court), in terms of s 47(9)(e) of the Act. It sought an order declaring the determination invalid, alternatively reviewing and setting it aside; and that the determination be substituted with one allowing the refund claims. [5] The High Court (Molotsi AJ) dismissed the appeal with costs, on the basis that the appellant had not complied with s 64F of the Act and its rules, nor the requirements prescribed in Schedule 6 to the Act. The High Court also found that the appellant had removed the fuel to Lesotho without the requisite permit issued in terms of the International Trade Administration Act 71 of 2002 (the ITA Act), by the International Trade Administration Commission (ITAC). The appeal is with its leave. Facts [6] The appellant’s sole member is Mr Thabiso Moroahae. He is also a shareholder and the sole director of Tholo Energy Services (Pty) Ltd, a private company incorporated in Lesotho (Tholo Lesotho). It carries on business in that country and supplies fuel mainly to companies operating in the construction and mining industries. [7] Between April and June 2016, 25 consignments of fuel of approximately 40,000 litres each, were collected on behalf of the appellant from depots of the Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd (PetroSA), for removal to Lesotho. PetroSA is a licensee of a customs and excise manufacturing 4 warehouse (a refinery) in Mossel Bay, also known and referred to in the papers as a ‘VM’. [8] The appellant alleged that it had purchased the fuel from PetroSA and that payment was made by Tholo Lesotho. SARS disputed this. It contended that Tholo Lesotho sourced the fuel it supplied to its customers from South Africa, but used the appellant’s particulars and credentials in its transactions with its South African suppliers and when dealing with SARS. The appellant denied this contention in reply and stated that it had acted in its own name and capacity as a LDF and licensed remover of goods under the Act. [9] It is common ground that the fuel was not obtained from PetroSA’s VM in Mossel Bay. Instead, 22 consignments of fuel were acquired from PetroSA’s storage tanks at its depot in Bloemfontein. The remaining three consignments were obtained from PetroSA’s depot at Tzaneen (two consignments) and from TotalEnergies at Alrode, Alberton (one consignment). [10] All 25 consignments of fuel were removed to Lesotho. It is also common ground that on the dates that they were so removed, the appellant had not been issued with an export permit; and that PetroSA does not have a VM in Bloemfontein, Tzaneen or Alrode. [11] On 17 March 2017 the appellant submitted the refund claims. SARS requested it to furnish further information. Subsequently SARS audited the refund claims and assessed whether the appellant had complied with its obligations under the Act and Rules, and whether it qualified for a refund. [12] On 27 June 2017 the Commissioner sent a letter of intent to the appellant in which it was informed that SARS was of the prima facie view that it had not complied with the provisions of the Act, nor with the requirements for a refund of 5 duty specified in Schedule 6 to the Act read with the Rules. SARS informed the appellant that the Commissioner intended to disallow the refund claims and granted it an opportunity to respond to the letter of intent within 21 days, by producing evidence that the fuel was dealt with in compliance with the Act. The appellant was specifically requested to furnish proof that the fuel had been purchased from the licensee of a VM and of the actual litres exported; and that it was in possession of an export permit. [13] On 30 June 2017 the appellant responded to the letter of intent. It stated that duty at source had been paid at the VM when the fuel was purchased; that the actual quantities of fuel loaded were reflected on the bills of lading; and that it never applied for a permit because SARS had informed it that permits were not required for export to BLNS countries (Botswana, Lesotho, Namibia, Swaziland) in the common customs area of the Southern African Customs Union. [14] On 20 July 2017, after considering the appellant’s submissions to the letter of intent, the Commissioner made the determination. The refund claims were disallowed on the grounds that the appellant had not complied with the following provisions of the Act and Rules: (a) ss 75 and 76; (b) s 64F read with rules 64F.01 and 64F.07; (c) s 19A4 read with rule 19A4.04 and Note 11(b) of Part 3 of Schedule 6 to the Act; (d) rebate item 671.09 of Schedule 6; and (e) rebate item 671.11 of Schedule 6. The appellant was informed that it was entitled to lodge an internal administrative appeal against the determination, as envisaged in s 77A-H of the Act. [15] On 31 July 2017 the appellant, assisted by its attorneys of record, lodged an internal administrative appeal. The grounds of appeal, in sum, were these. SARS’ 6 interpretation of s 64F(1)(b) was incorrect. The appellant had substantially complied with the refund items in Schedule 6 to the Act. At the relevant times, there was a practice generally prevailing that ITAC permits were not required for exports to BLNS countries. [16] On 20 October 2017 and pursuant to the appellant’s request, its attorney made oral representations to the appeal committee. Mr Moroahae, the appellant’s director, was present when the representations were made. [17] On 5 December 2017 the appeal committee asked the appellant to provide further information and documents. These were furnished by the appellant on 1 February 2018. Subsequently, on 7 May 2018 the appeal committee inspected various premises where the fuel had allegedly been manufactured and stored. On 10 December 2018 the appeal committee disallowed the internal appeal, on the basis that the fuel was not obtained from the stocks of the licensee of a VM as required by s 64F(1)(b) of the Act. [18] On 8 October 2019 the appellant delivered a notice of its intention to institute legal proceedings against SARS, as required by s 96(1) of the Act (the s 96 notice). In the annex to the s 96 notice the appellant set out its cause of action, essentially that SARS’ determination that the fuel was not obtained from stocks of the licensee of a VM and that an ITAC permit was required to export the fuel, was incorrect. [19] Subsequently SARS requested the appellant to furnish additional information and documents to enable it to evaluate the intended litigation. The appellant provided the information and documents on 31 March and 30 April 2020. [20] On 15 July 2020 SARS responded to the s 96 notice. It informed the appellant that its appeal under s 47(9)(e) of the Act ‘is an appeal de novo’ which required the appellant to ‘prove compliance with the provisions of the Act, in 7 particular but not limited to rebate item 671.11 read with the notes thereto, section 75 and section 19A read with the rules thereto’. SARS went on to say that ‘the Commissioner is entitled to oppose the intended litigation on different or additional factual and/or legal bases than those contained in the letter communicating the decision to refuse the four refund claims dated 20 July 2017 and the subsequent internal administrative appeal decision dated 10 December 2018’. [21] SARS’ response to the s 96 notice, in summary, was this. (a) PetroSA obtained the fuel from other oil majors and there was no evidence regarding the origin of the fuel.1 (b) The fuel was obtained from unlicensed premises. (c) The appellant did not pay PetroSA for the fuel. Instead, payment was made by Tholo Lesotho. (d) The export entry had to be supported by the PetroSA invoice and not an invoice issued by the appellant. The latter invoice did not reflect the correct volume and value of the fuel, which as a result had been incorrectly declared. (e) The refund claims were not accompanied by the requisite customs declaration form. (f) The fuel was not removed by a licensed remover of goods in bond. (g) The fuel was not wholly and directly exported to the purchaser. There were significant discrepancies regarding the amount of fuel loaded according to the bills of lading, and what was declared for export on the export bill of entry and the delivery notes. (h) The appellant was not in possession of an export permit. 1 An oil major is a licensee of a customs and manufacturing warehouse, such as BP Southern Africa (Pty) Ltd and TotalEnergies South Africa (Pty) Ltd. 8 Submissions in this Court Appellant’s submissions [22] The appellant submits that the Commissioner’s reliance on new grounds for the determination is ultra vires (beyond the powers of an administrator). Once the determination was the subject of proceedings under Chapter XA of the Act, so it is submitted, it became a final decision subject to a tariff appeal in terms of s 47(9)(e) and the Commissioner could not amend or vary such determination to the appellant’s prejudice. [23] The appellant contends that upon making the determination, the Commissioner was functus officio (an administrator is not entitled to revoke or alter a decision in the absence of statutory authority to do so). The Commissioner, so it is contended, could not change the determination by supplementing the grounds for it and the findings. Even if this were permissible, SARS cannot vary the determination without granting the appellant an opportunity to make representations; an amended determination must be issued; and the appellant must be given an opportunity to dispute the amended determination. [24] Consequently, so the appellant submits, this Court should interpret s 47(9)(e) of the Act – pre-constitutional legislation – in the light of the Constitution and the provisions of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). It is further submitted that SARS’ additional findings regarding the determination are ‘administratively unjust, procedurally unfair, and constitutionally invalid’; and that these grounds fall outside the ambit of the determination and do not form part of the justiciable issues in the tariff appeal. [25] The appellant therefore contends that there are only two issues in the tariff appeal. The first is whether a LDF is required to obtain fuel from a VM itself, or whether it must be obtained from ‘stocks of the licensee of a VM’ anywhere in the 9 Republic; and the second, whether an export permit issued by the ITAC is a requirement for a refund. [26] As to the first issue, the appellant’s argument, in summary, is the following: (a) The Commissioner ignores the wording of s 64F(1)(b) of the Act, which requires the fuel to be obtained from stocks of the licensee of a customs and excise manufacturing warehouse, not the warehouse itself. PetroSA is the licensee of a VM. The VM cannot be the licensee of itself. There is no provision in the Act, the Rules nor the items in Schedule 6, which requires a LDF to obtain the fuel from the VM itself. (b) Rule 19A4.04 provides that fuel levy goods removed for any purpose by the licensee must be removed from stocks which have been entered or deemed to have been entered for home consumption (duty paid stock); and where such goods may be removed for any purpose, they may only be so removed from a storage tank owned by or under the control of the licensee. (c) The Commissioner ignores the fact that SARS itself introduced the duty-at-source scheme, with the result that all fuel removed from a VM is duty paid stock. Consequently, there is no obligation, express or implied, to acquire the fuel from a VM. (d) In Tunica Trading2 a full court held that a LDF which obtains fuel from the depot of a licensee (and not from the VM itself) is entitled to a refund. [27] Regarding the second issue, the appellant submits that it did not require a permit and that it did not export the fuel. It contends that the Act, the Rules and the relevant item in Schedule 6 to the Act differentiate between a ‘removal’ of fuel levy goods to a BLNS country and the ‘export’ of goods to other countries, and that the provisions of the ITA Act are inapplicable to the refund claims. 2 Tunica Trading 59 (Pty) Ltd v Commissioner South African Revenue Service [2022] ZAWCHC 52; [2022] 4 All SA 571 (WCC); 85 SATC 185 paras 70 and 97. 10 [28] The appellant also contends that the alleged impermissible additional grounds for the determination, namely that there is no proof that the fuel was manufactured in South Africa; that it was not transported by a licensed remover of goods in bond; that it was not wholly and directly removed for delivery to Lesotho; and that payment was made by Tholo Lesotho and not PetroSA, have no merit, for the following reasons. During the inspection in loco SARS had established that the fuel was locally manufactured and originated from PetroSA’s VM in Mossel Bay. The appellant complied with the requirement of removal by a licensed remover of goods, since the appellant and Tholo Lesotho (which removed the goods) have the same member, director and shareholder. Although Tholo Lesotho paid PetroSA for the fuel, the Act does not require the LDF to do so. Respondent’s submissions [29] Counsel for the Commissioner submits that the main issue in this appeal is the correctness of the determination: whether the fuel was exported as provided in rebate item 671.11 in Part 3 of Schedule 6 to the Act, which is relevant to the more general question, namely whether the appellant is entitled to the refunds claimed. [30] It is submitted that in exercising its appellate jurisdiction and considering the correctness of the determination, the High Court is required to conduct a complete rehearing of the merits of the matter with or without additional evidence, and to make its own determination. This necessarily means that the High Court was not limited to the grounds on which the Commissioner made the determination. [31] In summary, the Commissioner contends that the fuel was not exported in accordance with the requirements of rebate item 671.11 as required, for the following reasons: (a) There is no evidence that the goods were manufactured in South Africa. (b) The fuel was not obtained from stocks of the licensee of a VM. (c) The fuel was not wholly and directly removed for delivery to Lesotho. 11 (d) The fuel was not transported by a licensed remover of goods. (e) The fuel was not removed by a LDF, the appellant. (f) The appellant did not pay the debt in respect of which the refund was sought. (g) The fuel was unlawfully exported to Lesotho without the requisite export permit. Issues [32] This appeal raises three issues: (a) The first is the nature of an appeal in terms of s 47(9)(e) of the Act. More specifically, is the Commissioner confined to the grounds for disallowing the refund claims, or is he entitled to advance additional grounds for refusing them? (b) The second is whether the High Court was correct in dismissing the appeal on the grounds of non-compliance with s 64F(1)(b) of the Act and the appellant’s exportation of the fuel without an ITAC permit. (c) The third issue, namely whether the refund claims were rightly refused on additional grounds, arises if the Commissioner is entitled to do so. The nature of an appeal under s 47(9)(e) of the Act [33] Section 47(9)(a)(i) provides: ‘The Commissioner may in writing determine– (aa) the tariff headings, tariff subheadings or tariff items or other items of any Schedule under which any imported goods, goods manufactured in the Republic or goods exported shall be classified; or (bb) whether goods so classified under such tariff headings, tariff subheadings, tariff items or other items of Schedule 3, 4, 5 or 6 may be used, manufactured, exported or otherwise disposed of or have been used, manufactured, exported or otherwise disposed of as provided in such tariff items or other items specified in any such Schedule.’ [34] Section 47(9)(b)(i) states: ‘Whenever any determination is made under paragraph (a) or any determination is amended or withdrawn and a new determination is made under paragraph (d), any amount due in terms 12 thereof shall, notwithstanding that such determination is being dealt with in terms of any procedure contemplated in Chapter XA or any proceedings have been instituted in any court in connection therewith, remain payable as long as such determination or amended or new determination remains in force: Provided that the Commissioner may on good cause shown, suspend such payment until the date of any final judgment by the High Court or a judgment by the Supreme Court of Appeal.’ [35] Section 47(9)(e) provides: ‘An appeal against any such determination shall lie to the division of the High Court of South Africa having jurisdiction to hear appeals in the area wherein the determination was made, or the goods in question were entered for home consumption.’ [36] In Pahad Shipping3 this Court considered the nature of an appeal in terms of s 65(6)(a) of the Act, against a determination by the Commissioner of the transaction value of goods. Referring to the distinction between the types of appeal in Tikly,4 Streicher JA said: ‘The parties dealt with the case as if it was an appeal in the wide sense, ie as if it was a complete re-hearing of the case and a fresh determination of the merits of the case. Correctly so, in my view, for the following reasons: (a) The Act does not require of the respondent to hear evidence, to give any reasons for his determination or to keep any record of proceedings. As was held in Tikly (supra) at 592B–C, these considerations militate completely against the “appeal” being an appeal in the strict sense. (b) It is implicit in the provisions of section 65(4)(c)(ii)(bb) to the effect that the determination by the respondent ceases to be in force from the date of a final judgment by the High Court or this Court that the court must itself make a determination upon appeal to it. That eliminates the appeal being a review in the sense set out in (iii) above (see Tikly at 591H–592A). (c) As there is no provision for a hearing before the determination of the transaction value by the respondent the Legislature must, in my view, have intended “appeal” to be an appeal in the wide sense.’5 3 Pahad Shipping CC v Commissioner for the South African Revenue Services [2009] ZASCA 172; [2010] 2 All SA 246 (SCA). 4 Tikly and Others v Johannes NO and Others 1963 (2) SA 588 (T). 5 Pahad Shipping fn 3 para 14. 13 [37] Accordingly, an appeal in terms of s 47(9)(e) is an appeal in the wide sense, but it remains an appeal against the determination. As Wallis JA explained in Levi Strauss: ‘[A]n appeal under s 49(7)(b) of the Act is an appeal against the determination. While it is an appeal in the wide sense, involving a complete rehearing and determination of the merits, it remains an appeal against what was determined in the determination, and nothing more. It is open to SARS to defend its determination on any legitimate ground, but it is not an opportunity for it to make a wholly different determination, albeit one with similar effect.’6 [38] The appellant concedes – as it must – that the appeal in this case is an appeal in the wide sense, which involves a complete rehearing and redetermination of the merits of the matter, with or without additional evidence or information. Indeed, this is specifically authorised by the empowering provision. [39] Not only is a court permitted to admit new evidence or information in a s 47(9)(e) appeal, but it also relies on the parties’ assistance in considering new evidence and information in those proceedings to assist it to arrive at the correct decision. In Toneleria Nacional,7 this Court stated that it was regrettable that the parties had not tendered evidence in the court of first instance on products that had to be classified and the industry in which they are produced, in an appeal against a tariff determination. The Judge had to conduct research on the Internet to obtain this information. [40] It follows that the appellant’s argument that the Commissioner was not entitled to raise additional grounds for the determination in the s 47(9)(e) appeal; and that this was administratively unjust and procedurally unfair, has no merit. The Commissioner was entitled to raise additional, legitimate grounds for the rejection 6 Commissioner, South African Revenue Service v Levi Strauss South Africa (Pty) Ltd [2021] ZASCA 32; [2021] 2 All SA 645 (SCA); 2021 (4) SA 76 (SCA) para 26. 7 Commissioner, South African Revenue Service v Toneleria Nacional RSA (Pty) Ltd [2021] ZASCA 65; [2021] 3 All SA 299 (SCA); 2021 (5) SA 68 (SCA); 83 SATC 42 para 29. 14 of the refund claims, as was done in the answering affidavit. The High Court was permitted to decide the correctness of the determination on the additional grounds. And it must be stressed that these grounds did not change the determination at all – whether the fuel had been exported in compliance with the relevant provisions of the Act, the Rules and the rebate items in Schedule 6. Was the High Court correct in dismissing the appeal? The statutory and regulatory provisions [41] Section 75(1) of the Act, insofar as is relevant, provides: ‘Subject to the provisions of this Act and to any conditions which the Commissioner may impose– . . . (d) in respect of any excisable goods or fuel levy goods manufactured in the Republic described in Schedule 6, . . . a refund of the excise duty, fuel levy or Road Accident Fund levy actually paid at the time of entry for home consumption shall be granted to the extent and in the circumstances stated in the item of Schedule 6 in which such goods are specified, subject to compliance with the provisions of the said item and any refund under this paragraph may be paid to the person who paid the duty or any person indicated in the notes to the said Schedule 6: Provided that any rebate, drawback or refund of Road Accident Fund levy as contemplated in paragraph (b), (c) or (d), shall only be granted as expressly provided in Schedule 4, 5 or 6 in respect of any item of such Schedule.’ [42] Section 64F reads, inter alia, as follows: ‘Licensing of distributors of fuels obtained from the licensee of a customs and excise manufacturing warehouse (1) For purposes of this Act, unless the context otherwise indicates– “licensed distributor” means any person who– (a) is licensed in accordance with the provisions of section 60 and this section; (b) obtains at any place in the Republic for delivery to a purchaser in any other country of the common customs area for consumption in such country or for export (including supply as ships' or aircraft stores), fuel, which has been or is deemed to have been entered for payment of excise duty and fuel levy, from stocks of a licensee of a customs and excise manufacturing warehouse; and 15 (c) is entitled to a refund of duty in terms of any provision of Schedule 6 in respect of such fuel which has been duly delivered or exported as contemplated in paragraph (b); (2) . . . (3) (a) In addition to any other provision of this Act relating to refunds of duty, any refund of duty contemplated in this section shall be subject to compliance with the requirements specified in the item of Schedule 6 providing for such refund and any rule prescribing any requirement in respect of the movement of such fuel to any such country or for export.’8 [43] One of the rules prescribing requirements regarding the movement of fuel for export, and on which the Commissioner relied, is rule 64F.04. It provides, inter alia, that: (a) a LDF who obtains any fuel from stocks of a licensee of a VM, must, in addition to any other document required to be completed in respect of any procedure prescribed in the Act, provide an invoice or a dispatch delivery note which must at least contain the licensed name, customs client number and physical address of the LDF who obtained the goods, the licensed name and customs number of the licensee of the VM, and the physical address of the storage tank from which the fuel was obtained;9 (b) the business name and address of the person in the country of export or in the common customs area to whom the goods are removed;10 and (c) ‘In addition to the requirements specified in rule 19A.04, the invoice issued by the licensee of the customs and excise manufacturing warehouse to the licensed distributor must reflect the rate of duty and amount of duty included in the price to the licensed distributor’.11 [44] In making the determination, the Commissioner also relied on rules 64F.01 and 64F.07: 8 Emphasis added. 9 Rule 64F.04(a)(i) and (ii). 10 Rule 64F.04(a)(vi). 11 Rule 64F.04(c), emphasis added. 16 (a) Rule 64F.01(a) defines, inter alia, ‘fuel’ as ‘fuel as defined in section 64F and includes “fuel levy goods” contemplated in rule 19A.01(c)’. It provides that a ‘manufacturing warehouse’ means a ‘licensed customs and excise manufacturing warehouse’; and that a ‘refund’ means ‘a refund of excise duty, fuel levy or Road Accident Fund levy as provided for in items 623.11, 671.09 and 671.11 of Schedule No 6’. Rule 64F.01(b) states that except as otherwise provided in s 64F and its rules, the provisions of, inter alia, the rules for s 19A, and s 64D and its rules, apply to any activity of, or in connection with, a LDF. (b) Rule 64F.07 provides that an application for a refund must be on form DA66 and must be supported by the invoice from the licensee of the customs and excise warehouse from whom the goods were obtained.12 [45] Rule 19A4.04, inter alia, provides: ‘19A4.04 (a) (i) Any fuel levy goods removed for any purpose by the licensee of a customs and excise warehouse must be removed from stocks which have been entered or are deemed to have been entered for home consumption in accordance with the provisions of these rules, hereafter referred to as “duty paid stock”. (ii) Where fuel levy goods are removed for any purpose specified in these rules requiring compliance with a customs and excise procedure either in respect of the removal, movement or receipt thereof, such goods may only be so removed from a storage tank owned by or under the control of a licensee of a customs and excise manufacturing or special customs and excise storage warehouse. . . . (v) When any fuel levy goods are transported by road for – (bb) removal to a BLNS country; . . . (dd) removal to a rail tanker, a ship or an aircraft for onward removal for export such removal shall only be by a licensed remover of goods in bond as contemplated in section 64D unless the goods are carried by the licensee or licensed distributor using own transport. 12 Rule 64F.07(b)(ii). 17 (b) (i) (aa) When fuel levy goods are exported, including supply as stores for foreign going ships, entry must be made thereof on form SAD 500 at the office of the Controller before loading. (bb) In the case of a removal by a licensed distributor each such form shall bear the invoice number of the licensee of the manufacturing warehouse from whom the goods are obtained.’ [46] Note 11(b) in Part 3 of Schedule 6 to the Act states that any application for the refund of a fuel or RAF levy is subject to compliance with s 64F and its rules, rule 19A4.04 and any other rule regulating the export of goods. [47] Item 671.09 provides that goods liable to the fuel levy and RAF levy are obtained by a LDF as contemplated in s 64F, from stocks of the licensee of a VM. This is reiterated in item 671.11 in terms of which the appellant applied for a refund, which states that such goods are delivered to a purchaser in any other country in the common customs area by a LDF, subject to compliance with Note 12. In turn, Note 12 provides that any load of fuel obtained from the licensee of a VM ‘must be wholly and directly removed for delivery in any other country in the common customs area by the licensed distributor in order to be considered for a refund of duty’. [48] In terms of tariff heading 2710, a permit issued under the ITA Act is required to import or export restricted goods. Diesel is specifically listed as restricted goods. [49] In sum, then, in order to qualify for a refund of duty, the appellant was obliged to meet the following requirements: (a) The fuel must have been manufactured in South Africa (s 75(1) of the Act). (b) It had to be obtained directly from stocks of the licensee of a VM (s 64F(1)(b) read with rule 19A4.04(a)(i) and (ii)). (c) The appellant had to produce an invoice from the licensee of the VM to the LDF – the appellant, not an intermediary – showing the licensed name, 18 customs client number and physical address of the LDF and the storage tank of the licensee, from which the fuel was obtained (rules 64F.04(c) and 64F.07(b)(ii)). (d) The fuel must have been removed by a licensed remover of goods in bond (rule 64F.06(b) and (d) read with rule 19A4.04(v)(bb) and (dd)). (e) It had to be wholly and directly removed for delivery to the purchaser in Lesotho (Note 12(b)(iii)(aa)). (f) The appellant had to obtain an ITAC permit. [50] It must be emphasised that each of these requirements must be met, failing which a refund of a fuel or RAF levy may not be granted. This is because a rebate of excise duty (or a refund of fuel levy) is a privilege and strict compliance with its conditions may be exacted from the claimant. In BP v Secretary for Customs and Excise,13 approved by this Court in Toyota South Africa,14 a full court held: ‘[T]he rebate of excise duty is a privilege enjoyed by those who receive it. It has been stated that it is neither unjust nor inconvenient to exact a rigorous observance of the conditions as essential to the acquisition of the privilege conferred and that it is probable that this was the intention of the Legislature . . . Moreover, the provision is obviously designed to prevent abuse of the privilege and evasion of the conditions giving rise to such privilege and again this supports the view that a strict compliance with the requirements laid down is necessary.’ [51] Consequently, the appellant’s submission that ‘[t]he right to a refund is not dependent on actual compliance with all sections of the Act (and the schedules), unless expressly stated’, is wrong. Moreover, the above statutory and regulatory provisions and in particular ss 75(1) and 64F(3)(a) of the Act are cast in peremptory terms. A refund ‘shall be granted to the extent and the circumstances stated in the item of Schedule 6’; and any refund of duty is expressly subject to compliance with the requirements specified in the Schedule 6 items and any rule prescribing any 13 BP Southern Africa (Pty) Ltd and Others v Secretary for Customs and Excise and Another 1984 (3) SA 367 (C) at 375H-376D. 14 Toyota South Africa Motors (Pty) Ltd v Commissioner, South African Revenue Service 2002 (4) SA 281 (SCA) para 45. 19 requirement relating to the export of fuel. And rule 64F.06(d) requires any load of fuel obtained from the licensee of a VM to be wholly and directly removed (from the VM) for export, before a refund may even be considered. [52] In addition, the use of the phrase ‘subject to compliance with’ in s 64F(3)(a) and s 75(1) of the Act; and rebate item 671.11, is deliberate. This means that a claimant for a refund of duty must satisfy the requirements of those provisions, failing which a refund may not be granted.15 [53] What is more, the appellant ignores s 102(5) of the Act, which requires it to show that the determination is wrong. It provides in relevant part: ‘If . . . in any dispute in which . . . the Commissioner or any officer is a party, it is alleged by. . . the Commissioner or such officer that any goods . . . have been or have not been . . . exported, manufactured in the Republic, removed or otherwise dealt with or in, it shall be presumed that such goods . . . have been or (as the case may be) have not been . . . exported, manufactured in the Republic, removed or otherwise dealt with or in, unless the contrary is proved.’ Was the fuel exported in compliance with the statutory provisions? [54] The appellant provided no proof that the fuel was obtained from the licensee of a VM. In support of its submission that this is not a requirement in terms of s 64F(1)(b) of the Act, it relies on Tunica Trading. 16 In that case, a full court of the Western Cape Division of the High Court, Cape Town (the WCHC), held that a LDF is entitled to a refund of customs duty and fuel levies, because s 64F(1) requires the LDF to obtain or acquire – not purchase – fuel from stocks of the licensee of a VM. This, so the WCHC reasoned, would include a case where fuel is purchased from an intermediary, but emanates from stocks of the licensee of a VM. The appellant therefore submits that a LDF which obtains fuel from a depot of the licensee and not from a VM itself, is nonetheless entitled to a refund of duty. 15 BP Southern Africa (Pty) Ltd and Others v Secretary for Customs and Excise and Another 1985 (1) SA 725 (A) at 734B-E; 735H-I and 737A. 16 Tunica Trading fn 2 above. 20 [55] However, most recently this Court held that the WCHC’s interpretation of s 64F(1)(b), is incorrect. The WCHC disregarded the items specified in Schedule 6 to the Act, and the rules prescribing the requirements in relation to the export of fuel.17 Consequently, its order granting the LDF a refund of the customs duty and fuel levy in that case, was set aside. [56] This Court’s findings in Commissioner SARS v Tunica Trading, may be summarised as follows: (a) On its plain wording, s 64F(1) states that a LDF means a person who obtains fuel ‘from stocks of a licensee’ of a VM. This means that the fuel must be acquired from stocks kept on the premises of the VM. Put differently, the LDF must obtain the fuel directly from the licensee’s inventory at the VM. The fuel may not be acquired from an intermediary. (b) This interpretation is consistent with the plain language of s 19(1) and (2) of the Act: a VM is a warehouse (ie premises) specifically licensed for the manufacture of dutiable goods from imported or locally-produced materials. It is also consistent with the definition of ‘manufacturing warehouse’ in rule 64F.01(a), which means a ‘licensed customs and excise manufacturing warehouse’ – not a depot nor unlicensed premises.18 (c) The plain wording of s 64F(1)(b) is buttressed by the immediate context. Section 64F(1)(c) states that a LDF is a person who ‘is entitled to a refund of duty in terms of Schedule No. 6’. This is underscored by s 64F(3)(a) which expressly states that such refund is ‘subject to compliance with the requirements specified in the item of Schedule No. 6’, namely rebate item 671.09, which requires the fuel to be obtained from stocks of the licensee of a VM, and any rule prescribing requirements for the movement of such fuel for export. (d) Consistent with s 64F(1)(b) which requires fuel to be obtained directly from a licensed warehouse, rule 64F.06(c) requires a claimant for a refund, in 17 The Commissioner for the South African Revenue Service v Tunica Trading 59 (Pty) Ltd [2024] ZASCA 115. 18 Emphasis added. 21 addition to the requirements specified in rule 19A.04, to furnish the invoice issued by the licensee of the VM to the LDF, which must reflect the rate and amount of duty included in the price to the LDF. This is the clearest indication that the LDF must obtain fuel directly from the licensee of a VM, from stocks kept at the VM. This construction is reinforced by rule 64F.06(d) which requires any load of fuel obtained from the licensee to be ‘wholly and directly removed’ (from the VM) for export, or delivery to a BLNS country, before a refund of duty may even be considered. (e) The text and structure of the relevant provisions are entirely consistent with the purposes of the Act, which include the control of importation, export and manufacture of certain goods. The purpose of licensing storage and manufacturing warehouses is to enable the Commissioner to control the entry to, storage at, and removal of goods from, such warehouses. The licensee of the warehouse has control over goods held in it and must ensure that the goods are not released for home consumption, without the relevant duty being paid. If such goods were so released and sold without duty being paid, SARS would not receive the duty that was otherwise payable and a fraud would be committed on the fiscus. For these reasons, s 64F(1), the Rules, and the items of Schedule 6 require that fuel be obtained from a controlled environment. [57] The unchallenged evidence is that in terms of the ‘duty at source’ scheme, the excise duty and fuel levy is paid by the licensee of the VM. Section 64F(1)(b) says so in express terms. The LDF pays the licensee of the VM a price inclusive of the duty and levy and although it sells for export at a price excluding the duty and levy (an ‘export price’), the LDF is required to pay the duty and levy to the VM and can recover same by applying for a refund from the Commissioner. It is therefore not surprising that rule 64F.06(c) requires the LDF to furnish the invoice issued by the licensee of the VM to the LDF, which must reflect the rate and amount of duty included in the price to the LDF. 22 [58] The appellant failed to establish that the fuel was obtained from stocks of the licensee at a licensed VM, as the Commissioner rightly determined. The fuel was removed from PetroSA’s depots in Bloemfontein and Tzaneen, and from the depot of TotalEnergies in Alrode. The undisputed evidence is that none of these depots is a licensed manufacturing warehouse. Solely on this ground, the appeal in terms of s 47(9)(e) of the Act was correctly dismissed. [59] Three consequences flow from the appellant’s failure to comply with s 64F(1)(b) of the Act, which also show that its appeal was correctly dismissed. First, the appellant could not, and did not, establish that the fuel was manufactured in South Africa (s 75(1)). Second, it could not produce an invoice issued to it by the licensee of the VM, showing (i) the rate and the amount of duty included in the price to the LDF (rule 64F.04(c)); and (ii) the licensed name and customs client number of the licensee of the VM (the licensed warehouse), and the physical address of the storage tank from which the fuel was obtained (rule 64F.04(a)(ii)). And third, the appellant could not demonstrate compliance with rule 19A4.04(a)(ii): the fuel was not removed from a storage tank at a licensed warehouse, owned by or under the control of the licensee. [60] As to its exportation of the fuel without an ITAC permit, the appellant submits that no ‘export of fuel levy goods occurred’, because the Act, the Rules and Note 12 differentiate between a ‘removal’ of fuel to a BLNS country and the ‘export’ of fuel to other countries. Then it is submitted that the SARS’ External Oil Directive ‘does not trump the appellant’s entitlement as LDF to its refund’. [61] These submissions however do not bear scrutiny. The External Oil Directive states, inter alia, that all mineral products (which include diesel produced from crude oil) ‘require an export permit which must be obtained in advance of the export’, issued by the ITAC; that when fuel levy goods are exported, entry must be made thereof on a declaration at the office of the Controller; and that in the case of 23 export by a licensed distributor, each declaration shall bear the invoice number of the licensee of the VM from whom the goods are obtained. [62] It is common ground that the appellant failed to comply with these provisions, and that it was not in possession of an export permit issued by the ITAC. SARS published on its website a list of restricted goods which are allowed to exit South Africa only on certain conditions. Diesel is included in that list and it is specifically stated that an ITAC permit is required to export fuel. [63] It follows that the appellant’s submission that an ITAC permit ‘is irrelevant insofar as it concerns the refund provisions’ has no merit. So too, its submission that SARS – an organ of state bound by the principle of legality – may not insist on compliance with the law. And as stated in the answering affidavit, an applicant applying for a licence as a LDF is required to acknowledge that it is acquainted with all legal requirements relating to the activity to be undertaken in terms of the licence, and agrees to comply with those requirements. [64] The submission that the fuel was not exported, is likewise without merit. Section 6(1) of the ITA Act empowers the Minister responsible for trade and industry (the Minister) to prescribe that no goods of a specified class or kind may be exported from the Republic, except on the authority of a permit. The Minister did so in Notice R92 published in Government Gazette 35007 dated 10 February 2012, in terms of which the goods described in Schedules 1, 2, and 3 to the notice, shall not be exported except on the authority of an export permit issued under s 6. Fuel levy goods such as petrol and diesel, are included in Schedule 1. [65] Section 1 of the ITA Act defines ‘export’. It means ‘to take or send goods, or to cause them to be taken or sent, from the Republic to a country or territory outside the Republic’. It accords with the definition of ‘exportation’ by the World 24 Customs Organisation: ‘The act of taking out or causing to be taken out any goods from the Customs territory.’19 [66] The appellant exported the fuel to Lesotho. There is no scope in the ITA Act or the External Oil Directive for an interpretation that the fuel was not exported, because Lesotho is a member state of the Customs Union. The s 47(9)(e) appeal was rightly dismissed on this ground also. It goes without saying that the appellant failed to show that the determination is wrong, as envisaged in s 102(5) of the Act. The additional grounds for refusing the refund claims [67] These grounds may be dealt with shortly. As stated, a claimant for a refund of excise duty or fuel levy must strictly comply with the requirements for such refund. The appellant’s failure to comply with a single requirement would justify the rejection of its refund claims. Fuel not manufactured in South Africa [68] The appellant alleges that during inspections it was established that the fuel was locally manufactured and originated from PetroSA’s VM in Mossel Bay. It contends that ‘the origin of the fuel is irrelevant’. [69] The contention that the origin of the fuel is irrelevant, is directly at odds with s 64F(1) and (3) of the Act, the Rules and the items of Schedule 6. Since the appellant did not obtain the fuel from a licensed warehouse, it failed to show that the fuel was manufactured in South Africa, as contemplated in s 75(1) of the Act. In fact, one of the reasons for the determination was non-compliance with the provisions of s 75(1). The appellant’s claim that it was established that the fuel was locally manufactured, is unsustainable on the evidence. None of the depots from which the fuel was obtained is registered with SARS as a VM. 19 Glossary of International Customs Terms December 2018, published by the World Customs Organisation http://www.wcoomd.org. 25 Fuel not wholly and directly removed [70] Assuming that the fuel was manufactured in South Africa (which was not established), it was first removed from a manufacturing warehouse for home consumption to the depots in Bloemfontein, Tzaneen and Alrode. Thereafter it was removed from those depots to Lesotho. [71] This is not a direct removal as contemplated in rule 64F.06(d), which states that the fuel must be wholly and directly removed for delivery to a BLNS country, in order to be considered for a refund of duty. The movement and storage of fuel in storage tanks, prior to export (or removal), does not comply with the requirement that the fuel be ‘wholly and directly’ exported.20 Similarly, Note 12(b)(iii)(aa) provides that any load of fuel obtained from the licensee of a VM must be wholly and directly removed for delivery in any other country in the common customs area. For this reason also, the appellant did not qualify for a refund of the fuel and RAF levy. Fuel not transported by licensed remover of goods [72] Note 12(b)(ii)(aa) renders an application for a refund subject to compliance with rule 64F and its rules. Rule 64F.06(b) provides that unless the LDF uses own transport, fuel wholly or partly transported by road must be carried by a licensed remover of goods in bond as envisaged in s 64D of the Act.21 [73] It is common ground that Tholo Lesotho, which transported the fuel to Lesotho, is not a registered remover of goods in bond. On this basis also, the refund claims must fail. 20 Kepu Trading (Pty) Ltd v Commissioner for the South African Revenue Services (3516/18) [2022] ZAGPPHC 1026 (28 December 2022) paras 42-43. 21 Section 64D(1) of the Act provides: ‘No person, except if exempted by rule, shall remove any goods in bond in terms of section 18 (1) (a) or for export in terms of section18A, or any other goods that may be specified by rule unless licensed as a remover of goods inbond in terms of subsection (3).’ 26 Fuel not delivered by LDF [74] Item 671.11 of Schedule 6 to the Act states, inter alia, that goods liable to the fuel and RAF levy is delivered by a LDF contemplated in s 64F, subject to compliance with Note 12. Both item 671.11 and Note 12(b)(iii)(aa) require that the fuel must be removed for delivery in a country in the common customs area by the LDF. [75] The appellant failed to comply with this requirement. The fuel was delivered by Tholo Lesotho to the purchaser in Lesotho. It is not a LDF. However, the appellant says that the nationality of the drivers and origin of the vehicles were disclosed to SARS, and that Tholo Lesotho has the same member, director and shareholder. All of this is irrelevant and does not change the fact that on this basis too, the appellant did not qualify for a refund. Conclusion [76] SARS also claims that the appellant is not entitled to a refund of duty on the ground that Tholo Lesotho, not the appellant, paid PetroSA for the fuel and there is no evidence that the appellant paid any levies. By reason of the conclusions to which I have come, it is unnecessary to deal with this ground; nor the challenge to the determination on the basis that it is reviewable on the grounds contemplated in the PAJA, alleged in the founding affidavit. [77] The following order is made: The appeal is dismissed with costs, including the costs of two counsel. _____________________ A SCHIPPERS JUDGE OF APPEAL 27 Appearances: For appellant: P A Swanepoel SC (with C A Boonzaaier and M Davids) Instructed by: Cliffe Dekker Hoffmeyr Inc, Johannesburg Lovius Block Inc, Bloemfontein For respondent: J Peter SC (with N Nxumalo) Instructed by: Klagsbrun Edelstein Bosman Du Plessis Inc, Pretoria Symington De Kok Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 6 August 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 Tholo Energy Services CC v Commissioner for the South African Revenue Service (Case no 378/2023) [2024] ZASCA 120 (6 August 2024) Today the Supreme Court of Appeal (SCA) handed down judgment in an appeal by Tholo Energy Services CC (the appellant), against an order of the Gauteng Division of the High Court, Pretoria (the High Court), sitting as court of appeal in terms of section 47(9)(e) of the Customs and Excise Act 91 of 1964 (the Act). The High Court upheld a determination by the Commissioner of the South African Revenue Service (the Commissioner), refusing the appellant’s claims for a refund of fuel and Road Accident Fund (RAF) levies under the Act (the refund claims). The SCA dismissed the appeal with costs. The appellant is a licensed distributor of fuel (LDF). In March 2017 it submitted the refund claims totalling some R4.25 million, related to 25 consignments of diesel exported to Lesotho. The appellant bought and collected the fuel from depots of the Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd (PetroSA). The fuel was not transported to Lesotho by a licensed remover of goods as required by the Act. The Commissioner disallowed the refund claims, essentially on the grounds that the fuel was not obtained from stocks of the licensee of a customs and manufacturing warehouse (a refinery), also known as a ‘VM’; that the fuel was not wholly and directly removed from a VM to Lesotho; and that the fuel had been exported without an International Trade Administration Commission (ITAC) permit, required in terms of the International Trade Administration Act 71 of 2002 (the determination). The appellant appealed the determination to an internal appeal committee of the South African Revenue Service, which dismissed its appeal. The appellant then appealed to the High Court, without success. In upholding the High Court’s decision, the SCA held that an appeal under section 47(9)(e) of the Act is an appeal in the wide sense, involving a complete rehearing and determination of the merits of the matter. Consequently, and contrary to the appellant’s submissions, the High Court 2 was entitled to decide the appeal on additional grounds advanced by the Commissioner for the rejection of the refund claims. The SCA found that the High Court had correctly dismissed the appeal. In terms of section 64F of the Act, its rules and the requirements of Schedule 6, to claim a refund of the fuel and RAF levy, a LDF must obtain the fuel directly from stocks of a licensed warehouse (not a depot), and produce an invoice from the licensee of the VM to the LDF. The appellant obtained the fuel from unlicensed depots of PetroSA. The appellant also exported the fuel without an ITAC permit. The appellant also did not qualify for a refund on the additional grounds advanced by the Commissioner. It failed to show that the fuel had been manufactured in South Africa. The fuel was not removed from a storage tank at a licensed warehouse. It was not wholly and directly removed from a VM to Lesotho. The fuel was not transported by a licensed remover of goods as required by section 64D of the Act, and it was not delivered by a LDF in Lesotho in terms of Schedule 6 to the Act. As a result, the SCA dismissed the appeal with costs, including the costs of two counsel. ~~~~ends~~~~

4183

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 787/2021 In the matter between: SELLO NONG FIRST APPELLANT THOMAS MASINGI SECOND APPELLANT and THE STATE RESPONDENT Neutral citation: Nong and Masingi v The State (787/2021) [2024] ZASCA 25 (20 March 2024) Coram: Mokgohloa, Nicholls, Mothle and Hughes JJA and Baartman AJA Heard: 29 February 2024 Delivered: 20 March 2024 Summary: Criminal Procedure – appeal against conviction – leave to appeal refused by regional magistrate – petition in terms of s 309C refused by the high court – special leave to appeal against the dismissal of the petition granted by this Court – the test is whether the appellants have shown reasonable prospects of success on appeal. 2 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Mokgoatlheng J and Grant AJ sitting as a court of appeal): The appellants’ application for leave to appeal against the refusal of the petition on their conviction is dismissed. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Hughes JA (Mokgohloa, Nicholls and Mothle JJA and Baartman AJA concurring): [1] The appellant and his co-accused were convicted in the Regional Court, Johannesburg on a count of robbery with aggravating circumstances read with s 51 of the Criminal Law Amendment Act 105 of 1997 (the Act). On 6 November 2017 the first appellant was sentenced to 12 years’ imprisonment and the second appellant was sentenced to 15 years’ imprisonment. The magistrate, on 21 June 2018, refused the appellants leave to appeal against their conviction but granted leave to appeal in respect of sentence. [2] Aggrieved by the outcome of their application for leave to appeal, the appellants lodged a petition for leave to appeal in respect of their conviction in terms of s 309C of the Criminal Procedure Act 51 of 1977 (the CPA), in the Gauteng Division of the High Court, Johannesburg (the high court). This petition was dismissed by the full bench of that division (Mokgoatlheng J and Grant AJ). It bears mentioning that on 21 June 2020 the appeal against sentence was heard by the high court and dismissed. 3 [3] In terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 (Superior Courts Act), the appellants lodged applications for special leave against the dismissal of their petitions seeking leave to appeal against their conviction. On 13 March 2021 the first appellant was granted special leave to appeal against the dismissal of his petition seeking leave to appeal against his conviction. The second appellant was granted special leave to appeal against the dismissal of his petition of his conviction on 28 September 2022. [4] Appeals from the magistrate court under s 309 must be heard by the high court in terms of s 309(1)(a) of the CPA.1 In law, no provision exists for this Court to hear an appeal on the merits directly from the magistrates’ court. The issue of this Court’s jurisdiction to entertain the appeal on the merits under the circumstances of this case was succinctly dealt with by this Court in a long line of cases, commencing with S v Khoasasa [2002] ZASCA 113; 2003 (1) SACR 123 (SCA); Dipholo v S (094/2015) [2015] ZASCA 120 (16 September 2015); Lubisi v S (230/2015) [2015] ZASCA 179 (27 November 2015); Mthimkhulu v S (1135/15) [2016] ZASCA 180 (28 November 2016) and most recently in De Almeida v S (728/2018) [2019] ZASCA 84 (31 May 2019). [5] In Dipholo,2 the ambit of appeals of a similar nature were dealt with, where the appellant had been granted special leave by this Court after his application for leave to appeal by way of petition had been refused and no appeal on the merits had been adjudicated by the high court. This Court went on to state as follows: ‘It follows therefore that what is before us is not an appeal on the merits, as the high court has not heard the appeal on the merits, but an appeal against the refusal of leave to appeal by the high court. S v Khoasasa (supra) paras 14 and 19-22; S v Matshona [2008] ZASCA 58; [2008] 1 309: Appeal from lower court by person convicted (1) (a) .... any person convicted of any offence by any lower court (including a person discharged after conviction) may, subject to leave to appeal being granted in terms of section 309B or 309C, appeal against such conviction and against any resultant sentence or order to the High Court having jurisdiction: Provided that if that person was sentenced to imprisonment for life by a regional court under section 51 of the Criminal Law Amendment Act, 1997 (Act 105 of 1997), he or she may note such an appeal without having to apply for leave in terms of section 309B. 2 Dipholo para 6. 4 4 All SA 68 (SCA); 2013 (2) SACR 126 (SCA) para 4. In the circumstances, what this Court had to decide is simply whether the court below erred in finding that there were no reasonable prospects of success on appeal against the sentence imposed by the regional magistrate and thus refusing leave to the appellant to appeal against the judgment of the regional magistrate. S v Tonkin (2014 (1) SACR 583 (SCA) para 3.’ [Footnotes omitted] [6] This Court in dealing with the ambit of the appeal in Van Wyk v S, Galela v S3 endorsed the sentiments expressed in S v Matshona4 and S v Khoasasa.5 The issue herein is not the merits of the appeal but rather, whether the high court ought to have granted leave to appeal. Therefore the merits are curtailed to determining only whether the appellant has reasonable prospects of success and should accordingly be granted leave.6 [7] As regards what constitutes ‘reasonable prospects of success’ Plasket AJA in S v Smith describes it concisely: ‘What the test of reasonable prospects of success postulates is a dispassionate decision, based on the facts and the law, that a court of appeal could reasonably arrive at a conclusion different to that of the trial court. In order to succeed, therefore, the appellant must convince this court on proper grounds that he has prospects of success on appeal and that those prospects are not remote but have a realistic chance of succeeding. More is required to be established than that there is a mere possibility of success, that the case is arguable on appeal or that the case cannot be categorised as hopeless. There must, in other words, be a sound, rational basis for the conclusion that there are prospects of success on appeal.’7 [8] I now turn to consider whether leave to appeal to the high court against the conviction imposed by the regional court should have been granted. I will refer to certain parts of the evidence that demonstrates that there are no prospects of success. [9] The complainant, Kwanele Arnold Dube, testified that he was robbed at gun point by two assailants. He was not aware that the gun being used was in fact a toy 3 Van Wyk v S, Galela v S [2014] ZASCA 152; 2015 (1) SACR 584 (SCA); [2014] 4 All SA 708 (SCA) para 13 – 14. 4 S v Matshona [2008] ZASCA 58; 2013 (2) SACR 126 (SCA) para 5. 5 S v Khoasasa 2003 (1) SACR 123 (SCA); [2002] 4 All SA 635 (SCA) para 14. 6 S v Smith [2011] ZASCA 15; 2012 (1) SACR 567 (SCA) para 3. 7 Ibid para 7. 5 gun or air pistol. After being robbed he managed to follow his assailants and was present when they were apprehended and the toy gun retrieved. In order to apprehend them he sought assistance from one of his colleagues in the Community Policing Forum (CPF), Simphiwe John Mthembu (Simphiwe). After receiving a call from the complainant, Simphiwe arrived on the scene and assisted in the arrest of the appellants and retrieved the toy gun from one of the appellants. The complainant also testified that whilst he and Simphiwe were on the scene, Constable Ndaonde was in attendance and Simphiwe handed the toy gun to him. [10] On appeal before us, counsel for the appellants, submitted that the trial court misdirected itself as it failed to take cognisance of the fact that the complainant was a single witness where the main issue in the trial was that of identification. In respect of both a single witness and that of identification, it was argued that the trial court ought to have demonstrated an awareness and an appreciation of the cautionary rule applicable in the circumstances. The appellants placed reliance on the fact that the incident happened very quickly, as per the testimony of the complainant, and as such he did not have an ‘adequate opportunity to observe the assailants’ who robbed him. [11] Furthermore, the appellants challenged the trial court’s reliance on Simphiwe’s evidence as providing corroboration of the complainant’s version, even though it acknowledged that there were some discrepancies in their evidence, for example who conducted the search of the appellants. As such, the appellants contended that the evaluation conducted by the trial court did not heed the applicable principles when dealing with such evidence. [12] It is trite that an accused can be convicted on the evidence of a competent single witness’s.8 In some instances contradictions in the evidence of a single witness maybe fatal,9 whilst in others they may not.10 Here the evidence of the complainant is corroborated by Simphiwe who arrived to assist. The identification of the perpetrators 8 Section 208 of the CPA. 9 S v Ooshuizen [2019] ZASCA 182; 2020 (1) SACR 561 (SCA) para 20; S v Doorewaard [2020] ZASCA 155; [2021] 1 All SA 311 (SCA); 2021 (1) SACR 235 (SCA) para 133. 10 ICM v The State [2022] ZASCA 108 paras 26-27. 6 is guided by the considerations expressed in S v Mthetwa11 that, because of the fallibility of human observation, evidence of identification is approached by the courts with caution. Taking the aforesaid into account, the reliability of the evidence of a complainant must be tested, even though he or she comes across as being an honest witness. In the case at hand, the proximity of the complainant to the appellants during the incident and thereafter on the scene, the corroboration by Simphiwe on the apprehension of the appellants, coupled with the evidence advanced by the appellants themselves ‘must be weighed up one against the other, in the light of the totality of the evidence, and the probabilities’.12 [13] On the other hand, the State, submitted that the trial court did not commit a misdirection. It contended that besides the single witness being honest, sincere and having exuded subjective assurance, there still had to be certainty beyond reasonable doubt that the identification made by that witness was reliable. The State conceded that identification evidence is generally unreliable and it must be approached with caution. However, counsel for the State submitted that its case relied on the complaints evidence as corroborated by Simphiwe and Constable Ndaonde who attended at the scene. [14] The difficulty that the appellants have in respect of identification is that they placed themselves on the scene where the alleged robbery took place. On their own version they interacted in close proximity with the complainant when he wanted to search them. Further, the appellants in some material respects corroborated the complainant’s version: they stated that Simphiwe was one of the persons who arrived on the scene, one of the persons who apprehended them, and that thereafter, Constable Ndaonde arrived on the scene. Their evidence that the toy gun was handed over by Simphiwe to the Constable Ndaonde in their presence corroborates the complainant’s and Simphiwe’s version of events which took place on the scene. 11 S v Mthetwa 1972 (3) SA 766 (A). 12 Ibid at 768C. 7 [15] Critically, for the appellants is the fact that their version as to what transpired in the presence of Constable Ndaonde only emerged when they gave evidence in chief and their versions were not put to him for his response thereto. Furthermore, the fact that their versions are contradictory as regards what in fact transpired when Constable Ndaonde was in attendance. [16] The totality of the evidence reflects that the complainant was robbed at gun point. A toy gun was retrieved by Simphiwe on the scene, in the possession of the first appellant when they were apprehended. The account given by Constable Ndaonde was that a toy gun was recovered and handed directly to him on his arrival at the scene. This in my view is indicative that the appellants have failed to show that there are reasonable prospects of success on appeal. [17] I am satisfied that the high court did not misdirect itself when it refused the petition to appeal against the conviction. [18] In the result I make the following order: The appellants’ application for leave to appeal against the refusal of the petition on their conviction is dismissed. ___________________ W HUGHES JUDGE OF APPEAL 8 Appearances For the Appellant: HL Alberts Instructed by: Legal Aid South Africa, Pretoria Legal Aid South Africa, Bloemfontein For the Respondent: VT Mushwana Instructed by: The Director of Public Prosecution, 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: 20 March 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 Nong and Masingi v The State (787/2021) [2024] ZASCA 25 (20 March 2024) Today the SCA dismissed the appeal against the decision of the Gauteng Division of the High Court, Johannesburg. (The high court). The appellant and his co-accused were convicted in the Regional Court, Johannesburg on a count of robbery with aggravating circumstances read with s 51 of the Criminal Law Amendment Act 105 of 1997 (the Act). On 6 November 2017 the first appellant was sentenced to 12 years’ imprisonment and the second appellant was sentenced to 15 years’ imprisonment. The magistrate, on 21 June 2018, refused the appellants leave to appeal against their conviction but granted leave to appeal in respect of sentence. Aggrieved by the outcome of their application for leave to appeal, the appellants lodged a petition for leave to appeal in respect of their conviction in terms of s 309C of the Criminal Procedure Act 51 of 1977 (the CPA), in the Gauteng Division of the High Court, Johannesburg (the high court). This petition was dismissed by the full bench of that division (Mokgoatlheng J and Grant AJ). It bears mentioning that on 21 June 2020 the appeal against sentence was heard by the high court and dismissed. In terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 (Superior Courts Act), the appellants lodged applications for special leave against the dismissal of their petitions seeking leave to appeal against their conviction. On 13 March 2021 the first appellant was granted special leave to appeal against the dismissal of his petition seeking leave to appeal against his conviction. The second appellant was granted special leave to appeal against the dismissal of his petition of his conviction on 28 September 2022. The facts were briefly as follows: The complainant, Kwanele Arnold Dube, testified that he was robbed at gun point by two assailants. He was not aware that the gun being used was in fact a toy gun or air pistol. After being robbed he managed to follow his assailants and was present when they were apprehended and the toy gun retrieved. In order to apprehend them he sought assistance from one of his colleagues in the Community Policing Forum (CPF), Simphiwe John Mthembu (Simphiwe). After receiving a call from the complainant, Simphiwe arrived on the scene and assisted in the arrest of the appellants and retrieved the toy gun from one of the appellants. The complainant also testified that whilst he and Simphiwe were on the scene, Constable Ndaonde was in attendance and Simphiwe handed the toy gun to him. The issue herein was not the merits of the appeal but rather, whether the high court ought to have granted leave to appeal. Therefore the merits were curtailed to determining only whether the appellant had reasonable prospects of success and should accordingly be granted leave. Before this Court, counsel for the appellants, submitted that the trial court misdirected itself as it failed to take cognisance of the fact that the complainant was a single witness where the main issue in the trial was that of identification. In respect of both a single witness and that of identification, it was argued that the trial court ought to have demonstrated an awareness and an appreciation of the cautionary rule applicable in the circumstances. The appellants also placed reliance on the fact that the incident happened very quickly, as per the testimony of the complainant, and as such he did not have an 2 ‘adequate opportunity to observe the assailants’ who robbed him. Furthermore, the appellants challenged the trial court’s reliance on Simphiwe’s evidence as providing corroboration of the complainant’s version, even though it acknowledged that there were some discrepancies in their evidence, for example who conducted the search of the appellants. As such, the appellants contended that the evaluation conducted by the trial court did not heed the applicable principles when dealing with such evidence. On the other hand, the State, submitted that the trial court did not commit a misdirection. It contended that besides the single witness being honest, sincere and having exuded subjective assurance, there still had to be certainty beyond reasonable doubt that the identification made by that witness was reliable. The State conceded that identification evidence was generally unreliable and it had to be approached with caution. However, counsel for the State submitted that its case also relied on the complaints evidence as corroborated by Simphiwe and Constable Ndaonde who attended at the scene. The SCA held that the difficulty faced by the appellants regarding the issue of identification, was that they placed themselves on the scene where the alleged robbery took place. On their own version they, according to the SCA, interacted in close proximity with the complainant when he wanted to search them. The SCA further held that the appellants in some material respects corroborated the complainant’s version by stating that Simphiwe was one of the persons who arrived on the scene, apprehended them, and that thereafter, Constable Ndaonde arrived on the scene. Their evidence that the toy gun was handed over by Simphiwe to the Constable Ndaonde in their presence corroborates the complainant’s and Simphiwe’s version of events which took place on the scene. The SCA also held that, the totality of the evidence reflects that the complainant was robbed at gun point. A toy gun was retrieved by Simphiwe on the scene, in the possession of the first appellant when they were apprehended. The account given by Constable Ndaonde was that a toy gun was recovered and handed directly to him on his arrival at the scene. This, held the SCA, was indicative that the appellants had failed to show that there were reasonable prospects of success on appeal. Therefore, the high court had not misdirected itself when it refused the petition to appeal against the conviction and as a result, the appellants’ application for leave to appeal against the refusal of the petition on their conviction should be dismissed. ~~~~ends~~~~

4309

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 695/2023 In the matter between: TERSIA JOOSTE NO FIRST APPELLANT JENS LIEVENS NO SECOND APPELLANT and JANA ANNELISE PRETORIUS FIRST RESPONDENT JANA ANNELISE PRETORIUS NO SECOND RESPONDENT RHINO PRIDE FOUNDATION THIRD RESPONDENT MASTER OF THE HIGH COURT FOURTH RESPONDENT JOHANNESBURG Neutral citation: Jooste NO and Another v Pretorius and Others (Case no 695/2023) [2024] ZASCA 130 (1 October 2024) Coram: SCHIPPERS, NICHOLLS, MOTHLE and UNTERHALTER JJA and BAARTMAN AJA Heard: 3 September 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The time and date for hand-down is deemed to be 11h00 on 1 October 2024. Summary: Law of trusts – removal of trustee – provision in trust deed empowering trustees to adopt resolution forcing trustee to resign – subject to Trust Property Control Act 57 of 1988 – destructive conduct by trustee – continued support of trust by donor imperilled – beneficiaries prejudiced – resolution by trustees requiring resignation of trustee valid. 2 _________________________________________________________________ ORDER _________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Maumela J, sitting as court of first instance): 1 The appeal succeeds with costs, which shall be paid by the first respondent in her personal capacity. 2 The order of the High Court is set aside and replaced with the following: ‘(a) The application is dismissed. (b) The counter-application succeeds. It is declared that the following resolutions taken at the meeting of the trustees of the Rhino Pride Foundation, Master’s reference number IT001464/15 (G) (the Trust), on 3 March 2022, are valid and enforceable: (i) that the second applicant, Dr Jana Annelise Pretorius NO, is required to resign and vacate the office of trustee, in terms of clause 11.1.5 of the Trust’s Deed of Trust; and (ii) that Ms Marielle Borgström is appointed as a trustee of the Trust in the place of the second applicant. (c) The second applicant shall tender her resignation and vacate the office of trustee within seven (7) calendar days of the date of this order, failing which the Sheriff of the High Court, Pretoria, is authorised to sign the necessary documents to give effect to that resolution. (d) The first applicant shall pay the costs of the application and the counter-application, in her personal capacity, including the costs of two counsel where so employed. (e) The second applicant is directed to sign all documents necessary to grant the first and second respondents full access to all the bank accounts of 3 the Trust, within seven (7) calendar days of the date of this order, failing which the Sheriff of the High Court, Pretoria, is authorised to sign the necessary documents in her stead.’ _________________________________________________________________ JUDGMENT _________________________________________________________________ Schippers JA (Nicholls, Mothle and Unterhalter JJA and Baartman AJA concurring) [1] This appeal concerns the proper construction of a clause in a trust deed, which, subject to the Trust Property Control Act 57 of 1988 (the Act), provides that the office of a trustee shall be vacated when the remaining trustees unanimously require the resignation of any trustee. The appellants are trustees of the third respondent, Rhino Pride Foundation (the Trust), a public charitable inter vivos trust (created during the lifetime of a person) established in terms of the Act, and registered as a non-profit and public benefit organisation. [2] The first respondent, Dr Jana Annelise Pretorius (the respondent), a specialist wildlife veterinarian, is the founder and a trustee of the Trust. The main objects of the Trust are the creation of a fund to put an end to the poaching of rhinos for their horns; the advancement and protection of rhinos in South Africa; and the provision of medical care and facilities to rhinos, including emergency relief and rescue. [3] On 3 March 2022, in terms of clause 11 of the Deed of Trust (the trust deed), the appellants adopted a resolution by majority vote, requiring the respondent to resign from her office with immediate effect (the impugned resolution). On 16 March 2022 the respondent, in her personal capacity and as a trustee, applied to the Gauteng Division of the High Court, Pretoria (the High Court), for an interdict 4 to prevent the appellants from enforcing the impugned resolution, pending the finalisation of an action to be instituted to set aside that resolution (the main application). The appellants filed a counter-application for an order that the impugned resolution be enforced; alternatively, that the respondent be removed from office as a trustee, in terms of s 20(1) of the Act. [4] The High Court granted the main application and dismissed the counter-application, with costs, including the costs of two counsel. It issued an interdict restraining the appellants from enforcing the impugned resolution, pending finalisation of an action which was subsequently instituted by the respondent for their removal as trustees. [5] The appeal is with the leave of this Court. Although an interim order is ordinarily not appealable,1 this case is somewhat unique: the facts in the main application and the counter-application are inextricably linked. Therefore, should it be found that the impugned resolution is valid, the interdict cannot remain in force. The facts [6] The facts are largely common ground and can be briefly stated. The respondent founded the Trust in 2014. She met the appellants in 2017, and they became friends through their shared passion for rhino conservation. The first appellant is an attorney who runs a non-profit organisation called Rhino Connect, which raises funds for various rhino protection projects, and she is not a recipient of any funds of the Trust. The second appellant is a Belgian banker who worked in the defence industry, and has experience in rhino anti-poaching technology. 1 Zweni v Minister of Law and Order [1992] ZASCA 197; [1993] 1 All SA 365 (A); 1993 (1) SA 523 (A) at 536B; TWK Agricultural Holdings (Pty) Ltd v Hoogveld Boerderybeleggings (Pty) Ltd and Others [2023] ZASCA 63; 2023 (5) SA 163 para 30. 5 [7] In May 2019 the second appellant, who sources overseas funding for the Trust, facilitated a substantial donation of some R50 million by a foreign donor who has chosen to remain anonymous (the donor), to expand the then existing sanctuary which was home to 50 rhinos. This donation constitutes about 90% of all the funds received by the Trust through donations, its sole source of income. The donor concluded a memorandum of understanding (MoU) with the Trust, valid until 30 May 2026. In terms of the MoU, the donor agreed to fund the establishment of a rhino sanctuary in a maximum amount of USD 5 540 000 over five years. The MoU contains stringent reporting requirements by the Trust to the donor, and states that the donor can terminate the MoU without any reason. [8] At the respondent’s request, the first appellant was appointed as a trustee in 2019 and the second appellant, in 2020. The Trust bought a farm in Bela-Bela, Limpopo (the farm), in July 2019, using the funds provided by the donor. A rhino sanctuary was established on the farm, which was improved by the construction of a veterinary hospital, animal enclosures, staff accommodation and a guardhouse. [9] The operating costs of the Trust – about R675 000 per month – which include staff salaries and extensive security costs to protect the rhinos, are funded by the foreign donation. Without this funding the Trust cannot protect, treat and rehabilitate rhinos on the farm. [10] The respondent provides veterinary services to the Trust at a fee of R75 000 per month. Initially she was not going to live on the farm and concluded an agreement to purchase her own property in Bela-Bela, but this did not materialise. Subsequently the trustees agreed that she could live in a house on the farm. [11] The parties had a good relationship until late 2021, when the appellants became concerned about the respondent’s administration of the Trust and management of the farm. She failed to adhere to the budget for improvements on 6 the farm, which created difficulties in reporting to the donor. Without the appellants’ knowledge, the respondent’s fiancé became involved in the activities of the Trust and its operations on the farm. She appointed her fiancé’s companies as service providers to the Trust. Numerous staff members lodged grievances with the appellants about the abusive behaviour of the respondent and her fiancé, and what they claimed were inhumane working conditions (they were denied access to kitchen and ablution facilities). As to the administration of the Trust, the appellants did not have any access to its bank accounts at the time. [12] These concerns were discussed at a meeting of the trustees on 18 January 2022. At the outset, the appellants made it clear that they were not there to attack the respondent, but to work with her in addressing their concerns. The transcribed minutes of that meeting state the following: that in the past few months the respondent had acted as a sole trustee; that the appellants could not communicate with her; that they had taken a decision that the respondent should take a leave of absence for at least a month, during which they would manage operations on the farm; and that her fiancé should leave the farm immediately. The meeting ended with the respondent agreeing to go on leave and saying that the appellants should tell her when they wanted her back. She recorded that she was being forced to do so and that things could have been done differently. Two resolutions were taken at the meeting. These were essentially that the respondent’s fiancé would leave the farm immediately; and that the appellants would be granted access and added as signatories to the Trust’s bank accounts, and all transactions in excess of R15 000 would be authorised by two trustees. [13] The appellants then made the necessary arrangements with the Trust’s employees and service providers for the continued operation of the farm. They ensured that the rhinos were cared for; that the security was adequate; and that the employees had access to the necessary facilities. The rhinos (which do not require constant attention of a veterinarian) were cared for mainly by the veterinary nurses 7 and staff who live on the farm. It was agreed that the respondent would be available to provide medical care to the rhinos, and arrangements were made with Warmbad Dierekliniek (animal clinic) for any ad hoc emergency assistance. [14] On 20 January 2022, two days after the trustees’ meeting, the respondent approached the High Court urgently – without any notice to the appellants – for a spoliation order and an interim interdict. The High Court (Millar J) issued an order restoring the possession and use of the farm to the respondent; and granted an interdict restraining the appellants from terminating her trusteeship, and interfering with her right to occupy the house on the farm and her management of the Trust, pending the outcome of proceedings to be instituted by the respondent for the removal of the appellants as trustees (the ex parte order). [15] After obtaining the ex parte order, the respondent excluded the appellants from all aspects of the Trust. She denied them access to its bank accounts, email server, accounting software, and to all documents relating to the Trust. She prevented the Trust’s accountants from accessing its accounting software. She removed the appellants from all of the Trust’s WhatsApp groups (which include its employees and business associates), posted a notice of the ex parte order on WhatsApp and informed the recipients that the appellants were no longer trustees. And she sent a copy of the order to the donor. [16] The donor became extremely concerned about the administration of the Trust, enquired whether the remainder of the donation could be withdrawn and stated that any future donations would not be made. The donor’s representatives requested certain information from the respondent. She apparently did not respond to this request. [17] On 26 January 2022 the appellants launched an urgent application to the High Court for an order that they be reinstated as trustees. Prior to the hearing of 8 that application, the respondent relented and the appellants’ trusteeship was restored. The respondent also did not pursue her application for contempt of court, which she had brought in the High Court in the interim. [18] The parties and their legal teams met thereafter. The appellants proposed that the litigation be resolved as follows. The respondent would return to the farm, but not her fiancé. The appellants would be granted access to the computer platforms and bank accounts of the Trust. The concerns raised by the appellants would be resolved by mediation. The respondent however rejected this proposal. [19] Meanwhile, the donor became increasingly concerned about the status of the Trust. On 1 February 2022 the donor’s representatives sent an email to the trustees, in which they expressed their dissatisfaction with the situation. They stated that all investments should be postponed; that a short-term solution should be implemented; and that spending should be avoided. [20] The appellants then applied to the High Court for the reconsideration of the ex parte order. The application came before Janse Van Nieuwenhuizen J on 4 February 2022, who set aside that order, with costs. The court found that the respondent ‘failed dismally in observing the utmost good faith when the ex parte order was obtained’; that certain allegations in her affidavit were ‘blatantly untrue’; that she had not been ‘unlawfully deprived of her undisturbed possession of the farm’; and that the facts did not sustain the order excluding the appellants from fulfilling their duties as trustees. [21] The judgment in the reconsideration application was sent to the donor, whose representatives responded by email on 21 February 2022, as follows: ‘The Donor has asked us to express their concern in respect of the recent developments regarding the court cases between the trustees. 9 We have considered the judgement and are disappointed with the way Jana has handled the situation. It is clear from the judgement that she acted dishonestly, and the donor has indicated that their trust in Jana is lost. The donor informed us that unless order is restored at the sanctuary, the donor considers no longer to support the Rhino Pride Foundation. Therefore, we ask that Jana resign and/or to be removed as Trustee. In the meantime, all investments and/or expenses must be put on hold unless absolutely critical for the safety and welfare of the rhinos.’ [22] The answering affidavit states that a loss of future donations from the donor would be the death knell of the Trust, since other donations make up only some 10% of its income, which would not meet the Trust’s monthly expenses, even for a few months. Consequently, there was a real possibility that the Trust would no longer be able to continue its work without the financial assistance of the donor. [23] The respondent’s reply to this is startling. She denied that ‘the Trust would not be able to continue its work without the donations from this specific donor’. She said that ‘there are many other donors available to the Trust, and there are other sources of income that could still be explored’. [24] A meeting of the trustees was convened for 3 March 2022. One of the items on the agenda for that meeting, prepared by the appellants, was that the respondent should vacate the office of trustee in terms of clause 11 of the trust deed, and be replaced by Ms Marielle Borgström, the donor’s representative. [25] The main reasons for the proposed resolution that the respondent vacate her office of trustee, were the following: (a) The respondent had deposed to the affidavit in the ex parte application against the appellants, containing false statements. This irreparably harmed the relationship between her and the appellants, imperilled the 10 administration of the Trust, and jeopardised the financial support by the donor. (b) After obtaining the ex parte order, the respondent, through her attorneys, addressed correspondence to the other trustees demanding that they cease any contact or engagement with any known associates of the Trust, including its sponsors, contractors, agents, suppliers and any other affiliate of the Trust. This was unlawful and contrary to the trust deed. (c) The respondent unlawfully removed the appellants from all computer platforms necessary to administer the Trust, and agreed to reinstate their access to those platforms, only after they launched an urgent application to the High Court. (d) The respondent falsely informed the trust’s employees, affiliates, service providers and business associates, that the appellants were no longer trustees, thereby damaging the Trust’s reputation. (e) Certain employees of the Trust were seeking redress of their grievances against the respondent, before the Commission for Conciliation, Mediation and Arbitration (CCMA). (f) The respondent’s continuance in office as trustee would prevent the Trust from being properly administered, and was detrimental to the welfare of the beneficiaries. [26] In the answering affidavit, the first appellant states that the impugned resolution was not taken lightly, but in the interests of the Trust and its beneficiaries, which could only be served if the Trust were properly administered. These allegations were met with a bald denial in reply, and an assertion that ‘no evidence was led’ to prove the allegations against the respondent; and that her constitutional rights in s 34 of the Constitution had been violated. 11 [27] As stated, on 16 March 2022 the respondent launched the main application. On 14 September 2022 the High Court granted the interdict and dismissed the counter-application. The High Court’s judgment [28] The High Court found that in seeking the relief which they did, there were allegations and counter-allegations by the parties, which gave rise to disputes of fact that could not be resolved without recourse to oral evidence. On this basis, the court said, it would be premature to prevent a trustee from participation in the affairs of the Trust ‘based on reasons that have not been substantiated’. [29] The court held that the respondent was not given a fair hearing and that the impugned decision ‘clearly amounts to an infringement of the constitutionally enshrined rights of the Founding Trustee’. Then it said that it was common cause that rhinos are an endangered species worldwide; that they require security; and that a ‘unilateral removal’ of the respondent in circumstances ‘where there is no oversight at all’, undermined the basis for the formation of the Trust. [30] The High Court reasoned that to remove a trustee, the appellants had to comply with the requirements and procedure set out in the common law or s 20(1) of the Act. It said, ‘the removal of a trustee cannot just be subject to the whims of fellow members of the Trust’; the appellants had failed to show that the respondent’s removal was ‘for the benefit of the Trust Property and the animals on it’; and the court was loath to endorse the impugned resolution without the application of the rules of natural justice. The court stated that that the impugned decision was ‘arrived at on a unilateral basis’, which was ‘contrary to s 34 of the Constitution’.2 2 Section 34 of the Constitution 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.’ 12 [31] The High Court concluded that the action instituted by the respondent should run its course, to determine whether the impugned resolution was correctly taken. The parties could then ‘substantiate fully’ the orders they were seeking. Disputes of fact requiring oral evidence? [32] It is convenient to deal first with the counter-application. The appellants sought a final order, essentially that the impugned resolution is valid and enforceable. [33] In Zuma3 Harms JA said: ‘Motion proceedings, unless concerned with interim relief, are all about the resolution of legal issues based on common cause facts. Unless the circumstances are special they cannot be used to resolve factual issues because they are not designed to determine probabilities. It is well established under the Plascon-Evans rule that where in motion proceedings disputes of fact arise on the affidavits, a final order can be granted only if the facts averred in the applicant's . . . affidavits, which have been admitted by the respondent . . . , together with the facts alleged by the latter, justify such order. It may be different if the respondent’s version consists of bald or uncreditworthy denials, raises fictitious disputes of fact, is palpably implausible, far-fetched or so clearly untenable that the court is justified in rejecting them merely on the papers.’ [34] The basic facts in the counter-application are common cause. The High Court’s finding that there were disputes of fact that could not be resolved on the papers is erroneous. So too, its conclusion that the reasons for the impugned resolution are unsubstantiated. 3 National Director of Public Prosecutions v Zuma [2009] ZASCA 1; 2009 (2) SA 277 (SCA); 2009 (1) SACR 361 (SCA); 2009 (4) BCLR 393 (SCA); [2009] 2 All SA 243 (SCA) para 26, affirmed by the Constitutional Court in Commercial Stevedoring Agricultural and Allied Workers’ Union and Others v Oak Valley Estates (Pty) Ltd and Another [2022] ZACC 7; [2022] 6 BLLR 487 (CC); 2022 (7) BCLR 787 (CC); 2022 (5) SA 18 (CC) para 46. 13 [35] The common cause facts are these. At the meeting of 18 January 2022, the respondent agreed to take a leave of absence for a month on account of the appellants’ concerns about her management of the farm. The appellants made arrangements to take over operations on the farm and protect the rhinos. At no stage was there going to be ‘no oversight at all’, as the High Court opined. Neither were the rhinos left unprotected. [36] Despite agreeing to take a temporary leave of absence, in a remarkable volte-face, the respondent obtained the ex parte order. She stated under oath that she had been unlawfully removed from the farm; that the appellants had prevented her from practising as a veterinarian and attending to rhinos under her care; that they had unilaterally and for no reason, summarily terminated the security measures to protect employees living on the farm, and the endangered rhinos; and that pursuant to the appellants’ threats to remove the respondent as trustee, they had contacted the Trust’s private banker to revoke her access to its bank accounts. [37] All of these statements were false, as Janse Van Niewenhuizen J indeed found. Consequently, the ex parte order was set aside. There is thus no factual dispute about the respondent’s procurement of that order on the basis of false statements, and its consequences – a complete breakdown of the relationship between her and the appellants; the donor’s support being placed at risk; and the sustenance of the beneficiaries being endangered. And the respondent’s statements that the Trust could continue its work without the support of the donor, and that there are many other donors available to the Trust, could safely have been rejected on the papers: they are far-fetched.4 [38] Then there are the common cause facts relating to the respondent’s conduct in removing the appellants from all computer platforms necessary to administer the 4 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634H-635C, affirmed in Mamadi and Another v Premier of Limpopo Province and Others [2022] ZACC 26; 2023 (6) BCLR 733 (CC); 2024 (1) SA 1 (CC) paras 22, 43-45. 14 Trust; falsely informing the Trust’s employees, service providers and business associates, that the appellants were no longer trustees; and causing the Trust to become involved in a labour dispute at the CCMA. And she refused mediation to settle the differences between the parties. [39] Not a scintilla of evidence can change the truth about any of the events described above. And the common cause facts apply equally to the main application. This is because the respondent was required to establish the requisites for the grant of an interim interdict, more specifically, a prima facie right, though open to some doubt.5 However, it is clear from the judgment that the High Court did not address the issue as to whether the respondent had met the requirements for an interim interdict. I revert to this aspect below. Is the impugned decision valid? [40] The first question that arises is whether the appellants were required to apply the rules of natural justice in taking the impugned decision. These rules have their origin in Administrative Law and are generally expressed in two maxims: audi alteram partem (hear the other side, or the audi principle) and nemo iudex in propria causa (no one may judge in his own cause).6 Procedural fairness in the form of the audi principle is concerned with giving people an opportunity to participate in the decisions likely to affect them, and to influence the outcome of those decisions.7 [41] The impugned decision, however, does not constitute administrative action as defined in the Promotion of Administrative Justice Act 3 of 2000.8 5 The requirements of an interim interdict are a prima facie right; a well-grounded apprehension of irreparable harm if the interim relief is not granted and the ultimate relief is granted; a balance of convenience in favour of the grant of interim relief; and the absence of any other satisfactory remedy (11 Lawsa 2 ed para 403). 6 L Baxter Administrative Law (1984) at 536. 7 C Hoexter and G Penfold Administrative Law in South Africa 3 ed (2021) at 502. 8 The Promotion of Administration Justice Act defines ‘administrative action’ essentially as: 15 Consequently, procedural fairness in the context of administrative action, does not arise, since a trust is a legal institution sui generis (of its own kind).9 Clause 11 of the trust deed – the constitutive charter of the Trust to which all trustees are bound10 – sets out the circumstances in which the office of trustee shall be vacated. The appellants took the impugned decision in terms of clause 11.1.5 of the trust deed, which empowers trustees to unanimously call for the resignation of a trustee. [42] That said, the removal of a trustee is a decision of considerable importance for the governance of a trust. A trustee will ordinarily have no claim of right to hold the office of trusteeship. But there is good reason to hear from a trustee before a decision is taken to remove them. This is so because a decision to remove a trustee must be well-informed and taken in the best interests of the trust and the fulfilment of its objects. What the trustee has to say enhances good decision-making. [43] Clause 11.1.5 may also not be invoked arbitrarily; nor on the basis of the unreasoned exercise of majoritarian power; nor to settle good faith disagreements; nor on the ground of minor irregular conduct by a trustee11 that does not affect the administration of the Trust, its assets or the beneficiaries. What matters is the proper administration of the Trust, to secure and carry out its objects, in the best interests of the Trust and the beneficiaries. But where, as here, a breakdown in relations makes the task of trustees difficult or impossible, 12 coupled with a real risk to the financial survival of the Trust and the welfare of the beneficiaries, replacement of a trustee may be the only option. [44] The decision to replace the respondent, the evidence shows, was not taken arbitrarily. There were compelling reasons for her removal, and she was treated ‘any decision taken, or any failure to take a decision, by . . . an organ of state, when . . . exercising a public power or performing a public function in terms of any legislation . . . which adversely affects the right of any person and which has a direct, external legal effect . . .’ 9 Braun v Blann and Botha NNO and Another 1984 (2) SA 850 (A) at 859E. 10 Land and Agricultural Development Bank of South Africa v Parker and Others 2005 (2) SA 77 (SCA) para 10. 11 Volkwyn NO v Clark & Damant 1946 WLD 456 at 467-9. 12 McNair v Crossman and Another [2019] ZAGPJHC 298; 2020 (1) SA 192 (GJ) paras 35 and 36. 16 fairly. She had scheduled a meeting of the trustees for 24 February 2022. She agreed that the meeting be postponed to 3 March 2022, for the appellants to prepare a list of agenda items, which included a proposed resolution that the respondent vacate the office of trustee, and that Ms Borgström be appointed to that position. The list of agenda items was given to the respondent on 21 February 2022. [45] The proposed resolution was discussed and debated at the meeting on 3 March 2022, after which the impugned resolution was adopted. A resolution appointing Ms Borgström in place of the respondent was also taken. The answering affidavit states that Ms Borgström’s appointment as trustee ensures both that the donor’s rights in the operations of the Trust are protected, and that the substantial funds donated are utilised in accordance with the MoU, in the interests of the beneficiaries. [46] What is more, in terms of the MoU, the Trust agreed ‘to collaborate with the Donor in accordance with the Donor’s desires relating to participation in the sanctuary activities and operations’. This unquestionably, renders Ms Borgström’s appointment appropriate. The respondent’s assertion that this appointment is not in the Trust’s best interests, or that it creates a conflict of interest, is unsustainable on the evidence. [47] What all of this shows, is that the respondent’s s 34 constitutional right to have a dispute that can be resolved by the application of law decided by a court, was not infringed. The High Court’s conclusion to the contrary, is incorrect. In fact, the respondent’s approach to the court for an interdict, constitutes the exercise by a dissenting minority to refer a decision by the majority to an appropriate forum for determination, as envisaged in the trust deed. [48] This brings me to the proper construction of clause 11 of the trust deed. It provides: 17 ‘11. TRUSTEES – DISQUALIFICATION AND VACATION OF OFFICE 11.1 Subject to the Trust [Property] Control Act, the office of a Trustee shall be vacated if: 11.1.1 he or she resigns his or her office by notice in writing to his or her co-Trustees; 11.1.2 as a natural person, he or she becomes insolvent or is convicted of any offence involving dishonesty; 11.1.3 he or she shall become of unsound mind and mentally incapable of managing his or her own affairs; 11.1.4 he or she shall become disqualified in terms of the Companies Act 71 of 2008 or its predecessor or successor in force from time to time, to act as a director of a company, or 11.1.5 the remaining Trustees shall unanimously agree in writing that any Trustee(s) be required to resign.’ [49] The disqualifying criteria in clauses 11.1.2 and 11.1.3, also constitute grounds upon which the Master of the High Court may remove a trustee from office under the Act.13 For present purposes, the relevant provisions of the Act are ss 9(1) and 20, which read: ‘9. Care, diligence and skill required of trustee (1) A trustee shall in the performance of his duties and the exercise of his powers act with the care, diligence and skill which can reasonably be expected of a person who manages the affairs of another.’ ‘20. Removal of trustee (1) A trustee may, on the application of the Master or any person having an interest in the trust property, at any time be removed from his office by the court if the court is satisfied that such removal will be in the interests of the trust and its beneficiaries.’ [50] The proper approach to the interpretation of the above provisions is settled: ‘It is the language used, understood in the context in which it is used, and having regard to the purpose of the provision that constitutes the unitary exercise of interpretation . . . [T]he triad of text, context and purpose should not be used in a mechanical fashion. It is the relationship between the words used, the concept expressed by those words and the place of the contested 13 Section 20(2)(a), (c) and (d) of the Act. 18 provision within the scheme of the agreement (or instrument) as a whole that constitute the enterprise by recourse to which a coherent and salient interpretation is determined.’14 [51] The inevitable starting point is the language of the statutory provisions and clause 11 of the trust deed.15 Section 20(1) of the Act empowers a court to remove a trustee from office, if it is in the interests of the Trust and the beneficiaries. Section 20(1) does not state that this power is exclusive to the court. Nor is there any reason to read such limitation into s 20(1). Thus, s 20(1) does not detract from the principle that a founder may reserve the right to remove a trustee, or may confer it on some other person, if that right is stipulated in the trust instrument.16 The principle is illustrated by this very case: clause 10.7 of the trust deed provides, inter alia, that the founder, with the support of at least a 66% majority of trustees, is entitled to remove a trustee. [52] Clause 11 states that its provisions are subject to the Act. The purpose of the phrase ‘subject to’, in the field of legislation, ‘is to establish what is dominant and what subordinate or subservient; that to which a provision is “subject”, is dominant – in case of conflict it prevails over that which is subject to it.’17 [53] The meaning and effect of this phrase in relation to clause 11.1.5 of the trust deed is no different, having regard to the plain wording, context and purpose of that provision. Clause 11.1.5 is subordinate to both s 20(1) and s 9(1) of the Act. Section 20(1) authorises the removal of a trustee if it is in the interests of the trust and the beneficiaries; and where a trustee fails to fulfil her duties in accordance 14 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, with reference to Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 18; University of Johannesburg v Auckland Park Theological Seminary and Another [2021] ZACC 13; 2021 (8) BCLR 807 (CC); 2021 (6) SA 1 (CC). 15 Natal Joint Municipal Pension Fund fn 14 para 18. 16 E Cameron, M de Waal and P Solomon Honoré’s South African Law of Trusts 6 ed (2018) at 268; Badenhorst v Badenhorst 2006 (2) SA 255 (SCA) para 10; Raath v Nel 2012 (5) SA 273 (SCA) para 12. 17 S v Marwane 1982 (3) SA 717 (A) at 747H-748A, affirmed in Zantsi v Council of State, Ciskei, and Others 1995 (4) SA 615 (CC) para 27. 19 with the standard set out in s 9(1), that trustee may be required to vacate her office in terms of clause 11.1.5. [54] In other words, and in the particular circumstances of this case, the power in clause 11.1.5 must be exercised for a reason sanctioned by the Act. That is why it may not, without more, be invoked by a simple majority. It follows that clause 11.1.5, for the reasons set out above, may also not be invoked arbitrarily, irrationally, or capriciously, for example, based on the will, preference or convenience of the majority of trustees; or where there is no evidence that the interests of the trust and its beneficiaries would be prejudiced. [55] This construction is buttressed by the context of clause 11 in the scheme of the trust deed, in relation to the powers of trustees and the objects of the Trust, and the purpose of clause 11 within that scheme. Thus, clause 12.1 provides: ‘The powers of the Trustees as set out in this Deed of Trust are powers which are conferred upon them as Trustees of the Trust and to enable them to administer the Trust Fund for the benefit of Rhinos in South Africa in accordance with the Trust Objects, and not for their personal benefit. The extent of the powers vested in the Trustees must be construed in accordance with and subject to the Trust Objects.’ [56] The main objects of the Trust include the creation of a fund to combat rhino poaching, the protection of the lives of rhinos in South Africa; the establishment of a rhino protection zone; the provision of funding for the acquisition of land to establish that zone for the safekeeping of rhinos; and support of sanctuaries and rehabilitation projects relating to rhinos. Where these objects are subverted or threatened by the conduct of a trustee, or where a trustee exercises her powers contrary to clause 12.1, the remaining Trustees are empowered to call for the resignation of that trustee in accordance with clause 11.1.5, without the need to approach a court for the removal of a trustee, in terms of s 20(1) of the Act. This plainly, was the intention of the founder – the respondent, no less. Otherwise construed, clause 11.1.5 is rendered meaningless. 20 [57] Clause 11.1.5 thus provides an expeditious method for the removal of a trustee, in the interest of the Trust and its beneficiaries. It obviates the lengthy delays, exorbitant costs and uncertainties associated with litigation. It is supplementary to the disqualification criteria in clauses 11.1.2 to 11.1.4 of the trust deed. And it does not oust the right of trustees to apply to court for the removal of a trustee in terms of s 20(1) of the Act, or under the common law, which permits the removal of a trustee when continuance in office would prevent the proper administration of a trust, or be detrimental to the welfare of beneficiaries.18 In Gowar19 this Court stated that the common law principle is endorsed in s 20(1) of the Act. [58] Returning to the present case, on the common cause facts outlined above, the appellants have established that the resolutions that the respondent vacate the office of trustee, and that Ms Borgström be appointed to that position, are valid and enforceable. The removal of the respondent as trustee is plainly in the interests of the Trust and its beneficiaries. The papers are confined to these resolutions, and it is therefore inappropriate to confirm all the resolutions taken at the meeting of 3 March 2022, as sought by the appellants. [59] The common cause facts also show that the respondent did not establish a prima facie right for the grant of the interim interdict: in essence, she failed to show that she has good prospects of success in the action in which she asks for an order that the appellants be removed as trustees.20 Had the High Court applied the test for a prima facie right, it ought to have concluded that in light of the inherent probabilities, the respondent is unlikely to succeed in her action. Consequently, the main application should have been dismissed. 18 Sackville West v Nourse and Another 1925 AD 516 at 527; Honoré’s op cit fn 16 at 271. 19 Gowar and Another v Gowar and Others [2016] ZASCA 101; [2016] 3 All SA 382 (SCA); 2016 (5) SA 225 (SCA) para 28. 20 Economic Freedom Fighters v Gordhan and Others [2020] ZACC 10; 2020 (6) SA 325 (CC); 2020 (8) BCLR 916 para 42. 21 Costs [60] Trustees must act honestly and reasonably. They have a duty to protect the assets of the trust for the benefit of the beneficiaries. For these reasons, as a general rule a trustee should not be ordered to pay costs de bonis propriis (out of own pocket), whether as an applicant or respondent, unless she has acted in bad faith, negligently or unreasonably.21 [61] This is such a case. The ex parte order, based on falsehoods, was obtained in bad faith. In that application the respondent sought an order that the appellants who opposed it, should pay costs on an attorney and client scale. The respondent then prevented the appellants from fulfilling their duties as trustees. Consequently, they were compelled to apply for a reconsideration of the ex parte order, which was set aside on the basis that it had no foundation, in fact or in law. The respondent was ordered to pay the costs of the ex parte application. [62] The respondent restored the appellants’ administration of the Trust, only after they launched a separate urgent application on 26 January 2022 for her to do so. In the meantime, the respondent had brought an application for contempt of court by the appellants, which she subsequently withdrew. She then launched the main application which, on the common cause facts, was doomed to failure from the outset. In that application, she also sought an order that the appellants pay the costs of her contemplated action for their removal, on an attorney and client scale. Throughout, the respondent paid scant regard to Trust’s continued existence and the welfare of the beneficiaries, regardless of their utter dependence on the donor. [63] In these circumstances, the only appropriate order is that the respondent should pay the costs of these proceedings in her personal capacity. She acted in bad faith and recklessly. 21 Grobbelaar v Grobbelaar 1959 (4) SA 719 at 725B; Honoré’s op cit fn 16 at 476-477; See 3 Lawsa 2 ed para 377 and the authorities there collected. See also Pheko and Others v Ekurhuleni Metropolitan Municipality [2015] ZACC 10; 2015 (5) SA 600 (CC); 2015 (6) BCLR 711 (CC) para 51. 22 Conclusion [64] In the result, the following order is issued: 1 The appeal succeeds with costs, which shall be paid by the first respondent in her personal capacity. 2 The order of the High Court is set aside and replaced with the following: ‘(a) The application is dismissed. (b) The counter-application succeeds. It is declared that the following resolutions taken at the meeting of the trustees of the Rhino Pride Foundation, Master’s reference number IT001464/15 (G) (the Trust), on 3 March 2022, are valid and enforceable: (i) that the second applicant, Dr Jana Annelise Pretorius NO, is required to resign and vacate the office of trustee, in terms of clause 11.1.5 of the Trust’s Deed of Trust, and (ii) that Ms Marielle Borgström is appointed as a trustee of the Trust in the place of the second applicant. (c) The second applicant shall tender her resignation and vacate the office of trustee within seven (7) calendar days of the date of this order, failing which the Sheriff of the High Court, Pretoria, is authorised to sign the necessary documents to give effect to that resolution. (d) The first applicant shall pay the costs of the application and the counter-application, in her personal capacity, including the costs of two counsel where so employed. (e) The second applicant is directed to sign all documents necessary to grant the first and second respondents full access to all the bank accounts of the Trust, within seven (7) calendar days of the date of this order, failing which the Sheriff of the High Court, Pretoria, is authorised to sign the necessary documents in her stead.’ 23 __________________ A SCHIPPERS JUDGE OF APPEAL 24 Appearances: For appellants: N Marshall Instructed by: Visser Inc Attorneys, Pretoria Honey Attorneys, Bloemfontein For first and second respondents: A van der Walt Instructed by: Krige Attorneys Inc, 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: 1 October 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 Jooste NO and Another v Pretorius and Others (Case no 695/2023) [2024] ZASCA 130 (1 October 2024) Today the Supreme Court of Appeal (SCA) handed down judgment setting aside an order by the Gauteng Division of the High Court, Pretoria (the High Court), which granted an interim interdict against the appellants, the trustees of the Rhino Pride Foundation Trust (the Trust). In terms of the interdict the appellants were prohibited from enforcing a resolution that required the respondent, the founder and trustee of the Trust, to resign, in terms of the relevant trust deed. The SCA upheld the appeal and ordered the respondent to pay costs in her personal capacity. The Trust was established in 2014 by the respondent, a wildlife veterinarian, with the primary objective of combating rhino poaching and providing medical care for rhinos in South Africa. The appellants were subsequently appointed as trustees. The Trust receives significant funding from an anonymous foreign donor, which constitutes approximately 90% of its income, which it utilised to purchase a farm in Limpopo, on which a rhino sanctuary was established. In late 2021 tensions arose between the appellants and the respondent concerning the respondent’s management of the Trust, which included mismanagement of funds, inhuman working conditions for staff members, and inappropriate involvement of the respondent’s fiancé in the operations of the Trust. A meeting was held on 18 January 2022, at which the respondent agreed to take a leave of absence for one month, during which the appellants would run the rhino sanctuary. However, two days later, on 20 January 2022, without notice to the appellants, the respondent obtained an urgent spoliation order an interim interdict to prevent her removal as trustee (the ex parte order). On 4 February 2022, the ex parte order was set aside upon reconsideration by another judge, who held that the respondent failed dismally in observing the upmost good faith and that there were numerous allegations in her affidavit which were ‘blatantly untrue’. On 3 March 2022, the trustees passed resolutions by majority vote: (i) requiring the respondent to resign; and (ii) replacing her with the donor’s representative as trustee. The main reasons for 2 calling for her resignation were that she had made false statements in the ex parte application, which irreparably harmed relationship between the trustees, imperilled the administration of the Trust, jeopardised the financial support by the donor, and was detrimental to the welfare of the beneficiaries. The respondent then applied to the High Court for an interdict to prevent the appellant from enforcing the resolutions, pending finalisation of an action to be instituted to set the resolutions aside. The appellants filed a counter-application for the enforcement of the resolutions. The High Court granted the interdict and dismissed the appellants’ counter-application. It held that there were factual disputes that required oral evidence; that the respondent had not been given a fair hearing; and that her right of access to court to have a dispute resolved, contained in s 34 of the Constitution, was not infringed. The SCA held that the High Court was wrong. There were no factual disputes concerning the reasons for the adoption of the resolutions, nor in relation to the interdict obtained by the respondent. No amount of oral evidence could change the facts. The SCA also held that the resolution to remove the respondent as trustee was authorised in terms of the trust deed and that it was not necessary in the circumstances, to approach a court for the removal of the respondent in terms of s 20(1) of the Trust Property Control Act 57 of 1988, that the resolution was valid; that it was not taken arbitrarily; and that there were compelling reasons for the respondent’s removal. The SCA concluded that the respondent was treated fairly, and that she failed to establish a prima facie right for the grant of the interdict. For these reasons, the SCA set aside the interdict and granted the counter-application for the respondent’s removal as trustee. The respondent was ordered to pay the costs in her personal capacity because she had acted male fide and recklessly. ~~~~ends~~~~

4266

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not reportable Case no: 322/2023 In the matter between: MAWECRO (PTY) LTD APPELLANT and JABULANI LIGHTER SITHOLE FIRST RESPONDENT ISAAC MYOMO NITWANE SECOND RESPONDENT ETIENNE JACQUES NAUDE THIRD RESPONDENT JOHANNES PETRUS KOEKEMOER FOURTH RESPONDENT JOHANNES LODEWYK BOUWER FIFTH RESPONDENT MAWEWE COMMUNAL PROPERTY ASSOCIATION SIXTH RESPONDENT Neutral citation: Mawecro (Pty) Ltd v Sithole and Others (322/2023) [2024] ZASCA 91 (10 June 2024) Coram: PONNAN, MATOJANE and KGOELE JJA and DAWOOD and BAARTMAN AJJA Heard: 22 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 10 June 2024. Summary: Challenge to decision to remove directors – on the facts declaratory relief without review not competent. 2 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Mpumalanga Division of the High Court, Mbombela (Roelofse AJ sitting as court of first instance). 1 The appeal is upheld with costs such costs to include those of two counsel, where so employed. 2 The order of the court below is set aside and replaced with the following: ‘The application is dismissed with costs, including those of two counsel where so employed.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Baartman AJA (Ponnan, Matojane and Kgoele JJA and Dawood AJA concurring): [1] The appellant, Mawecro (Pty) Ltd (the company) is a joint venture. It has two shareholders, the sixth respondent, Mawewe Communal Property Association (the Association) and Crooks Brothers Limited. The latter holds a 49% share in the company while the Association holds 51% of the shares. Their relationship is governed by a Shareholders’ Agreement which, in clause 10.1.1,1 provides that each shareholder may appoint three directors to the company’s board as representatives of the respective shareholder, while clause 10.1.2 provides for the removal of said directors.2 [2] Acting in terms of the Shareholders’ Agreement, the Association appointed Mr Sithole (the first respondent) and Mr Nitwane (the second respondent) as directors of 1 Clause 10.1.1 of the Shareholders’ Agreement states as follows: ‘each SHAREHOLDER holding more than 45% (forty-five percent) of the voting rights of the COMPANY shall have the right to appoint 3 (three) DIRECTORS to the BOARD. . .’. 2 Clause 10.1.2 of the Shareholders’ Agreement provides as follows: ‘the SHAREHOLDERS will be entitled to remove any of their representative appointees to the BOARD and to replace any such DIRECTOR who is removed or who ceases for any other reason to be a DIRECTOR. . . ’. 3 the company. The Association subsequently resolved that they be removed as directors of the company. Both Messrs Sithole and Nitwane thereafter approached the high court seeking declaratory relief, under case numbers 714/2021 and 715/2021 respectively. The applications were heard together and succeeded before Roelofse AJ in the Mpumalanga Division of the High Court, Mbombela (the high court), which granted the following order: ‘1. The removal of Mr. Jabulani Lighter Sithole (“Mr. Sithole) as Director and Chairperson of Mawecro (Pty) Ltd (“the company”) is hereby set aside; 2. The removal of Mr Isaac Myomo Nitwane (“Mr Nitwane”) as Director of the company is hereby set aside; 3. The company is ordered to pay the directors’ fees of Mr Sithole and Mr Nitwane from March 2020 to date of this judgment, such payment to be effected to Mr. Sithole and Mr. Nitwane within 30 days of this order; 4. All meetings of the reconstituted Board from March 2020 to date of this judgment are declared unlawful; 5. The company is ordered to pay the applicants’ costs.’ The appeal by the company against that order is with leave of the high court. [3] The application to the high court arose against the following backdrop: Infighting in the Association led to an urgent application by the chieftainess, Ms Mkhatshwa and the Mawewe Tribal Authority and followed by the grant of an Anton Piller Order, dated 4 February 2020, in the following terms: ‘Interim Interdict 28. Pending the further proceedings to be instituted by the applicants not more than 180 days from the execution of this order, which further proceedings are foreshadowed in this application, it is ordered that: 28.1. the current committee of the Mawewe Communal Association is dissolved with immediate effect; 28.2 no person other than the persons appointed in prayer 28.3 below, may conduct the affairs of the Mawewe Communal Property Association, or hold themselves out as being authorised to conduct the affairs of the Mawewe Communal Property Association. 28.3. that the following persons are appointed to take control of all affairs of the Mawewe Communal Property Association, and to report back to this Court on the affairs of the Mawewe Communal Property association within 180 days of the date of the execution of this order: 28.3.1. Mr Johannes Lodewyk Bouwer 28.3.2. Mr Johannes Petrus Koekemoer 4 28.3.3. Mr Etienne Jacques Naude. . .’ [4] On 10 March 2020, the high court confirmed the Anton Piller order and granted the following additional relief: ‘3. Pending the further proceedings to be instituted by the applicants not more than 120 days from the execution of the order. . .it is ordered that: 3.1. the current committee of the Mawewe Communal Property Association (eighth respondent) has dissolved on 4 February 2020; 3.2. no person other than the persons appointed in prayer 3.3 below, may conduct the affairs of the Mawewe Communal Property Association, or hold themselves out as being authorised to conduct the affairs of the Mawewe Communal Property Association; 3.3. that the following persons are appointed to take control of all the affairs of the Mawewe Communal Property Association and to report back to this court. . .within 90 days of the date of execution of this order; 3.3.1 Mr Johannes Lodewyk Bouwer [the fifth respondent]; 3.3.2 Mr Johannes Petrus Koekemoer [the fourth respondent]; 3.3.3 Mr Etienne Jacques Naudè [the third respondent] who shall at all relevant times and in conjunction with and in agreement with Mr Justus van Wyk.’ [5] On 13 March 2020, three days after the grant of the order, the Association’s management, represented by Messrs Naudè, Bouwer and Koekemoer, who had been appointed in terms of the court order dated 10 March 2020, resolved as follows: ‘1. That [first respondent] and [second respondent] be removed as Directors of Mawecro Farming (Pty) Ltd. with immediate effect. 2. That Etienne Jacques Naudè, Johannes Lodewyk Bouwer and Justus van Wyk be appointed as Directors to represent Mawewe Communal Property Association as Directors to represent Mawecro Farming (Pty) Ltd.’ [6] The first and second respondents, aggrieved by their removal, approached the high court seeking the following declaratory relief: ‘1. Setting aside the suspension of the Applicant as director and Chairperson of Mawecro (Pty) Ltd; 2. Re-appointing the Applicant director and chairperson of the Fifth Respondent with immediate effect; 3. The Fifth Respondent to pay all director fees due to the Applicant for the period dating from March 2020, to date within 30 days; 5 4. The meetings that were held before, during and after the removal of the Applicant were not properly constituted and are declared unlawful. . .’ [7] The respondents did not seek to review or the setting aside of the decision to remove them, nor did they specify precisely which of the decisions they sought to impugn. In Oudekraal Estates (Pty) Ltd v City of Cape Town,3 this Court confirmed that a decision stands until reviewed and set aside. Without reviewing and setting aside the impugned decision(s), in particular that of the Association removing them as directors, for which no proper case had been made out, the application had to fail. On appeal, it was suggested, on the respondents’ behalf, that it was unclear to the respondents when the application had been launched, which decisions were susceptible to review, including the dates when those decisions had been taken, and by whom. Rule 53 of the Uniform Rules of Court caters for precisely such a situation; however instead of employing rule 53, the respondents confined themselves to declaratory relief. [8] The high court approached the matter on the basis that s 71 of the Companies Act 71 of 2008 provides for the removal of directors and since that process was not followed, the respondents were entitled to declaratory relief. However, that misconceived the enquiry. The respondents served as directors of the company – as the representatives of the Association. The resolution of the Association had not been challenged. The adoption of the resolution had the effect that the respondents could no longer serve as directors of the company. It follows that the relief granted by the high court cannot stand and falls to be set aside on appeal. In the result: 1 The appeal is upheld with costs such costs to include those of two counsel, where so employed. 2 The order of the court below is set aside and replaced with: ‘The application is dismissed with costs, including those of two counsel where so employed.’ 3 Oudekraal Estates (Pty) Ltd v City of Cape Town and Others [2004] ZASCA 48; [2004] 3 All SA 1 (SCA); 2004 (6) SA 222 (SCA) para 26. 6 _______________________________ E BAARTMAN ACTING JUDGE OF APPEAL 7 Appearances For the appellant: J de Beer SC with A Van Dyk Instructed by: WDT Attorneys, Mbombela Honey Attorneys, Bloemfontein. For the first and second respondents: S Van Rensburg SC Instructed by: S Tsotetsi Attorneys, Middleburg Mavuya Attorneys Inc, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 10 June 2024 Status: Immediate The following summary is for the benefit of the media in the reporting of this case; it does not form part of the judgments of the Supreme Court of Appeal Mawerco (Pty) Ltd v Sithole and Others (322/2023) [2024] ZASCA 91 (10 June 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal by a company against the order of the high court setting aside the removal of two of the company’s directors by its shareholder. Acting in terms of the Shareholders’ Agreement, the Association, a 51% shareholder in the company (the Association), appointed Mr Sithole (the first respondent) and Mr Nitwane (the second respondent) as directors of the company. The Association subsequently resolved that they be removed as directors of the company. Both Messrs Sithole and Nitwane thereafter approached the high court seeking declaratory relief, under case numbers 714/2021 and 715/2021 respectively. The applications were heard together and succeeded in the high court which set aside the removal of the 2 directors and granted further ancillary relief. The application to the high court arose against the following backdrop: Infighting in the Association had led to an urgent application by Ms Mkhatshwa and the Mawewe 2 Tribal Authority and the grant of an Anton Piller Order, dated 4 February 2020. In terms of that order, the Association’s committee at the time was dissolved with immediate effect and persons were appointed to deal exclusively with the Association’s affairs. On 10 March 2020, the high court confirmed the Anton Piller order. It further confirmed that the Association’s committee at the time had dissolved on 4 February 2020 and appointed persons to deal exclusively with the Association’s affairs. On 13 March 2020, three days after the order, the Association’s management, represented by the court appointed persons resolved to remove 2 of the Association’s directors. The latter aggrieved by their removal, approached the high court seeking among others the following declaratory relief: ‘1. Setting aside the suspension of the Applicant as director and Chairperson of Mawerco (Pty) Ltd; 2. Re-appointing the Applicant director and chairperson of the Fifth Respondent with immediate effect;. . .’ The former directors did not seek to review and the setting aside of the decision to remove them, nor did they specify precisely which of the decisions they sought to impugn. Nevertheless, the high court granted the relief sought. On appeal, it was submitted, on the directors’ behalf, that it was unclear to them when the application had been launched which decisions were susceptible to review, including the dates when those decisions had been taken and by whom. However, the Supreme Court of Appeal pointed out that Rule 53 of the Uniform Rules of Court caters for precisely such a situation; but instead of employing rule 53 to obtain the outstanding information, the directors confined themselves to declaratory relief. The Court set aside the high court’s order as without reviewing and setting aside the impugned decision(s), in particular that of the Association removing the former directors the application had to fail. ends

4269

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 420/2023 In the matter between: POLO SUSAN PITSO NO FIRST APPELLANT POLO SUSAN PITSO SECOND APPELLANT LIPALESA PITSO THIRD APPELLANT TLOTLISO PITSO FOURTH APPELLANT MASTER OF THE HIGH COURT, PRETORIA FIFTH APPELLANT SELEKA ATTORNEYS SIXTH APPELLANT and CHABELI MOLATOLI ATTORNEYS INCORPORATED RESPONDENT Neutral citation: Pitso and Others v Chabeli Molatoli Attorneys Incorporated (Case no 420/2023) [2024] ZASCA 94 (12 June 2024) Coram: SCHIPPERS, MOKGOHLOA and MABINDLA- BOQWANA JJA and DAWOOD and SEEGOBIN AJJA Heard: This appeal was, by consent of the parties, disposed of without an oral hearing in terms of s 19(a) of the Superior Courts Act 10 of 2013. Delivered: The judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the 2 Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 12 June 2024 at 11h00. Summary: Agency and representation – at common law a mandate is in general terminable at the will of the principal – requirements of final interdict not met. 3 __ ___ ___ ORDER __ ___ On appeal from: Gauteng Division of the High Court, Pretoria (Ndlokovane 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 substituted with the following: ‘The application is dismissed with costs.’ 3 The cross-appeal is dismissed with costs. __ ___ ___ JUDGMENT __ ___ Mokgohloa JA (Schippers and Mabindla-Boqwana JJA and Dawood and Seegobin AJJA concurring): [1] The central issue in this appeal is whether the first appellant, Mrs Polo Susan Pitso (Mrs Pitso), the widow and executrix in the estate of the late Mr Likano John Pitso (the deceased), was entitled to terminate the mandate of the respondent, a firm of attorneys, Chabeli Molatoli Attorneys Incorporated, who was responsible for the administration of the deceased’s estate. The appeal is with leave of the Gauteng Division of the High Court, Pretoria (the high court). [2] The high court also granted the respondent leave to cross-appeal to this Court, despite making no adverse order against it. This error is compounded by the respondent’s notice of appeal, in terms of which it seeks an order, inter alia, that the cross-appeal be upheld and that the ‘termination of the applicant’s 4 mandate by the second respondent is declared unlawful’. That is the order on appeal before us. It follows that the cross-appeal is fatally defective. [3] Prior to the hearing of this appeal, the parties requested that it be disposed of without hearing oral argument in terms of s 19(a) of the Superior Courts Act 10 of 2013. This Court granted that request. [4] The issue must be considered against the following factual background. Mr Chabedi Molatoli (Mr Molatoli) is an attorney and the director of the respondent. The Molatoli and the deceased’s family became close friends when the latter moved into the same residential estate where Mr Molatoli lives. Mr Molatoli gave legal advice to the deceased and assisted him in matters which involved the deceased and members of his family. [5] The deceased died intestate on 15 November 2021. Mr Molatoli assisted Mrs Pitso to report the estate to the fifth appellant, the Master of the High Court, Pretoria (the Master). On 18 November 2021, the respondent and Mrs Pitso concluded a written mandate and fee agreement (the agreement), in terms of which Mrs Pitso agreed to appoint the respondent as her agent should she be appointed as executrix of the deceased’s estate (the estate). In terms of the agreement the respondent would be responsible for the administration of the estate and the drafting of the liquidation and distribution account, and would be entitled to charge a fee of 3.5% of the estate. The agreement reads: ‘Should this mandate be terminated without any valid reason by the executrix which warrants such termination, [the] full agent fee shall be payable to Chabedi Molatoli Attorneys Inc. within seven (7) working days. Any legal costs shall be payable on [an] attorney and client scale by [the] defaulting party.’ On 30 December 2021, the Master issued a letter of executorship appointing Mrs Pitso as the executrix in the estate of the deceased. 5 [6] On 1 April 2022, the respondent sent an interim invoice for services rendered to Mrs Pitso. She replied in an email sent on 3 April 2022 in which she stated that the respondent’s first interim invoice was for more than 60% of the total funds available to finance the debts against the estate. She requested the respondent to provide a schedule of ‘the amounts to be claimed pertaining to the entire process until closure of the estate account’. She also stated that, when she signed the agreement she was not in her right state of mind, and would not have done so had she known that the respondent would claim payment of the amounts stated in the invoice. [7] The respondent claimed to have replied to Mrs Pitso’s email of 3 April 2022 through a letter explaining how the agreement had been entered into. However, that letter was not annexed to the founding affidavit. Nothing however turns on this. [8] On 28 April 2022, Mrs Pitso signed a document titled ‘TERMINATION OF MANDATE’, in terms of which she terminated the respondent’s mandate and appointed Seleka Attorneys Incorporated (Seleka Attorneys), the sixth appellant, to administer the estate. On the same day, Seleka Attorneys sent the termination of mandate to the respondent. They informed the respondent that they would approach the Master to request that they be substituted in the place of the respondent. They requested the respondent to furnish them with its final account and enquired as to when Mrs Pitso’s file could be collected. [9] On 10 May 2022, the respondent launched an urgent application in the high court seeking an order: (a) declaring the termination of its mandate invalid; 6 (b) that Mrs Pitso ‘be interdicted from terminating the [respondent’s] mandate, unless with the leave of the court on reasonable grounds’; (c) that the Master ‘be ordered not to recognize the purported termination and appointment of Seleka Attorneys as agents of [Mrs Pitso]’; and (c) that Mrs Pitso be removed as executrix of the estate and she be ordered to return the letters of executorship to the Master. [10] The application came before Makhoba J, who struck it from the roll for lack of urgency. It subsequently came before Ndlokovane AJ. Despite referring to this Court’s decision in Liberty Life Group Ltd and Others v Mall Space Management CC t/a Mall Space Management (Liberty Group),1 in which it was held that it is against public policy to force the principal to retain an agent against her will, the court made an order declaring the termination of the respondent’s mandate unlawful. The court ordered the first to the fourth appellants to pay the respondent’s costs. [11] The application was misconceived. An applicant for a final interdict must show a clear right; an injury actually committed or reasonably apprehended; and the absence of similar protection by any other remedy.2 The respondent simply failed to make out a case for the relief sought. It did not establish the requisites for the grant of a final interdict, more specifically a clear right and the absence of an adequate alternative remedy. A final interdict is extraordinary robust relief. It is therefore important that the applicant establish all the requisites for such an interdict. 1 Liberty Life Group Ltd and Others v Mall Space Management CC t/a Mall Space Management [2019] ZASCA 142; 2020 (1) SA 30 (SCA). 2 Setlogelo v Setlogelo 1914 AD 221 at 227; Olympic Passenger Services (Pty) Ltd v Ramlagan 1957 (2) 382 (D). 7 [12] It is trite that a principal is entitled to revoke a mandate of agency in these circumstances. As this Court stated in Liberty Group:3 ‘It would be against public policy, to coerce a principal into retaining an individual as his agent, when he no longer wishes to retain him as such. If the termination of the mandate has prejudiced the agent his remedy lies in a claim for damages and not in an order compelling the principal to retain him as his agent in the future.’ [13] The respondent is not without a remedy. If Mrs Pitso’s termination of the mandate prejudiced the respondent, its remedy lies in a claim for damages. After all, its claim is nothing more than one for payment of its fees. One can just imagine the chaos that would result if every attorney whose mandate is terminated were to approach court for an order that his or her services be retained. [14] The high court did not make an order for the removal of Mrs Pitso as an executrix of the estate. In any event, the allegations in the founding affidavit that Mrs Pitso ‘acted in her own interest and not in the interests of the creditors of the estate’ is not supported by any facts. No more need be said about this relief. [15] For the above reasons, I make the following order: 1 The appeal is upheld with costs. 2 The order of the high court is set aside and substituted with the following: ‘The application is dismissed with costs.’ 3 The cross-appeal is dismissed with costs. _______________________ F E MOKGOHLOA JUDGE OF APPEAL 3 Op cit fn 1 para 36. 8 Written submissions: For the appellants: RM Mahlatsi with O Tommy Instructed by: Ketwa Incorporated, Pretoria Wesi Attorneys, Bloemfontein For the respondent: C Molatoli Instructed by: Nwandzule Attorneys Inc Cooper 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: 12 June 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 Pitso and Others v Chabeli Molatoli Attorneys Incorporated (Case no 420/2023) [2024] ZASCA 94 (12 June 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal with costs, further setting aside and substituting the order of the Gauteng Division of the High Court, Pretoria (the high court). Lastly, the SCA dismissed the cross-appeal in the matter. Mr Chabedi Molatoli (Mr Molatoli) is an attorney and the director of the respondent. The Molatoli and the deceased’s family became close friends when the latter moved into the same residential estate where Mr Molatoli lives. Mr Molatoli gave legal advice to the deceased and assisted him in matters which involved the deceased and members of his family. The deceased died intestate on 15 November 2021. Mr Molatoli assisted Mrs Pitso to report the estate to the fifth respondent, the Master of the High Court, Pretoria (the Master). On 18 November 2021, the respondent and Mrs Pitso concluded a written mandate and fee agreement (the agreement), in terms of which Mrs Pitso agreed to appoint the respondent as her agent should she be appointed as executrix of the deceased’s estate (the estate). In terms of the agreement the respondent would be responsible for the administration of the estate and the drafting of the liquidation and distribution account, and would be entitled to charge a fee of 3.5% of the estate. On 30 December 2021, the Master issued a letter of executorship appointing Mrs Pitso as the executrix in the estate of the deceased. On 1 April 2022, the respondent sent an interim invoice for services rendered to Mrs Pitso. She replied in an email sent on 3 April 2022 in which she stated that the respondent’s first interim invoice was for more than 60% of the total funds available to finance the debts against the estate. She requested the respondent to provide a schedule of ‘the amounts to be claimed pertaining to the entire process until closure of the estate account’. The respondent claimed to have replied to Mrs Pitso’s email of 3 April 2022 through a letter explaining how the agreement had been entered into, however, that letter was not annexed to the founding affidavit. On 28 April 2022, Mrs Pitso signed a document titled ‘TERMINATION OF MANDATE’, in terms of which she terminated the respondent’s mandate and appointed Seleka Attorneys Incorporated (Seleka Attorneys), the sixth appellant, to administer the estate. On the same day, Seleka Attorneys sent the termination of mandate to the respondent. They informed the respondent that they would approach the Master to request that they be substituted in the place of the respondent. They requested the 2 respondent to furnish them with its final account and enquired as to when Mrs Pitso’s file could be collected. On 10 May 2022, the respondent launched an urgent application in the high court seeking an order: (a) declaring the termination of its mandate invalid; (b) that Mrs Pitso ‘be interdicted from terminating the [respondent’s] mandate, unless with the leave of the court on reasonable grounds’; (c) that the Master ‘be ordered not to recognize the purported termination and appointment of Seleka Attorneys as agents of [Mrs Pitso]’; and (c) that Mrs Pitso be removed as executrix of the estate and she be ordered to return the letters of executorship to the Master. The application was initially struck from the high court’s roll for lack of urgency and subsequently heard by Ndlokovane AJ, who made an order declaring the termination of the respondent’s mandate unlawful. The issue before the SCA was whether Mrs Pitso was entitled to terminate the mandate of the Chabeli Molatoli Attorneys Incorporated, who was responsible for the administration of the deceased’s estate. The SCA reasoned that the application brought by the respondent in the high court was misconceived as, an applicant for a final interdict must show a clear right; an injury actually committed or reasonably apprehended; and the absence of similar protection by any other remedy. The SCA was of the view that the respondent simply failed to make out a case for the relief sought and did not establish the requisites for the granting of a final interdict, more specifically a clear right and the absence of an adequate alternative remedy. Lastly, the SCA held that the respondent is not without a remedy as, if Mrs Pitso’s termination of the mandate prejudiced the respondent, its remedy lay in a claim for damages. In the result, the SCA made an order upholding the appeal with costs, setting aside and substituting the high court’s order and dismissing the cross-appeal. --------oOo--------

4203

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 240/2023 In the matter between: ORGANI MARK (PTY) LTD APPELLANT and GOOLAM NABI EBRAHIM AKOODIE FIRST RESPONDENT JAMEEL GOOLAM AKOODIE SECOND RESPONDENT Neutral citation: Organi Mark (Pty) Ltd v Goolam Nabi Ebrahim Akoodie and Another (240/2023) [2024] ZASCA 44 (8 April 2024) Coram: PONNAN, SCHIPPERS and MATOJANE JJA and COPPIN and MBHELE AJJA Heard: 29 February 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 08 April 2024. Summary: Whether a South African high court has jurisdiction to consider and determine a claim under s 361 of the Swaziland Companies Act 8 of 2009 against two directors resident within its area of jurisdiction arising from their directorship of an eSwatini company liquidated in that country. 2 ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Van der Schyff J sitting as a court of first instance): The appeal is dismissed with costs. JUDGMENT Coppin AJA (Ponnan, Schippers and Matojane JJA and Mbhele AJA concurring): [1] The appellant, Organi Mark (Pty) Ltd, is a company incorporated in accordance with the laws of South Africa with its registered address in Stellenbosch. In 2020, it instituted an action in the Gauteng Division of the High Court, Pretoria (the high court) for an order declaring that the respondents were personally liable, in terms of s 361 of the Swaziland Companies Act 8 of 2009 (the Swaziland Companies Act), for the debts allegedly owed by an eSwatini company, Spintex Swaziland (Pty) Ltd (Spintex), and related relief. Spintex has since been liquidated in eSwatini. The respondents who were directors of Spintex, are resident within the area of jurisdiction of the high court. [2] The appellant alleges that the respondents permitted Spintex to trade ‘recklessly’ within the meaning of that expression as contemplated in s 361 of the Swaziland Companies Act. On that basis, the appellant sought to hold the respondents liable in terms of the provisions of that section for ‘the payment of all or any of the debts of Spintex, including [the] debts [owed] to [Organi Mark (Pty) Ltd]’. [3] The appellant accordingly sought an order in the following terms: ‘1. Declaring that the defendants are liable without limitation for the payment of the debts of Spintex. 2. Declaring that the defendants are liable to make payment to the plaintiff in the sum of R7 167 880.97 together with interest, calculated from 1 April 2019 to date of payment at the prime rate charged by the First National Bank plus 3.0%. 3. Granting judgment against the defendants jointly and severally, the one paying the other 3 to be absolved for payment of the sum of R7 167 880,97 together with interest, calculated from 1 April 2019 to date of payment at the prime rate charged by the First National Bank plus 3.5%. 4. Ordering the defendants to pay the plaintiff’s costs of suit jointly and severally the one paying the other to be absolved.’ [4] The respondents raised the following special plea: ‘1. The plaintiff seeks declaratory relief in terms of section 361 of the Eswatini Companies Act No. 8 of 2009 (“the Swaziland Act”), to the effect that the first and second defendant be held personally liable, without limitation, for the debts of a foreign company, Spintex Swaziland (Pty) Ltd, premised on the allegation that the defendants, as directors of Spintex, permitted it to trade recklessly within the meaning of section 361 of the Swaziland Act. 2. The plaintiff’s cause of action offends the principle that foreign statutes, such as the Swaziland Act, have no extra-territorial effect. In addition, the reference to “court” in section 361 of the Swaziland Act is a reference to the High Court of Swaziland and not the High Court of South Africa. 3. This Honourable Court accordingly lacks jurisdiction to grant the declaratory and consequential relief sought in terms of the plaintiff’s particulars of claim.’ [5] The matter thereafter proceeded by way of the following stated case before the high court: ‘1. The plaintiff has its registered office situated at 14 Sultan Avenue, Die Boord, Stellenbosch, Western Cape, South Africa. 2. Spintex (Swaziland) (Pty) Ltd (“Spintex”) is a company incorporated in eSwatini according to the laws of that country. 3. At all material times Spintex conducted its business in eSwatini, and not in South Africa. 4. Spintex was placed under final winding up by the high court of eSwatini on 8 May 2019. 5. At all times material, the defendants: 5.1. Were directors of Spintex and registered as such in eSwatini; 5.2. Were resident in Johannesburg, South Africa and are subject to the jurisdiction of this Court. 5.3. The eSwatini Companies Act of 2009, which forms part of the agreed bundle of documents is an Act duly promulgated in eSwatini and has at all material times been in force in eSwatini. 6. The eSwatini Constitution of 2005, which forms part of the agreed bundle of documents, is an Act duly promulgated in eSwatini and has at all material times been in force in eSwatini. 4 7. Section 252 (1) of the eSwatini Constitution reads as follows: “Subject to the provisions of this Constitution or any other written law, the principles and rules that formed, immediately before the 6th September, 1968 (Independence Day), the principles and rules of the Roman Dutch Common Law as applicable to Swaziland since 22 February 1907 are confirmed and shall be applied and enforced as the common law of Swaziland except where and to the extent that those principles or rules are inconsistent with this Constitution or a statute.” 8. The plaintiff has sued the defendants in the Gauteng High Court. It seeks an order that the defendants are liable without limitation for the debts of Spintex pursuant to the provisions of section 361 of the eSwatini Companies Act which reads: “If it appears, whether it be in a winding-up, judicial management or otherwise, that any business of the company was or is being carried on recklessly or with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose, the court may on the application of the Master, the liquidator, the judicial manager, any creditor or member of the company, declare that any person who knowingly was a party to the carrying on of the business in such manner, shall be personally responsible, without any limitation of liability, for all or any debts or other liabilities of the company as the court may direct.” 9. The defendants have raised a special plea in bar asserting: 9.1 “The plaintiff’s cause of action offends the principle that foreign statutes, such as the Swaziland Act have no extra-territorial effect. In addition, the reference to “court” in section 361 of the Swaziland Act is a reference to the High Court of Swaziland and not the High Court of South Africa;” and 9.2 “This Honourable Court accordingly lacks jurisdiction to grant the declaratory and consequential relief sought in terms of the plaintiff’s particulars of claim.” 10. In order to determine the merits of the claim, this Court would be obliged to apply the law of eSwatini, including its Companies Act to the dispute between the parties. 11. In particular, in order to find in favour of the plaintiff, this Court would be obliged: 11.1 To apply the provisions of the eSwatini Companies Act to the dispute; 11.2 To hold that the defendants are liable without limitation for the debts of Spintex pursuant to the provisions of section 361 of the eSwatini Companies Act. 12. Section 424 of the old Companies Act in South Africa, which is still in force by virtue of Item 9(1) of Schedule 5 of Act 71 of 2008, provides the same statutory relief as section 361 of the eSwatini Companies Act, however section 424 of the old Companies Act in South Africa does not apply on the facts of this matter. 13. Subject to the plaintiff establishing a basis upon which the jurisdiction of the eSwatini court could be founded the law of eSwatini entitled the Plaintiff to issue summons out of the courts of eSwatini and to sue the defendants by way of a edictal citation, alternatively, the 5 law of eSwatini entitled the Plaintiff to issue summons out of the courts of eSwatini and, to establish jurisdiction over the defendants in one or more of the recognised methods at common law, in the event that a basis existed upon which the jurisdiction of the eSwatini court could be founded.’ The issues for determination ‘1. Does this court have jurisdiction to determine the dispute between the parties and apply eSwatini law in so doing? 2. Would the exercise of jurisdiction to determine the dispute offend “the principle that foreign statutes, such as the Swaziland act have no extra-territorial effect”? 3. Is “the reference to ““court”” in section 361 of the Swaziland Act . . . a reference to the high court of Swaziland and not the high court of South Africa”? 4. If the reference to “court” in section 361 of the Swaziland act is a reference to the high court of Swaziland and not the high court of South Africa, does this have as a consequence that this Court does not have jurisdiction to determine the dispute between the parties? 5. Should the defendants’ special plea succeed or fail? ….’ [6] The high court upheld the special plea with costs. This is an appeal against that order with the leave of the high court. [7] In terms of s 21(1)1 of the Superior Courts Act 10 of 2013, the high court has jurisdiction over all persons residing in and all causes arising within its area of jurisdiction. Our courts have for more than a century interpreted the predecessors of the current section to mean ‘no more than that the jurisdiction of the high courts is to be found in the common law’.2 [8] As Nienaber JA pointed out in Ewing Macdonald & Co Ltd v M & M Products Company and Others:3 ‘This section, the latest in a line of legislative enactments broadly restating the common law, differentiates between “persons” and “causes arising”. The expression “causes arising” has been 1 The section provides that a High Court has jurisdiction ‘over all persons residing or being in and in relation to all causes arising …within its area of jurisdiction in all other matters of which it may according to law take cognizance’ and that it has certain powers in respect of appeals, reviews and the making of declaratory orders. The previous section, s 19(1)(a) of the Supreme Court Act 59 of 1959 provided virtually the same. 2 Gallo Africa Ltd and others v Sting Music (Pty) Ltd and Others [2010] ZASCA 96; 2010 (6) SA 329 (SCA); [2011] 1 All SA 449 (SCA) para 10. 3 Ewing McDonald & Co Ltd v M&M Products Company and Others [1990] ZASCA 115; [1991] 1 All SA 319(A); 1991 (1) SA 252 (AD) (Ewing McDonald) at 257E-H. 6 interpreted in the Bisonboard judgement. . . as signifying not “causes arising” but “legal proceedings duly arising”, that is to say, proceedings in which the Court has jurisdiction under the common law. . .’ [9] As pointed out by Trollip JA in Estate Agents Board v Lek (Estate Agents Board),4 whether the high court has jurisdiction in these proceedings depends on: (a) the nature of the proceedings; (b) the nature of the relief claimed therein; or (c) in some cases, both (a) and (b). The consideration in (b) is based on the principle of effectiveness, which is the power of the court not only to grant the relief claimed, ‘but also to effectively enforce it directly within its area of jurisdiction’, i.e., without any resort to other procedural provisions that rendered the processes and judgments of a division effective beyond its area of jurisdiction. [10] The argument advanced on behalf of the appellant is that because the respondents reside within the high court’s area of jurisdiction, that is sufficient for it to give an effective judgement against them. That, however, is to emphasize effectiveness at the expense of territoriality. Although effectiveness may be a rationale for jurisdiction, it is not necessarily the criterion for its existence, and it does not by itself confer jurisdiction on a court.5 [11] Having pointed out that effectiveness may be a factor to be taken into account, in conjunction with other factors, in considering whether some reason for jurisdiction exists, Trollip JA in Estate Agents Board, stated:6 ‘It follows that, merely because under the SC Act of 1959 the notice of motion issued out of the court a quo in the present proceedings was effectively served on the Board in Johannesburg and any judgment or order given by it can be effectively executed (if it is executable) against it, it does not mean that the court a quo had jurisdiction to hear and determine these proceedings. Some ratio jurisdictionis according to the common law had also to be present before it could be held that the “cause” was one “arising” within the area of jurisdiction of the court a quo in terms of section 19 (1) of the SC Act of 1959.’ [12] Counsel for the appellant conceded that residence on its own did not determine jurisdiction in this matter. But no ratio jurisdictionis aside from residence was relied upon. The subject matter over which the appellant asks the high court to assume jurisdiction concerns the alleged reckless or fraudulent conduct by respondents in a foreign country, 4 Estate Agents Board v Lek 1979 (3) SA 1048 (AD) at 1063F-H. 5 Ewing McDonald at 259H-260D. 6 Ibid at 1063D-E. 7 in relation to a foreign company that was wound up by a foreign court in that country. There is nothing that links the high court to the statutory claim that the appellant seeks to enforce. Moreover, s 361 is a provision of an eSwatini statute that arises upon the insolvency of a company in that country. The statute has no extraterritorial effect.7 The reference to ‘the court’ in s 361 can only be a reference to the courts in eSwatini and not South Africa. [13] It follows that the appeal must fail. In the result, it is dismissed with costs. P COPPIN ACTING JUDGE OF APPEAL 7 Cooperativa Muratori Cementisi - CMC Di Ravenna and Others v Companies and Intellectual Property Commission [2020] ZASCA 151; 2021 (3) SA 393 (SCA) para 31. 8 Appearances For the appellant: J P Van Der Berg SC Instructed by: VZLR Inc. Attorneys, Pretoria Honey Attorneys Inc, Bloemfontein For the respondents: J Daniels SC with T Govender Instructed by: J V Rensburg Kinsella Inc, Pretoria Noordmans Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 8 April 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 Organi Mark (Pty) Ltd v Goolam Nabi Ebrahim Akoodie and Another (240/2023) [2024] ZASCA 44 (8 April 2024) Today, the Supreme Court of Appeal, per Coppin AJA (Ponnan, Schippers, and Matojane JJA and Mbhele concurring), handed down a judgment dismissing an appeal by a South African company against the dismissal by the Gauteng Division of the High Court, Pretoria (the high court) of an application in which it sought to hold former directors of an eSwatini company (in liquidation in eSwatini) personally liable for the debts of that company under eSwatini’s company law. Organi Mark (Pty) Ltd (Organi Mark), a South African company, brought an application in the high court in which it sought to hold two former directors of Spintex Swaziland (Pty) Ltd (Spintex), a liquidated eSwatini company, personally liable for the debts of that company in terms of s 361 of the Swaziland Companies Act 8 of 2009 (the Swaziland Companies Act). Organi Mark alleged that these directors allowed the company to trade recklessly. The directors, who at the material time were residents in the high court’s area of jurisdiction, raised a special plea that the court lacked jurisdiction to apply and enforce the Swaziland Companies Act. The high court upheld the special plea, and Organi Mark appealed to the SCA. The SCA found that for a court to assume jurisdiction, there must be a valid ‘ratio jurisdictionis’ or a jurisdictional basis under common law principles. The mere residence of the directors in South Africa was not a sufficient jurisdictional basis to apply eSwatini’s company law statute. Secondly, the subject matter related to the alleged mismanagement of an eSwatini company, whose liquidation was being overseen by eSwatini’s courts. The SCA found that in so far as s 361 of the eSwatini Companies Act referred to a ‘court’, it only referred to the courts of eSwatini. Section 361 is part of eSwatini’s domestic company law and has no extraterritorial effect. As a result, the SCA ruled that the South African court 2 lacked jurisdiction in respect of Organi Mark’s claim, which was based on the Swaziland Companies Act. Accordingly, Organi Mark’s appeal was dismissed with costs. ~~~~ends~~~~

4261

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 821/2022 In the matter between: AMINA IRANKUNDA FIRST APPELLANT ARAVA NIYONKURU SECOND APPELLANT and DIRECTOR OF ASYLUM SEEKER MANAGEMENT: DEPARTMENT OF HOME AFFAIRS FIRST RESPONDENT CAPE TOWN REFUGEE RECEPTION OFFICE MANAGER SECOND RESPONDENT MINISTER OF HOME AFFAIRS THIRD RESPONDENT DIRECTOR-GENERAL OF THE DEPARTMENT OF HOME AFFAIRS FOURTH RESPONDENT CHAIRPERSON OF THE STANDING COMMITTEE FOR REFUGEE AFFAIRS FIFTH RESPONDENT SCALABRINI CENTRE OF CAPE TOWN AMICUS CURIAE 2 Neutral citation: Irankunda and Another v Director of Asylum Seeker Management: Department of Home Affairs and Others (with Scalabrini Centre of Cape Town intervening as Amicus Curiae) (821/2022) [2024] ZASCA 87 (5 June 2024) Coram: ZONDI, MAKGOKA and MOLEFE JJA, and KATHREE-SETILOANE and UNTERHALTER AJJA Heard: 7 September 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 time and date for hand-down is deemed to be 11h00 on the 5th day of June 2024. Summary: Immigration – Refugee Act 130 of 1998 – whether asylum seeker entitled to submit subsequent applications after initial application has been declined. The 1951 United Nations Relating to the Status of Refugees Convention – The 1969 Organization of African Unity (OAU) Convention Governing the Specific Aspects of Refugee Problems in Africa. Sur place refuge claims – nature of – basis for such claims – principle of non-refoulement. 3 ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Slingers J, sitting as a court of first instance): 1 The appeal is upheld with costs. 2 Paragraphs (iv) and (v) of the order of the high court are set aside and replaced with the following: ‘(iv) The first and second respondents are directed to accept the applicants’ sur-place refugee claims applications, within five working days of the granting of this order, and to determine such applications within 21 working days thereafter. (v) The first and second respondents are ordered to pay the costs of the application, jointly and severally.’ JUDGMENT Makgoka JA (Zondi and Molefe JJA, and Kathree-Setiloane and Unterhalter AJJA concurring): [1] This case implicates two interrelated concepts of international law. The first is the customary international law principle of non-refoulement, in terms of which a person fleeing persecution should not be made to return to the country inflicting it. The second is refugee status sur place, which entails that a person enters the country of refuge on one basis, and thereafter, supervening events in their country of origin render them refugees. [2] The appellants appeal against the judgment and order of the Western Cape Division of the High Court, Cape Town (the high court). That court dismissed the first and second appellants’ application to compel the first and second 4 respondents to accept their asylum seeker re-applications. The appeal is with the leave of the high court. The parties [3] The appellants are Burundian nationals. They seek to submit further asylum applications in South Africa after their initial applications were unsuccessful. The first respondent is the Director of Asylum Seeker Management in the Department of Home Affairs (the Director). The Director had determined that the appellants may not again apply for asylum in South Africa without returning to their country of origin. [4] The second respondent is the Cape Town Refugee Reception Office Manager, who manages the Cape Town Refugee Reception Office (the CTRRO). The second respondent oversees the work of the Refugee Status Determination Officers (RSDOs), based at the CTRRO. The second respondent is, in practice, the manager responsible for issuing and renewing asylum seeker permits at the CTRRO. The third respondent is the Minister of Home Affairs (the Minister), a Member of the National Executive responsible for the administration of the Refugees Act.1 [5] The fourth respondent is the Director General of the Department. He is responsible for the implementation and administration of the Refugees Act and the Refugee Regulations.2 The fifth respondent is the Chairperson of the Standing Committee for Refugee Affairs (the SCRA). He is responsible for, among other things, reviewing decisions by RSDOs. The SCRA is the body which made the final decisions on the previous applications made by the appellants for asylum in South Africa. No direct relief was sought against the SCRA, and it is cited to the 1 Refugees Act 130 of 1998. 2 Published in Government Notice R366 in Government Gazette 21075 of 6 April 2000. 5 extent that it may have interest in this matter. It is convenient to refer to the first to fifth respondents, collectively as ‘the Department’. [6] Scalabrini Centre of Cape Town (Scalabrini) sought to intervene as amicus curiae. To establish its interest in the matter, Scalabrini asserted the following. It is a registered non-profit organisation with a strong track record in protecting migrant and refugee rights through its advocacy work and involvement in public interest litigation on refugee rights. It has been involved in litigation in this Court and the Constitutional Court.3 [7] The basis on which a party may be admitted as an amicus to a case is well settled. In Certain Amicus Curiae Applications4 the Constitutional Court laid down the following guidelines: (a) the role of an amicus is to draw the attention of the Court to relevant matters of law and fact to which attention would not otherwise be drawn; (b) an amicus has a special duty to the Court to provide cogent and helpful submissions that assist the Court; (c) an amicus must not repeat arguments already made but must raise new contentions; and (d) generally these new contentions must be raised on the data already before the Court. [8] In the present matter, the Presiding Judge was satisfied that Scalabrini’s intended submissions satisfied all of the above guidelines. He accordingly admitted it as amicus curiae in the case and allowed it to file heads of argument and to make oral submissions. Scalabrini’s late filing of its application to intervene was also condoned. 3 Scalabrini Centre of Cape Town and Others v Minister of Home Affairs and Others [2017] ZASCA 126; [2017] 4 All SA 686 (SCA); 2018 (4) SA 125 (SCA); Scalabrini Centre of Cape Town and Another v Minister of Home Affairs and Others [2023] ZACC 45; 2024 (4) BCLR 592 (CC). 4 In Re Certain Amicus Curiae Applications: Minister of Health and Others v Treatment Action Campaign and Others 2002 (5) SA 713 (CC) para 5. See also Children's Institute v Presiding Officer, Children's Court, Krugersdorp, and Others [2012] ZACC 25; 2013 (2) SA 620 (CC); 2013 (1) BCLR 1 (CC) para 26. 6 The issue for determination [9] The issue in the appeal is whether a person whose application for refuge has been declined is entitled to submit further applications, and if so entitled: (a) the circumstances under which such applications may be submitted; and (b) the factors to be taken into account when considering such applications. To answer these questions, I consider: (a) the relevant international instruments foundational to refugee law; (b) our domestic refugee legislation; and (c) some foreign law. I will consider the merits of the appeal within that framework. The applicable international and regional instruments [10] Refugees are guaranteed legal protection in South Africa under international treaties and domestic legislation. The 1951 United Nations Relating to the Status of Refugees Convention (the UN Convention) and its 1967 Refugee Protocol, as well as the 1969 Organization of African Unity (OAU) Convention Governing the Specific Aspects of Refugee Problems in Africa (the OAU Convention)5, are key treaties. South Africa has acceded to both treaties. [11] Article 1A(1) of the UN Convention read with Article 1A(2) of the Protocol and Article 1 of the OAU Convention define a refugee as: any person who is outside their country of origin and is unable or unwilling to return or avail themselves of its protection, owing to a well-founded fear of persecution for reasons of race, religion, nationality, membership in a social group, or political opinion. [12] Thus, the protection afforded in the UN Convention requires a person’s fear of persecution to be based on one of the five enumerated grounds, namely race, religion, nationality, membership in a particular social group and political 5 Organization of African Unity (OAU) Convention Governing the Specific Aspects of Refugee Problems in Africa, 10 September 1969, 1001 U.N.T.S 45. 7 opinion. On the other hand, the OAU Convention recognises that in addition to the UN Convention grounds, refugee status may arise due to other factors. Its definition specifically protects refugees experiencing armed conflict in war-torn countries. It provides: ‘The term ‘refugee” shall also apply to every person who, owing to external aggression, occupation, foreign domination, or events seriously disturbing public order in either part or the whole of his country of origin or nationality, is compelled to leave his place of habitual residence in order to seek refuge in another place outside his country of origin or nationality.’ The principle of non-refoulement [13] Both the UN Convention and the OAU Convention contain the well-known protection against refoulement. Article 33(1) of the UN Convention provides as follows: ‘No Contracting State shall expel or return (“refouler”) a refugee in any manner whatsoever to the frontiers of territories where his life or freedom would be threatened on account of his race, religion, nationality, membership of a particular social group or political opinion.’ Clause 3 of Article II of the OAU Convention provides: ‘No person shall be subjected by a Member State to measures such as rejection at the frontier, return or expulsion, which would compel him to return to or remain in a territory where his life, physical integrity or liberty would be threatened…’ [14] Article 33(1) of the UN Convention and Clause 3 of Article II of the OAU Convention find expression in s 2 of the Refugees Act, which reads as follows: ‘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 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 social group; or 8 (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.’ Sur place refugee claims [15] The concept of refugee sur place is expressly recognised by the United Nations High Commissioner for Refugees (UNHCR), the body responsible for overseeing the implementation of the UN Convention. In its Handbook on Procedure and Criteria for Determining Refugee Status,6 (the UNHCR Handbook) it explains the concept and gives guidelines for determining whether a person is a refugee sur place. It provides as follows: ‘A person who was not a refugee when he left his country, but who becomes a refugee at a later date, is called a refugee ‘sur place’. A person becomes a refugee “sur place” due to circumstances arising in his country of origin during his absence. Diplomats and other officials serving abroad, prisoners of war, students, migrant workers and others have applied for refugee status during their residence abroad and have been recognized as refugees. A person may become a refugee “sur place” as a result of his own actions, such as associating with refugees already recognized, or expressing his political views in his country of residence. Whether such actions are sufficient to justify a well-founded fear of persecution must be determined by a careful examination of the circumstances. Regard should be had in particular to whether such actions may have come to the notice of the authorities of the person’s country of origin and how they are likely to be viewed by those authorities.’7 [16] Thus, the UNHCR Handbook recognises two categories of refugees: first, those who fear returning to their countries due to circumstances arising in their country of origin during their absence; and second, those who fear returning to their countries due to their own actions while residing in a host country. Regarding the latter category, for example, the UNHCR Guidelines on 6 UNHCR Handbook and Guidelines on Procedure and Criteria for Determining Refugee Status, re-issued February 2019. 7 Ibid paras 94-96. 9 International Protection No. 9, identifies members of the LGBTI+ community who do not express their sexual orientation in their country of origin due to fear of persecution, but do so in another country. They would be entitled to make a sur place claim. Domestic legislation [17] To give effect to the relevant international legal instruments, principles and standards relating to refugees, South Africa enacted the Refugees Act. Its long title says that it is enacted ‘to provide for the reception into South Africa of asylum seekers; to regulate applications for and recognition of refugee status; to provide for the rights and obligations flowing from such status . . . ’. [18] Section 2 provides that no person may be refused entry into the Republic, expelled, extradited or returned to any other country, if as a result thereof, they will be forced to return to a country where they may suffer persecution on account of one of the reasons stated in the UN Convention, or their life, physical safety or freedom would be threatened. [19] The grounds upon which an asylum seeker may apply for asylum in South Africa is set out in s 3 of the Refugees Act, which reads as follows: ‘Subject to Chapter 3, a person qualifies for refugee status for the purpose of this Act if that person- (a) Owing to a well-founded fear of being persecuted by reason of his or her race, gender, tribe, religion, nationality, political opinion, or membership of a particular social group, is outside the country of his or her nationality and is unable or unwilling to avail himself 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; or (b) owing to external aggression, occupation, foreign domination or other events seriously disturbing public order in either a part or the whole of his or her country of origin or 10 nationality, is compelled to leave his or her place of habitual residence in order to seek refuge in another place outside his or her country of origin or nationality; or (c) is a spouse or dependent of a person contemplated in paragraph (a) or (b).’ [20] The following observations are worth noting about the grounds in (a) and (b): (a) is modelled on the UN Convention, while (b) is based on the expanded definition of a ‘refugee’ in the OAU Convention, which definition, as mentioned, specifically protects refugees experiencing armed conflict from war-torn countries. [21] The asylum application process commences when an asylum seeker reports to a Refugee Reception Office under s 21(1)(a) of the Refugees Act. This application must be made in person within five days of entry into the Republic. Such a person must be assisted by an officer designated to receive asylum seekers. In terms of s 21(1)(b) an asylum application must be made in person as per the prescribed procedures to a Refugee Status Determination Officer (the RSDO) at any Refugee Reception Office or any other place designated by the Director-General by notice in the Gazette. Upon considering the application, the RSDO must, in terms of s 24(3), make one of the following decisions: (a) grant asylum; (b) reject the application as manifestly unfounded, abusive or fraudulent; or (c) reject the application as unfounded. A ‘manifestly unfounded application’, means an asylum application made on grounds other than those contemplated in section 3’, and an ‘unfounded application, in relation to an application for asylum in terms of section 21, means an application made on the grounds contemplated in section 3, but which is without merit’.8 8 Section 1 of the Refugees Act. 11 [22] In terms of s 24(3), the decision of the RSDO to grant asylum or to reject asylum is ‘subject to monitoring and supervision’, whereas the decision to reject the application as manifestly unfounded, abusive or fraudulent, is subject to review by a designated member of the Standing Committee. If an application is rejected as either being manifestly unfounded, abusive or fraudulent in terms of s 24(3)(b) or being unfounded in terms of s 24(3)(c), the RSDO is enjoined to: (a) furnish the applicant with written reasons within five working days after the date of the rejection; and (b) inform the applicant of his or her right to appeal in terms of s 24B.9 [23] As to how the asylum seeker is to be dealt with once their application is rejected, depends on the reason for the rejection. In terms of s 24(5)(a), if the reason for the rejection is that the application is manifestly unfounded, abusive or fraudulent, and such a decision is confirmed by the Standing Committee in terms of s 24A(2), then the asylum seeker ‘must be dealt with as an illegal foreigner in terms of section 32 of the Immigration Act’. On the other hand, if the reason for the decision is that the application unfounded, the asylum seeker must, in terms of section 24(5)(b), ‘be dealt with in terms of the Immigration Act, unless he or she lodges an appeal in terms of section 24B(1)’. [24] Section 24A(1) provides for the review by the Standing Committee of any decision taken by the RSDO to reject an application as being manifestly unfounded, abusive or fraudulent. The Standing Committee may also act in terms of s 9C(1)(c) in respect of any decision taken to grant or reject an asylum application.10 In terms of s 24A(3) the Standing Committee may, after having determined a review, confirm, set aside or substitute any decision taken by RSDO 9 Section 24(4) of the Refugees Act. 10 In terms of s 9C(1)(c) the Standing Committee may monitor and supervise all decisions taken by Refugee Status Determination Officers and may approve, disapprove or refer any such decision back to the Refugee Reception Office with recommendations as to how the matter must be dealt with. 12 that the application is, in terms of s 24(3)(b), manifestly unfounded, abusive or fraudulent. The asylum seeker must be informed of the Standing Committee’s decision within five working days of such decision, ‘whereafter the Standing Committee is functus officio’.11 [25] In terms of s 24B appeals against the decisions of the Standing Committee lie with the Refugee Appeals Authority (the Appeals Authority), which may set aside or substitute any decision taken by the RSDO that, in terms of s 24(3)(c), the application is unfounded. In terms of s 24B(5), if new information, which is material to the application, is presented during the appeal, the Appeals Authority is obliged to refer the matter back to the RSDO to deal with that asylum seeker in terms of the Refugees Act. Jurisprudence on sur place claims [26] South Africa has not yet developed a significant jurisprudence on sur place refugee claims. In Ruta v Minister of Home Affairs,12 the Constitutional Court made a passing reference to the issue. This is understandable, as the dispute there centered around two issues, namely: (a) the effect of delay on entitlement to apply for refugee status; and (b) the operation of the exclusionary provisions of the Refugees Act, particularly s 4(1)(b). As far as we could establish, this is the first case in this Court in which a sur place claim was directly asserted. Although we are not called upon to determine the merits of the appellants’ claim that they qualify as sur place refugees, it is important to give some guidance as to how such claims should be considered. [27] Given the absence of authority on this issue in our jurisprudence, it is useful to look to foreign law, as permitted by s 39(1)(c) of the Constitution. I do so 11 Section 24A(4). 12 Ruta v Minister of Home Affairs [2018] ZACC 52; 2019 (3) BCLR 383 (CC); 2019 (2) SA 329 (CC). 13 bearing in mind what the Constitutional Court said in H v Fetal Assessment Centre13 about the utility of foreign law and how it should be approached. The Court explained: ‘Foreign law has been used by this Court both in the interpretation of legislation and in the development of the common law. Without attempting to be comprehensive, its use may be summarised thus: (a) Foreign law is a useful aid in approaching constitutional problems in South African jurisprudence. South African courts may, but are under no obligation to, have regard to it. (b) In having regard to foreign law, courts must be cognisant both of the historical context out of which our Constitution was born and our present social, political and economic context. (c) The similarities and differences between the constitutional dispensation in other jurisdictions and our Constitution must be evaluated. Jurisprudence from countries not under a system of constitutional supremacy and jurisdictions with very different constitutions will not be as valuable as the jurisprudence of countries founded on a system of constitutional supremacy and with a constitution similar to ours. (d) Any doctrines, precedents and arguments in the foreign jurisprudence must be viewed through the prism of the Bill of Rights and our constitutional values.’ [28] With these guidelines in mind, I consider the jurisprudence of two comparable common law jurisdictions – the United Kingdom (the UK) and Canada, as to the treatment of sur place refuge claims. Hopefully, this will serve as a basis for developing and shaping our jurisprudence on sur place refuge claims. Axiomatically, our jurisprudence will be informed by our constitutional values; our national legislation (the Refugees Act); the OAU’s expanded definition of a ‘refugee’; and the injunction of s 233 of the Constitution which commands us to give an interpretation of the Refugees Act ‘that is consistent with international law over any alternative interpretation that is inconsistent with international law’. 13 H v Fetal Assessment Centre [2014] ZACC 34; 2015 (2) BCLR 127 (CC); 2015 (2) SA 193 (CC) para 31. 14 [29] In the UK, the relevant legislation is the Asylum and Immigration Appeals Act 1993. In Canada, the applicable legislation is the Immigration and Refugee Protection Act.14 Although there may be different conceptual bases between these and our Refugees Act, the UK and Canadian legislations, like ours, are premised on articles 1 and 33 of the UN Convention, which, respectively, set out the definition of ‘refugee’, and contain the well-known protection against refoulement. Thus, the basic premise of these articles is the protection of persons with well-founded fears of persecution. [30] I consider, in turn, five aspects which I deem relevant to the present case, namely: (a) the effect of bad faith and/or fraud in applications for refuge; (b) countries in a state of war; (c) whether a claimant will be specifically affected by events in their home country; (d) whether the risk of persecution is personalized or generalized; (e) change of government in the claimant’s country of origin. Bad faith and/or fraud [31] In the UK, the leading case is Danian v Secretary of State for the Home Department.15 There, the Court of Appeal concluded that the fact that a refugee sur place had acted in bad faith should not on its own exclude him or her from the protection of the UN Convention. Such a person should not be deported to their home country if their fear of persecution is genuine and well-founded for a Convention reason, and there is a real risk that such persecution may take place. Although such an applicant’s credibility is likely to be low and the claim must be rigorously scrutinised, they are still entitled to the protection of the Convention if a well-founded fear of persecution is accepted. 14 Immigration and Refugee Protection Act (SC 2001, c 27). 15 Danian v Secretary of State for the Home Department [1999] EWCA Civ 3000; [2000] Imm AR 96, [1999] INLR 533 (Danian). 15 [32] In that case, a Nigerian national had been given leave to live in the UK as a student in 1985. In 1990 he was convicted of a criminal offence for working in breach of the conditions of his leave to remain in the UK as a student. Following his conviction, a deportation order was issued against him. Resisting his deportation, he applied for asylum on two grounds: first, that he had suffered discrimination and ill-treatment in Nigeria; and second, that political activities that he had undertaken in the UK on behalf of the pro-democracy movement would place him at risk was he to be deported to Nigeria. The Immigration Appeal Tribunal (the Tribunal) found that his political activity before 1995 would not have come to the attention of the Nigerian authorities, and his political activities after 1995 were motivated by a desire to tailor a false asylum claim. It further held that a refugee sur place who has acted in bad faith to create a risk of persecution is not entitled to the protection of the UN Convention. [33] The Court of Appeal disagreed with the Tribunal’s reasoning, and set aside the decision of the Tribunal. Lord Justice Brooke, who gave the leading opinion, reasoned: ‘I do not accept the Tribunal's conclusion that a refugee sur place who has acted in bad faith falls out with the Geneva Convention and can be deported to his home country notwithstanding that he has a genuine and well-founded fear of persecution for a Convention reason and there is a real risk that such persecution may take place. Although his credibility is likely to be low and his claim must be rigorously scrutinised, he is still entitled to the protection of the Convention, and this country is not entitled to disregard the provisions of the Convention by which it is bound, if it should turn out that he does indeed qualify for protection against refoulement at the time his application is considered.’16 16 Danian fn 37. 16 [34] The court also referred with approval to Mbanza17 in which it was said: ‘If, therefore, despite having made such a claim and having had it rejected he can nevertheless at any time thereafter and on whatever basis satisfy the authorities that he has a well-founded fear of persecution for a Convention reason if he is returned to the country of his nationality, it would be a breach of the United Kingdom's international obligations under the Convention to return him to face possible death or loss of freedom.’ [35] The issue in M v Secretary of State18 was whether a person whose claim for asylum is fraudulent could nevertheless benefit from the terms of the UN Convention. In his asylum application, the appellant had made false claims about his arrest, imprisonment and escape from Zaire.19 His asylum application was refused based on these falsehoods. The applicant appealed to the Tribunal, contending that he was at risk of persecution if he returned to Zaire because he had made an asylum claim. The Tribunal dismissed the appeal because: (a) a person who put forward a fraudulent and baseless claim for asylum could not bring himself within the convention and (b) in any event, the evidence was insufficient to show that there was a reasonable likelihood that the appellant would be persecuted, as required by the UN Convention. [36] The Court of Appeal held that the making of a false asylum claim could not act as a total barrier to reconsideration of an applicant's status as a potential refugee, since it was possible that, by the very act of claiming asylum, an applicant could put himself at risk of persecution. However, where an application is rejected on the basis that it was based on fraudulent facts, this would affect the claimant’s credibility. He would likely find it extremely difficult to demonstrate 17 Mbanza [1996] Imm AR 136; [1995] EWCA Civ 44. 18 M v Secretary of State for the Home Department [1996] 1 All ER 870, [1996] 1 WLR 507, United Kingdom: Court of Appeal (England and Wales), 24 October 1995, available at: https://www.refworld.org/jurisprudence/caselaw/gbrcaciv/1995/en/15975 [accessed 08 May 2024]. 19 Now Democratic Republic of Congo. 17 to the required standard a genuine subjective fear of persecution within article 1A(2)a of the UN Convention. [37] In Canada, the position is also that there is no ‘good faith’ requirement in making a sur place claim. A decision-maker should not reject a sur place claim solely on the basis that the claimant was acting for an improper motive without examining the potential risk to the claimant upon return to their country of origin.20 Professor Hathaway sums up the effect of lack of good faith in sur place refugees claims as follows: ‘It does not follow, however, that all persons whose activities abroad are not genuinely demonstrative of oppositional political opinion are outside the refugee definition. Even when it is evident that the voluntary statement or action was fraudulent in that it was prompted primarily by an intention to secure asylum, the consequential imputation to the claimant of a negative political opinion by authorities in her home state may nonetheless bring her within the scope of the Convention definition. Since refugee law is fundamentally concerned with the provision of protection against unconscionable state action, an assessment should be made of any potential harm to be faced upon return because of the fact of the non-genuine political activity engaged in while abroad.’21 [38] In Ghasemian22 the court followed the reasoning of the English Court of Appeal in Danian and held that opportunistic claimants are still protected under the UN Convention if they can establish a genuine and well-founded fear of persecution for a Convention ground. There, an Iranian Muslim national had asserted sur place refugee status on the basis that she had converted to Christianity while in Canada. On that basis, she said, she would be persecuted were she to return to Iran. The decision-maker rejected her application on the 20 See, for example, Ngongo, Ndjadi Denis v M.C.I. (F.C.T.D., no. IMM-6717-98), Tremblay-Lamer, October 25, 1999. 21 J C Hathaway The Law of Refugee Status 4 ed (1991) at 39. 22 Ghasemian, Marjan v M.C.I. (F.C., no. IMM-5462-02), Gauthier, October 30, 2003; 2003 FC 1266. See also, Ding v Canada (Citizenship and Immigration) 2014 FC 820; Yang v Canada (Citizenship and Immigration) 2012 FC 849. 18 basis that her conversion to Christianity was not genuine, but a ruse for her to remain in Canada. Thus, the basis of her application (her conversion) was not made in good faith. [39] The court held that while it was open to the decision-maker to reject her sur place claim based on a lack of subjective fear, the decision-maker misconstrued her evidence regarding her alleged lack of fear of reprisals and applied the wrong test by rejecting her claim on the basis that it was not made in good faith, i.e., she did not convert for a purely religious motive. Countries in a state of war or political upheaval [40] In R v Secretary of State ex p Adan23 the UK House of Lords considered the distinction between persecution and the ordinary incidents of civil war. It held that where a country is in a state of civil war, it is not enough for an asylum-seeker to show that he would be at risk if he were returned to his country. He must be able to show fear of persecution for Convention reasons over and above the ordinary risks of clan warfare. The matter concerned a Somalian national who had fled Somaliland because of civil war in his country. The court found that all sections of society in northern Somalia were equally at risk so long as the civil war continues. There was no ground for differentiating between the claimant and the members of his own or any other clan. Accordingly, it held that the claimant was not entitled to refugee status. Whether a claimant will be specifically affected by events in their home country [41] Where a claimant will be not specifically affected by events in their home country, and will be affected to the same degree as all citizens of their country, a sur place claim would ordinarily fail. In Zaied v Canada (Citizenship and 23 Adan, R (on the application of) v Secretary of State for Department [1999] EWCA Civ 1948, [1999] 4 All ER 774, [1999] COD 480, [1999] 3 WLR 1274, [1999] Imm AR 521, [1999] INLR 362. 19 Immigration)24 the applicants based their sur place claim on the insecurity and major upheaval in his country of origin, Tunisia, which occurred after the claimants had left country. They had obtained a six months’ visa in Canada in September 2008, which was extended for a further six months. In March 2010 the applicants applied for asylum as sur place refugees alleging possible religious persecution in Tunisia as minority Shi’ite Muslims in a predominantly Sunni country, which was refused by the Refugee Protection Division (the RPD). [42] On review, the Federal Court found that it was reasonable for the panel to draw negative inferences from, inter alia, the fact that: (a) the applicants did not provide clear explanations to the panel’s questions about their persecutors; (b) the applicants made a claim for refugee protection following a two-year stay in Canada and following two visa extensions; and (c) the applicants’ responses indicated that they wished to remain in Canada for economic and family reasons. [43] Concerning the sur place refugee claim, the court concluded thus: the evidence of what could happen to the applicants if they were to return to Tunisia was speculative. It did not demonstrate how their situation differed from those of other Shi’ite Muslims in Tunisia. It was therefore reasonable to conclude that there was no connection between that situation and the applicants’ claim for refugee protection in that they were affected to the same degree as all Tunisians. The applicants were not specifically affected by the events arising from the revolution. They would therefore face the same fate as the rest of the Tunisian population. 24 Zaied v Canada (Citizenship and Immigration) 2012 FC 771. 20 Whether the risk of persecution is personalized or generalized [44] In Prophète v Canada25 a national of Haiti claimed to have been the target of gang violence on multiple occasions, in the form of vandalism, extortion, and threats of kidnapping. He alleged that he was targeted because he was a known businessman, and perceived to be wealthy. His application for asylum in Canada was rejected by the Refugee Protection Division of the Immigration and Refugee Board on two grounds: (a) his fear of persecution had no nexus with any of the five grounds contained in the definition of Convention refugee; (b) he failed to demonstrate that he would be subject to danger or to a risk to his life or cruel or unusual treatment owing to his personal circumstances or those of similarly situated individuals. [45] On review of the Board’s decision, Justice Tremblay-Lamer pointed out the difficulty in analyzing personalized risk in situations of generalized human rights violations, civil war, and failed states. She addressed the second of the two conjunctive elements contemplated by paragraph 97(1)(b)(ii), in circumstances in which the first of those elements (personal risk) had been established. She determined that s 97(1) can be interpreted to include a sub-group within the larger one that faces an even more acute risk. She explained: ‘The difficulty lies in determining the dividing line between a risk that is “personalized” and one that is “general”. Under these circumstances, the Court may be faced with applicant who has been targeted in the past and who may be targeted in the future but whose risk situation is similar to a segment of the larger population. Thus, the Court is faced with an individual who may have a personalized risk, but one that is shared by many other individuals.’26 [46] After a survey of the jurisprudence of the Federal Court, the court concluded that the applicant did not face a personalized risk that is not faced generally by other individuals in or from Haiti. The risk of all forms of criminality was general and 25 Prophẻte v Canada (Minister of Citizenship and Immigration) 2008 FC 331. 26 Ibid para 18. 21 felt by all Haitians. While a specific number of individuals may be targeted more frequently because of their wealth, all Haitians are at risk of becoming the victims of violence. Consequently, the application for judicial review of the Immigration and Refugee Board decision was dismissed. [47] Subsequently, in Baires Sanchez v Canada (Citizenship and Immigration),27 the Federal Court narrowed the test further. It held that in order to show that a risk is not generalized, applicants must establish that the risk of actual or threatened similar violence is not faced generally by other individuals in or from that country, and that applicants must demonstrate that the respective risks that they face are not prevalent or widespread in their respective countries of origin, in the sense of being a risk faced by a significant subset of the population. This case also concerned apprehension of risk at the hands of gangsters, this time in El Salvador. The court concluded that the gang violence (including murder), was a risk faced widely by people in El Salvador.28 [48] In Portillo v Canada29 the Federal Court developed a two-step test for determining whether the risk is generalized or personalized. First, the RPD must determine the nature of the risk faced by the claimant under the following subsets: (a) an assessment of whether the claimant faces an ongoing or future risk; (b) what that risk is; (c) whether it is one of cruel and unusual treatment or punishment and; and (d) the basis for the risk. Secondly, the correctly described risk faced by the claimant must then be compared to that faced by a significant group in the country at issue. This is to determine whether the risks are of the same nature and degree. In this enquiry, it will typically be the case that where an 27 Baires Sanchez v Canada (Citizenship and Immigration) 2011 FC 993. 28 Ibid para 23. 29 Portillo v Canada (Citizenship and Immigration) 2012 FC 678. 22 individual is subject to a personal risk to his life or risks cruel and unusual treatment or punishment, then that risk is no longer general.30 Change of government [49] Where there has been a change of government in the claimant’s country of origin, and it is asserted this had eliminated the cause of fear of prosecution, Canadian courts have held that in such cases, the evidence must be subjected to a detailed analysis to determine whether the change is significant enough to eliminate the claimant’s fear of persecution. 31 The decision-maker must consider the objective basis of the claimant’s fear of persecution, the alleged agents of persecution and the form or nature of the persecution feared. [50] This evaluation must relate to the particular circumstances of the claimant and the decision-maker should provide a clear indication or explanation for its finding.32 It should not rely on or give much weight to changes that are short-lived, transitory, inchoate, tentative, inconsequential or otherwise ineffective in substance or implementation.33 The changes which are being relied on as removing the reasons for the claimant’s fear of persecution are not to be assessed in the abstract but for their impact on the claimant’s particular situation.34 The decision-maker must consider the quality of the institutions of the democratic government.35 30 Ibid paras 40 and 41. 31 Ahmed v Canada (Minister of Employment and Immigration) (1993), 156 N.R. 221 (F.C.A. ), at 223- 224. 32 Mohamed, Mohamed Yasin v. M.E.I. (F.C.T.D., no. A-1517-92), Denault, December 16, 1993 para 4. 33 In this regard, in its Discussion Paper (2021) Chapter 7, the Immigration and Refugee Board of Canada has made a useful collation of cases in which the issue is discussed. 34 Alfaro v Canada (Citizenship and Immigration) 2011 FC 912 para 16. 35 Soe v Canada (Public Safety and Emergency Preparedness) 2018 FC 1201. 23 The appellants’ appeal Factual background [51] It is now convenient to turn to the present appeal. As mentioned, both appellants are Burundian nationals. The first appellant entered the country illegally in May 2008 and applied for asylum in September 2009. She stated in her application for asylum that her parents died a long time ago and that she wished to work and study in South Africa. The second appellant entered the country illegally in May 2009 and applied for asylum in August 2009. She also stated that she wished to study, work and have access to medical facilities in South Africa. According to her application form, she informed the RSDO that she wished to return to Burundi and that nothing would happen to her if she did. [52] The appellants’ applications were rejected by the RSDO as being manifestly unfounded in terms of terms of s 24(3)(b) of the Refugees Act. The refusal of the applicants’ asylum applications was automatically reviewed by the Standing Committee which confirmed the finding of the RSDO in February and December 2014, respectively. Thereafter, they were both informed in writing that, in terms of the Immigration Act,36 they were illegal foreigners, and had to leave the country within 30 days of receipt of the notice. [53] The appellants neither left the country nor appealed against the decisions of the Standing Committee. By virtue of not challenging the rejection of their initial applications, it must be accepted that the appellants’ reasons for leaving Burundi were those advanced in their initial applications. The upshot is that the appellants did not flee Burundi because of any persecution, nor did they have a well-founded fear of persecution upon their arrival in South Africa. On their 36 Immigration Act 13 of 2002. 24 version, their alleged fear of persecution only arose in 2015, when, according to them, the political situation in Burundi changed for the worse. [54] On 3 August 2018, after over four years of inactivity on the appellants’ part, an attorney on behalf of the appellants, wrote a letter to the Manager of the Cape Town Refugee Reception Office, and stated that the appellants accepted that their asylum applications had been finally rejected. The appellants averred that, after the rejection of their applications, circumstances changed in Burundi. Widespread political violence broke out, following which, thousands of Burundians fled the country. Those who remained were subjected to oppression, torture, rape, and sexual violence. The applicants said that it was therefore not safe for them to return to Burundi, as this would place them at risk of persecution or serious threat to their lives, safety and/or physical freedom. For these reasons, they considered themselves to be sur place refugees, and made new applications for asylum as such. [55] The appellants did not explain the nearly four years of inactivity on their part since being informed of the decisions to decline their applications. Be that as it may, the appellants were subsequently interviewed in September 2018. Nothing was heard from the Department after the interviews, and after an enquiry by the appellants, an official of the Department stated that their case was ‘closed’. On 25 October 2018 the official wrote to the appellants’ attorney as follows: ‘A failed asylum seeker who has not departed the Republic after he/she was rejected must be deported, that’s my instruction to the Officials and I am [a]waiting their update. Those who return from their countries and wish to apply, they are free to apply at any Refugee Centre accepting newcomers.’ 25 In the high court [56] The stance by the Department triggered an application by the appellants in the high court on 29 November 2018. The appellants sought an order directing the Department to accept their asylum seeker applications based on their sur place refugee claims within five days of the order. In their founding affidavit, the appellants advanced substantially different reasons for leaving Burundi to seek asylum in South Africa, to those they furnished in their unsuccessful asylum applications. This time they alleged that they left Burundi because of persecution at the hands of members of rebel soldiers. Both alleged that they were abducted and raped, and their family members killed. As a result, they suffered trauma and loss in Burundi, which led them to flee to South Africa to seek asylum. The appellants attributed this to misunderstanding between them and immigration officials, due to language barriers. [57] The appellants alleged that in April 2015 – after their asylum applications had been rejected, the spiral of political violence in Burundi worsened due to then-President Nkurunziza’s announcement that he would seek a third term in office. This led to mass oppression, torture, sexual violence, illegal arrests, and killings. These political developments, they asserted, placed them at risk of harm if they were to return to Burundi, as demanded by the Department and would violate the principle of non-refoulement. Thus, they were entitled to make new applications as sur place refugees. [58] Accordingly, the appellants sought an order directing the Department to accept their new asylum applications under s 21 of the Refugees Act without requiring them to leave the country. [59] In its answering affidavit, the Department accepted that foreigners who leave their countries of origin for reasons other than being refugees can become 26 sur place refugees. In these circumstances, the Department accepted that a foreigner can apply for asylum without departing South Africa. However, the Department did not accept that the appellants are sur place refugees. According to the Department, the circumstances upon which the appellants rely for their sur place refugee applications, existed in their country at the time of their departure. To contend that the circumstances worsened since then, did not render them sur place refugees. They were not refugees when they left Burundi, given the reasons originally furnished to the RSDO. [60] According to the Department, when the asylum process is completed and an application is finally rejected, the Refugees Act does not contemplate that they may apply for asylum again. Such people must depart the Republic, and their continued presence in the Republic, until their departure, is regulated by the provisions of the Immigration Act. The judgment of the high court [61] The high court accepted the contention by the Department that an asylum seeker whose application has been unsuccessful should leave the country. It said that to allow for resubmission without the asylum seeker leaving the country would: (a) result in a never-ending cycle of asylum applications, and thus undermine the public interests in finality of decisions. As soon as an asylum application is refused, the asylum seeker would simply re-submit a new application, thereby rendering him or her subject to the protections and general rights set out in s 27A of the Refugees Act. This, the high court reasoned, would render the asylum system nugatory, as the asylum seeker need only continuously apply for asylum to be granted the right to stay in the country in terms of s 27A(b). (b) render s 24(5)(a) of the Refugees Act invalid because as soon as an application is finally determined, the asylum seeker need merely indicate an intention to 27 reapply for asylum to escape the provisions of s 24(5)(a) and avoid being dealt with in terms of the Immigration Act. (c) render s 21(4) of the Refugees Act to be tautologous or superfluous. [62] The high court emphasised the fact that the appellants’ asylum applications had been finally determined as manifestly unfounded and they had accepted this decision. Thus, reasoned the court, the shield of non-refoulement had been lifted. The high court said that on the appellants’ approach, the application of the Immigration Act could potentially be deferred indefinitely as an asylum seeker could always have an asylum application pending. [63] Consequently, the high court concluded that there was no general obligation on the Department to accept a new application for asylum upon the refusal of an application that was found to be manifestly unfounded. The high court reasoned that the Refugees Act does not contemplate that a failed refugee application can be re-submitted. The court reasoned that an interpretation of the Refugees Act which allowed for such re-submission would defeat the purpose of the legislation and would result in a never-ending process. For all of these reasons, the high court dismissed the appellants’ application. However, the high court subsequently granted the appellants leave to appeal to this Court against paragraphs (iv) and (v) of the high court’s order. 37 In this Court [64] Before us, the parties persisted with their respective positions adopted in the high court. The appellants do not request this Court to determine whether indeed they qualify as sur place refugees, and are thus entitled to asylum on that basis. All they seek is for an order directing the Department to consider their 37 Paragraphs (i), (ii) and (iii) concerned a third applicant in the high court, who is not before this Court. 28 applications. Thus, the merits of those claims need not be determined in this appeal. [65] As mentioned, what is at issue is whether a person whose refugee application has been declined is entitled to submit subsequent applications. With reference to international instruments and comparative law, I have already established that there is no bar to subsequent claims, as long as there is a valid basis to do so. [66] At the heart of refugee law is the principle of non-refoulement. In our domestic law, this finds expression in s 2 of the Refugees Act. It provides: ‘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 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 social 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.’ [67] The Constitutional Court pointed to the significance of this section as follows: ‘This is a remarkable provision. Perhaps it is unprecedented in the history of our country’s enactments. It places the prohibition it enacts above any contrary provision of the Refugees Act itself – but also places its provisions above anything in any other statute or legal provision. That is a powerful decree. Practically it does two things. It enacts a prohibition. But it also expresses a principle: that of non-refoulement, the concept that one fleeing persecution or threats to “his or her life, physical safety or freedom” should not be made to return to the country inflicting it.’38 38 Ruta para 24. 29 [68] The appellants and Scalabrini, on the one hand, emphasised the absolute nature of this principle of non-refoulement. The appellants submitted that having regard to the principle of non-refoulement, there was nothing in the Refugees Act that precluded an asylum seeker from submitting a second or further applications if there is a reason to do so. By ordering the appellants to leave the country and submit their subsequent applications while in their country of origin, the high court’s order breached this principle. [69] Scalabrini contended that the right does not fall away just because an adjudication process has declared that a person is not entitled to refugee protection under the Refugees Act. Thus, so went the submission, if a person is not granted refuge protection under the Refugees Act but factually meets the definition of being a refugee, such a person cannot be compelled to return to the country from which they fled. Compelling them to return to such a country would violate customary international law. [70] Scalabrini centred its submissions on the existence of conflict as a raison de’etre for asylum systems in the first place. According to Scalabrini, for as long as conflict persists in its various manifestations, asylum seekers maintain the right to make subsequent applications. On the other hand, the respondents contended that the principle of non-refoulememt applies once, and upon a final rejection, the protection is lifted. [71] It is convenient to clarify the reach of the principle of non-refoulement. When it is said that the principle is absolute, it means this: the protection afforded by the principle endures for as long as an asylum seeker has not exhausted all available remedies, including internal appeals and judicial review. But once these processes are exhausted, and an asylum application is finally rejected, the protection falls away. For, it is implicit in that rejection that the claimant does not 30 meet the definition of a refugee. In other words, they do not have a well-founded fear of persecution for a Convention reason, as envisaged in article 1A(1) of the UN Convention. [72] Under those circumstances, requiring them to return to the country from which they fled would not violate customary international law. As explained by the Constitutional Court in Ruta: ‘Until the right to seek asylum is afforded and a proper determination procedure is engaged and completed, the Constitution requires that the principle of non-refoulement as articulated in section 2 of the Refugees Act must prevail. The “shield of non-refoulement” may be lifted only after a proper determination has been completed. . .’39 [73] Also, as correctly observed by this Court in Somali Association v Refugee Appeal Board and Others40 (Somali Association) ‘there is a legitimate State interest and concern to ensure that refugee status is granted only to those who qualify, to disqualify unfounded applications and to provide for the cessation of refugee status’. (Emphasis added.) [74] The construction of the principle favoured by the appellants and Scalabrini is at odds with the above dicta. If their construction were correct, there would never be an end to a cycle of asylum applications. I do not think that the principle goes as far as to suggest that once an asylum seeker makes an application, he or she will never be returned to their country of origin, irrespective of the outcome of such an application or its final determination. [75] This brings me to the Refugees Act, and the context in which the principle of non-refoulement should be construed. The legislation does not, without more, 39 Ruta para 54. 40 Somali Association of South Africa and Others v Refugee Appeal Board and Others [2021] ZASCA 124; [2021] 4 All SA 731 (SCA); 2022 (3) SA 166 (SCA) para 1. 31 contemplate that applicants whose applications for asylum have been lawfully refused can remain in the country and simply re-submit their applications. A new application can only be brought based on substantially different or changed circumstances. An application brought on the same facts would likely constitute an abuse of the asylum system. Absent a new basis or new facts, a failed applicant for asylum is not entitled to make one application after another. There has to be finality to the processes. [76] Therefore, the suggestion that one can without more, submit one application after the other when the previous one has been finally determined, is not what the Refugees Act contemplates. For such applicants, the period between the final rejection of their asylum and their departure, is regulated by the Immigration Act. Without any permit to remain in the country, such applicants are regarded as illegal foreigners as defined in the Immigration Act. Section 32 of the Immigration Act provides that ‘any illegal foreigner shall depart unless authorised by the Department to remain in the Republic’. [77] Thus, a failed asylum applicant can only remain in the country on either of the following bases: (a) that the final determination of their asylum application is pending; (b) that he or she has authorisation by the Department to remain in the country; or (c) that there is some other lawful basis to remain in the country. This is the essence of the rule of law – a foundational value of our Constitution. [78] Applied to the present case, one should bear in mind the following. The appellants have neither applied to review the decisions to reject their initial asylum applications nor do they have authorisation from the Department to remain in the country. Ordinarily, that rendered them illegal foreigners under the Immigration Act, as they had no legal basis to remain in the country. 32 [79] However, by asserting sur place claims, the appellants sought to remove themselves from the clutches of the Immigration Act and placed themselves back in the purview of the Refugees Act. The appellants alleged that after their asylum applications had been rejected, the situation in their country of origin became risky for them to return home. They said that this entitled them to submit subsequent applications for asylum without being obliged to leave the country. The high court was, correctly so, concerned that this amounted to an abuse of the system, especially that for four years since their applications were refused, the appellants did nothing about their situation. As mentioned, there is no explanation for this period, during which the applicants lived in the country without any lawful basis, thus rendering them illegal foreigners in terms of the Immigration Act. Having said that, it was not the high court’s place to determine whether the appellants’ sur place applications were genuine. That duty fell on the Department after having had regard to the merits of the application. This is where the high court erred. [80] The basis for the new applications was, on the face of it, different from the initial one. This time, it was alleged that since the rejection of their initial applications, circumstances in their country of origin have changed for the worse, which exposed them to the risk of harm were they to return home. Hence, they claim to be sur place refugees. In the circumstances, the Department was obliged to consider the applications, investigate the grounds on which they are made, and decide whether there was merit in the applications. The Department was not entitled to simply refuse to consider the applications. Indeed, the high court recognised that there may well be circumstances that would allow an applicant to re-submit an application. However, it did not explain or explore what those circumstances might be. 33 Conclusion [81] Be that as it may, it was wrong of the Department to demand that the appellants leave the country and make such applications while in the country of origin. To be clear, once a refugee sur place claim is made, there is no basis to: (a) demand that an asylum seeker returns to their country of origin pending the determination of their application; or (b) reject the application on the basis that the initial one had been finally determined. The Canadian courts have held that once an applicant asserts a sur place claim before a decision-maker, it must be addressed. Failure to do so amounts to a reviewable error.41 The claim must be addressed, even if it is raised late, even in post-hearing evidence.42 In the same breath, the Department should have considered and determined the appellants’ sur place claims. It follows that the failure to do so constituted a reviewable error. [82] These conclusions must be understood to be subject to some cautionary observations. First, a sur place claim is not validly made by reformulating a claim that has already been finally determined. Second, a sur place claim must set out a proper evidential basis for the claim. What circumstances have changed, the evidence of that change, and their specific consequences for the applicant must be set out in the application. Absent this content, an application may be summarily rejected. Third, there is much scope for abuse, in which sur place claims are made, sometimes on a repeated basis, without proper foundation, to extend protections for lengthy periods of time. This should not be tolerated. And the Department should develop expedited procedures to bring to finality sur place claims that facially have no basis. 41 See for example, Manzila v Canada (Minister of Citizenship and Immigration) (1998) 165 FTR 313; [1998] FCJ 1364 paras 4 and 5; Gebremichael v Canada (Minister of Citizenship and Immigration) 2006 FC 547 para 52; Hannoon v Canada (M.C.I.) (2012), 408 F.T.R. 118 (FC). 42 Gurung, Subash v M.C.I. 2013 FC 1042. 34 [83] The appeal must succeed. The decision of the Department should be set aside and remitted to the Department for it to consider the appellants’ new applications. In doing so, the Department should, generally, be faithful to the injunction of this Court in Somali Association: ‘In dealing with such applications, it must be emphasised, once again, that State authorities are required to ensure that constitutional values, including those that embrace international human rights standards set by international conventions and instruments in relation to those seeking asylum, adopted by South Africa are maintained and promoted.’43 [84] In particular, the Department should have regard to the principles discussed in this judgment, and principally, whether: (a) there has been a deterioration in the political situation in Burundi since the appellants left that country, and whether such situation persists to the date of the inquiry. The Department will no doubt receive up-to-date evidence about the situation in Burundi before it reaches its decision on the appellants’ applications and determine them based on the facts known at the date of the inquiry. (b) If the answer to (a) above is in the affirmative, whether the appellants, as a result, have a well-founded fear of persecution were they to return to Burundi. (c) If the answer to (c) above is in the affirmative, whether such fear of persecution is owed to: (i) any of the five UN Convention grounds, ie race, nationality, membership of a particular social group or political opinion; or (ii) events seriously disturbing public order in either part or the whole of Burundi as envisaged in the OAU Convention. [85] Costs should follow the result. There should not be any costs order occasioned by the participation of the amicus. 43 Somali Association para 8. 35 Order [86] The following order is made: 1 The appeal is upheld with costs. 2 Paragraphs (iv) and (v) of the order of the high court are set aside and replaced with the following: ‘(iv) The first and second respondents are directed to accept the applicants’ sur-place refugee claims applications, within five working days of the granting of this order, and to determine such applications within 21 working days thereafter. (v) The first and second respondents are ordered to pay the costs of the application, jointly and severally.’ __________________ T MAKGOKA JUDGE OF APPEAL 36 APPEARANCES: For appellants: D Simonsz Instructed by: UCT Refugee Rights Clinic, Cape Town University of Free State Law Clinic, Bloemfontein For respondents: De Villiers-Jansen SC (with him T Mayosi) Instructed by: State Attorney, Cape Town State Attorney, Bloemfontein. For amicus curiae: J Bhima Instructed by: Lawyers for Human Rights, Johannesburg EG Cooper Madjiet Inc., Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY FROM: The Registrar, Supreme Court of Appeal DATE: 5 June 2024 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. Irankunda and Another v Director of Asylum Seeker Management: Department of Home Affairs and Others (with Scalabrini Centre of Cape Town intervening as Amicus Curiae) (821/2022) [2024] ZASCA 87 (5 June 2024) Today, the Supreme Court of Appeal handed down a judgment upholding an appeal against an order of the Western Cape Division of the High Court, Cape Town (the high court). That court dismissed the first and second appellants’ application to compel the Department of Home Affairs (the Department) to accept their asylum seeker re-applications after the initial ones were unsuccessful. The appellants are Burundian nationals. They seek to submit further asylum applications in South Africa after their initial applications were unsuccessful as being manifestly unfounded. The appellants averred that, after the rejection of their applications, circumstances changed in Burundi. Widespread political violence broke out, following which, thousands of Burundians fled the country. Those who remained were subjected to oppression, torture, rape, and sexual violence. The applicants said that it was therefore not safe for them to return to Burundi, as this would place them at risk of persecution or serious threat to their lives, safety and/or physical freedom. For these reasons, they considered themselves to be sur place refugees, and made new applications for asylum as such. The Department determined that the appellants may not again apply for asylum in South Africa without returning to their country of origin. The high court dismissed their applications on the basis that a re-submission of an asylum application after the initial one had been unsuccessful amounted to abuse of the asylum system provided for in the Refugees Act 130 of 1998. On appeal, the Supreme Court of Appeal had regard to international instruments such as the 1951 United Nations Relating to the Status of Refugees Convention (the UN Convention) and its 1967 Refugee Protocol, as well as the 1969 Organization of African Unity (OAU) Convention Governing the Specific Aspects of Refugee Problems in Africa (the OAU Convention). The Court noted that these treaties embodied the customary international law of non-refoulement. The Court further explored the concept of refugee sur place, as embodied in the Handbook on Procedure and Criteria for Determining Refugee Status of United Nations High Commissioner for Refugees (UNHCR), the body responsible for overseeing the implementation of the UN Convention. The Court noted that the principle of non-refoulement finds expression in the Refugees Act, which is the domestic legislation enacted to give effect to the relevant international legal instruments, principles 2 and standards relating to refugees, South Africa enacted the Refugees Act. The Court considered the relevant provisions of the Refugees Act. Noting that South Africa has not yet developed a significant jurisprudence on sur place refugee claims, the Court turned to foreign law. The Court undertook a comprehensive excursion of the jurisprudence of the United Kingdom (the UK) and Canada, as to the treatment of sur place refuge claims. The Court then turned to the appellants’ appeal, based on the principle of non-refoulement. The Court clarified the reach of the principle of non-refoulement as follows. The protection afforded by the principle endures for as long as an asylum seeker has not exhausted all available remedies, including internal appeals and judicial review. But once these processes are exhausted, and an asylum application is finally rejected, the protection falls away. For, it is implicit in that rejection that the claimant does not meet the definition of a refugee. In other words, they do not have a well-founded fear of persecution for a Convention reason, as envisaged in article 1A(1) of the UN Convention. The Court pointed out that whilst the high court was understandably concerned about the possible abuse of the asylum system by the appellants, it was not the court’s place to determine whether indeed the new applications had merit. That was within the remit of the Department. To the extent the high court approached the matter in they manner it did, it erred. The matter had to be remitted to the Department to consider the merits of the appellants’ refugee sur place claims in the light of certain guidelines outlined in the judgment. However, the Court sounded caution against possible abuse of refugee sur place claims, and made the following observations. First, a sur place claim is not validly made by reformulating a claim that has already been finally determined. Second, a sur place claim must set out a proper evidential basis for the claim. What circumstances have changed, the evidence of that change, and their specific consequences for the applicant must be set out in the application. Absent this content, an application may be summarily rejected. Third, there is much scope for abuse, in which sur place claims are made, sometimes on a repeated basis, without proper foundation, to extend protections for lengthy periods of time. This should not be tolerated. And the Department should develop expedited procedures to bring to finality sur place claims that facially have no basis. Accordingly, the Court upheld the appeal with costs, set aside the order of the high court and remitted the matter to the Department. ***END***

4206

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 522/2021 & 523/2021 In the matter between: MINISTER FOR TRANSPORT AND PUBLIC WORKS: WESTERN CAPE FIRST APPELANT PREMIER OF THE WESTERN CAPE PROVINCE SECOND APPELLANT THE PROVINCIAL GOVERNMENT OF THE WESTERN CAPE THIRD APPELANT MINISTER OF HUMAN SETTLEMENTS: WESTERN CAPE FOURTH APPELANT CITY OF CAPE TOWN FIFTH APPELANT and THOZAMA ANGELA ADONISI FIRST RESPONDENT PHUMZA NTUTELA SECOND RESPONDENT SHARONE DANIELS THIRD RESPONDENT SELINA LA HAINE FOURTH RESPONDENT RECLAIM THE CITY FIFTH RESPONDENT TRUSTEES OF NDIFUNA UKWAZI TRUST SIXTH RESPONDENT 2 and in the matter between: PREMIER OF THE WESTERN CAPE PROVINCE FIRST APPELANT MINISTER FOR TRANSPORT AND PUBLIC WORKS: WESTERN CAPE SECOND APPELANT CITY OF CAPE TOWN THIRD PPELLANT and MINISTER OF HUMAN SETTLEMENTS FIRST RESPONDENT NATIONAL DEPARTMENT OF HUMAN SETTLEMENTS SECOND RESPONDENT SOCIAL HOUSING REGULATORY AUTHORITY THIRD RESPONDENT Neutral citation: Minister for Transport and Public Works: Western Cape & others v Adonisi and Others (522/2021 & 523/2021) [2024] ZASCA 47 (12 April 2024) Coram: DAMBUZA AP, ZONDI, SCHIPPERS and MOLEFE JJA, UNTERHALTER AJJA Heard: 20 February 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 12 April 2024. Summary: Constitutional Law: principle of constitutional subsidiarity whether the respondents, in asserting their right of access to land and adequate housing, could rely directly on ss 25 and 26 of the Constitution – whether the Housing Act 107 of 1997 and the Social Housing Act 16 of 2008 giving effect to the 3 constitutional right of access to adequate housing obliges the state to provide social housing at a specified location (Central Cape Town). Regulations issued in terms of the Western Cape Land Administration Act 6 of 1998 (WCLAA) – whether regulation 4(6) and the proviso in regulation 4(1) are unconstitutional – whether conclusion of a conditional contract of sale of land owned by the provincial government prior to the notice and comment process is unlawful. Government Immovable Asset Management Act 19 of 2007 (GIAMA) – whether the Western Cape Provincial Government may sell provincial government property in the absence of a custodian asset management plan or user asset management plan prescribed in s 13 of the Act. Intergovernmental Relations Framework Act 13 of 2005 (IGRFA) – whether the Western Cape Provincial Government has an obligation to inform and consult the National Minister of the Department of Human Settlement of an intention to dispose of provincial land. Designation of restructuring zones in terms of ss 3, 4 and 5 of the Social Housing Act – whether Sea Point was designated as a restructuring zone in terms of a notice issued by the National Minister of the Department of Human Settlements – principles applicable to interpretation of legal documents restated. 4 ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Gamble and Samela JJ, sitting as court of first instance): 1 The appeal is upheld with no order as to costs. 2 The order of the high court in Case No 7908/2017 is set aside and replaced with the following order: ‘The application is dismissed with no order as to costs.’ 3 The order of the high court in Case No 12327/2017 is set aside and replaced with the following: ‘The application is dismissed with no order as to costs.’ JUDGMENT Dambuza AP (Zondi, Schippers and Molefe JJA and Unterhalter AJJA concurring) Introduction [1] At the heart of this appeal is a decision by the third appellant, the Provincial Government of the Western Cape (the Province) to sell to the Phyllis Jowell Jewish Day School (NPC) (the Day School)1 two properties, namely, Erf 1675, an unregistered portion of Erf 1424 Sea Point, and the remainder of Erf 1424 Sea Point (collectively referred to as the Tafelberg property). The respondents in this appeal brought two applications in the Western Cape Division of the High Court contesting the sale on the basis that it occurred in circumstances where the 1 The school was the third respondent in the first application before the high court. It did not participate in the appeal in this court. 5 Province and the fifth appellant,2 the City of Cape Town (the City) had failed, over a protracted period, to comply with their obligation to ‘reverse apartheid special design’ and to provide social housing in the centre of Cape Town. The two applications were heard together. The Western Cape Division of the High Court (the high court, Gamble J, with Samela J concurring), granted the order sought in each of the two applications. The main effect of the orders was to declare the sale unlawful and to set it aside. Leave to appeal was granted by the high court in part, and this court granted leave in respect of the remaining issues on appeal.3 This appeal relates to the orders made in both applications. The facts The history of the property [2] The Tafelberg property is located at 355 Main Road, in Sea Point, Cape Town. It measures 1,7054 hectares (ha) in extent. It is registered in the name of the Province. Its long history is set out in full in the judgment of the high court. In brief, in 1899 a girls’ school was established on the property. Almost a century later, the girls’ school was converted into a co-educational public school. At some stage, the school building was used as a remedial school. A block of flats known as Wynyard Mansions was built on a portion of the property and was managed by the Western Cape Provincial Department of Transport and Public Works (Department of Transport). In 2010, the remedial school was closed down. [3] After the last group of scholars were transferred elsewhere, the Province started a process of determining the most suitable use of the property. The tenants of Wynyard Mansions were given notice to vacate the property. Following a lengthy process of provincial inter-governmental discussions and procurement, 2 Third appellant in the second appeal. 3 In respect of the first order, the high court granted the Province and the departments leave to appeal against orders 1 to 6, and 10 to 12. It also granted the City leave to appeal against orders 1 to 6 and 12. 6 in January 2016 the property was sold to the Day School for R135 million. It is this sale that was challenged in two court applications launched in the high court. The process that preceded the sale [4] When the school was closed in 2010, the Provincial Department of Transport was the custodian of the Tafelberg property, as provided in s 1 of the Government Immovable Asset Management Act, 19 of 2007 (GIAMA).4 The Western Cape Department of Education made use of the school premises, and the Provincial Department of Human Settlements made use of Wynyard Mansions.5 The latter continued to use the property until 30 May 2014, when the last tenant was evicted from the Wynyard Mansions. [5] From 2011, the Provincial Department of Human Settlements initiated an investigation into the feasibility of social housing on certain land within the City, including the Tafelberg Property, in line with the ‘Cape Town Central City Regeneration Programme Strategic Framework’ (the Regeneration Programme) and the Western Cape Property Development Process, adopted by the Province in September and October 2010 respectively. The essence of the Regeneration Programme is captured in the following extract from its executive summary: ‘The Western Cape Provincial Government aims through the Cape Town Central Regeneration Programme (CT-CCRP) to:  Unlock Cape Town’s potential to become a city that provides the needs of all its citizens as one of the world’s greatest cities of the world;  Leverage private sector investment, capacity and expertise;  Refurbish and achieve savings in the operation and maintenance of the properties; and 4 Under s 1 read with s 4 of GIAMA a ‘custodian’ is a national or provincial department, as managed by the National Minister, the Minister for Land reform, a Premier of a province, or an MEC of a province duly delegated by the Minister. 5 Under s 1 of GIAMA a ‘user’ is defined as ‘a national or provincial department that uses or intends to use an immovable asset in support of its service delivery objectives and includes a custodian in relation to an immovable asset that it occupies or intends to occupy, represented by the Minister of such national department, Premier of a province or MEC of such provincial department, so designated by the premier of that province’. 7  Generate an income stream to finance provincial property development and maintenance. Not only will this generate economic activity and create jobs and opportunities for empowerment, provide access to the cities resources, facilitate social cohesion and well-being and enable environmental sustainability and energy efficiency. . . . The CC-CCRP will achieve the following Strategic objectives:  Mobilise new investments in the central city;  Ensure that all significant components of the business premises are affordable for small and micro enterprises;  Achieve densification by developing a percentage of residential stock for affordable housing;  Provide access to green and vibrant public spaces within walking distance of residential buildings;  Develop exemplary social facilities for all age groups and cultural persuasions;  Reinforce the vision of trans-oriented development; and  Develop a fibre optic backbone for the central city.’ [6] Whilst the Regeneration Programme was in progress, the Provincial Department of Transport began implementing a ‘High Level Scoping’ exercise that it had designed for the purpose of establishing development potential on the Tafelberg property. On 26 February 2013 this department invited the other provincial departments to make written representations as to whether they required the Tafelberg property for infrastructure purposes to further government objectives. In a written response, dated 13 March 2013, Mr Tshangana, the Manager, Property Planning in the Provincial Department of Human Settlements, advised that his department was of the view that both erven 1424 and 1625 were needed for development of ‘integrated and sustainable human settlements’, more specifically, social housing for persons in the income bracket of R1 500 to R7 500. 8 [7] In a comprehensive response Mr Tshangana expressed his department’s response as follows: ‘[T]he Tafelberg school property is well suited for residential use, Social Housing in particular. It is well serviced by public transport and engineering services. It is recognised that careful thought and design are required for an appropriate use and response to the existing school buildings, which enjoy heritage protection and cannot be demolished or altered. The opportunity for the development of some retail and commercial uses in the Main Road frontage should be exploited as it has the potential to provide cross subsidization for Social Housing. Refurbishment must also be considered for the conversion of the existing school buildings, potentially to community facilities.’ [8] The first appellant, the Member of Executive Council for the Department of Transport did not agree. In a meeting attended by the MECs of the departments, on 15 May 2013, the MEC for Transport made it clear that the Tafelberg property would not be considered for social housing. During March 2014, the Tafelberg property was one of four properties in respect of which the Department of Transport invited expressions of interest for development. The invitation was contained in a 50-page document titled ‘Expression of Interest: Property Development Opportunities in the Cape Town Central Regeneration Programme’. The other properties included in the invitation were: the Alex Street Complex, the Helen Bowden Nurses’ Home Site, and the ‘Top Yard’. In respect of the Tafelberg property, the Department of Transport envisaged a mixed use development which would include a residential component. [9] In January 2015, the Province resolved to finance an anticipated shortfall in a project initiated by the Department of Transport to establish a ‘public private partnership’ (PPP) to relocate the head office of the Department of Education from the Golden Acre/Grand Parade area in the City’s Central Business District (CBD) to the Provincial Office Precinct, in order to reduce rental costs. The idea was to raise funds by selling provincial properties. At the time, no decision had 9 yet been taken on the submission made by the Human Settlements Department regarding the proposed sale of the Tafelberg Property. In March 2015, the Province resolved to sell the Tafelberg property to fund the shortfall anticipated with the Provincial Department of Education office park development. [10] The first respondent, Ms Adonisi, the sixth respondent, Ndifuna Ukwazi, and the Social Justice Coalition (SJC) objected to the sale of the Tafelberg property as part of the Regeneration Programme. Their objections were dismissed by the Department of Transport. So were proposals by other objectors that the MEC of this Department should first consult with the local and national government before making the decision to sell the Tafelberg property. Similarly, a proposal by a Social Housing Institution,6 Communicare, that a project consisting of a social housing and market related rental housing should be implemented found no favour with the Provincial Department of Transport. [11] Following the decision to sell the Tafelberg Property, the Department of Transport had it valued. It obtained a valuation of R107,3 million. The Department then invited bids from prospective purchasers, stipulating that only offers above the market value would be considered. The tender document provided that the scoring system would be 90:10 for price as against Broad-based Black Economic Empowerment (BBEE). Of the five offers received only two were above the market valuation. The scoring resulted in the Day School winning the tender for the sale price of R135 million. On 3 July 2015, the Department of Transport recommended Provincial Property Committee (PPC), that the property be sold to the Day School. The Provincial Cabinet approved the proposal as 6 In terms of s 1 of the Social Housing Act a social housing Institution is an institution accredited or provisionally accredited under the Social Housing Act, and carries or intends to carry on the business of providing rental or co-operative housing options for low to medium income households (excluding immediate individual ownership and a contract as defined as defined under the Alienation of Land Act, 1981 (Act No 68 of 1981), on an affordable basis, ensuring quality and maximum benefits for residents, and managing its housing stock over a long term. 10 provided in Reg 4(5) of the regulations promulgated in terms of the Western Cape Land Administration Act 6 of 1998. [12] The Department of Human Settlements was duly informed that a decision had been taken to dispose of the property in order to create an income stream for an Asset Reserve Fund that would be used for the construction and maintenance of social infrastructure. It agreed to withdraw its request to have the property made available for social housing, albeit grudgingly, highlighting that the property had been found to be suitable for human settlement development. Mr Thando Mguli, the Head of Department (HOD) of the Department of Human Settlements remarked that whereas his department had released hundreds of hectares of land under its custodianship for human settlement development, the Department of Transport had never released any land under its custodianship for that purpose. He expressed his frustration with what he considered to be an incorrect interpretation of s 5(1)(a) of GIAMA by the officials in the Department of Transport, to the effect that only ‘surplus’ land that is not needed for Provincial functions, may be made available for human settlement development.7 [13] On 11 November 2015, the Provincial Cabinet approved the sale, and on 20 November 2015 the MEC for Transport accepted and signed the offer made by the Day School. However, about six months later, the respondents launched the first application, challenging the lawfulness of the sale. They maintained, amongst other things, that there had been no compliance with the procedural and substantive requirements prescribed in s 3 of the WCLAA, in that the notice of the intended sale by the Provincial Premier was never published in an IsiXhosa 7 In terms of s 5(1)(a) of GIAMA one of the principles of management of government immovable assets is that an immovable asset must be used efficiently. It becomes surplus to a user if it does not support the user’s service delivery objectives at an efficient level and if it cannot be upgraded to that level. In terms of s 5(f) of GIAMA when a custodian intends disposing of a government immovable asset he or she must consider whether that asset can be used by another user, or jointly by different users, in relation to other specified government objectives. 11 newspaper, circulating within the Province, prior to the notice and comment process. This led to the court granting an order that the notice and comment process be re-opened. The Province invited comments from the public on whether it should resile from the sale.8 [14] The reopening of the notice and comment process led to numerous submissions. As a result, the Province resolved that work should be done on a financial model for development of social housing on the Tafelberg property. Thirty-seven comments were received in respect of the newly proposed financial model. On 22 March 2017 the Province published, on its website, a minute of its decision not to resile from the sale. The minute reads: ‘CABINET DECISION IN RESPECT OF WHETHER TO RESILE OR NOT FROM THE SALE AGREEMENT PERTAINING TO THE TAFELBERG SITE Department of Transport and Public Works Department of Human Settlements Department of the Premier RESOLVED that – 1 Having taken into account the comments submitted out of the public participation process applied in this matter to date, along with the recommendation of the custodian, the legal advice received and the presentations by the various officials, the Cabinet considered the following factors to be material during the course of its deliberations on whether or not to resile from the Tafelberg sale agreement: 1.1 The current proposed and future initiatives being undertaken by the DOHS in relation to the progressive realization of the right to adequate housing by the citizens of the Western Cape, and specifically the pipeline of 40 000 affordable housing opportunities reported to the Cabinet by DOHS in this regard. In relation to social housing, specifically the pipeline includes 10 810 units at a cost of R1,2 billion over the next 10 years- in the metro and 14 008 units at a cost of R1.57 billion, in the non-metro area of the Western Cape. 8 In terms of the sale agreement the Province had an option of resiling from the sale. 12 1.2 The Memorandum of Undertaking between DOHS and DOTPW, and the result thereof, i.e. the identification of 18 parcels of land by DOHS for human settlement purposes, including but not limited to land within the City of Cape Town. 1.3 The prior decisions of Cabinet on 22 March 2017 in relation to the proposed use and/or disposal of the Woodstock hospital site and the Helen Bowden Nurses Home site (both within the metro) as contained in the presentation by DOTPW in this regard. More specifically the request by Cabinet that any proposed disposal of the Woodstock hospital site (in whole or in part) be referred to Cabinet so as to enable it to ensure that affordable housing is best achieved on that site given its locality and size. Similarly with respect to Green Point Helen Bowden site, that any RFP that is developed contain within it the requirement for the maximum quantum of affordable housing as will make the development of the site viable. 1.4 The identified legal risks in a social housing development under the auspices of the Social Housing Act on this site currently, including, inter alia: 1.4.1 The legal advice received from senior counsel pertaining to the comment made by the Phyllis Jowel Jewish Day School, in relation to the definition of a “Restructuring Zone” in the Social Housing Act, read with the National Minister’s designations and the City’s currently identified Restructuring Zones. Counsel’s advice is that the Tafelberg site does not currently fall within such a Zone as defined, rendering the availability of the restructuring capital grant unavailable to any social housing institution for a project on that site currently. All social housing proposals received to date as part of the public participation process presume a restructuring capital grant is available. Cabinet notes that the National Minister may be approached to amend the Restructuring Zone designations but, as of 22 March 2017, counsel’s advice is that Sea Point does not fall within such a designated area. 1.4.2 That the current income bands and associated grants applicable to social housing projects are in the process of amendment. Such amendments have not, to date come into operation. Necessary legislative amendments, to enable any social housing project in Sea Point or Green Point to benefit from a restructuring Capital grant and increased income bands are required and probable but as of date this cabinet decision, neither of the necessary suite of amendments is in operation. 1.5 While Cabinet accepts that social housing is notionally an option on any piece of land owned by the Western Cape Government, in addition to what has been set out above, the value of the land which has been achieved in this sale, the high construction costs acknowledged in the public participation process, the acknowledgment out of the public participation process that extensive cross-subsidisation is required to render the project financially feasible and the 13 inherent land use restrictions which apply to this site, including, inter alia, heritage and zoning requirements, render this specific site sub-optimal for social housing. 1.6 The loss of injection of revenue of R135 million earned for other infrastructure required for the provincial government, in a climate of fiscal austerity and under a direct instruction from National Treasury to optimize the use of its assets for inter, alia, revenue raising measures. RESOLVED further that – 2 Accepting that –  A rational approach to a policy-laden decision of this nature, encompasses a basket of legal and policy considerations;  The expertise and comment of the administration are necessary;  Cabinet is entitled to accord its interpretation of the facts and the law to the matter at hand, subject to no fraud, corruption or mala fides being in evidence, The Cabinet is of the view that a holistic approach to the utilization of provincial assets and the methods by which the Western Cape Government is pursuing its legislative obligations and policies in that regard, is preferable to an ad hoc site-by-site determination, i.e. of trying to achieve all its objectives on every site. The recommendation in this regard, by the custodian, that an integrated angle approach be adopted is one which is rational and accepted. RESOLVED further that – Cabinet is accordingly of the view that a decision to uphold the contract of sale is rational, prudent and appropriate, and accordingly decides not to resile from the current contract of sale concluded with the Phyllis Jowell Jewish Day School.’ It is this decision that lies at the centre of the dispute between the parties to this appeal. [15] On 30 March 2017, the National Minister of the Department of Human Settlements wrote to the Province advising that she intended to ‘pursue the development of social housing on the Tafelberg property’. She invoked s 41 of the Intergovernmental Relations Framework Act 13 of 2005 (IGRFA) advising that a dispute had arisen as a result of the sale of the property. She warned that she would be referring the dispute for inter-governmental dispute resolution. The Premier denied that there was a dispute between the National Department of Human Settlements and the Province. She asserted that IGRFA found no 14 application in the circumstances, but indicated her willingness for engagement to take place between members of the respective offices about the sale. [16] In the ensuing correspondence, the National Minister insisted that she would be referring for resolution four aspects of an intergovernmental dispute for resolution. These related to whether, in concluding the sale, the Province: (a) complied with the s 5 of GIAMA; (b) disregarded its obligation to provide social housing in terms of the Social Housing Act (c) provided rational reasons for its decision not to resile from the sale, taking into account the constitutional and legislative requirements to provide social housing; and (d) whether the property fell within a restructuring zone; and if not, whether it was ‘rational’ for the Province not to approach the National Minister for a designation declaring it to be a restructuring zone. [17] In addition to maintaining that there was no merit in the alleged disputes, the Premier argued that the Province was functus officio in relation to the sale, and that IGRFA was not applicable to the sale, particularly as a private entity was involved. The high court applications The first application [18] In the first application (High Court Case no 7908/17), the first respondent, Ms Thozama Angela Adonisi (Ms Adonisi) and five other applicants (the second to sixth respondents in this appeal), sought an order declaring that the Province and the City, had failed to comply with their obligations under the Constitution and the legislation enacted to give effect to their rights of access to land and adequate housing. The Provincial Minister of the Department Transport was cited 15 as the official responsible under the WCLAA and GIAMA, for disposal of land owned by the government. [19] When the first high court application was launched, the first to fourth respondents9 were residents of various suburbs, in and around the City. Ms Adonis resided in a basement of a block of flats in Sea Point. She sat on the leadership committee of the Sea Point Chapter of the fifth respondent, ‘Reclaim the City’, a voluntary organisation with about 3000 ‘working class’ members within the City. Reclaim The City was instrumental in launching the first application in the high court.10 The second respondent, Ms Phumza Ntutela, lived in Nyanga Township, about 25km from Sea Point. The third respondent Ms Sharone Daniels lived in Ocean View and worked in the City. The fourth respondent Ms Selina La Hane resided in Sandrift, Milnerton. The trustees for the time being of Ndifuna Ukwazi Trust, were the sixth applicant. [20] The application was brought on substantially the same basis on which the Ms Adonisi and Ndifuna Ukwazi had objected to the sale during the notice and comment process - that when deciding to sell the Tafelberg property to a private entity, the Day School, the Province failed to take into consideration various constitutional and legislative imperatives, to take reasonable measures to enable black and coloured working class residents of the City, to access land and housing within the CBD of the City and its surrounds, on an equitable basis. The respondents contended that the availability of the Tafelberg property for sale presented the Provincial Government, as an entity charged with the task of urgently re-engineering spatial inequality in the Province and the City, with an opportunity to improve the availability of affordable housing within the City. 9 Ms Adonisi, Ms Ntutela, Ms Daniels, and Ms Hane. 10 Hence the reference in the high court judgment to the first application as the RTC application. 16 [21] The respondents argued that the conception and implementation of the urban regeneration objective of the City was skewed. They maintained that since the late 1990’s, buildings in the City centre had been renovated and new buildings had been constructed to provide residential accommodation to households with income brackets in the top 20% of income earners in the City. In addition, gentrification of areas such as the BO-Kaap, Woodstock and Salt River had resulted in rental properties which accommodated the poor and working class people being sold to property developers, who converted them into residential accommodation unaffordable for the poor and low income earners. As a result, people who could least afford the cost of transport were forced to move further to the outskirts of the city. All of this resulted in increased demand, and a corresponding increase in the price of acquiring land for social housing. They contended that because the State cannot acquire land at market related prices it must use the pockets of land that it still owns in and around the CBD to provide social housing. [22] More specifically, with regard to residents who live and work in Sea Point, the respondents maintained that instead of considering the Tafelberg property for social housing, the Province gave priority to purely financial considerations. They sought orders to the effect that that the Province, the MECs for the Departments of Public Transport, and Human Settlements had failed to meet their Constitutional and statutory obligations; and that they be ordered to comply with such obligations, and report to the court the steps taken to comply; and that the decisions taken to sell the Tafelberg property be reviewed and set aside. [23] The Province denied that it had acted in breach of its constitutional and statutory duties in selling the property. It contended that it was doing its best with the limited resources at its disposal to provide affordable housing generally and social housing in particular. It acknowledged, however, that spatial apartheid is 17 far from being redressed in Cape Town, but highlighted that an appropriate balance had to be struck between delivery of spatially-integrated housing, on the one hand, and ensuring delivery in respect of other constitutional imperatives, on the other hand. In the answering affidavit, the Head of the Provincial Department of Transport, Ms Jacqueline Gooch, explained the budgetary constraints under which the Province was operating, particularly following the 2015 public servants wage agreements, the reduction in the provincial equitable share revenue allocation in the 2016/17 financial year, and the instruction from the Deputy Minister of Finance that MECs should reprioritize their budgets. [24] The Province also emphasised that the 2014 Western Cape Provincial Spatial Development Framework (provincial SDF) showed a considered commitment to ensure spatial integration. However, that notwithstanding, spatial integration could not be effected in respect of every available property in central Cape Town. [25] The City asserted that as far back as 1996 it had acknowledged the historical legacy of under-development, deprivation, and it designed its own spatial development framework, the City’s Spatial Development Framework of 2012 (City SDF). That framework is also aimed at increasing affordable housing that is located in close proximity to the City’s economic opportunities, the City argued.11 The second application [26] In the second application (high court case no 12327/17), which was launched two months after the first application, the National Minister of the Department of Human Settlements together with the Social Housing Regulatory 11 City SDF at 77. 18 Authority (SHRA) sought an order that the decision to sell the Tafelberg property be reviewed and set aside. The application was brought on the basis that the Provincial Government had failed to comply with its obligation under IGRFA, to consult the two respondents about its intention to dispose of government land. [27] The Province denied the existence of any constitutional and statutory obligation to consult the National Government when disposing of its property. However, it did respond to inquiries from the National Minister about the sale, until the lines of communication ended. The City also contended that the respondents were not entitled in law to demand social housing in central Cape Town or a specific location. Both the Province and City contended that, the respondents should assert the obligations owed to them under the social housing legal framework comprising the Housing Act, the Social Housing Act and the Spatial Land Use Management Act 16 of 2013 (SPLUMA). The high court orders [28] The orders granted by the high court in the two applications are lengthy. However, it is necessary to set them out in full for a clear appreciation of the issues that arise in this appeal. The order in the first application reads as follows: ‘1. That it is declared that the fourth and sixth respondents have the following obligations in terms of the Constitution of the Republic, 1996: (i) Under s 25(1) the said respondents are obliged to take reasonable and other measures, within their available resources, to foster conditions which enable citizens to gain access to land on an equitable basis; (ii) Under s 26(2) the said respondents are obliged to take reasonable and other legislative measures, within their available sources, to achieve the progressive realization of the right of the citizens to have adequate housing as contemplated in s 26(1) of the Constitution. 2. It is declared that the fourth and the sixth respondents have failed to comply with their respective obligations under the legislation enacted to give effect to the said rights, namely, the 19 Housing Act 107 of 1997 and the Social Housing Act, 16 of 2008, and have accordingly breached their respective duties under the Constitution. 3. It is declared that in so failing to comply with their obligations as aforesaid, the fourth and sixth respondents have failed to take adequate steps to redress spatial apartheid in central Cape Town (the boundaries of which were in 2017 as depicted on the map annexed hereto marked “A”); 4. The fourth and sixth respondents are directed to comply with their constitutional and statutory obligations as set out in paras 1 to 3 above. 5. The fourth and sixth respondents are directed to jointly file a comprehensive report under oath, by 31 May 2021, stating what steps they have taken to comply with their constitutional and statutory obligations as set out above, what future steps they will take in that regard and when such future steps will be taken. Without derogating from the generality of the aforegoing, the fourth and sixth respondents are specifically directed to: (i) consult with all departments of State and organs necessary to discharge their duty in so reporting to the court; and (ii) include in their report their respective policies and integration thereof in regard to the provision of social housing as contemplated in the Social Housing Act within the area of central Cape Town as depicted on annexure “A” hereto. 6. The applicants are granted leave to file an affidavit (or affidavits) responding to the reports filed by the fourth and sixth respondents in terms of paragraph 5 above within one month of them having been served on their attorneys of record. 7. The November 2015 decision of the Premier of the Western Cape Province, acting together with other members of the Provincial Cabinet to sell Erf 1675, an unregistered portion of Erf 1424 Sea Point, and the remainder of Erf 1424 Sea Point (hereinafter collectively referred to as “the Tafelberg Property”) to the third respondent, together with the deed of sale in respect of the Tafelberg Property entered into between the third and sixth respondents is hereby reviewed and set aside. 8. The 22 March 2017 decision of the Premier of the Western Cape Province, acting together with the other members of the Provincial Cabinet, not to resile from the contract of sale concluded with the third respondent is hereby reviewed and set aside. 9. It is declared that Sea Point falls within the restructuring zone ‘“CBD and surrounds Salt River, Woodstock and Observatory)”’ as contemplated in sub-regulation 6.1 of the Provincial Restructuring Zone Regulations published under General Notice 848 in Government Gazette 34788 of 2 December 2011. 20 10. It is declared that Regulation 4(6), and the proviso in Regulation 4(1), of the Regulations made under section 10 of the Western Cape Land Administration Act, 6 of 1998 by Provincial Notice No 595 published in Provincial Gazette No. 5296 on 16 October 1988 (hereinafter referred to as “the Regulations”) are unconstitutional and invalid.’ 11. It is declared that the disposal of the Tafelberg Property in accordance with Regulation (4(6), and the proviso in Regulation 4(1), of the Regulations is unlawful. This declaration shall operate prospectively and will not affect any rights which have accrued to any party as at the date of this judgment. 12. The applicants’ costs of suit (which are to include the costs of two counsel where employed), are to be borne by the fourth and sixth respondents, jointly and severally. 13. Save as aforesaid, each party is to bear its own costs of suit in relation to this application’. [29] In the second application the high court granted the following order: ‘1. It is declared that the failure of the Western Cape Provincial Government (hereinafter “the Province”) to inform the National Government (represented by the first and second applicants herein) of its intention to dispose of Erf 1675, an unregistered portion of Erf 1424 Sea Point, and the remainder of Erf 1424 Sea Point (hereinafter collectively referred to as “the Tafelberg Property”) and to consult and engage with National Government (represented as aforesaid) in this regard, constitutes a contravention of the Province’s obligations in terms of Chapter 3 of the Constitution, and the Intergovernmental Relations Framework Act, 13 of 2005 2. The November 2015 Decision of the Premier of the Western Cape Province, acting together with other members of the Provincial Cabinet, to sell the Tafelberg Property to the fifth respondent, together with the deed of sale in respect of the Tafelberg Property entered into between the first and fifth respondents are hereby reviewed and set aside. 3. The 22 March 2017 decision of the Premier of the Western Cape Province, acting together with the other members of the Provincial Cabinet, not to resile from the contract of sale concluded in respect of the Tafelberg Property with the fifth respondent is hereby set aside. 4. It is hereby declared that the deed of sale between the Province and the fifth respondent in respect of the Tafelberg Property is void, of no force and effect and is hereby set aside. 5. It is declared that Regulation 4(6) and the Proviso in Regulation 4(1), of the Regulations made under section 10 of the Western Cape Land and Administration Act, 6 of 1998 by Provincial Notice No. 595 published in Government Gazette No 5296 on 16 October 21 1998, are unconstitutional and invalid. This declaration shall operate prospectively and will not affect any rights which have accrued to any party as at the date of this judgment. 6. The first and third applicants’ costs of suit (which are to include the costs of two counsel where employed) are to be borne by the first respondent. 7. Save as aforesaid, each party is to bear its own costs of suit in relation this application.’ [30] Subsequent to the granting of the court orders, the sale of the property (which had already been set aside by the court), was cancelled, at the instance of the Day School. The parties are in agreement, and I agree, that although the sale was cancelled the issues pertaining to the provision social housing and the role of the different spheres of government are very important and require clarification. They are of considerable public interest. The appeal Constitutional subsidiarity [31] The appellants accept that they bear the responsibilities set out in para 1 of the first order. They assert, however that their responsibilities flow from the Housing Act and the Social Housing Act, these being the statutes enacted to give effect from the rights and obligations that are provided for in ss 25 and 26 of the Constitution. They contest the rest of the first order and the whole of the second order. The high court traversed the guiding principles relevant to interpretation of socio-economic rights, set out in the judgments of the Constitutional Court, including Mazibuko,12 Grootboom,13 and TAC.14 It discussed the established principles of legislative interpretation – that courts must promote the spirit, purport and objects of the Bill of Rights as required under the s 39(2) of the 12 Mazibuko and Others v City of Johannesburg and Others 2010 (4) SA 1 (CC) at 87-88. 13 Government of the Republic of South Africa and Others v Grootboom and others 2001 (1) SA 46. 14 Minister of Health and Others v Treatment Action Campaign and Others (No 2) 2002 (5) SA 721 (CC). 22 Constitution, 15 and accord to statutory provisions a contextual, purposive meaning which is consistent with these objectives. [32] It is necessary, first, to highlight that the principle of constitutional subsidiarity is part of our Constitutional framework. The foundational norms of the Constitution are expressed in general terms. Where legislative and other measures have been enacted to realise the rights and obligations in the Constitution, the foundational norms espoused in the Constitution should find expression in such legislative measures. By way of example, the preamble to SPLUMA recognises that many people in South Africa continue to live and work in places defined and influenced by past spatial planning, land use laws, and practices, which were based on racial inequality, segregation, and unsustainable settlement patterns. It provides that it is the obligation of the State to realise the constitutional imperatives in ss 24, 25, 26, and 27(1) of the Constitution. Section 12(1) of SPLUMA imposes an obligation on the national, provincial and local governments to prepare spatial development frameworks. The statute, rather than the Constitution, is therefore the direct source of the rights and obligations relating to preparation of spatial development frameworks. It is to its statutory provisions that litigants must look in asserting their rights and the obligations owed to them. [33] In My Vote Counts,16 Cameron J (writing for the minority) re-affirmed the principle of constitutional subsidiarity as follows: ‘[52] The Constitution is primary, but its influence is mostly indirect. It is perceived through its effects on the legislation and the common law - to which one must look first. 15 Makate v Vodacom Ltd 2016 (4) SA 121 (CC). 16 My Vote Counts NPC v Speaker of the National Assembly and Others 2015 (12) BCLR 1407 (CC). Although the Court was split as to whether the statute in question gave effect to the rights in question all the judges agreed that the principle remains part of our law. 23 [53] These considerations yield the norm that a litigant cannot directly invoke the Constitution to extract a right he or she seeks to enforce without first relying on, or attacking the constitutionality of, legislation enacted to give effect to that right. This is the form of constitutional subsidiarity Parliament invokes here. Once legislation to fulfil a constitutional right exists, the Constitution's embodiment of that right is no longer the prime mechanism for its enforcement. The legislation is primary. The right in the Constitution plays only a subsidiary or supporting role. [54] Over the past 10 years, this Court has often affirmed this. It has done so in a range of cases. First, in cases involving social and economic rights, which the Bill of Rights obliges the state to take reasonable legislative and other measures, within its available resources, to progressively realise, the Court has emphasised the need for litigants to premise their claims on, or challenge, legislation Parliament has enacted. In Mazibuko, the right to have access to sufficient water guaranteed by section 27(1)(b) was in issue. The applicant sought a declaration that a local authority's water policy was unreasonable. But it did so without challenging a regulation, issued in terms of the Water Services Act, that specified a minimum standard for basic water supply services. This, the Court said, raised "the difficult question of the principle of constitutional subsidiarity". O'Regan J, on behalf of the Court, pointed out that the Court had repeatedly held "that where legislation has been enacted to give effect to a right, a litigant should rely on that legislation in order to give effect to the right or alternatively challenge the legislation as being inconsistent with the Constitution". The litigant could not invoke the constitutional entitlement to access to water without attacking the regulation and, if necessary, the statute.’ [34] The majority agreed. At paragraph 160 of the judgment Judges Khampepe, Madlanga, Nkabinde and Acting Judge Theron said: ‘The minority judgment correctly identifies the “inter-related reasons from which the notion of subsidiarity springs”. First, allowing a litigant to rely directly on a fundamental right contained in the Constitution, rather than on legislation enacted in terms of the Constitution to give effect to that right, “would defeat the purpose of the Constitution in requiring the right to be given effect by means of national legislation”. Second, comity between the arms of government enjoins courts to respect the efforts of other arms of government in fulfilling constitutional 24 rights. Third, “allowing reliance directly on constitutional rights, in defiance of their statutory embodiment, would encourage the development of 'two parallel systems of law”.’17 [35] To realise the rights in s 26 of the Constitution the legislature enacted the Housing Act, the Social Housing Act and SPLUMA. The preamble to the Housing Act acknowledges the right, under s 26(1) of the Constitution to have access to adequate housing, and the obligation on the State to take reasonable legislative and other measures, within its available resources, to give effect to this right. The Act then sets out, as its objectives, the establishment and promotion of a sustainable social housing environment, the definition of the functions of national, provincial and local governments, and the establishment of the Social Housing Regulatory Authority. [36] Part 1 of the Act sets out the general principles which all spheres of government must take into account when implementing the objectives of the Act. These include giving priority to the needs of the poor, consulting meaningfully with individuals and communities affected by housing development, ensuring that housing developments provide a wide choice of housing and tenure options, are economically affordable and sustainable, are based on integrated development planning, and are administered in a transparent manner. Specific ‘roles and responsibilities’ of the national, provincial and local governments are set out in Parts 2, 3, and 4, of the Act. The Social Housing Act is formulated similarly, with the roles and responsibilities of the different spheres of government, and those of other role players set out in ss 3, 4, 5, and 6 of that Act.18 Evidently, a 17 See also Clutchco (Pty) Ltd v Davis [2005] 2 All SA 225; [2005] ZASCA 16; 2005 (3) SA 486) (SCA); NAPTOSA and others v Minister of Education, Western Cape and others 2001 (4) BCLR 388; [2000] ZAWCHC 9; 2001 (2) SA 112, and Member of the Executive Council for Development Planning and Local Government, Gauteng v Democratic Party and others [1998] ZACC 9; 1998 (4) SA 1157 (CC); 1998 (7) BCLR 855 (CC) at para 62. 18 Other role players include the National Housing Finance Corporation, and the Social Housing Regulatory Authority, which bears the responsibility of promoting awareness of social housing and advising the Department of Human Settlements in its development of policy for the social housing sector, amongst other things. 25 comprehensive statutory regime is in place as implementation of the constitutional rights under s 26 of the Constitution is in progress. It is upon that statutory regime, rather than the Constitution, that the source of any right or obligation sought to be enforced must be located. The obligation to provide social housing in central Cape Town [37] Recently, in City of Cape Town v Commando and Others19 this Court considered whether the State has an obligation to provide emergency residential accommodation at a specific location, as an extension of the obligation to provide access to adequate housing entrenched in s 26 of the Constitution. Occupiers of properties within the City, including Woodstock and Salt River, had asserted that the City’s housing programme was deficient in that it did not provide for access to emergency housing and accommodation in the immediate inner city and surrounds in order to meet their urgent emergency housing needs. The high court had ordered the City to make emergency housing in the inner city. Ironically, in that case the high court ‘suggested’20 that City’s implementation of its housing programme in the inner City gave undue preference to social housing at the expense of its constitutional obligation to provide emergency housing. [38] This Court emphasised that it is within the domain of the executive to determine how public resources are drawn upon and re-ordered. It held that: ‘Having failed to identify the source of the constitutional duty in the Constitution or the Housing Act, the occupiers resorted to relying on s 26 of the Constitution in general terms. However the principle of subsidiary prohibits direct reliance on the Constitution where specific and detailed legislation giving effect to a right sought to be enforced has been passed’.21 [39] More importantly, it also held that: 19 City of Cape Town v Commando and Others [2023] ZASCA 7. 20 See para 59 of the judgment of this Court. 21 At para 56. 26 ‘For this contention [that the State has an obligation to provide emergency residential accommodation at a specified location] to withstand scrutiny, a source of the duty had to be identified. The legislative measures and programmes taken by the government giving effect to s 26 of the Constitution do not impose a duty on it to provide temporary emergency accommodation at a specific locality. Nor have line of cases since Grootboom interpreted the duties flowing from s 26 to oblige the government to provide emergency housing at a specific location. In fact the opposite is suggested. In Thubelitsha Ngcobo J observed that ‘the Constitution does not guarantee a person a right to housing at government expense at a locality of his or her choice. Locality is determined by a number of factors including availability of land. However, in deciding on the locality, the government must have regard to the relationship between the location of residents and their places of employment’.22 (emphasis supplied) (footnotes omitted) [40] In this case too, the respondents did not plead, and the high court did not identify, any statutory provision that requires the provision of social housing at a specified location. Apart from relying on provisions of ss 25 and 26 of the Constitution, the respondents placed reliance, generally, on obligations created in the Housing Act and Social Housing Act. The high court accepted that the two pieces of legislation, together with SPLUMA, are components of the legislative framework enacted to give effects to the rights created in the Constitution. It went to great lengths to describe the racial and class aligned patterns of segregated residential settlement and socio economic exclusion in the landscape of the City that still derive from apartheid. It highlighted the plight of the poor and working class, and black majority that live on the periphery of the City, far from places of employment, and in overcrowded conditions, with hardly any amenities and services, while the predominantly white middle class residents are located in well-located areas with access to ‘excellent’ amenities, services and employment opportunities. 22 At para 53. 27 [41] That historical context does find expression in s 2 of the Housing Act, which sets out the relevant factors for determination of the extent of the right of access to adequate housing. The country’s history of racial inequality, segregation and unsustainable settlement patterns are acknowledged. So are the obligations on the state to respect, protect, promote and fulfil the social, economic and environmental rights of everyone, and to strive to meet the basic needs of previously disadvantaged communities. [42] The specific roles and responsibilities of provincial governments are listed in s 4 of the Social Housing Act as to: ‘(a) ensure fairness, equity and compliance with national and provincial social housing norms and standards; (b) ensure the protection of consumers by creating awareness of consumer’s rights and obligations; (c) facilitate sustainability and growth in the social housing sector; (d) mediate in cases of conflict between a social housing institution or other delivery agent and a municipality, if required; (e) submit proposed restructuring zones to the Minister; (f) monitor social housing projects to ascertain that relevant prescripts, norms and standard are being complied with; (g) approve, allocate and administer capital grants, in the manner contemplated in the social housing investment plan, in approved projects; (h) ensure that the process contemplated in paragraph (g) is conducted efficiently; (i) administer the social housing programme, and may for this purpose approve- (i) any projects in respect thereof; and (ii) the financing thereof out of money paid into the accredited bank account of the province as contemplated in section 18(3); and (j) develop the capacity of municipalities to fulfill the roles and responsibilities contemplated in section 5’. 28 In s 7 of the Housing Act similar roles and responsibilities are referred to as functions of the Province.23 [43] Under s 5 of the Social Housing Act, municipalities have an obligation – ‘where there is a demand for social housing within its municipal area, [to] . . . take all reasonable and necessary steps, within the national and provincial legislative, regulatory and policy framework- (a) to facilitate social housing delivery in its area of jurisdiction; (b) to encourage the development of new social housing stock and the upgrading of existing stock or the conversion of existing non-residential stock (c) to provide access- (i) to land and buildings for social housing development in designated structured zones; (ii) for social housing institutions to acquire municipal rental stock; (iii) to municipal infrastructure and services for approved projects in designated restructuring zones; and (d) to the extent permitted under the Local Government: Municipal Finance Management Act, 2003 (Act 53 of 2003), (i) (initiate and motivate the identification of restructuring zones; and (ii) enter into performance agreements with social housing institutions’. The functions of municipalities under the Housing Act are listed in s 9.24 23 Under the Social Housing Act the functions of provincial governments are set out in s 7 as follows: (1) Every provincial government through its MEC, must, after consultation with the provincial organisations representing municipalities as contemplated in s163 (a) of the Constitution, do everything in its power to promote and facilitate the provision of adequate housing in its province within the framework of national policy. (2) For the purpose of subsection (1) every provincial government must, through its MEC- (a) determine provincial policy in respect of housing development; (b) promote the adoption of provincial legislation to ensure effective housing delivery; (c) take all reasonable and necessary steps to support and strengthen the capacities of municipalities to effectively exercise their powers and perform their duties in respect of housing development; (d) when a municipality cannot or does not perform a duty imposed by this Act, intervene by taking any appropriate steps in accordance with section 139 of the Constitution to ensure the performance of such duty; and (e) prepare and maintain a multi-year plan in respect of the execution in the province of every national housing programme and every provincial housing programme, which is consistent with national housing policy and section 3 (2) (b), in accordance with the guidelines that the Minister approves for the financing of such a plan with money from the Fund. Other functions listed under this section relate to the MEC. 24 Section 9 of the Social Housing Act stated: ‘Functions of municipalities. -(1) Every municipality must, as part of the municipality’s process of integrated development planning, take all reasonable steps within the framework of national and provincial housing legislation and policy to- (a) ensure that- (i) the inhabitants of its area of jurisdiction have access to adequate housing on a progressive basis; 29 [44] The Province and the City cannot be allowed to shun the obligation to consider racial, social, economic, and physical integration, and the location of the residents’ places of employment, when implementing social housing programmes. The respondents had to demonstrate that the Province and the City had failed to consider the s 2 obligations (under both or either of the Housing Act and the Social Housing Act) in performing one or more of the roles and responsibilities or functions specified in relevant legislation. [45] In relation to the Province the respondents acknowledged that the provincial Spatial Design Framework addresses the relationship between planning for future land use and affordable housing strategies. In that framework the Province admits, amongst other things, that: ‘Exclusionary land markets mitigate against spatial integration of socio-economic groups and limit affordable housing to well-located land. At the same time, government sits on well-located under-utilised land buildings. . .’ . They also acknowledged the shortage of state-owned land that can be used for affordable housing, especially social housing, in the CBD. The respondents also refer to the City’s acknowledgment, in its 2017/2018 Built Environment Performance Plan, that the availability of and development of affordable rental accommodation in central areas of the city must play a key role in the future development of the City and that no site that meets that meets the criteria for (ii) conditions not conducive to the health and safety of the inhabitants of its area of jurisdiction are prevented or removed; (iii) services in respect of water, sanitation, electricity, roads storm-water drainage and transport are provided in a manner which is economically efficient; (b) set housing delivery goals in respect of its area of jurisdiction; (c) identify and designate land for housing development; (d) create and maintain a public environment conducive to housing development which is financially and socially viable; (e) promote the resolution of conflicts arising in the development process; (f) initiate, plan co-ordinate, facilitate, promote and enable appropriate housing development in its area of jurisdiction; (g) provide bulk engineering services, and revenue generating services in so far as such services are not provided by specialist utility suppliers; and (h) plan and manage land use and development’. 30 providing affordable housing should be excluded from being realised as an opportunity to reverse the legacy of apartheid by providing affordable housing to lower income families. [46] The City admits that its housing delivery strategy was initially focused on delivering as many houses as possible. This resulted in the implementation of social housing programmes on the periphery of the city where land is cheaper, with the unintended consequence of entrenching the old apartheid spatial patterns. The pipeline programme is a plan of action or a strategy for housing delivery, and in that sense a government policy. It was an adjustment from the regeneration programme. However, the Province and the City had to also consider the higher cost of housing delivery in the inner City. The Province explained that the driving factors include the cost of land, the economies of scale in respect of building costs because of land availability, and the high cost of rates and taxes in the inner City. These were relevant factors in their decision-making-process. [47] The high court made no reference, in its judgment, to the evidence relating to the social housing pipeline programme. This factor was listed prominently as one of the considerations that led to the decision not to resile from the sale. The respondents contended that ‘the single most important – and damning – aspect of the context which should be taken into account is the complete failure to deliver affordable housing in central Cape Town’. They argued that neither the Province, nor the City could claim to have completed a single affordable housing programme in central Cape Town in the 24 year period between the end of apartheid and the finalization of their answering affidavits in 2018’. However, there was evidence of a number of social housing projects in the City which yielded 2 168 social housing units at a cost of R686 489 804. By March 2017, the number of social housing units in the metropolitan pipeline programme was 10 810. In addition, as at 25 April 2018, the total number of houses planned for 31 the Cape Metropole was 11 007, with an additional 3 844 units under discussion. The appellants describe the social housing pipeline as ‘a working document, which is updated as projects progress in terms of readiness planning’. [48] The reasons for the decision not to resile from the sale of the Tafelberg property included consideration of the planned development on the Helen Bowden site (10 hectares), as part of the Somerset Precinct development, in close proximity to the V&A Waterfront, the natural amenities, the Cape Town Stadium and the CBD. Social housing would constitute 20 percent of the Helen Bowden site development. The Provincial Department of Transport had already applied for rezoning, consolidation and subdivision of several erven in Green Point, ‘approximately two kilometres north-west of the CBD’. In addition the Province had approved disposal of 12 erven to the City at a price of R5,1 million (a price below the market value of R9 million) for provision of social housing. [49] The other projects listed as part of the social pipeline project included the Woodstock Hospital site development, in which provision had been made for a minimum of 700 social housing units. The respondents did not give much consideration to the appellants’ evidence relating to the social housing pipeline. However this factual context cannot be ignored. Their case was built around the unacceptability of the Regeneration programme and an alleged total disregard by the Province and the City of their constitutional obligations. Against the detailed evidence tendered by the appellants on ongoing provision of social housing within the City, I do not agree with the submission made on behalf of the respondents that the arguments made by the Province was without context. The evidence of the appellants’ policy formulation and implementation disproved the allegations that they had no coherent housing delivery strategy, and that the Province remained intent on not providing any social housing in the CBD. 32 [50] Much was made of the denial by the Province and the City of any obligation resting on them to ‘reverse apartheid spatial design’. I do not think this issue requires extensive consideration. The history of the spatial design in urban and rural spaces of this country is well known. And, despite this denial, the Province and the City acknowledged that spatial apartheid is far from redress in the City. In their respective Spatial Design Frameworks they acknowledged their responsibility to achieve equitable spatial integration.25 The real questions are (1) whether the Province and City had an obligation to provide social housing at a specified location - central Cape Town, and (2) whether they failed to meet this obligation. As apparent from the roles and responsibilities, and functions of the provincial and local governments set out above, there is no such obligation. Apart from the roles and responsibilities set out in the Housing Act and Social Housing Act, the Province and the City were obliged to apply the general principles applicable to the Housing Act and the Social Housing Act26. This legal framework entails no obligation to provide social housing in a specific location. Social legislation of this kind, by its very nature, must give a broad measure of optionality to the Province and the City as to how to achieve the general principles the legislation lays down. To interpret the legislation otherwise would render it incapable of practical implementation because the courts would become the arbiters of detailed implementation, an outcome we should be careful to avoid. [51] As demonstrated the Province and the City have put in place policies that are consistent with the principles applicable to social housing under the relevant statutory framework. In addition, they are in the process of implementing social housing in their areas of jurisdiction, particularly through the pipeline programme. To this extent the Province was recognised by the national government in 2013 and 2015 as the leading province for delivery of social 25 See paras 43 and 44 above. 26 Section 2 of Social Housing Act. 33 housing.27 Furthermore, in 2016 and 2017 the Province wrote to the national Department of Public Works requesting that 29 national government properties identified in various areas, including Bellville, Constantia, and Somerset West, be released for social housing development. Their letters went unanswered. Consequently, the contention that the Province and the City have, in general, not met their constitutional obligations regarding social housing delivery finds no support in the evidence. Failure to comply with the provisions of GIAMA [52] The high court concluded that the disposal of the property was unlawful because the Province did not take the requisite steps to procure the status of the land as surplus under GIAMA, before disposing of it as provided in s 5 of GIAMA. Furthermore, both the Province, as the custodian of the property, and the departments of Transport and Human Settlements, as users, did not have asset management plans when the property was sold. The context is this: GIAMA provides the framework for the management of immovable assets held or used by national and/or provincial governments.28 The Act sets out the management roles of the two spheres of government in relation to immovable assets owned by these spheres of government. [53] In terms of s 4(1) of GIAMA national and provincial government departments are custodians and users of immovable assets that vest in them. The national government Ministers perform a ‘caretaker’ role as custodians of immovable assets that vest in the national government (except where specific custodial functions are assigned to other Ministers by specific legislation). Premiers of provinces or MECs designated by Premiers are in a similar position 27 This award has since been discontinued. 28 See preamble to GIAMA. 34 with regard to immovable assets that vest in provincial government. Section 1 defines a ‘custodian’ as the: ‘national or provincial department referred to in section 4 represented by the Minister of such national department, Premier of a Province or MEC of provincial department, so designated by the Premier of that Province’. A ‘user’ is the: ‘national or provincial department that uses or intends to use an immovable asset in support of its service delivery objectives and includes a custodian in relation to an immovable asset that it occupies or intends to occupy, represented by the Minister of such national department, Premier of the province or MEC of such provincial department, so designated by the Premier of that province’. [54] Section 4(2)(b)(ii) of GIAMA provides that custodians acquire, manage, and dispose of immovable assets as prescribed in s 13. Section 13(1) provides that the accounting officer of a custodian must compile asset management plans for all immovable assets for which the custodian is responsible. Asset management plans become part of the strategic plan of a custodian.29 In terms of s 7 asset management plans must consist of: ‘(a) a portfolio strategy and management plan; (b) a management plan for each moveable asset throughout its life cycle; (c) a performance assessment of the immovable asset; (c) subject to section 13(1)(d)(iii), a condition assessment of the immovable asset; (d) the maintenance activities required and the total and true cost of the maintenance activities identified; and (e) a disposal strategy and management plan’. (emphasis supplied) [55] The high court reasoned that the Province did not purport to act in terms of either a custodian or user asset management plan, when taking the decision to dispose of the Tafelberg property in 2010. Nor was there an internal policy 29 Section 9 of GIAMA. 35 document by which the province ‘might have been guided’ in its thinking. It was of the view that if there had been a user asset management plan at the time of the initial decision, the Province ‘might’ have dealt differently with the use of the whole site by each of the different users. [56] It is not clear from the record why the details of the intended disposal of the Tafelberg property, first as part of the regeneration programme, and later as part of the development of the four identified properties within the city, did not constitute an acceptable asset management strategy that fulfilled the purpose of s 7 of GIAMA. In any event, Ms Gooch explained, on behalf of the Province, that the requirements of GIAMA in relation to asset management plans were being implemented incrementally by all organs of state under the guidance of the GIAMA Implementation Technical Committee which was co-ordinated by the National Department of Public Works, with concurrence of National Treasury. It was not yet completed in 2010. [57] It was not in dispute that the Province and the relevant provincial departments had no custodian or user asset management plans in place at the time of the initial decision to dispose of the property. Furthermore, although there were assets management plans when the Province resolved not to resile from sale in 2017, the Tafelberg property was not included in them. [58] It is important to understand that the source of the power of the Province to acquire and dispose of provincial immovable property is not GIAMA. This statute only regulates disposal of immovable assets, and requires asset disposal strategy as part of its asset management objective. [59] The WCLAA is the legislation that was enacted for effective exercise of the powers concerning matters listed under Schedule 4 of the Constitution. 36 Section 3(1) of the WCLAA empowers the Premier to ‘dispose of provincial state land on such conditions as are deemed fit’. The procedure for doing so is prescribed under s 3(2) of WCLAA, which provides that: ‘The Premier must publish in the Provincial Gazette in the three official languages of the province and in an Afrikaans, an English and an isiXhosa newspaper circulating in those respective languages, a notice of any proposed disposal in terms of subsection (1), calling upon interested parties to submit, within 21 days of the date of the notice, any representations which they wish to make regarding such proposed disposal . . .’. Therefore, the source of power for acquisition and disposal of immovable property by the Province is the WCLAA. [60] The provisions of GIAMA, on which the respondents rely, in contesting the decision to sell the Tafelberg property must be interpreted harmoniously with s 3 of the WCLAA which empowers provinces to dispose of State property. A sensible interpretation requires consideration of the fact that the Tafelberg property had not been in use since 2013, and from 2010 its disposal had been under consideration. It is in that context that its exclusion from the custodian and user asset management plans should be considered. [61] The absence of a custodian management plan in 2010 must also be viewed within the context that GIAMA became effective on 30 April 2009. In addition, as stated, and as the preamble to GIAMA indicates, the legislation is primarily intended to introduce a uniform framework for management of government immovable assets. It is not the empowering legislation in respect of acquisition and disposal of immovable assets by provinces. It is in that context that the references in the Act to inclusion of immovable asset disposal strategy in the management plan must be viewed. [62] With regard to the high court’s view that under GIAMA and the WCLAA, the Province was required to inquire not only into whether the property could be 37 of use to another department within the Province, but also at national government level, again the court did not identify any specific provision in the legislation as the source for this requirement. Neither did it identify a legislative provision in relation to its finding that the Province could consider disposal of the Tafelberg property only in exceptional circumstances, and even then, in order to meet compelling social needs. [63] The procedure for disposal of immovable assets by the Province is provided in s 3(3) of the WCLAA. The Premier is required to cause copies of the notices of the impending disposal of provincial state land to be delivered to occupants of the land to be disposed of (if any), the chief executive officer of the local government of the area in which the land is situated, the Western Cape provincial directors of the National Departments of Land Affairs and Public Works, and the Western Cape provincial Director of the National Department of Agriculture, if the provincial state land is applied or intended to be applied for agricultural purposes. Except in so far as the first published notices of disposal were not published in an isiXhosa newspaper, it was not the respondents’ case that the Province did not meet these requirements under s 3 of WCLAA. Consequently, compliance with the prescribed manner of notification to the relevant national departments was not an issue between the parties. [64] With regard to the respondents’ contention that the sale of the property was inconsistent with the provisions of ss 5(1)(f) and 13(3) of GIAMA in that it was not surplus property, on the facts, the property became surplus to the Department of Education when the remedial school vacated it in 2010. The impending action, which was finalised in 2013, would have been known to the Department of Transport prior to its happening. The Province would have known that the tenants of Wynyard Mansions were in the process of vacating the property long before the last tenant left. As already stated, in terms of s 5 of GIAMA an immovable 38 asset must be used efficiently. It becomes surplus to a user if it does not support its service delivery objectives at an efficient level and if it cannot be upgraded to that level. In terms of s 5(f) of GIAMA, when contemplating the disposal of an asset, the custodian must consider whether it can be used: ‘(i) by another user or jointly by different users; (ii) in relation to social development initiatives of government; and (iii) in relation to government’s socio-economic objectives; including land reform, black economic empowerment, alleviation of poverty, job creation and redistribution of wealth’.30 As the facts outlined above show, the Department of Transport complied with the provisions of s 5(f). The Provincial Department of Human Settlements later withdrew its objection to the disposal of the property. Does Sea Point fall within a restructuring zone? [65] The status of Sea Point became an issue because one of the aspects considered by the Province in its decision not to resile from the sale was that It was not a designated restructuring zone. This meant that no restructuring capital grant would be awarded in respect of a social housing development in Sea Point. The high court declared Sea Point to be a restructuring zone. In addition, it found that the Province should have approached the National Minister for either clarification of the designation of Sea Point as a restructuring zone, or to request that the area be designated as such. [66] A ‘restructuring zone’ is defined in s 1 of the Social Housing Act as: ‘. . . a geographic area that has been- (a) identified by the municipality, with the concurrence of the provincial government, for purposes of social housing; and (b) has been designated by the Minister in the Gazette for approved projects’. 30 Section 5(1)(f). 39 [67] In order for a restructuring zone to be established, the municipality must identify the specific geographic area that it intends to have designated as such. The municipality then advises the provincial government under whose authority it falls accordingly, and if the Province concurs, it submits the details of the identified geographic area to the national Minister of the Department of Human Settlements. [68] The high court considered two notices issued by the National Department of Human Settlements in respect of restructuring zones. Sea Point was not listed in either notice. The respondents contend that on a proper interpretation of the notices, Sea Point was designated as a restructuring area. The first, Notice No 848 of 2011, titled ‘Provisional Restructuring Zones’, was published in Government Gazette 34788 of 2 December 2011. It read: ‘The Department of Human Settlements hereby publishes for public information the following restructuring zones in terms of the Social Housing Policy, the Guidelines and the Social Housing Act, 2008 (Act No. 16 of 2008)’. [69] With respect to the City the five provisional restructuring zones established were: (a) ‘CBD and surrounds (Salt River, Woodstock and Observatory) (b) Southern Near (Claremont, Kenilworth and Rondebosch, (c) Southern Central (Westlake - Steenberg) (d) Northern Near (Milnerton) (e) Northern Central (Belville, Bothasig, Goodwood and surrounds)’. [70] The second notice (Notice No 900 of 2011) was a ‘Correction Notice’ published in Government Gazette No 38439 of 15 December 2011, to correct Notice 848. In the later notice the restructuring zones were listed as follows: (a) ‘CBD and surrounds (Salt River, Woodstock and Observatory) (b) Southern Near (Claremont, Kenilworth and Rondebosch, 40 (c) Southern Central (Westlake - Steenberg) (d) Northern Near (Milnerton) (e) Northern Central (Belville, Bothasig, Goodwood and surrounds) (f) South Eastern (Somerset West, Strand, and Gordons Bay) (g) (Southern (Strandfontein, Mitchells Plain, Mandalay and surrounds) (h) Eastern (Brackenfell, Durbanville, Kraaifontein, and Kuils River) (i) (Cape Flats (Athlone and surrounds (Pinelands to Ottery) (j) Far South (Fishoek and Simonstown).’ [71] The contested geographic area is defined in both notices as ‘CBD and surrounds (Salt River, Woodstock and Observatory)’. Given that the second notice was a correction of the first one, it is to the corrective notice that I will direct my attention. The City maintains that it had always intended that all areas surrounding economic hubs, such as the CBD would be included in the specific hubs for purposes of designation of restructuring zones. The City would then enjoy the flexibility of identifying land in the surrounds, in respect of which to access restructuring capital grant funding. The specific reference to Salt River, Woodstock and Observatory was intended to be illustrative rather than exclusive, the City argued. As a result, when the dispute arose in this case regarding the interpretation of the designation as set out in the Notices, the City informed the Province and National government that it intended to have the whole City designated as a restructuring zone. [72] I do not agree with the argument by the Province that, because the notice was provisional or was published ‘for public information’ the designation was not effective. The notice expressly referred to the areas listed as ‘restructuring zones’. It also provided that ‘[t]hese shall remain in force as designated areas until and unless re-designated . . .’. There is no evidence that the areas under consideration were re-designated during the period under consideration. 41 [73] On the other hand I do not agree that Sea Point was designated as a restructuring zone in terms of the notice. The respondents (Reclaim the City and Ndifuna Ukwazi) contend that given that Sea Point is situated approximately 5 kilometers from the city centre, it is therefore located within the “surrounds” in relation to the CBD. The reference to Woodstock, Observatory, and Salt River was merely intended to give examples of areas falling within the meaning of surrounds, they maintained. And because the purpose of the social housing policy is to house poor people, the restructuring zone of ‘CBD and surrounds (Salt River, Woodstock and Observatory)’must be generously interpreted to include Sea Point. [74] In interpreting the notice the high court first considered the dictionary meaning of ‘surround’ in the New Shorter Oxford Dictionary.31 It considered that the meaning of the word includes ‘the area or place around a place or thing; the vicinity, the surroundings, the environment . . .’. The court also considered the definition of ‘environs’, which is ‘[t]he district surrounding a place, an urban area’. It then applied these definitions to the geographical location of Sea Point as depicted on the map referred to in paragraph 3 of the first order and reasoned as follows: ‘. . . if one were to look at a plan of the city centre, the Sea Point area in which the property is located is closer (distance wise, as the proverbial crow flies) to the CBD than, for example, Observatory. But one cannot access the Sea Point area directly from the city centre because of the geography presented by the mountain along Ocean View Drive, High Level Road or Main Road to reach Sea Point. So I suppose it might be argued that Sea Point cannot be regarded as a “surrounding suburb” in the same manner as Woodstock (which is the first suburb one encounters when travelling eastwards out of the city centre) because it is not contiguous to the CBD. But then neither is Observatory which is located beyond Salt River and University Estate, neither of which is contiguous to the city centre either. 31 As the dictionary did not have a definition of ‘surrounds’. 42 On the other hand, the inner suburbs of BO-Kaap (also known as Schotschekloof and on the southern slopes of the Signal Hill), Gardens, Tamboerskloof, Oranjezicht, District Six, Vredehoek and Devils Peak (all of which nestle between the foothills of Table Mountain and the Southern side of the CBD) undoubtedly surround the City Centre – in fact, they are colloquially referred to as the City Bowl.’ [75] Having reached this ‘conundrum’ the high court went on to consider the evidence of Mr Pogiso Molapo, a manager in the Social Housing and Land Restitution unit within the City’s Transport and Urban Development Authority. In the relevant part of his affidavit Mr Molapo explained that the words “‘and surrounds” were used by the City to ensure that no area surrounding an economic hub, for example, the CBD, would be specifically excluded [from the restructuring zone]’ . . . In other words, the City would have the flexibility to identify land for purposes of being able to apply for RCG funding in relation to development that falls into the ‘surrounds’ as identified above. [76] The difficulty with the approach used by the high court is that it used Mr Molapo’s evidence to shore up the inclusion of Sea Point as a designated restructuring area, when it was clear that such interpretation found no support in the text of the notice. Such interpretation is impermissible. While it is true that the present state of our law on interpretation of legal documents is that context in which the document came into existence is always part of the interpretative process, there are limits to such use of extrinsic evidence. In University of Johannesburg v Auckland Park Theological Seminary and Another (ATS),32 the Constitutional Court, while emphasizing that contextual evidence forms part of every interpretative exercise, also warned that the admission of such evidence is not limitless. At paragraph 68 Khampepe J said: 32 University of Johannesburg v Auckland Park Theological Seminary and Another [2021] ZACC 13; 2021 (8) BCLR 807 (CC); 2021 (6) SA 1 (CC). 43 ‘Let me clarify that what I say here does not mean that extrinsic evidence is always admissible. It is true that a court’s recourse to extrinsic evidence is not limitless because “interpretation is a matter of law and not of fact and, accordingly, interpretation is a matter for the court and not for witnesses”. It is also true that “to the extent that evidence may be admissible to contextualise the document (since ‘context is everything’) to establish its factual matrix or purpose or for purposes of identification, one must use it as conservatively as possible”.33 I must, however, make it clear that this does not detract from the injunction on courts to consider evidence of context and purpose. Where, in a given case, reasonable people may disagree on the admissibility of the contextual evidence in question, the unitary approach to contractual interpretation enjoins a court to err on the side of admitting the evidence. There would, of course, still be sufficient checks against any undue reach of such evidence because the court dealing with the evidence could still disregard it on the basis that it lacks weight. When dealing with evidence in this context, it is important not to conflate admissibility and weight’. (footnote references omitted) It is instructive that, while compelling the consideration of contextual evidence in interpretation of all legal documents, in ATS, the Constitutional Court still affirmed the judgments of this court in Novartis,34 Endumeni,35 KPMG36 and others. [77] In Capitec Bank Holdings and Another v Coral Lagoon Investments 19437 (Coral Lagoon Investments) this court admitted extrinsic evidence relating to conduct of the parties but found that the conduct of one of the parties lent context that displaced the clear meaning to the clause of the contract under consideration, and the context of the structure of the agreement as a whole, and its proclaimed purpose. The Court held: 33 Ibid. 34 Ibid para 67; see also Novartis SA (Pty) Ltd v Maphil Trading (Pty) Ltd [2015] ZASCA 111; 2016 (1) SA 518 (SCA) para 27. 35 Ibid para 64; see also Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 para 18. 36 KPMG Chartered Accountants (SA) v Securefin Ltd and Another 2009 (4) SA 399 (SCA) at para 39; 37 In Capitec Bank Holdings and Another v Coral Lagoon Investments 194 [2021] ZASCA 99. 44 ‘The issue is this. Under the expansive approach to interpretation laid down in Endumeni extrinsic evidence is admissible to understand the meaning of the words used in a contract. Such evidence may be relevant to the context within which the contract was concluded and its purpose, and this is so whether or not the text of the contract ambiguous, either patently or latently. On the other hand, the parol evidence rule is an important principle that remains part of our law’.38 (emphasis supplied) Significantly, both the Constitutional Court in ATS and this court in Coral Lagoon Holdings maintained the crucial guiding principle articulated in KPMG, that, ‘Interpretation is a matter of law and not of fact, accordingly, interpretation is a matter for the court and not for the witnesses (or, as said in common-law jurisprudence, it is not a jury question . . . ). 39 [78] I do not think that Mr Molapo’s evidence of the City’s intention should have been admitted. It is not evidence of context. And the attempt to disguise it as such by referring to social housing grants that were secured by the City in respect of undesignated suburbs does not assist the respondents. If the intention of the City had to be admitted, it could not trump the meaning of the clear language used in the notice, together with the legislative context and purpose. [79] Consequently, the notices had to be interpreted as they were. Meaning had to be given to the words used, considered within the context in which the documents was generated, and its purpose. The high court’s interpretation, in as far as it was based on its own analysis of the location of various suburbs within the City, is not permissible. On the language used in the notice, the CBD, together with identified geographical areas within the surrounds, were designated as a restructuring zone. The word ‘surrounds’ was restricted to the identified areas, ‘Salt River, Woodstock and Observatory’ in the brackets to identify with certainty, a geographic zone. Had this not been done the notices would not 38 At 38. 39 At para 39. 45 achieve the purpose of identifying with certainty, the specific geographical area identified and designated as a restructuring zone. [80] The contention that Sea Point is included in the area designated as a restructuring zone in the notices does not find support in the words used in the notice. It does not account for all the words used in the notice, and the context and purpose served by the notice – to define a geographical area designated as a restructuring zone. It renders the notice vague. The ‘preamble’ to the notice put paid to this contention. It states that: ‘In accordance with the resolutions: 1 of MEC 2 Of the MAYCO of the City of Cape Town 3 And endorsement by the National Department of Housing The areas in the Table below are designated as within Provisional Restructuring zones as defined in the interim policy. All three parties in signing this part of the agreement acknowledge that these areas are the only areas which can access available Social Rental Housing subsidy in accordance with the interim social housing policy. These shall remain in force as Restructuring Zones until and unless all three parties sign re-designation of the areas or the social housing policy on Restructuring zones is superseded by other relevant legislation or policy’. (emphasis supplied) Against the background that s 3(1)(f) of the Social Housing Act which prescribes that restructuring zones be specifically provided for in the municipality’s integrated plan, restructuring zones must be clearly identified in the relevant Government Gazettes. [81] The submission on behalf of the respondents, that the Province should have sought the advice of the National Minister for proper interpretation of the notice cannot be sustained. The Province was entitled to interpret the notice and make (decisions) accordingly. Consideration of legal advice was a reasonable step in that process. Any decision made by the Province based on the notice was an 46 administrative decision. However, the conclusion that the error on the part of the Province in not approaching national government, rendered its decision reviewable under ss 6(2)(d) of PAJA, is unsustainable. So too is the finding that the conduct of the Province was mala fide in so far it did not seek clarification from the national Department of Human Settlements on the uncertainty about the status of Sea Point. [82] This finding ignores the long history of correspondence between the Province and the National Minister, and the delays experienced by the Province with designation of restructuring zones. Extensive correspondence, dating as far back as 29 June 2010, had been addressed by the Provincial Department of Housing Settlements to its national counterpart, requesting designation of additional restructuring zones for the City. In most of this correspondence, the Province urged the national department to respond to correspondence on designation of restructuring zones. In correspondence that preceded the two notices, the Provincial Department had to remind its national counterpart that ‘the current restructuring zones were only intended: no restructuring zones had actually been designated by the National Minister of Human Settlements.’ [83] Similar delays were experienced with amendments to limitations on the income bands of households that could be accommodated in a housing project. A maximum of 70 percent of the units in a project had to support households earning R3 501 to R7 500 per month. The low income bands meant that rental income (which was limited to 33 percent of monthly household income) was not a large part of funding the housing project. The income bands were only increased in 2018 to include households earning between R1 500 to R5 000 per month (referred to as the ‘primary market’). By that time the Social Housing Institutes had advised that the social housing projects were not financially viable without capital grant funding, which was dependent on designation of restructuring zones. 47 They withdrew as delivery partners on their own land parcels in favour of private development initiatives which were financially viable. [84] The Province referred to four projects where 1 512 units were lost from the pipeline. It demonstrated that the delays in the designation of restructuring zones and revision of the income bands had a significantly negative impact on the pipeline programme. Nevertheless, despite the impact of these delays, the Province and the City proceeded to with some of the social housing projects. Against this background, the suggestion that the Province and the City were dragging their feet is unfounded. So is the conclusion that the conduct of the Province was mala fide in its interactions with National Department or in failing to communicate with that Department. [85] It must also be stressed that the issue whether Sea Point was a restructuring zone was one of many factors considered by the Province. As discussed, the Premier had considered the social housing units that had been constructed, and the housing projects that were in the pipeline programme. It also considered the social housing units that were to be part of the Helen Bowden Nurses home site, the social housing project that was part of the Woodstock Hospital development, the extensive cross-subsidisation that was required for development on the Tafelberg property to be sustainable, the loss of the capital injection of R135 million amidst the budget cuts implemented by National Treasury, and the high construction costs of a social housing development on the Tafelberg property that was acknowledged during the notice and comment process. The obligation on the Province to inform and consult National Government on the decision to dispose of the property. [86] In the second application the Minister had argued that a dispute arose between her and the Premier on whether there was an obligation to consult her 48 prior to making the decision to dispose of the property. The high court reasoned that: ‘To the extent that the national minister may have been in a position to address the areas of concern or uncertainty raised by the Province on behalf of her Department, she could, and should, have been consulted by the Province. After all the injunction in the [Social Housing Act] required both the national Minister and the Province to act in the interests of the parties who were the subject of that Act, as contemplated under ss 5(b) and (c) of IGRFA, an act, as I have said which envisages comity rather than shunning the other aside. And, such an approach may have afforded an opportunity to resolve the conundrum I posed earlier – But why didn’t you ask?’ [87] The court found that the failure by the Province to inform the national Minister of the Department of Human Settlements of its intention to sell the Tafelberg properties was a breach of Chapter 3 of the Constitution and the Intergovernmental Relations Framework Act (IGRFA). It held that: ‘Section 41(1)(g) [of IRGFA] is concerned with the way power is exercised, not with whether or not a power exists. That is determined by the provisions of the Constitution. In the present case what is relevant is that the constitutional power to structure the public service vests in the national sphere of government’. [88] It took the view that the ‘dual competencies’ in respect of housing granted by the Constitution to both the national and the provincial spheres of government emphasises the necessity for co-operative governance as held in Grootboom. Therefore, once the Province communicated its decision not to cancel the contract the National Minister was entitled ‘inquire’ about the decision, given her statutory obligations under the s 2(1)(i)(iv) of the Social Housing Act and the broader umbrella of the Housing Act, including the duty to promote social, physical and economic integration of housing development into existing urban and inner city areas through the creation of quality living environments. 49 [89] At the hearing of the appeal, counsel for the National Minister clarified that it is not the Minister’s stance that she must be consulted in respect of every disposal. Although the explanation reduces the scope of the dispute on this issue, it remains unclear which disposals, according to the Minister, she must be consulted on and where the source of the asserted obligation to consult lies. Section 4(1) of the WCLAA on which the National Minister seemed to also rely, is not a source of power for the alleged obligation to inform and consult. The section merely provides that: The Premier must co-ordinate the provincial government’s actions regarding the administration of provincial State land with the national and local spheres of government as contemplated in Chapter 3 of the Constitution and section 7 of the Constitution of the Western Cape’. [90] In as far as the court located the source of the obligation to inform and consult in Chapter 3 of the Constitution, the two sections in that chapter provide for consultation between three spheres of government40 and outline the principles for co-operative government and intergovernmental relations.41 IGRFA is the legislation enacted to give effect to Chapter 3 s 41(2) of the Constitution. [91] Subsections 5(b) and (c) of IGRFA provide that- ‘In conducting their affairs the national government, provincial governments and local governments must seek to achieve the object of this Act, including by- (a) . . . (b) Consulting other affected organs of the state in accordance with formal procedures, as determined by any applicable legislation, or accepted convention or as agreed with them or, in the absence of formal procedures, consulting them in a manner best suited to the circumstances, including by way of = (i) Direct contact; or (ii) Any relevant intergovernmental structures; 40 Section 40. 41 Section 41. 50 (c) Co-ordinating their actions when implementing policy or legislation affecting the material interests of other governments’. (emphasis supplied) [92] The formal procedure determined for notification of affected organs of state in this instance is to be found in ss 3(2) and 3(3) of the WCLAA. It entails publication of the intended disposal of property in the Provincial Gazette and delivery of the notice of the intended disposal on occupants of the property and the provincial offices of the National Departments of Land Affairs and Public Works. It was not the respondents’ case that these determined procedures were not complied with.42 [93] Even within the context of co-operative governance and the framework established in IGRFA, for the promotion and facilitation of intergovernmental relations, the status, powers and functions of the different spheres of government must be maintained. The preamble to IGRFA highlights co-operation and integration of actions in government and the necessity to establish a legislative framework applicable to all spheres of government, to ensure intergovernmental relations, in the spirit of the Constitution. Section 41 of the Constitution sets out the principles of co-operative government and intergovernmental relations. In terms of s 41(1)(g) all spheres of government and organs of state within each sphere must exercise their powers and perform their functions in a manner that does not encroach on the geographical, functional, or institutional integrity of government in another sphere. In any event, once the National Minister of Human Settlement conceded that there was no obligation to consult her on every proposed disposal her case caved in, as the issue had been pleaded as an across the board obligation to inform and consult. 42 See paras 53 and 56 above. 51 Constitutionality of regulation 4(6) and the proviso to regulation 4(1) [94] Regulation 4 (1) regulates the procedure of acquisition and disposal of provincial state land as follows: ‘4(1) An offeror shall: (a) Complete and sign a written offer, and (b) Submit that offer to the Head of Component as a formal offer; Provided that all offers of disposal shall contain a provision to the effect that the offeror acknowledges that – (i) The Provincial Cabinet, after consulting the Committee, may, within 21 days of the receipt of written representations received pursuant to section 3(3) of the Act, or such longer period not exceeding 3 months as the Provincial Cabinet may determine in writing prior to the expiry of that 21 day period, resile from any contract resulting from the offer, and (ii) In the event of the Provincial Government so resiling the offeror will have no right of recourse against the Province or any of its organs or functionaries, but if the Province intends to sell the land at a higher price than that specified in the formal offer within a period of three months from the date when it resiled, the Province must first offer to sell the land to the offeror at that price.’ (Emphasis in original text) [95] Ndifuna Ukwazi maintained the argument that the procedure provided for in these regulations is irreconcilable with a meaningful public participation that could influence the decision not to dispose of the property in the first place. Furthermore, the procedure favours commercial interests over constitutional considerations. The respondents also maintained that there is an ‘inconsistency’ between the regulations and s 10 of WCLAA. This section empowers the Premier to: ‘(a) … make regulations regarding the norms and standards, including procedures applicable to the acquisition, exchange, disposal and letting of provincial state land, the demolition of buildings on provincial state land, donations of provincial state land and the general space and cost norms applicable in the Provincial Administration: Western Cape, and (b) … make any other regulations considered necessary or expedient for the achievement of the purpose or objectives of this Act’. 52 [96] The high court’s decision on this issue was based on an interpretation of ss 3(2) of the WCLAA. The subsection provides that: ‘The Minister must publish in the Provincial Gazette in the three official languages of the province and in an Afrikaans, an English, and an IsiXhosa newspaper circulating in the province in those respective languages, a notice of any proposed disposal in terms of subsection (1)43 calling upon interested parties to submit, within 21 days of the date of the notice, any representations which they wish to make regarding such proposed disposal; provided that the aforegoing provision does not apply to any disposal concerning the leasing of provincial state land for a period not exceeding twelve months without an option to renew.’ [97] The high court correctly found that the words ‘proposed disposal’ in ss 3(2) envisaged an intention to conclude a written contract of sale. It also found, and I agree, that the subsection contemplated that the public would be afforded the opportunity to comment before a decision was finally taken. This is an essential requirement of both an administrative decision making process.44 The high court then reasoned that the sale of the Tafelberg property did not allow for a fair opportunity to make representations; a fair procedure would allow for objections at an early stage of the process, ‘providing a clean slate for the evaluation of competing views. [98] The inquiry into the constitutionality of the impugned regulations requires (an) interpretation of the regulations and a determination of whether they provide for meaningful public participation. As set out above, the impugned regulations govern the process that follows after a decision to dispose of provincial land. Regulation 4(1) provides for the making and acceptance of an offer to purchase the land. At first glance, and if Regulation 4(1) is viewed in isolation from the rest of the regulation, the offer and acceptance process may appear complete, 43 Which empowers the province to dispose of provincial state land. 44 Section 3 of the Promotion of Administrative Justice Act 3 of 2000. 53 final, and having an external effect.45 However, the provisions of the Regulation 4 must be read and interpreted comprehensibly, and harmoniously. [99] Regulation 4(6) provides that; ‘If a written contract has been duly signed on behalf of the Province, that contract shall be a proposed disposal, or proposed acquisition and, in the case of proposed disposals, the Minister shall exercise the powers and comply with the duties conferred on the Premier by section 3(2), (3) and (4) of the Act’. Importantly this portion of Regulation 4 is written in peremptory language. In providing that a signed written offer signed shall be a proposed disposal (or proposed acquisition) the sub-regulation renders the transaction incomplete. The transaction remains a proposed disposal until the Minister has complied with the requirements of s 3(2), (3), and (4) of the WCLAA - the notice and comment procedure. [100] As to the nature of the notice and comment process, whilst the transaction remains a proposed disposal, ss 3(2), (3), and (4) of the WCLAA regulate that process as follows: ‘The premier must, in addition to the notices to be published in terms of subsection (2), cause to be delivered to – (a) The occupants, if any, of the provincial state land to be disposed of; (b) The chief executive officer of the local government for the area in which the provincial state land to be disposed of is situated; (c) The Western Cape provincial directors of the National Department of Land Affairs and Public Works, and (d) The Western Cape provincial director of the National Departments of Agriculture, if the provincial state land is applied or intended to be applied for agricultural purposes, A copy of the notice referred to in subsection (1), and must advise those persons that they may, within 21 days of the receipt of such notice, make written representations regarding the proposed disposal. 45 See the definition of ‘administrative action’ in s 1 of PAJA. 54 (4) (a) The notices referred to in subsections (2) and (3) must include the following information regarding the provincial state land concerned: (i) the full title deed description of such land, including the title deed number, the administrative district in which the provincial state land is situated and, if applicable, the nature of any right in or over such land; (ii) the current zoning of such land, and (iii) the actual current use of such land.’ (b) The notice referred to in paragraph (a) must include an office address at which full details concerning the provincial state land in question and the proposed disposal may be obtained’. [101] These subsections of the WCLAA, read together with Regulation 4, mean that, while the Province solicits and considers written representations received, the transaction remains a proposal. It is only completed and becomes a disposal once the Province, after consideration of the representations as provided in Regulation 1(b), makes a decision as to whether to resile from the proposed disposition of not. [102] Our courts have approached the assessment of procedural fairness flexibly, on a case by case basis, taking into account the facts and circumstances peculiar to each case.46 It is difficult to imagine a more fair and balanced procedure in terms of which an intended disposal of State land can be conducted. Interested parties are afforded opportunity to comment on a comprehensive proposal, which includes not only the description of the property intended to be disposed of, but also the identity of the prospective purchaser, the value of the land, its current and intended use, the reasons why the offer has been accepted for further consideration, and the proposed purchase price, amongst other details. All this while government is able to execute its responsibilities in relation to the land 46 Janse Van Rensburg v Minister of Trade and Industry 2000 11 BCLR 1235 (CC); 2001 (1) SA 29 (CC) para 24. 55 efficiently, transparently, and cost effectively. The contention that the procedure is ultra vires and/or inconsistent with the requirements of s 4 of PAJA is unfounded. [103] Having considered the above issues the appeal must succeed. In the result, the following order is made: 1 The appeal is upheld with no order as to costs. 2 The order of the high court in high court Case No7908/2017 is set aside and replaced with the following order: ‘The application is dismissed with no order as to costs.’ 3 The order of the high court in Case No 12327/2017 is set aside and replaced with the following: ‘The application is dismissed with no order as to costs.’ ___________________ N DAMBUZA ACTING PRESIDENT 56 Appearances For the first to fourth appellants: E Fagan SC with him K Pillay SC, A Du Toit and M Mokhoaetsi Instructed by: State Attorney, Cape Town State Attorney, Bloemfontein For the fifth appellant: N Bawa SC with him T Mayosi Instructed by: Riley Inc, Cape Town Webbers Attorneys, Bloemfontein For the first and second respondents: I Jamie SC with him T Masuku SC and L Stansfield Instructed by: State Attorney, Cape Town State Attorney, Bloemfontein For the third respondent: S Budlender SC with him E Webber Instructed by: MF Jassat Dhlamini Inc, Johannesburg Symington De Kok Inc, Bloemfontein. For the fourth to sixth respondents: P Hathorn SC with him C De Villiers, Instructed by: Ndifuna Ukwazi Law Centre, Cape Town Phatshoane Henney, 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 April 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 Minister of Transport and Public Works: Western Cape and Others v Thozama Angela Adonisi and Others (522& 523/2021) [2024] ZASCA 47 (12 April 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal brought by the Western Cape Provincial Minister of Transport and Public Works and the City of Cape Town, against an order granted by the Western Cape Division of the High Court, Cape Town, in terms of which the Provincial government of the Western Cape together with the City of Cape Town were ordered to comply with their obligations under sections 25 and 26 of the Constitution, together with their obligations under the Housing Act, 107 of 1997 and the Social Housing Act 16 of 2008. They were given until 31 May 2021 to file, with the court, a comprehensive report on the progress made in complying with the order. In a related application, heard by the same court, a contract of sale in terms of which the Province sold an immovable property comprising Erven 1675 and 1424 Sea Point, Cape Town to the Phyllis Jowell Jewish Day School, was set aside by the court. In that application the court also granted an order declaring that the failure by the Province to inform and consult with the National Government, represented by the Minister of the Department Human Settlements, of its intention to dispose of the property. The first application was brought by Ms Angela Adonisi, together with three other applicants who were members of Reclaim the City, a voluntary social movement made up of about 3000 members from Cape Town. Ndifuna Ukwazi Trust was also one of the applicants. In their application they argued that when the decision to sell the property was made, the Province and the City failed to consider the constitutional obligations to enable black and coloured working class residents of Cape Town to access housing within the CBD of the City, and to consider their right to access land on equitable basis. More specifically, they maintained that when the property became ‘available’, the Provincial Government, as the entity charged with the responsibility of re-engineering the spatial inequality in the Province and the City, should have taken the opportunity to provide affordable housing on the property. Their case was that the 2 implementation of the City’s policy of urban regeneration was skewed and resulted in rental properties that had been occupied by the poor and working class people being sold to property developers who converted them into residential accommodation which was unaffordable to the poor and low income earners. They alleged that, when selling the property, the Province prioritised financial considerations over their constitutional and statutory obligations. In the second application, the National Minister of Human Settlements argued that the Province had an obligation to inform and consult with her before selling the property. She declared a dispute with the Province and the City and insisted that the matter be referred to an intergovernmental dispute resolution forum. The high court agreed with both sets of applicants and granted the orders sought. In addition to finding that the Province and the City had failed to meet their constitutional and statutory obligations, it found that the Province had acted in bad faith in not approaching the National Minister of Human Settlements, to ascertain whether Sea Point had been designated as a restructuring zone, such that restructuring capital grant funding could be accessed for development of social housing on the Tafelberg Property. The high court also found that the Province had an obligation under the Constitution and the Intergovernmental Relations Framework Act 13 of 2005 to inform and consult with the National Minister on the proposed disposition of the Tafelberg property. The Supreme court of appeal overturned the judgment of the high court. It found that it was improper for Reclaim the City and Ndifuna Ukwazi applicants to rely directly on the Constitution in asserting their constitutional rights. Under the principle of constitutional subsidiarity they had to rely on the Housing Act and the Social Housing Act, as those are the statues enacted to give effect to the asserted constitutional rights. The Supreme Court of Appeal highlighted that the applicants had not relied on any specific provisions of the two pieces of legislation – they only contended, in general terms that they had rights under the Acts. Furthermore, the applicants did not make out a proper case for their claim that the Province and the City had an obligation to provide social housing at a specific legislation – in Central Cape Town. The court considered that there was evidence that the Pipeline programme in terms of which social housing projects were underway. That programme had yielded more than two thousand social housing units in the City. In addition 20 % of a development on the Helen Bowden Nurses Home Site, close to the V & A Waterfront was reserved for social housing. Furthermore, social housing would be provided on the Woodstock Hospital Site. In relation to the same allegations, by the National Minister of Human Settlements, that the Province and the City had failed to provide social housing, the Supreme Court of Appeal also considered that the National Department of Human Settlement had, until 2013, recognised the Province more than once as the leader in provision of Social Housing amongst other provinces in the Country. The Supreme Court of appeal also found that on a proper interpretation of the proclamation on which the National Minister relied in asserting that Sea Point was a restructuring zone, neither the text, context nor the purpose of the proclamation supported the interpretation advanced by the Minister. Further, 3 there was no support in the evidence provided for the allegation that the Province had an obligation to inform and consult the National Minister of its intention to dispose of provincial government land. The Supreme Court of Appeals reversed the order of the high court in terms of which the regulations governing the notice and comment procedure were set aside as unconstitutional. The regulations were issued in terms of the Western Cape Land Administration Act. The SCA found that the conclusion of a proposed sale under the regulations, read with the provisions of s 3 of the WCLAA provided for a cost effective, comprehensive and transparent process in which interested parties are presented with comprehensive details of the proposed transaction. For these reasons the appeal was upheld. ~~~~ends~~~~

4334

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1203/2021, 1334/2021 & 261/2022 In the matter between: MLULEKI MARTIN CHITHI FIRST APPELLANT DLUDLU ATTORNEYS SECOND APPELLANT MC NTSHALINTSHALI ATTORNEYS THIRD APPELANT IN RE: MAVUNDULU COMMUNITY CLAIMANT and MINISTER OF RURAL DEVELOPMENT AND LAND REFORM FIRST RESPONDENT REGIONAL LAND CLAIMS COMMISSIONER SECOND RESPONDENT DJ SCHEUER FARMING CC THIRD RESPONDENT LOUIS MEYER MANFRED FAMILY TRUST FOURTH RESPONDENT MANFRED MARTIN HILLERMAN FIFTH RESPONDENT HERMAN THEODOR MEYER SIXTH RESPONDENT EVANGELICAL LUTHERAN CHURCH- NEW HANOVER SEVENTH RESPONDENT HOPEWELL TRUST EIGHTH RESPONDENT 2 ROLF MATTHEW SCHRODER NINTH RESPONDENT UHLMANN FAMILY TRUST TENTH RESPONDENT PEGMA TWENTY-SIX INVESTMENTS (PTY) LIMITED ELEVENTH RESPONDENT MANFRED VICTOR SCHRODER TWELFTH RESPONDENT WOERNER TRUST THIRTEENTH RESPONDENT WHITE THORN TRUST FOURTEENTH RESPONDENT RM MARK FAMILY TRUST FIFTHTEENTH RESPONDENT WITTENMOUTAIN TRUST SIXTHTEENTH RESPONDENT MANFRED MEYER FAMILY TRUST SEVENTEENTH RESPONDENT WERNER MEYER FAMILY TRUST EIGHTEENTH RESPONDENT WERNER MARK REDINGER NINENTEETH RESPONDENT AMBLESIDE MEATS CC TWENTIETH RESPONDENT BRIAN BASIL MITROPOULUS TWENTY-FIRST RESPONDENT TMJ INVESTMENTS 15 CC TWENTY-SECOND RESPONDENT DROGEMOLLER LIFE & SHORT-TERM BROKERS CC TWENTY-THIRD RESPONDENT ROLAND GERHARD FRENZEL TWENTY-FOURTH RESPONDENT COCOHAVEN 1057 CC TWENTY-FIFTH RESPONDENT ROYHEATH RAMDEWU AND REETHA RAMDEWU TWENTY-SIXTH RESPONDENT UCL CO-OPERATIVE LTD TWENTY-SEVENTH RESPONDENT MOOIZICHT TRUST TWENTY-EIGHTH RESPONDENT Neutral citation: Mluleki Martin Chithi and Others v Minister of Rural Development and Land Reform and Others (1203/2021, 1334/2021 & 261/2022) [2024] ZASCA 149 (4 November 2024) Coram: ZONDI, HUGHES and MATOJANE JJA and SEEGOBIN and KEIGHTLEY AJJA 3 Heard: 19 February 2024 Delivered: 4 November 2024 Summary: Land claims – restitution of land – Restitution of Land Rights Act 22 of 1994 – claim for restitution of land on grounds of being a ‘community’ as defined in the Restitution Act – question decided separately from other issues in terms of rule 57(1) of the Land Claims Court Rules – allegation of lack of judicial independence in the conduct of the trial proceedings. Application for recusal of presiding judge unfounded. Civil procedure – costs – adverse costs order – disallowed fees of legal practitioners – whether conduct of legal practitioners in the trial was vexatious, frivolous and an abuse of court process for persisting with claim in light of precedent contrary to success thereof. 4 ORDER On appeal from: Land Claims Court, Randburg (Canca AJ, sitting as court of first instance): 1 The appeal under case number 1203/2021 against the order of the Land Claims Court dismissing the Mavundulu Community’s land claim is dismissed with no order as to costs. 2 The appeal under case number 1334/2021 against the order of the Land Claims Court disallowing the fees of the first to third appellants in the matter and directing them to repay the fees they had already received from the state is upheld with no order as to costs. 3 The appeal against the costs order in respect of the recusal application under case number 261/2022 is dismissed with costs. ______________________________________________________________________ JUDGMENT ______________________________________________________________________Zondi JA (Hughes and Matojane JJA and Seegobin and Keightley AJJA concurring): [1] These three consolidated appeals are against the following orders of the Land Claims Court, Randburg (LCC) issued by Canca AJ: (a) The appeal under case number 1203/2021 is against the judgment delivered on 25 May 2020, dismissing the Mavundulu Community appellants’ claim for the restitution of rights in land on the grounds that they were not a ‘community’ as defined in the Restitution of Land Rights Act, No 22 of 1994 (Restitution Act).1 In dismissing the claim, the learned Acting Judge disallowed, in full, the first to third appellants’ fees in the entire matter and ordered them to repay the fees that had already been paid to them by the relevant entity 1 Leave to appeal was granted by this Court on 11 November 2021. ______________________________________________________________________ 5 that funded the litigation on behalf of the State. This forms the subject of the second appeal under case number 1334/202.2 (b) Dissatisfied with the costs order against them, the first to third appellants (the legal practitioner appellants) applied for leave to appeal against it. Before the application for leave was argued, the legal practitioner appellants brought an application for the recusal of Canca AJ. He dismissed the application for his recusal and ordered the legal practitioner appellants to pay the third to twenty seventh respondents’ (landowner respondents) costs. This forms the subject of the third appeal under case number 261/2022.3 Background [2] The appeals concern a claim that was lodged by the Mavundulu Community (Community appellants/claimants) for the restitution of rights in land of which they were allegedly dispossessed in terms of the Restitution Act (land claim). The land claim was lodged on behalf of the Community claimants on 30 December 1998 by Mr Sipho Cebekhulu. He was authorized to do so by the Community claimants in terms of a resolution dated 9 August 1998. The claimed land comprises certain portions/sub-divisions of the farm Spitzkop No. 1129 (Spitzkop) and Mooiplaats No. 1315 (Mooiplaats), situated in the Magisterial District of New Hanover, KwaZulu-Natal. The Regional Land Claims Commissioner: KwaZulu-Natal accepted and investigated the claim as a community claim. The claim was accepted in terms of s 11 of the Restitution Act by publication in the Government Gazettes of 29 November 1996 and 1 August 2001. [3] During October 2017, the Community claimants, whilst the determination of the community claim was underway, added individual claims as an alternative to the community claim. On 31 March 2020, the LCC dismissed the individual claims on the basis that they were not lodged by 31 December 1998 and were not supported by evidence. The dismissal of the alternative claims was correct as an individual claim 2 Leave to appeal was granted by Canca AJ on 16 August 2021. 3 Leave to appeal was granted by this Court on 2 March 2022. 6 cannot be introduced by way of amendment.4 So, what remained was the Community claim which had been duly accepted, published and investigated. [4] As already mentioned, the claimed land relates to some portions of the two farms, namely farm Mooiplaats No 1315, which was granted to a Mr Cornelius J Laas in March 1853, and the farm Spitzkop No 1129, which was granted to a Mr Cornelius J G Vermaak in May 1851. The farms were granted to them by the British government following its annexation of the then Natal in 1842. The farms underwent certain sub-divisions and changed ownership over the years, in particular, prior to 1913 and thereafter. [5] The third to twenty-eighth respondents are the landowner respondents. The first and second respondents (the State respondents) are the Minister of Agriculture, Rural Development and Land Reform (the Minister) and the Regional Land Claims Commissioner, KwaZulu-Natal (RLCC), respectively. The State respondents did not appeal against the finding of the LCC that the existence of a community had not been proved and the associated costs order. [6] Mr Mluleki Martin Chithi (the first appellant) (Mr Chithi), Dludlu Attorneys (the second appellant) and MC Ntshalintshali Attorneys (the third appellant) were the legal representatives of the Community claimants. The second and third legal practitioner appellants were appointed to represent the Community claimants in terms of s 29(4) of the Restitution Act5 and they instructed the first appellant as counsel. [7] During the hearing in the LCC in March 2020, at the close of the Community claimants’ case (and that of the State respondents), Canca AJ ordered the separation of 4 Minister of Agriculture, Land Reform and Rural Development and Others v Ndumo (obo Emdwebu Community) [2023] ZASCA 136. 5 Section 29(4) of the Restitution Act provided as follows: ‘Where a party cannot afford to pay for legal representation itself, the Chief Land Claims Commissioner may take steps to arrange legal representation for such party, either through the State legal aid system or, if necessary, at the expense of the Commission.’ 7 issues in terms of rule 57(1)(c) of the Land Claims Court Rules.6 He directed that the issue whether Mavundulu is a community, as envisaged in the Restitution Act, be determined separately before any other issues. To that end Canca AJ directed the parties to file heads of argument to address the separated issue. In addition, he directed Mr Chithi to address him on why legal costs or the costs of the legal team for the claimants should not be disallowed. The parties filed heads of argument as directed. [8] On 25 May 2020, Canca AJ delivered the judgment in respect of the main case, in which he found that the Community claimants had failed to prove the existence of a community as defined in s 1(iv) of the Restitution Act. The judgment, in the main case, included an order that the legal fees of the legal practitioner appellants were to be disallowed and that any fees already paid to them had to be repaid, as well as ordering the State respondents to pay the costs of the landowner respondents. [9] An application for leave to appeal was instituted by the legal practitioner appellants against the disallowance of their fees. Prior to the hearing of the application for leave to appeal by the legal practitioner appellants and after heads of argument had been filed by the parties, the legal practitioner appellants brought an application for the recusal of Canca AJ from hearing the application for leave to appeal. The landowner respondents did not oppose the application for leave to appeal and the order pertaining to the disallowance of the legal practitioner appellants’ fees. The landowner respondents opposed the application for the recusal of Canca AJ. [10] On 16 August 2021, Canca AJ dismissed the recusal application with costs. No appeal was lodged against the dismissal of the recusal application. However, the legal practitioner appellants sought leave to appeal against the costs order in the recusal 6 Rule 57(1)(c) provides as follows: ‘57. Prior Adjudication upon Issues of Law or Fact (1) Should the Court, upon application by any party or of its own accord, be of the opinion that there is an issue of law or fact in a case which may conveniently be decided — . . . (c) separately from some other issue, the Court may order a separate hearing of that issue and grant any extensions of time periods prescribed in the rules which may be desirable because of the separate hearing.’ 8 application (in favour of the landowner respondents), which leave to appeal was dismissed by the LCC on 22 November 2021. On 2 March 2022, this Court granted leave to the legal practitioner appellants to appeal the recusal costs order. [11] On 16 August 2021, in a separate judgment, the LCC granted an application for leave to appeal against the disallowance of the legal practitioner appellants’ fees. It dismissed the Community claimants’ application for leave to appeal against the dismissal of their claim for restitution of land on the ground that they had failed to prove that they were a community as defined in the Restitution Act. On 11 November 2021, this Court granted leave to the Community claimants to appeal against the LCC’s order dismissing their community claim. Having set out the background facts I turn to consider each appeal. Whether the LCC was correct to decide the ‘community issue’ separately in terms of rule 57(1)(c) [12] As already stated, the LCC dismissed the land claim because the Community claimants had failed to establish that they are a community as defined in s 1 of the Restitution Act. That issue was decided on a separated basis in terms of rule 57(1) (c) of the LCC’s Rules. The two issues therefore are whether the LCC’s finding that the Community claimants was not a community, was correct and whether in the circumstance of the case using rule 57(1)(c) to determine the community issue was appropriate. [13] Counsel for the Community claimants submitted that the LCC’s application of rule 57(1) constituted a misdirection in that it failed to give the parties an opportunity to address it before it made the separation order, and this failure offended the principles of natural justice and violated the Community claimants’ right to access to court under s 34 of the Constitution. The issue of whether the Community claimants constituted a community, proceeded the argument, is not a discrete legal issue capable of being determined separately from other issues in proceedings under the Restitution Act. Rather, it forms the bedrock of the claim for restitution of land and can only be determined once all the evidence in the trial has been heard and assessed. Therefore, factual evidence had to be led and, by abruptly stopping the proceedings midway and not allowing the full 9 trial to unfold, the LCC violated the Community claimant’s right to have a fair hearing and to have their case fully ventilated before a court of law. [14] Rule 57(1)(c) of the LCC Rules provides that the Court may of its own accord order a hearing of an issue, separately from other issues if ‘an issue of law or fact in a case may conveniently be decided separately’. Nugent JA, in Denel (Pty) Ltd v Vorster had this to say regarding the purpose of rule 33(4) (the equivalent of rule 57(1)(c)) and how it is to be applied: ‘Rule 33(4) of the Uniform Rules – which entitles a court to try issues separately in appropriate circumstances – is aimed at facilitating the convenient and expeditious disposal of litigation. It should not be assumed that that result is always achieved by separating the issues. In many cases, once properly considered, the issues will be found to be inextricably linked even though at first sight they might appear to be discrete. And even where the issues are discrete the expeditious disposal of the litigation is often best served by ventilating all the issues at one hearing, particularly where there is more than one issue that might be readily dispositive of the matter. It is only after careful thought has been given to the anticipated course of the litigation as a whole that it will be possible properly to determine whether it is convenient to try an issue separately. But where the trial court is satisfied that it is proper to make such an order – and in all cases it must be so satisfied before it does so – it is the duty of that court to ensure that the issues to be tried are clearly circumscribed in its order so as to avoid confusion’.7 [15] In Luhlwini Mchunu Community v Hancock and Others (Luhlwini),8 the LCC dismissed a similar argument which was raised by counsel for the claimants in those proceedings, namely that the invocation of rule 57(1)(c) could deprive the claimant of a full hearing. It held that: ‘The order granted in terms of Rule 57(1)(c) is clearly permitted and Mr Chithi conceded as much. His contention that the Plaintiff would be deprived of a full hearing by the determination of the separated issue, is without merit. The Plaintiff has adduced all its evidence and was thus not constitutionally deprived of a full hearing. It is ludicrous to suggest, as the Plaintiff does, that it 7 Denel (Pty) Ltd v Vorster [2004] ZASCA 4; [2005] 4 BLLR 313 (SCA); 2004 (4) SA 481 (SCA); (2004) 25 ILJ 659 (SCA) para 3. 8 Luhlwini Mchunu Community v Hancock and Others [2020] ZALCC 2. 10 would be unjust to consider if the Plaintiff has discharged its onus after it has delivered all its evidence.’9 The LCC explained that this was so because ‘the Plaintiff [bears] the onus of establishing at the close of its case, prima facie at the very least, that it [is] a community as defined in the Act’.10 [16] In my view, Canca AJ was entitled to invoke the provisions of rule 57(1)(c) in determining whether the Community claimants had made out a case on the evidence at that stage of the hearing (after the close of the claimant’s case, including the submissions of the State respondents). The question whether or not the Community claimants were a ‘community’ as defined in the Restitution Act is a discrete legal point that is capable of being disposed of separately from other issues. It is a statutory requirement that must be met by a claimant seeking a restitution of a right in land which it lost as a result of past discriminatory practices. Undoubtedly, the claimant will have to present evidence – both oral and documentary - to substantiate its claim. Oral evidence will be from the lay witnesses and expert witnesses. But once all the evidence has been presented there appears to be no reason for not deciding some of the issues on a separated basis. In this matter the claimants had had ample time to present their case, some 30 court days, excluding inspections, which lasted two days. After the claimants closed their case, witnesses were called on behalf of the State respondents, and the parties were given ample time to prepare heads of argument and to argue the issue. [17] Moreover, s 32 of the Restitution Act clothes judges with the power to, inter alia, manage the procedure and manner of conducting a trial and, thus, permits a judge to curtail the proceedings to ensure that resources, both public and private, are not wasted. The LCC is vested with inquisitorial powers in terms of s 32(3)(b) of the Restitution Act,11 to conduct any part of any of its proceedings on an informal or inquisitorial basis and to 9 Ibid para 11. 10 Ibid para 12. 11 Section 32(3)(b) of the Restitution Act provides: ‘(3) Notwithstanding anything to the contrary in this Act or in the rules contemplated in subsection (1) — . . . (b) the Court may conduct any part of any proceedings on an informal or inquisitorial basis.’ 11 identify issues to be determined separately, which power may be invoked at any stage of the proceedings by the presiding judge. I therefore find that the contention that the Community claimants were in any way prejudiced through the invocation of rule 57(1), has no merit. Whether Mavundulu was a ‘community’ [18] The next question is whether the finding of the LCC that the Community claimants did not constitute a community, was correct. Section 2(1)(d) of the Restitution Act provides that a ‘person shall be entitled to restitution of a right in land if it is a community or part of a community dispossessed of a right in land after 19 June 1913 as a result of past racially discriminatory laws or practices’. The claim for such restitution must have been lodged with one of the offices of the Land Claims Commission, by not later than 31 December 1998. [19] A ‘community’ is defined in s 1 of the Restitution Act as: ‘. . . any group of persons whose rights in land are derived from shared rules determining access to land held in common by such group and includes part of any such group.’ [20] Section 1 defines ‘right in land’ as: ‘. . . any right in land whether registered or unregistered, and may include the interests of a labour tenant and sharecropper, a customary law interest, the interest of a beneficiary under a trust arrangement and beneficial occupation for a continuous period of not less than 10 years prior to the dispossession in question; . . .’ [21] In In re Kranspoort Community,12 Dodson J explained what the statutory definition entails: ‘… it is clear that there must be a community in existence at the time of the claim. Moreover, it must be the same community or part of the same community which was deprived of rights in the relevant land … This seems to me to require that there must be, at the time of the claim, (1) a sufficiently cohesive group of persons to show that there is still a community or 12 In re Kranspoort Community 2000 (2) SA 124 (LCC) para 34. 12 a part of a community, taking into account the impact which the original removal of the community would have had; (2) some element of commonality with the community as it was at the time of the dispossession to show that it is the same community or part of the same community that is claiming.’ (Footnotes omitted.) [22] The Constitutional Court, in Department of Land Affairs and Others v Goedelegen Tropical Fruits (Pty) Ltd, was also concerned with the question as to what constitutes a community. It had this to say in this regard: ‘At the heart of this enquiry is whether the occupational rights in the land were derived from shared rules determining access to land held in common. At its core, the question is whether the labour tenants, through shared rules, held the land rights jointly. The community and individual applicants contend that they did. They support this contention by pointing to the history of their use and occupation of the land and to the attendant social arrangements. Their forebears lived on the farm since the mid-1800s, before the first registered owner Mr Hattingh in 1889, and the claimants continue to do so despite successive registered ownership of the land.’13 [23] At paragraphs 37 and 38 of the judgment the Constitutional Court went on to state: ‘However, what is clear on all the evidence is that the indigenous ownership of land in the original Boomplaats farm was lost before 1913. Once they had lost ownership, they were compelled to work for the owner. Their relationship with the owner was coercive. The Land Claims Court found, correctly in my view, that “the white owners took possession of the land, and compelled the inhabitants to become labour tenants” - Although they had lost indigenous ownership, they continued to exercise the right to occupy the land, to raise crops and to graze their livestock. Successive registered owners did not terminate these rights. By 1969, the collective indigenous title to land of the Popela Community had succumbed to settler dispossession and subsequent land laws on ownership and occupation of land by black people. Members of the community had been successfully coerced into being farm labourers whose occupational interest in the land had become subject to the overriding sway of the registered owner. They had to work the lands of the owner without wages in order to live there. 13 Department of Land Affairs and Others v Goedgelegen Tropical Fruits (Pty) Ltd [2007] ZACC 12; 2007 (10) BCLR 1027 (CC); 2007 (6) SA 199 (CC) para 35. See also Elambini Community v Minister of Rural Development and Land Reform and Others [2018] ZALCC 11 para 141 (Elambini). 13 Mr Altenroxel makes the point that, whilst there was a supervisor who was also regarded by the workers as Kgoshi, as well as a community, they derived their right to live there, plant crops and keep livestock from him, the white registered owner, at whose whim and fancy they lived.’ [24] The Land Claims Court held in Elambini Community and Others v Minister of Rural Development and Land Reform and Others that: ‘Thus it is settled law that for a community litigant to succeed in a restitution claim it must prove that it existed as a community after 19 June 1913, that it derived its possession and use of the land from common rules, and that it existed as the same community at the time that the claim was lodged. If at the time of dispossession, the possession and use of the land did not derive from common rules, but were supplanted by labour tenancy rules, the rights in land were not held by a community at the time of dispossession.’14 [25] It was submitted on behalf of the Community claimants that the LCC misdirected itself by finding that they did not constitute a community. It was argued that the evidence presented on their behalf established that that they existed as a community at the time of dispossession. In support of this submission, the Community claimants relied on the evidence of lay witnesses; expert testimony of Mr Hennie Schoeman, the aerial photography expert, Dr Ndukuyakhe Ndlovu, an anthropologist and the witnesses who testified for the State respondents, Mr Lionel Joubert and Mr Adolph Gerber and documentary evidence. [26] The question is whether the members of the Mavundulu community derived their possession and use of the land from common rules. This requires the analysis of the pleadings including the Notice of Referral in terms of s 14 of the Restitution Act, the Community claimants’ response thereto and the evidence presented in support of the pleaded case. 14 Elambini para 141. 14 [27] The following allegations are made by the Regional Land Claims Commission KZN in the Referral Report in support of the Notice of Referral in terms of s 14 of the Restitution Act: ‘The claimant community had beneficial occupation of the claimed land. They resided on the claimed land by virtue of historical right of occupation; alternatively, they had historically beneficial occupation for a continuous period in excess of ten (10) years prior to their dispossession. They practised subsistence farming on the claimed land until the arrival of English and German speaking settlers, when the process of systematic colonial occupation and dispossession of the indigenous people from the land commenced in earnest. In this regard, the State's design to forcibly dispossess indigenous population from the land, was facilitated by a barrage of legislation such as the Masters & Servant Amendment Act, 1926, giving effect to the Native Land Act, 1913, Native Service Control Act of 1932 and the Group Areas Act of 1966, and which legislation contributed directly to the claimant community’s dispossession from the claimed land.’ [28] As regards the status of the claimants, the Report records that: ‘1.2 The Mavundulu Community comprises of individuals and all descendants of individuals of a community who were dispossessed of their rights in the land after 19 June 1913 as a result of a deliberate and enforced system of segregation and racial discrimination. Their rights in the claimed land are derived from shared rules determining access to land, held in common by the community, and they used the land for their own benefit and subsistence. … 1.4 The claimed land in Natal at the time of dispossession was occupied under the enforced land tenure system, incorporating indigenous traditional practices, as imposed by the colonial authority. This system provided that traditional leaders would administer and allocate land (chieftainship) as agents of the State, to members of the community. In essence, the traditional leaders held the land in trust for its community members. 1.5 By virtue of the above system, the claimant community enjoyed beneficial occupational rights under an implied trust arrangement, which was derived from being members of a “traditional community” and subscribing to the cultural values and norms of that community. Such traditional communities were defined by its members’ subscription to a common cultural value and norm system. In this regard, the claimant community, a traditional community, as defined above, 15 acquired its rights, to the claimed land, by reason of its beneficial use and occupation of the land, bestowed as trust beneficiaries, prior to 1913. … 4.4 The claimant community and/or their predecessors lived on the land and used the claimed land for cultivation of crops, as shared access to communal grazing and as shared access to available water and firewood and other resources from the land, for example medicinal plants.’ Community claimants’ response to the referral in terms of rule 38(7)(b) [29] In their response to the referral in terms of rule 38(7)(b) of the LCC Rules, the Community appellants alleged that the Mavundulu Community members were in occupation of the claimed land since time immemorial prior to the arrival of the white people who later came to the land. They surveyed and subdivided the land and thereafter registered title deeds. The Community claimants alleged further that the problem started with the arrival of the white people of English and German descent, on their land, between 1850 and 1860. Upon their arrival, they approached Chief Mavundulu for a piece of land to be allocated to them. They, however, started to build their own dwellings before Chief Mavundulu granted them authority to do so. When questioned about their behaviour, the white people said that they had been granted authority and permission to use the land by the government of the day and later displayed and presented the title deeds which had been issued to them. The white people started tilling the land and rearing livestock. Mavundulu Community members were then compelled to live side by side with the white people. [30] The Community appellants explained how the dispossession occurred: ‘7.16 The Mavundulu community were dispossessed of their land between 1914 and 1920. The dispossession did not comprise in one singular and isolated act akin to an event which happens once and for all but it occurred over a period of time which extended over a number of years. This includes the period extending from 1920 to 1994 wherein a number of people were removed and evicted from their ancestral land.’ [31] In paragraphs 8 and 9 of the response the Community claimants pointed out that as a precursor to the dispossession, the white people: 16 ‘8.1 in 1903 dismantled the chieftaincy of Chief Cebekhulu Mavundulu by kidnapping him and throwing him in a deep ditch (odibini). . . and left him to die there. 8.2 in 1912 they started a big fire which destroyed the Claimant Community’s homesteads and other valuable belongings and annihilated various natural landmarks after which they substantially and significantly increased the land which they occupied. 9.1 The Customary rights held by the claimant community to the land were reduced to those of labour tenants overtime and…, the rights were gradually reduced to those of farm labourers over a period of time. The claimant community members were forced to work for various white landowners on their land and those who were not willing to be subjected to the labour tenancy and farm labourer system were forced to seek residence in the black townships and black rural areas in the greater KwaZulu-Natal Province including Greytown, Pietermaritzburg, Hammersdale and in Zululand. . . . 9.3 Those that elected to remain on the farms they were allowed to [live] on the farms and in exchange for their rights to live on the farms they provided labour to the farm owners as labour tenants and/or alternatively they were obliged to work for minimum wages. At the end of six months, those were under labour tenant contracts were forced to seek work elsewhere.’ Lay witnesses’ testimony [32] The Community claimants led the evidence of following lay witnesses. Mr Umbross Absalom Ndlovu testified that after the arrival of the white people, black people encountered quite a lot of problems. They started losing their rights of utilising the land as it was utilised customarily. They lost their traditional way of utilisation of the land. [33] Mr Ndlovu further testified that his father and mother worked for ‘Jubela’ (Mr Joubert). Critically, he conceded during cross-examination that the people lost the use of land during Nkosi Mavundulu’s time. From when the white people arrived in the 1800s, they restricted the grazing grounds, the number of cattle, the number of houses the community could have, their movement and rights to bury their dead. He conceded that the Mavundulu as a community disappeared in 1903. 17 [34] Mr Sipho Wilson Cebekhulu, who was 72 years old when he gave evidence, testified that his great grandfather was Chief Mavundulu of Cebekhulu clan from KwaMavundulu area. His family lived at Kwa-Jubela until it was forcibly removed by the police. This must have been between 1961 and 1966. Their neighbours were the Zondi’s, Ndlovu’s, Sithole’s, Kunene’s and Dlamini’s. After the eviction his family trekked to Pietermaritzburg and settled at Kwa-Dambuza and thereafter relocated to Kwa-Mpumuza. [35] Mr Cebekhulu testified that before the arrival of the white people at their land the community occupied the land in terms of the rules established by the chief. All that changed after the arrival of the white people. They undermined the traditional leadership. They replaced Chief Cebekhulu with Malinga who ruled the community according to the rules set by the white people. [36] Mr Cebekhulu conceded, under cross-examination, that blacks had no control over the land, and they lived there with the permission of the landowner. The landowner made the rules where they could live, how many houses they could build, how many cattle they could keep. He further conceded that ‘he worked for 6 months looking after the cattle and ploughing the fields.’ Mr Cebekhulu represented and acted on behalf of the community. [37] Mr Makhonda Albert Ntanzi testified that his father and mother worked for the landowner. He testified that his father worked full time. He testified that when his father got ill, his mother had to work for the landowner in order for them to be resident on the farm. They were evicted because his mother got ill and could no longer work. He also conceded under cross-examination that when he lived on the farm, they were under the authority of the landowner. They needed permission to bury the dead and the landowner allocated places where they could graze their cattle. [38] Mr Dludla conceded under cross-examination that after the arrival of whites the community that existed was disestablished and by 1960 it no longer existed. Mr Ngubane 18 testified that ‘he was removed from the farm Welverdient, which was degazetted. He testified that his grandfather, uncles and aunties worked on the farm Mooiplaas. [39] It is clear from the statements of the lay witnesses that from the time of the arrival of white farmers in the 1800s, their forebears lived on the claimed land under the rules of the farmers, and they set the terms on which they could occupy and use the designated portions of a particular farm. [40] Additionally, the common cause facts undermine the Community claimants’ claim that they existed as a community. No reference is made in any historical records of the existence of Nkosi Mavundulu or any other Cebekhulu Inkosi or a community of African people living on the farms Mooiplaats or Spitzkop. No reference is made in any historical maps to Inkosi Mavundulu or any chiefs of the Mavundulu or a community of African people living in the area or on the farms Mooiplaats or Spitzkop. [41] Mr Schoeman testified that numerous farmsteads were present already in 1937 on the various sub-divisions of the farms Mooiplaats and Spitzkop and, already in 1937, these farms commercially farmed with agricultural products linked to a commercial farming enterprise instead of it being farmed by subsistence farming. By 1937, fences had been erected on the various sub-divisions of the farms Mooiplaats and Spitzkop. [42] According to Mr Gerber, in 1937, there were already established timber plantations in various stages of growth on the farms Mooiplaats and Spitzkop and that no cattle kraals, manufactured in a rudimentary fashion with branches were situated near any of the homestead areas on both the farms Mooiplaats and Spitzkop. He further testified that there were clearly demarcated paths between the homesteads and the farmsteads indicating a link between the homesteads and the farmsteads, such as would indicate employees visiting the farmsteads. [43] The only two references to the Cebekhulu clan are in the HSRC report which covers an area that is situated a substantial distance away from Mooiplaats and Spitzkop 19 and by Dr Bleek in 1849 and 1853. According to Dr Bleek, Cebekhulu was found between the Umtyezi and Umsuluzi rivers being a reference to the Bushmansriver and the Bloukransriver in the area of Estcourt. [44] Further, a report of a survey done by Dr NJ Van Warmelo, in 1934, in the New Hanover area, records the tribe in the area as Gwamanda and no reference is made to Cebekhulu. Instead, the survey refers to other chiefs in the New Hanover district. [45] Dr Ndlovu admitted that no reference is made in the Blue Books of 1896 and 1907 of Cebekhulu’s in the area on the farms Mooiplaats and Spitzkop. No reference to the Cebekhulu is made in the New Hanover district but reference is made to other chiefs. Finally, there is no evidence of officially sanctioned removals after 1913 in the New Hanover district, from the farms Mooiplaats and Spitzkop. Expert witnesses' evidence [46] The Community claimants called Dr Ndlovu to testify on its behalf to give expert evidence. His expertise was placed in issue. The LCC concluded that Dr Ndlovu did not qualify as an expert and for that reason placed no weight on his evidence. [47] Section 30(2)(b) of the Restitution Act provides that it is competent for evidence to be adduced by ‘expert evidence regarding the historical and anthropological facts relevant to any particular claim’. Dr Ndlovu has an MA degree in anthropology from Rhodes University and a PhD in rock art. He is not an historian. He testified that he is a heritage expert and, according to him, the land is part of heritage. [48] Dr Ndlovu’s evidence was correctly disregarded. He conceded under cross-examination that he did not conduct independent archival research but merely relied on the report of Dr Whelan, the landowner respondents’ expert witness. He stated that he neither verified the archival documents of Dr Whelan nor looked at the aerial photography in respect of the claimed land. Dr Ndlovu did not profess to have any skill or knowledge to analyse oral evidence and/or archival documents to determine whether there was in 20 existence a community and/or a person and/or persons who lost rights in land, subsequent to 19 June 1913. [49] Besides these shortcomings in Dr Ndlovu’s evidence, it is clear from the evidence of various witnesses who testified for the Community claimants, including those who testified for the State respondents, that although the claimants’ forebears may have existed as a community before the arrival of the white people, that community disintegrated before June 1913. Individual members of what may historically have been a community prior to the arrival of white farmers continued to occupy the land as labour tenants subject to the rules and policies of the white landowners and later as farm workers post-1913. For instance, each household in terms of the labour tenancy regime was restricted to a certain number of livestock and if they failed to obey the rules they could be evicted from the farm. However, what the evidence establishes in this case is that whatever rights individual occupiers may have enjoyed as labour tenants and later as farm workers they were no longer derived from shared rules determining access to land held in common by a group in 1913. Their occupation and use of the land did not meet the acid test referred to by the Constitutional Court in Goedgelegen. Disallowance of fees [50] The next issue is whether the LCC misdirected itself in ordering that the legal practitioner appellants were not entitled to fees in the matter and ordering them to repay the fees they had already received from the state. This was because, reasoned the LCC, they had pursued the claim which they knew had no merit. It described such conduct as vexatious, frivolous and an abuse of the process of the court. [51] In Multi Links Telecommunications Ltd v Africa Prepaid Services Nigeria Ltd, the court remarked: ‘. . . [A]ttorneys and counsel are expected to pursue their clients’ rights and interest fearlessly and vigorously without undue regard for their personal convenience. In that context they ought not to be intimidated by their opponent or even, I may add, by the Court. Legal practitioners must present 21 their case fearlessly and vigorously, but always within the context of set ethical rules that pertain to them. . ..’15 [52] In Jazz Spirit 12 (Pty) Limited and Others v Regional Land Claims Commissioner: Western Cape and Others, this Court made it clear that: ‘It is crucial for the promotion and maintenance of the rule of law that parties who approach the courts to resolve their land disputes should not be mulcted with costs, particularly where there are no allegations of wilfulness or vexatiousness as is in this case. Undoubtedly s 6 of the Restitution Act places an onerous duty on the office of the Land Claims Commission to take all reasonable steps to ensure that claims that are lodged are well investigated and properly prepared. Evidently, this is intended to ensure that all facts relevant to a particular claim are considered. In addition, it has as its rationale the fact that many of the people dispossessed of land have also been systematically disadvantaged in many other ways and may well be unlikely to be in a position to fund any adverse costs order. Such people might be dissuaded from pursuing the very rights provided for in the Restitution Act if costs orders were made in the ordinary course. If this was their response, it would defeat the very object of the Restitution Act. This is, perhaps, an additional reason for the exceptional circumstances envisaged in s 21A(3) [of the Supreme Court Act 59 of 1959] to be required to meet an even higher standard in matters concerning costs arising from the Restitution Act.’16 [53] Where there is an unresolved dispute, the Commission is obliged to refer such dispute to the LCC for adjudication. The investigation and reports by the Commission play a pivotal role in the ultimate resolution of any ensuing dispute. Self-evidently, costs orders might be subversive of the spirit of social justice underlying the Restitution Act. [54] The approach followed by Canca AJ in disallowing the fees for the legal practitioner appellants in the entire matter and directing them to repay the fees they had already received for the work they had done, fails to appreciate the sui generis nature of the 15 Multi-links Telecommunications Ltd v Africa Prepaid Services Nigeria Ltd [2013] ZAGPPHC 261; [2013] 4 All SA 346 (GNP); 2014 (3) SA 265 (GP) para 34. 16 Jazz Spirit 12 (Pty) Limited and Others v Regional Land Claims Commissioner: Western Cape and Others [2014] ZASCA 127 (SCA) para 27. 22 Restitution Act.17 Unlike in any other litigation, litigation in terms of the Restitution Act is instituted at the instance of the Commission on Restitution of Land Rights. Although the claimants are cited as plaintiffs, they are not the ones who have a right to initiate and stop proceedings. Once an arguable case has been shown to exist the Commission must accept the claim, even if the arguments are relatively weak. Once a land claim has been accepted as valid claim and published in the Government Gazette by the Regional Land Claims Commission, it can only be withdrawn by the Commission in terms of s 11A (1) of the Restitution Act. Having regard to the evidence of the witnesses called by the State respondents who testified that the claimants were a community as defined in the Restitution Act, there was no basis for the finding that the claim was frivolous and that its prosecution amounted to an abuse of court process. In fact, it is stated in the Report filed by the Regional Land Claim Commission in terms of s 14 of the Restitution Act that ‘the claim as submitted is neither frivolous nor vexatious’ and that it had merit. [55] The LCC committed a material misdirection in disallowing the legal practitioner appellants to recover their fees for the work they had performed and also in directing them to refund the fees they had already received from the State for representing the Community claimants. This is a land claim and, once a claim has gone through the internal vetting mechanisms contained in the Restitution Act, it would generally be reasonable for a legal practitioner appointed in terms of s 29(4) of the Restitution Act to rely on the decision of the Regional Land Claims Commissioner to accept the claim as a valid claim and to refer it to court for adjudication. Thereafter, the appointed legal practitioner is expected to put forward the best case as is reasonably possible on behalf of the claimants at the hearing of the matter. [56] It is clear from the evidence that the LCC misdirected itself in imposing a punitive costs order. Its decision was influenced by irrelevant considerations and that being so, this Court is entitled to interfere in the exercise of its discretion. There is evidence to suggest that Canca AJ’s judgment was improperly influenced by the Luhlwini case, as 17 Salem Party Club and Others v Salem Community and Others 2018(3) SA 1 (CC) para 72. 23 reflected in the striking similarities between the two judgments, particularly regarding the costs order. This reliance on an external case raises concerns about his impartiality and independence in deciding the punitive costs issue. Judicial independence requires that each case be considered on its own merits, and his failure to independently assess the facts and evidence in this case undermines confidence in the exercise of his discretion. [57] It follows, therefore, that the order made by the LCC disallowing the legal practitioner appellants to recover their fees in the matter and directing them to repay the fees they already received from the state should be set aside. There was no legal basis for such order. Recusal application [58] The application for Canca AJ’s recusal was brought by the legal practitioner appellants. It sprang from the costs order made by Canca AJ depriving the legal practitioner appellants of their fees (both already earned and those still to be paid). The recusal application was in respect of the presiding judge hearing the application for leave to appeal the 25 May 2020 judgment. [59] The objection to Canca AJ’s continued involvement in this matter was based on his alleged extensive reliance on the Luhlwini judgment, handed down shortly before the conclusion of the trial, by Meer AJP. In support of this objection, attention was drawn to the similarity in terms and language of the costs order and the amendment judgment. The manner in which judgment was written, it was contended, would leave any reasonable person, in the position of the affected parties, with a reasonable perception of bias and a reasonable apprehension that Canca AJ ‘did not have a mind open to persuasion in particular the pertinent and germane arguments which were raised by the first appellant’. [60] It is so that Luhlwini was the authority on which Canca AJ heavily relied for depriving the legal practitioner appellants of their fees. In that case, like in the present one, the Community claimants failed in their claim because they were unable to prove that they were a community when the claim was lodged. The legal practitioners were 24 deprived of their fees for having unsuccessfully contended, contrary to the established legal principle, that persons who were at best labour tenants or farm workers on privately owned land constituted a community as defined in the Restitution Act. The legal practitioner appellants were said to have abused the court process in pursuing a community claim that was bound to fail. Luhlwini has since been overturned by this Court on appeal18 which means that the whole basis on which the costs order in the present matter was made, has ceased to exist. [61] A further allegation levelled at Canca AJ was that he was a participant in a virtual meeting and/or tele-conference held with certain officials of the Department during which Acting Judge President Meer allegedly, ‘complained about the incompetence of the first appellant [Mr. Chithi] herein’. He denied having been a participant in that meeting. [62] The allegations of bias based on the adverse remarks concerning the first appellant allegedly made at the virtual meeting to which the first appellant had not been invited were totally unfounded and the grounds upon which they were based were unfortunately unsubstantiated. The legal practitioner appellants had ample opportunity to support their allegations with affidavits from any of the participants at that meeting, in view of the gravity of the allegation, they failed to do so. The recusal application on this ground was properly dismissed. [63] The legal practitioner appellants further submitted that Canca AJ erred in deviating from the LCC’s usual practice of not awarding costs unless special circumstances exist. For the reasons that will follow, Canca AJ was justified in dismissing the recusal application with costs. In Le Car Auto Traders v Degswa 10138 CC and Others,19 Sutherland J dealt with a similar situation where leave to appeal was sought against a judgment and, before the application could be heard, an application for recusal from hearing the application for leave to appeal was instituted. He commented as follows: 18 Chithi and Others: In re: Luhlwini Mchunu Community v Hancock and Others (Case no.423/2020) [ZASCA] 123 (23 September 2021). 19 Le Car Auto Traders v Degswa 10138 CC and Others [2012] ZAGPJHC 286. 25 ‘These propositions have only to be stated to be revealed as nonsense. The effect of a recusal can only be in respect of a prospective or current proceeding. Asking a judge to recuse himself after judgment is given is silly. Even if he chose to recuse himself, the judgment is not thereby nullified. A judgment once given stands until an appeal sets it aside. The judge who gave the judgment is functus officio.’20 [64] Spilg J, in Bennett and Another v S; In Re: S v Porritt and Another, expressed the disapproval of recusal applications as follows: ‘More and more recusal application are brought as a tactical device or simply because the litigant does not like the outcome of an interim order made during the course of the trial. The seeming alacrity with which legal practitioners bring or threaten to bring recusal applications is a cause for concern.’21 [65] There is therefore no merit in the contention that Canca AJ erred in awarding costs against the legal practitioner appellants. Canca AJ considered the application for his recusal. He determined that it had no legal basis, and he dismissed it with costs. In awarding costs against the legal practitioner appellants, he was exercising his discretion and there is no suggestion that he had in any way misdirected himself in the manner in which he did so. That being the case, there is no basis for this Court to interfere with his costs order. [66] It was further contended by the legal practitioner appellants that the landowners did not have a direct and substantial interest in the recusal application and therefore a costs order in their favour was not warranted. In response, it was argued on behalf of the landowner respondents that the contention that the landowners had no interest in the application for the recusal is without merit. Since the recusal application was grounded in the disallowance of fees, the allegations of judicial bias, and the improper influence of the Luhlwini judgment, the facts underlying the principal case (the community claim) and the conduct of the legal practitioners and that of the presiding officer would, of necessity, be 20 Ibid para 36. 21 Bennett and Another v S; In Re: S v Porritt and Another [2020] ZAGPJHC 275; [2021] 1 All SA 165 (GJ); 2021 (1) SACR 195 (GJ); 2021 (2) SA 439 (GJ) para 113. 26 brought into issue in the recusal application. The landowner respondents therefore indeed had a direct and substantial interest in such matters. Further, any submissions by the landowner respondents in regard to the aforementioned issues, can only assist the court in bringing to the court’s attention facts and legal authority to assist it in arriving at a considered decision with regard to the recusal application, whether or not this is ultimately in favour or against the recusal per se. [67] I agree with the landowner respondents’ submissions. The landowners were parties to the case and their land was the subject of the case. In terms of the audi alterem partem rule they were entitled to oppose the application and to make their views known in response to an ill-conceived application which was bad in law and on the facts. The landowners made no issue about the disallowance of the fees of the legal practitioner appellants but considered themselves obliged to counter the attack on the factual and legal findings of the LCC on which the disallowance of fees order was dependent. The landowners had a substantial interest in the application for recusal in that the granting of it would have resulted in the entire evidence having to be re-run before another presiding officer, resulting in enormous costs to the landowners. Thus, the landowner respondents had a direct and substantial interest in the recusal application and the landowner respondents’ legal representatives, as officers of the court, were duty bound to put the record straight when scurrilous and uncalled for allegations are made attacking the integrity of a Judge. [68] In conclusion, the appeal against the dismissal of the land claim is dismissed. The Community claimants failed to prove that they constituted a ‘community’ as envisaged in the Restitution Act. The appeal against the order disallowing the legal practitioner appellants from recovering their fees on the matter is upheld. The LCC misdirected itself in depriving the legal practitioner appellants of their fees and in directing them to repay the fees they had already received from the State. The conclusion that the legal practitioner appellants had pursued a hopeless case in circumstances where they should not have done so, is wrong for the simple reason that it is the State respondents who accept and refer the claim after investigation. It is therefore unfair to punish the legal 27 practitioner appellants by depriving them of their fees and ordering them to repay the fees they had received simply because the land claim was at the end of trial found to have no merit. The appeal against the order directing the legal practitioner appellants to pay the landowner respondents’ costs of opposing the recusal application should fail. Order [69] The following order is made: 1 The appeal under case number 1203/2021 against the order of the Land Claims Court dismissing the Mavundulu Community’s land claim is dismissed with no order as to costs. 2 The appeal under case number 1334/2021 against the order of the Land Claims Court disallowing the fees of the first to third appellants in the matter and directing them to repay the fees they had already received from the state is upheld with no order as to costs. 3 The appeal against the costs order in respect of the recusal application under case number 261/2022 is dismissed with costs. ____________________ D H ZONDI JUDGE OF APPEAL 28 Appearances Case number: 1334/2021 & 261/2022 For the appellants: C J Pammenter SC and C Nqala Instructed by: Dludlu Attorneys, Durban Maduba Attorneys, Bloemfontein For the third to twenty-seventh respondents in case number 261/2022: M G Roberts SC and E Roberts Instructed by: Cox & Partners Attorneys, Vryheid Symington De Kok, Bloemfontein. Case number: 1203/2021 For the appellants: S Poswa-Lerotudi and K Shazi Instructed by: Dludlu Attorneys, Durban Maduba Attorneys, Bloemfontein For the third to twenty-seventh respondents: M G Roberts SC and E Roberts Instructed by: Cox & Partners Attorneys, Vryheid 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: 4 November 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 Mluleki Martin Chithi and Others v Minister of Rural Development and Land Reform and Others (1203/2021, 1334/2021 & 261/2022) [2024] ZASCA 149 (4 November 2024) Today the Supreme Court of Appeal (SCA), in a consolidated matter consisting of three appeals emanating from the Land Claims Court, Randburg (the LCC), made an order as follows: (a) in case number 1203/2021, which was an appeal against the order of the LCC dismissing the Mavundulu Community’s land claim, it dismissed the appeal with no order as to costs; (b) in case number 1334/2021, which was against the order of the LCC disallowing the fees of the legal practitioner appellants in the matter and directing them to repay the fees they had already received from the State, it upheld the appeal with no order as to costs and; (c) in case number 261/2022, which was against the LCC dismissing the recusal application with costs, it dismissed the appeal with costs. The appeals concerned a land claim lodged by Mr Sipho Cebekhulu (Mr Cebekhulu), on 30 December 1998, on behalf the Mavundulu Community (Community appellants/claimants) for the restitution of rights in land of which they were allegedly dispossessed in terms of the Restitution of Land Rights Act 22 of 1994 (the Restitution Act). Mr Cebekhulu was authorised to do so by the Community claimants in terms of a resolution dated 9 August 1998. The claimed land comprised certain portions of the farms Spitzkop No. 1129 (Spitzkop) and Mooiplaats No. 1315 (Mooiplaats), situated in the Magisterial District of New Hanover, KwaZulu-Natal. The Regional Land Claims Commissioner: KwaZulu-Natal accepted and investigated the claim as a community claim. The claim was accepted in terms of s 11 of the Restitution Act and investigated as such. The third to twenty-eighth respondents are the landowners (the landowner respondents). The first and second respondents (the State respondents) are the Minister of Agriculture, Rural Development and Land Reform (the Minister) and the Regional Land Claims Commissioner (RLCC), respectively. Mr Mluleki Martin Chithi (the first appellant), (Mr Chithi), Dludlu Attorneys (the second appellant) and MC Ntshalintshali Attorneys (the third appellant) were the legal representatives of the claimant community (the legal practitioner appellants). The first and second appellants were appointed to represent the Community claimants in terms of s 29(4) of the Restitution Act. During the hearing in the LCC in March 2020, at the close of the Community claimants’ case (and that of the State respondents), Canca AJ ordered the separation of issues in terms of rule 57(1)(c) of the Land Claims Court Rules, directing the parties to file heads of argument to address, separately and before other issues, whether Mavundulu was a ‘community’, as envisaged in the Restitution Act. In 2 addition, he directed Mr Chithi to address him on why legal costs or the costs of the legal team for the claimants should not be disallowed. The parties filed heads of argument as directed. On 25 May 2020, Canca AJ delivered the judgment in respect of the main case, in which he found that the Community claimants had failed to prove the existence of a community as defined in s 1(iv) of the Restitution Act. The judgment included an order that the legal fees of the legal practitioner appellants were to be disallowed and that any fees already paid to them had to be repaid, as well as ordering the State respondents to pay the costs of the landowner respondents. The legal practitioner appellants applied for leave to appeal against the disallowance of their fees. Prior to the hearing of the application for leave to appeal and after heads of argument had been filed by the parties, the legal practitioner appellants applied for the recusal of Canca AJ from hearing the application for leave to appeal. This recusal application was opposed by the landowner respondents and ultimately dismissed with costs. No appeal was lodged against the dismissal of the recusal application, however, the legal practitioner appellants sought leave to appeal against the costs order in the recusal application. This leave to appeal was dismissed by the LCC on 22 November 2021. On 16 August 2021, in a separate judgment, the LCC granted an application for leave to appeal against the disallowance of the legal practitioner appellants’ fees. It dismissed the Community claimants’ application for leave to appeal against the dismissal of their claim for restitution of land on the ground that they had failed to prove that they were a community as defined in the Restitution Act. On 11 November 2021, the SCA granted leave to the Community claimants to appeal against the LCC’s order dismissing their claim. In addressing whether the LCC was correct in deciding the ‘community issue’ separately in terms of rule 57(1)(c), the SCA held that Canca AJ was entitled to invoke the provisions of rule 57(1)(c) in determining whether the Community claimants had made out a case on the evidence at that stage of the hearing as the question of whether or not the Community claimants were a ‘community’, as defined in the Restitution Act, was a discrete legal point that was capable of being disposed of separately from other issues. In rejecting the contention that the Community claimants were prejudiced through the invocation of rule 57(1), the SCA pointed out that the LCC was vested with inquisitorial powers in terms of s 32(3)(b) of the Restitution Act to conduct any part of any of its proceedings on an informal or inquisitorial basis and to identify issues to be determined separately, which power may be invoked at any stage of the proceedings by the presiding judge. When dealing with the issue of whether Mavundulu Community was a ‘community’ as defined in s 1 of the Restitution Act, the SCA deemed it necessary to investigate whether the members of the Mavundulu Community derived their possession and use of the land from common rules. This required the SCA to analyse the pleadings, including the Notice of Referral in terms of s 14 of the Restitution Act, the Community claimants’ response thereto, and the evidence presented in support of the pleaded case. After evaluating the evidence, which included the pleadings, the respective parties’ responses and the testimony of lay and expert witnesses at trial, the SCA found that it was clear from the evidence of the various witnesses who testified for the Community claimants, including those who testified for the State respondents, that, although the claimants’ forebears may have existed as a community before the arrival of the white people, that community disintegrated before June 1913. The community members then continued to occupy the land as labour tenants who were subject to the rules and policies of the white landowners. Therefore, the rights which the community members enjoyed as labour tenants, and later, as farm workers were not derived from shared rules which determined access to land held in common by a group and the Community claimants failed to prove that they constituted a ‘community’ as envisaged in the Restitution Act. With regards to whether the LCC misdirected itself in ordering that the legal practitioner appellants were not entitled to fees for the matter, the SCA, in setting aside this decision, stated that the LCC committed a material misdirection in disallowing the legal practitioner appellants to recover their fees for the work they had performed and also in directing them to refund the fees they had already received from the 3 State for representing the Community claimants as there was no legal basis for such an order, given that the legal practitioners were appointed in terms of s 29(4) of the Restitution Act and were thereafter expected to put forward the best case as was reasonably possible on behalf of the claimants at the hearing of the matter. On the issue of Canca AJ’s recusal application, which was brought by the legal practitioner appellants, the SCA held that the allegations of bias based on the adverse remarks concerning Mr Chithi allegedly made at the virtual meeting to which he had not been invited were totally unfounded and the grounds upon which they were based were unsubstantiated. In pointing out that the legal practitioner appellants had ample opportunity to support their allegations with affidavits from any of the participants at that meeting, which they failed to do, the SCA, on this ground, concluded that the recusal application was properly dismissed. With regards to the submission that Canca AJ erred in deviating from the LCC’s usual practice of not awarding costs unless special circumstances exist, the SCA was of the view that Canca AJ was justified in dismissing the recusal application with costs due to the fact that, in awarding costs against the legal practitioner appellants, Canca AJ was exercising his discretion and there was no suggestion that he had, in any way, misdirected himself in the manner in which he did so. Lastly, the SCA disagreed with the contention by the legal practitioner appellants that the landowners did not have a direct and substantial interest in the recusal application and therefore a costs order in their favour was not warranted. In doing so, the SCA held that the landowners were parties to the case and that their land was the subject of the case and, in terms of the audi alterem partem rule, they were entitled to oppose the application and to make their views known in response to an ill-conceived application which was bad in law and on the facts. In the result, the SCA made an order as detailed in the introductory paragraph above. --------oOo--------

4265

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 421/2023 In the matter between: EDWARD NATHAN SONNENBERG INC. APPELLANT and JUDITH MARY HAWARDEN RESPONDENT Neutral citation: Edward Nathan Sonnenberg Inc v Hawarden (Case no 421/23) [2024] ZASCA 90 (10 June 2024) Coram: Ponnan, Dambuza and Goosen JJA and Tlaletsi and Dawood AJJA Heard: 8 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email; publication on the Supreme Court of Appeal website and released to SAFLII. The time and date for hand-down is deemed to be 11h00 on 10 June 2024. Summary: Delictual claim – claim for pure economic loss caused by omission – wrongfulness – risk of indeterminate liability – vulnerability to risk – plaintiff could reasonably have taken steps to protect against the risk. 2 ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Mudau J, sitting as court of first instance): 1 The appeal is upheld with costs, such costs to include the costs of two counsel where so employed. 2 The order of the high court is set aside and substituted with the following order: ‘The Plaintiff’s claim is dismissed with costs, such costs to include the costs of two counsel where so employed.’ JUDGMENT Dawood AJA (Ponnan, Dambuza and Goosen JJA and Tlaletsi AJA concurring): [1] The appellant, Edward Nathan Sonnenberg Inc. (ENS), appeals against the whole judgment and order of the Gauteng Division of the High Court, Johannesburg, per Mudau J (the high court). The high court allowed the delictual claim for pure economic loss by the respondent, Ms Hawarden, in the sum of R5.5 million against ENS, based on an omission. The appeal is with the leave of the high court. Background [2] Ms Hawarden purchased a property from the Davidge Pitts Family Trust (the trust) for the sum of R6 million on 23 May 2019. Pam Golding Properties (Pty) Ltd (PGP), the estate agent mandated by the seller to market the property, sent Ms Hawarden an email on 23 May 2019 at 09h15, congratulating her on the purchase and asking her to deposit R500 000 into its trust account. The email contained a notice that warned Ms Hawarden of the ever-present risk of cybercrime, and advised her to call Mr Lukhele of the agency to verify their banking details. Further warnings 3 pertaining to email hacking, phishing and cyber scams appeared in the attached letter containing the banking details of PGP, which was dated 6 September 2016. [3] Ms Hawarden effected payment of the deposit into the trust account of PGP on 23 May 2019. Prior to doing so, she verified the banking details of PGP telephonically, with Mr Prince Lukhele of PGP, on the same day at 09h15. On 24 May 2019, PGP emailed ENS, the Trust’s appointed conveyancers, in which Ms Hawarden was copied. It confirmed receipt of the deposit and attached a copy of the signed agreement. ENS advised PGP, in response, that Ms Ambaram would attend to preparing the documentation for submission to the deeds office, to effect the transfer and registration of the property into the name of Ms Hawarden. Once again Ms Hawarden was copied. [4] On 20 August 2019 at 13h24, an email was sent by Eftyhia Maninakis (Ms Maninakis), a secretary in the property division of ENS, to Ms Hawarden with an attached letter setting out the necessary guarantee requirements (actual letter containing the correct banking details of ENS). Unbeknown to both Ms Maninakis and Ms Hawarden that letter was intercepted by a cyber criminal, who had, some days prior thereto, gained access to Ms Hawarden’s email account. On 21 August 2019 at 09h02, Ms Hawarden received an email purporting to be from Ms Maninakis with email address emaninakis@ensafrica.com, inter alia setting out the guarantee requirements and furnishing Ms Hawarden with ENS’ banking details (fraudulent letter containing banking details of the fraudsters). In response to this letter, Ms Hawarden telephoned Ms Maninakis on 21 August 2019, to discuss the letter and asked whether, if the bank was unable to furnish the guarantees by 3 September 2019, she could elect to transfer the outstanding amount directly to ENS. Ms Maninakis confirmed that this could be done and stated that she would email two more documents to Ms Hawarden, namely a letter to Standard Bank with guarantee requirements and a document from FNB providing the bank account details of ENS for purposes of a direct transfer of the balance of the purchase price to ENS. [5] Ms Maninakis sent to Ms Hawarden an email at 16h18 on 21 August 2019 with attachments including the guarantee requirements and the banking details of ENS on an FNB letterhead as well as a letter from FNB warning of the dangers of cyber crime and fraud. This email was not received by Ms Hawarden. Instead, later that day at 4 16h39, Ms Hawarden received an email from emaninakis@ensafirca.com that appeared to be a follow-up to her conversation with Ms Maninakis earlier that day. Ms Hawarden failed to notice that the word africa in Ms Maninakis’ email had been changed to afirca. She was unaware at that stage, and only subsequently learnt, that the email purporting to have issued from Ms Maninakis had been manipulated, the banking details of ENS altered and the warning letter from FNB had been removed. [6] On 22 August 2019, at 09h57, Ms Hawarden sent an email to Ms Maninakis indicating that she would be going to her bank, Standard Bank, for assistance, which she did later that day. She was assigned to Ms Sinethemba Shabalala (Ms Shabalala) an employee of Standard Bank. Ms Hawarden discussed with her the option of furnishing a guarantee versus an electronic transfer to ENS. Ms Shabalala informed Ms Hawarden that it would take 14 working days to furnish a guarantee. Whilst at Standard Bank, Ms Hawarden called Ms Maninakis to discuss the issue of interest that she would earn on any deposit made into ENS’ trust account. Ms Maninakis was not available. In response to her call, she was telephoned by Mr Arshad Carrim, a senior associate in the ENS real estate department, who advised her that the interest offered by ENS was less than that offered by Standard Bank’s money market. [7] Subsequently, and whilst she was still at the bank, Ms Maninakis called Ms Hawarden. Ms Hawarden confirmed that she had the emails sent to her reflecting the banking details of ENS. She subsequently effected a transfer into what she believed was the ENS bank account. She did this with the help of Ms Shabalala, using the latter’s computer. In effecting the payment, she used the banking details provided in the fraudulent email and transferred the monies into the fraudster’s FNB bank account, in the belief that she was making a payment into the banking account of ENS. She did not make telephonic contact with ENS, after making her election to pay by way of an electronic fund transfer (EFT), and prior to transferring the funds. [8] Ms Hawarden thereafter on 22 August 2019 at 12h55 sent Ms Maninakis proof of payment. This email as well was intercepted and altered. Instead, at 17h57 an email purporting to have issued from Ms Hawarden was sent to Ms Maninakis enclosing proof of payment into ENS’ bank account and stating that the payment should reflect between 24 to 48 hours. This was a fraudulent email. 5 [9] Ms Hawarden was sent an email by Ms Maninakis on 23 August 2019 at 14h52, which thanked her for the deposit and attached an investment mandate that contained several warnings about business email compromise (BEC) and the precautions to be taken against BEC. Ms Hawarden had already made payment by this time, but the fraud had not yet been discovered, and this letter was not received by her on that day. She received instead an investment letter on 26 August 2019 from the fraudster in which the words ‘I will advise when the same is reflected in our trust account’ had been removed. Ms Hawarden’s money was withdrawn in the period between the payment by EFT and her becoming aware of the fraud. The beneficiary bank, namely FNB, was unable to retrieve the misappropriated funds. [10] On 26 August 2019 at 11h12, Ms Maninakis received a letter purportedly from Ms Hawarden stating inter alia that the monies had not left the account and required authorisation, which she was going to go to the bank to sort out. This letter was not sent by Ms Hawarden but by the fraudster. On 26 August 2019 at 13h27, an email was sent by Ms Hawarden to Ms Maninakis using the @afirca email address with the signed mandate letter which was also not received by Ms Maninakis. [11] On 28 August 2019 at 12h38, Ms Maninakis sent an email to Ms Hawarden advising that ENS has not received payment. Ms Maninakis received an email on 28 August 2019 at 16h26 purportedly from Ms Hawarden claiming that the previous transfer had been returned to her account and that she would have to redo the transfer. This was also a fraudulent email designed to delay the detection of the fraud and allow sufficient time for the withdrawal of the funds. The fraud was only discovered on 29 August 2019. Pleadings [12] Ms Hawarden instituted action against ENS for the recovery of the R5.5 million. She claimed inter alia that ENS and its authorised employees or representatives, who interacted with her during August 2019 in regard to the property transaction, owed her a legal duty to: (a) Exercise that degree of skill and care by a reasonable conveyancer, who specialised in the preparation of deeds documents, to advise her that it was safer to 6 secure the balance of the purchase price by way of a bank guarantee issued in favour of the seller in accordance with the offer to purchase. Ms Hawarden also pleaded that ENS had a legal duty to warn her of the danger of BEC and the increase in BEC type fraud. (b) Alert Ms Hawarden to the fact that criminal syndicates may attempt to induce her to make payments due to ENS into bank accounts, which do not belong to the firm and are controlled by criminals. (c) Advise Ms Hawarden that these frauds are typically perpetrated using emails or letters that appear to be materially identical to letters or emails that may be received by her from ENS. (d) Warn Ms Hawarden to take proper care in checking that any email received in connection with the transaction indeed emanated from ENS. (e) Warn Ms Hawarden, before making any payments to ENS, to ensure that she verified that the account into which payment will be made is a legitimate bank account of ENS. (f) Advise Ms Hawarden that if she was not certain about the correctness of the bank account, she may contact ENS and request to speak to the person attending to her matter, who will assist in confirming the correct bank details. (g) Refrain from using email as a means of communicating banking details in instances where banking transactions of high value were to be performed, and rather use the easily available services of hand delivery of the relevant documents. (h) Implement adequate security measures such as password protection of emails and or attachments thereto. (i) Load the ENS Trust account as a public beneficiary in the FNB and Standard Bank online banking systems, so that the bank account does not require transmission by the medium of an unprotected and unsafe form of communication. (j) Use secure portals where users need to log in by means of two or multi-factor authentication for access, thus avoiding transmission of sensitive information by way of email. [13] Ms Hawarden pleaded further that the reasonableness of imposing a legal duty on ENS and to hold it liable for the damages suffered by her in breach thereof is supported by the following considerations of public and legal policy in accordance with constitutional norms. That ENS is a large sophisticated firm of attorneys compared to 7 Ms Hawarden, who is an elderly divorced pensioner without the knowledge, experience or resources to protect herself against sophisticated cybercrime of which she had no knowledge or experience. BEC has gained notoriety and is well known amongst members of the legal fraternity, ENS would or should have been fully aware of and taken practical steps to minimise the risk of BEC and protect its clients and others like Ms Hawarden when exposed to the risk of BEC, especially where banking transactions of high value are involved. [14] ENS pleaded that: the seller had appointed ENS to effect registration and transfer of the property; and, the balance of the purchase price had to be paid to the seller’s conveyancing attorneys by a bank guarantee in favour of the seller or other acceptable undertaking. It denied further knowledge of the allegations and averred that if correspondence that had been sent or received was fraudulently intercepted, altered and forwarded to Ms Hawarden, then unbeknown to it a hacker had gained access to Ms Hawarden’s email account and interposed himself or herself between Ms Hawarden and those to whom she sent and from whom she received email messages, thereby altering her incoming and outgoing messages and their attachments. [15] ENS specifically denied that Ms Maninakis or Mr Carrim had a legal duty to advise Ms Hawarden on the payment, which she made from and with the help of her own bank. ENS denied that its conduct was either wrongful or negligent and in the alternative pleaded contributory negligence. Issue for determination [16] It is not necessary to consider all of the requirements (that had been placed in issue by ENS) for Ms Hawarden to succeed in her delictual claim against ENS. I shall confine myself to whether or not Ms Hawarden has in particular established the wrongfulness element for a delictual claim arising out of an omission causing pure economic loss. Wrongfulness [17] Ms Hawarden’s claim was one for pure economic loss caused by an alleged wrongful omission. In Home Talk, it was stated that: 8 ‘The first principle of the law of delict, as Harms JA pointed out in Telematrix, is that everyone has to bear the loss that he or she suffers. And, in contrast to instances of physical harm, conduct causing pure economic loss is not prima facie wrongful. Accordingly, a plaintiff suing for the recovery of pure economic loss, is in no position to rely on an inference of wrongfulness flowing from an allegation of physical damage to property (or injury to person), because “the negligent causation of pure economic loss is prima facie not wrongful in the delictual sense and does not give rise to liability for damages unless policy considerations require that the plaintiff should be recompensed by the defendant for the loss suffered”.’ 1 [18] This principle was further emphasised in Halomisa Investment Holdings: 2 ‘. . . As a general rule our law does not allow for the recovery of pure economic loss. In Country Cloud Trading CC v MEC, Department of Infrastructure Development, the Constitutional Court said the following: “. . . There is no general right not to be caused pure economic loss. So our law is generally reluctant to recognise pure economic loss claims, especially where it would constitute an extension of the law of delict . . .” Wrongfulness is an element of delictual liability. The test for wrongfulness was set out in Le Roux and Others v Dey as follows: “[I]n the context of the law of delict: (a) the criterion of wrongfulness ultimately depends on a judicial determination of whether – assuming all the other elements of delictual liability to be present – it would be reasonable to impose liability on a defendant for the damages flowing from specific conduct; and (b) the judicial determination of that reasonableness would in turn depend on considerations of public and legal policy and in accordance with constitutional norms. The test for wrongfulness should not be confused with the fault requirement. The test assumes that the defendant acted negligently or wilfully and asks whether, in the light thereof, liability should follow”.’ (Citations omitted). [19] These principles apply to Ms Hawarden’s claim. Our law does not generally hold persons liable in delict for loss caused to others by omission. . In Hawekwa,3 Brand JA stated as follows: 1 Home Talk Development (Pty) Ltd and Others v Ekurhuleni Metropolitan Municipality [2017] ZASCA 77; [2017] 3 All SA 382 (SCA); 2018 (1) SA 391 (SCA) para 1. (Citations omitted). 2 Halomisa Investments Holdings (RF) Ltd and Another v Kirkins & Others [2020] ZASCA 83; [2020] 3 All SA 650 (SCA); 2020 (5) SA 419 (SCA) para 58, 62 and 63. (Citations omitted). 3 Hawekwa Youth Camp and Another v Byrne [2009] ZASCA 156; [2010] 2 All SA 312 (SCA); 2010 (6) SA 83 (SCA) para 22. See also Cape Town City v Carelse [2020] ZASCA 117; [2020] 4 All SA 613 (SCA); 2021 (1) SA 355 (SCA) para 37. 9 ‘The principle 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 omissions, if negligent, should attract legal liability for the resulting damages.. . .’ (Citations omitted). [20] The issue of wrongfulness in this matter needs to be considered having regard to the following: That Ms Hawarden was not a client of ENS at the relevant time and there was no contractual relationship between Ms Hawarden and ENS. Her loss occurred at a time when there was no attorney-client relationship between them. Ms Hawarden suffered loss, not as a result of any filing in the ENS system, but because hackers had infiltrated her email account and fraudulently diverted her payment meant for ENS into their own account. The interference that caused the loss was as a result of her email account having been compromised. Ms Hawarden had been warned in the PGP letter about this very risk. In that instance she heeded the warning and verified the account details. She, however, failed to do so three months later in respect of ENS and was unable to explain her failure in that regard. It would have been fairly easy for Ms Hawarden to have avoided the risk of which PGP had warned her. As she did with Mr Lukhele of PGP earlier, she could have verified ENS’ bank account details with either Ms Maninakis or Carrim, when she spoke to them whilst at the bank. Both of them would no doubt have taken comfort from the fact that she was at her bank (Ms Hawarden banked at that very branch of Standard Bank) and in professional hands. It was open to Ms Hawarden, who had enlisted the assistance of Ms Shabalala, to assist her in verifying ENS’ bank details. She could not explain why she did not do so. Ms Hawarden thus had ample means to protect herself. Moreover, any warning by ENS of the risk of BEC would have been meaningless, in the circumstances of this case, because by that time the cyber criminal was already embedded in Ms Hawarden’s email account, consequently the risk had already materialised. 10 [21] In this case, a finding that ENS’ failure to warn Ms Hawarden attracts liability would have profound implications not just for the attorneys’ profession, but all creditors who send their bank details by email to their debtors. The ratio of the high court judgment that all creditors in the position of ENS owe a legal duty to their debtors to protect them from the possibility of their accounts being hacked is untenable. The effect of the judgment of the high court is to require creditors to protect their debtors against the risk of interception of their payments. The high court should have declined to extend liability in this case because of the real danger of indeterminate liability. [22] In Country Cloud,4 the Constitutional Court recognised the risk of indeterminate liability as the main policy consideration that militates against the recognition and liability for pure economic loss: 'In addition, if claims for pure economic loss are too-freely recognised, there is the risk of "liability in an indeterminate amount for an indeterminate time to an indeterminate class." Pure economic losses, unlike losses resulting from physical harm to the person or property – “are not subject to the law of physics and can spread widely and unpredictably, for example, where people react to incorrect information in a news report, or where the malfunction of an electricity network causes shut-downs, expenses and losses of profits to businesses that depend on electricity”.’ [23] In Country Cloud,5 the Constitutional Court identified ‘vulnerability to risk’ as an important criterion for the determination of wrongfulness in claims for pure economic loss. It held: 'It is settled that where a plaintiff has taken, or could reasonably have taken, steps to protect itself from or to avoid loss suffered, this is an important factor counting against a finding of wrongfulness in pure economic loss cases. In these circumstances, the plaintiff is not “vulnerable to risk” and, so it is reasoned, there is no pressing need for the law of delict to step in to protect the plaintiff against loss.' [24] In Cape Empowerment Trust,6 Brand JA held: 4 Country Cloud Trading CC v MEC, Department of Infrastructure Development, Gauteng [2014] ZACC 28; 2015 (1) SA 1 (CC); 2014 (12) BCLR 1397 (CC) para 24. (Citations omitted). 5 Country Cloud Trading CC v MEC, Department of Infrastructure Development, Gauteng [2014] ZACC 28; 2015 (1) SA 1 (CC); 2014 (12) BCLR 1397 (CC) para 51. (Citations omitted). 6 Cape Empowerment Trust Limited v Fisher Hoffman Sithole [2013] ZASCA 16; [2013] 2 All SA 629 (SCA); 2013 (5) SA 183 (SCA) para 28 (Citations omitted). 11 '…What is now well established in our law is that a finding of non-vulnerability on the part of the plaintiff is an important indicator against the imposition of delictual liability on the defendant...In many cases there will be no sound reason for imposing a duty on the defendant to protect the plaintiff from economic loss where it was reasonably open to the plaintiff to take steps to protect itself. The vulnerability of the plaintiff to harm from the defendant's conduct is therefore ordinarily a prerequisite to imposing a duty. If the plaintiff has taken or could have taken steps to protect itself from the defendant’s conduct and was not induced by the defendant's conduct from taking such steps, there is no reason why the law should step in and impose a duty on the defendant to protect the plaintiff from the risk of pure economic loss.' [25] The court held in Two Oceans,7 that the criteria of vulnerability to risk will ordinarily only be satisfied 'where the plaintiff could not reasonably have avoided the risk by other means. . . '. It is evident in this case that Ms Hawarden could reasonably have avoided the risk by either asking Mr Carrim or Ms Maninakis to verify the account details of ENS. Ms Hawarden had previously been made aware by PGP of the need to verify banking details and the risks of BEC fraud. She could also have had her bank verify the banking details of ENS. She enlisted the help of her bank to make the payment. She did so at the desk and on the computer of Ms Shabalala. It would have been easy in those circumstances to have had her assist in verifying the bank details of ENS. There was thus more than sufficient protection available to Ms Hawarden. [26] In all of this, sight must not be lost as well of the fact that after weighing up her options she elected, whilst at the bank, to forego a bank guarantee for a cash transfer. As she had ample means available to her, she must in the circumstances take responsibility for her failure to protect herself against a known risk. There can thus be no reason to shift responsibility for her loss to ENS. It follows that Ms Hawarden ought to have failed before the high court. Consequently, the appeal must succeed. [27] In the circumstances the following order is made: 1 The appeal is upheld with costs, such costs to include the costs of two counsel where so employed. 2 The order of the high court is set aside and substituted with the following order: 7 Trustees for the Time Being of Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd [2005] ZASCA 109; [2007] 1 All SA 240 (SCA); 2006 (3) SA 138 (SCA) para 23. 12 ‘The Plaintiff’s claim is dismissed with costs, such costs to include the costs of two counsel where so employed.’ ________________________ F B A DAWOOD ACTING JUDGE OF APPEAL 13 Appearances For appellant: W Trengove SC (with R Ismail) Instructed by: Clyde & Co, Johannesburg Mayet & Associates, Bloemfontein. For respondent: C.H.J Badenhorst SC (with M.D Williams) Instructed by: Werksmans Inc, Johannesburg Matsepes Inc, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 10 June 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 Edward Nathan Sonnenberg Inc v Judith Mary Hawarden (Case no 421/2023) [2024] ZASCA 90 (10 June 2024) Today the Supreme Court of Appeal (SCA) handed down judgment upholding an appeal, with costs, against an order of the Gauteng Division of the High Court, Johannesburg (the high court). The order of the high court was set aside and replaced with an order that: ‘The Plaintiff’s claim is dismissed with costs, such costs to include the costs of two counsel where so employed.’ The core issue before the SCA was whether Ms Hawarden (the respondent) had satisfied the wrongfulness element for a delictual claim arising out of pure economic loss. On 23 May 2019, the respondent purchased a property from the Davidge Pitts Family Trust in the amount of R6 million, in terms of which a deposit of R500 000 was payable into the trust account of Pam Golding Properties (Pty) Ltd (the estate agent). The respondent received a request from the estate agent via email, enclosing their banking details and further contained a warning regarding the ever present-risk of cybercrime, email hacking, phishing and cyber scams. She was advised to verify their banking details, which she confirmed telephonically and she successfully effected payment. During August 2019 communication ensued between the respondent and the authorised employees of Edward Nathan Sonnenberg Inc (the appellant), who was appointed to effect the transfer and registration of the property into the name of the respondent, regarding payment of the balance of the purchase price. The respondent was provided with banking details in a similar fashion while unbeknown to both parties, the respondent’s email account had been intercepted by a cyber criminal days prior. Their email communication was intercepted by the cyber criminal, who fraudulently manipulated and altered the banking details of the appellant to their own, in addition to removing a warning letter from FNB. This led to the respondent effecting payment of the balance of the purchase price into the banking account of the fraudsters. The respondent subsequently instituted action against the appellant in the high court for the recovery of the R5.5 million claiming that the appellant and its authorised employees or representatives owed her a legal duty of care to warn her of the dangers of business email compromise (BEC) as well as advise her on the various methods to employ to avoid falling victim to BEC. The high court granted the order sought and held the appellant liable in delict for the pure economic loss suffered by the respondent, based on an omission. The high court granted the appellant leave to appeal to the SCA. The SCA found that our common law does not generally render people liable in delict for the loss that they have caused others by omission. The SCA held further that respondent’s loss occurred at a time 2 when there was no attorney client relationship between herself and the appellant and further that the loss did not occur as a result of any failing of the appellant’s system but as a result of her email account having been compromised. The SCA found further that the respondent was aware of the risk of BEC as she had been previously made aware thereof by the estate agent and had various options available to verify the banking details of the appellant, however she failed to take reasonable steps to do so. The SCA held further that the respondent was obligated to take responsibility for her failure to protect herself against a known risk and found no reason to shift the responsibility for the respondent’s loss to the appellant. As a result, the SCA upheld the appeal. ~~~~ends~~~~

4278

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 475/2023 In the matter between: DINESH MOODLEY FIRST APPELLANT UGRESEN PERUMAL SECOND APPELLANT and THE STATE RESPONDENT Neutral citation: Moodley and Another v The State (475/2023) [2024] ZASCA 102 (20 June 2024) Coram: HUGHES and MABINDLA-BOQWANA JJA and SMITH AJA Heard: This appeal was, by consent between the parties, disposed of without an oral hearing in terms of s 19(a) of the Superior Courts Act 10 of 2013. Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email; publication on the Supreme Court of Appeal website and released to SAFLII. The time and date for hand-down is deemed to be 11h00 on 20 June 2024. 2 Summary: Criminal Law and Procedure – identification – witnesses’ previous knowledge of the appellants – appellants identified by witnesses on the strength of their prior knowledge – whether the state witnesses’ identification was reliable and credible. 3 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Van Veenendaal AJ, sitting as court of first instance): The appeal is dismissed. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Hughes JA (Mabindla-Boqwana JA and Smith AJA concurring): [1] This appeal is against the judgment of Van Veenendaal AJ of the Gauteng Division of the High Court, Johannesburg (the high court) regarding conviction only. On 6 September 2019, the appellants, Dinesh Moodley and Ugresen Perumal, were convicted of murder and subsequently sentenced to twenty-five years’ imprisonment. The high court granted leave to appeal to this Court. [2] The fundamental issue in the appeal is whether the State proved the identity of the assailants who shot and killed the deceased, Avinash Manjanu, beyond a reasonable doubt. Critical, is the reliability of the evidence of the state witnesses and the strength of the witnesses’ prior knowledge of the assailants. At the trial, the first appellant was accused 1 and the second appellant accused 2, respectively. [3] The evidence led is briefly as follows. On the evening of 4 November 2017, Mr Vinay Choonie, one of the state witnesses, hosted a party at his home in Lenasia South. The first appellant, Dinesh Moodley and the deceased were amongst the guests in attendance. An altercation broke out involving the first appellant and a brother of the deceased. The deceased’s brother was accused of touching the first appellant’s sister, Ms Nerisha Moodley, inappropriately. This altercation escalated to a physical fight, which caused Mr Choonie to end the celebrations. He requested all the guests to leave his home. The first appellant left the venue with his family and the deceased also left. The deceased returned at a later stage and enquired about the assault on his brother. 4 [4] On his arrival, the deceased parked his vehicle close to the pavement by Mr Choonie’s house. He alighted from the vehicle and stood by the driver’s door, conversing with Mr Choonie, Ms Prenisha Moodley, Mr Simeshan Naidoo, and Ms Lorraine Moodley (the group). The individuals in the group all testified that the area was well lit by the streetlights situated on the road. Whilst they were still conversing about the first appellant assaulting the deceased’s brother, the second appellant, Ugresen Perumal, arrived in a grey Hyundai i20 motor vehicle, with the first appellant in the passenger seat. This vehicle made a U-turn on Hibiscus Crescent and came to park behind the deceased’s vehicle. The second appellant alighted from the vehicle, proceeded straight towards the deceased with a firearm in his hand, and started shooting directly at the deceased. He was spurred on by the first appellant to shoot the deceased. When the shots were fired, the deceased was facing the second appellant. After the shooting, the deceased got into his vehicle and drove off. The appellants also got into their vehicle and sped off following the deceased’s vehicle. [5] The group with whom the deceased was conversing sought safe refuge when the gunshots were being fired. After the appellants had sped off, following the deceased’s vehicle, Mr Choonie together with the others of the group, climbed into his vehicle and followed the appellant’s vehicle. They drove for about 220 metres and saw the deceased’s vehicle, which had driven into and collided with a wall of one of the resident’s houses. They found the deceased slumped in the driver’s seat. The post- mortem found that he had succumbed to the fatal gunshot wound to his chest. [6] At the trial, the State presented eyewitness evidence to confirm the identity of the shooter and his co-perpetrator. One of the witnesses, Prenisha testified that the first appellant was her stepbrother. She grew up with him in the same home. The first appellant was known to the majority of the state witnesses. Mr Choonie was Prenisha’s husband and Lorraine was Prenisha’s mother. As regards the second appellant’s identification, both Lorraine and Prenisha knew him well as he was the first appellant’s uncle. First names are used for convenience as the witnesses concerned share a surname. [7] At the trial, Mr Naidoo testified that he encountered the first appellant for the first time at the party. Earlier that evening, Prenisha introduced the first appellant to 5 him, as her brother. Regarding the second appellant, he was adamant that he was the shooter and he had seen him clearly. His testimony was: ‘…I saw him, clean and clear, he climbed out and he started shooting like he was crazy’. He further reaffirmed this whilst being cross-examined. His testimony was ‘…I can say for sure. . ., I saw Accused 2 climb out and shoot our friend. It is all I can explain that, you can ask me [a] hundred times over and I will tell you the same thing’. His evidence was that Lorraine confronted the second appellant saying, ‘shoot me instead of Avenash’, the deceased. [8] When it was put to him, that the first appellant would say that he was not present when the shooting occurred, he responded, ‘It is a lie though, because everyone was around, saw him climb out and say, “shoot him, fucken kill him”. He described what the appellants wore that night. Mr Naidoo’s evidence was further that during the party and whilst the first appellant and the deceased’s brother were fighting, he witnessed that the deceased had tried ‘continuously’ to stop the fight between the two. [9] Lorraine confirmed in her evidence that the first appellant was her daughter’s (Prenisha) brother, and her stepson. Her testimony was that the first appellant refers to her as ‘Aunty Lorraine’. She further testified that it was the first appellant’s fight with the deceased’s brother that led to Mr Choonie requesting the guests to go to their respective homes. At some stage, after he arrived on the scene with the second appellant, the first appellant spoke to her directly and instructed her to go inside. In cross-examination she was asked ‘how did you identify Accused 2’. Her response was that he was the first appellant’s uncle. That was followed up with another question: ‘I am referring to that evening; how did you recognise him?’. Her response was: ‘I know him, he is sitting right there . . . His face I recognised immediately’. [10] Prenisha corroborated Mr Naidoo’s evidence that the second appellant drove a Hyundai i20 and arrived with the first appellant after the guests had gone home, whilst the group was conversing with the deceased. Further, that after the shooting, the appellants got back into their vehicle and chased after the deceased’s vehicle. [11] Mr Choonie’s testimony was that whilst he was being interviewed at the police station, he saw the second appellant through an open door and pointed him out to the investigating officer. Captain Israel, who also testified, corroborated this and explained 6 that while he was busy taking Mr Choonie’s statement, the two appellants arrived at the police station, having been called by another police officer. This was when Mr Choonie pointed at them as being the ones involved in the shooting of the deceased. [12] The appellants’ testimonies amounted to a bare denial. Both were adamant that they were not present at Mr Choonie’s home when the shooting of the deceased occurred. They both relied on alibi evidence. The first appellant testified that he was nowhere near the vicinity of the shooting at Mr Choonie’s home. He had been at the party earlier, had a fight with the deceased’s brother, and when the guests were told to leave, he left for his home with his family. He only became aware of the shooting when he went to the police station the following day to assist his sister, Nerisha, to open a case. [13] The second appellant confirmed that he owned a silver grey Hyundai i20. He testified that on the night of the shooting, he was at home. He passed out on the couch watching television. He woke up at 23h00 to prepare for the prayer he was going to have for his late brother the following day. The only time he left his home was to collect his sister in Lenasia South, between 3h00 and 3h30, the following morning. [14] The trial court found that the eyewitnesses all identified the second appellant as the shooter and ‘accused 1 as being with him, even goading accused 2 on’. Further, that the witnesses corroborated each other in relation to the manner in which the shooting of the deceased unfolded, and that they were not shaken, even though they were subjected to thorough cross-examination. The trial court was conscious of the fact that the critical issue in this case was identification. It was also mindful of the trite approach to be followed when dealing with evidence of identification, which is ‘the opportunity, the lighting, the length of time [and] the acquaintance between the witnesses’. The trial court concluded that the eyewitnesses had ample time to identify the appellants, knew the appellants personally, and the visibility was good, even though the shooting occurred at night. [15] It is trite that the state bears the onus to prove the identity of the appellants and to dispel their alibi defence beyond reasonable doubt. In the circumstances, it is not 7 sufficient for the witness to be honest, as the reliability of the witness must also be tested against opportunity of observation, lighting, visibility and the witnesses’ proximity to the appellant.1 The alibi defence raised, must be considered with other evidence in totality, together with the impression of the witnesses.2 In S v Liebenberg this Court stated: ‘. . . Once the trial court accepted that the alibi evidence could not be rejected as false, it was not entitled to reject it on the basis that the prosecution had placed before it strong evidence linking the appellant to the offences. The acceptance of the prosecution’s evidence could not, by itself alone, be a sufficient basis for rejecting the alibi evidence. Something more was required. The evidence must have been, when considered in its totality, of the nature that proved the alibi evidence to be false. . . ’3 [16] Still on the topic of the law relevant to identification, especially in relation to witnesses having prior knowledge of the identity of the person sought to be identified, I refer to a judgment of this Court in Abdullah v The State,4 where Nicholls JA quoted the following: ‘In Arendse v S this Court quoted with approval the trial court’s comments in R v Dladla: “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”. 1 S v Mthethwa 1972 (3) SA 766 (A) at 768A-C. See also, but not limited to S v Nango [1990] ZASCA 123;1990 (2) SACR 450 (A) at 10 and S v Charzen and Another [2006] ZASCA 147; [2006] 2 All SA 371 (SCA); 2006 (2) SACR 143 (SCA) para 11. 2 R v Hlongwane 1959 (3) SA 337 (A) at 340H-341A. 3 S v Liebenberg [2005] ZASCA 56; 2005 (2) SACR 355 (SCA) para 14. 4 Abdullah v The State [2022] ZASCA 33 paras 14 and 15. 8 This Court reaffirmed this principle more recently in Machi v The State 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.’ [17] The trial court was correct to reject the alibi defence, albeit partially on a wrong principle, when it stated that the alibi version of the appellants was not disclosed for the state to disprove. It was, however, correct in its examination of the evidence regarding the alibi defence as well as the other evidence, and correctly declared it as false. [18] In addition, the trial court recognised that this case was not one of mistaken identity, as the witnesses knew the appellants. They were close relatives; the first appellant was the brother to Prenisha, and they grew up together; he referred to Lorraine as ‘aunty Lorraine’. She was his stepmother with whom he had lived. The second appellant was known to both Lorraine and Prenisha as the first appellant’s uncle. [19] In his heads of argument, the appellants' counsel criticised the evidence of the eyewitnesses, submitting that the witnesses and the first appellant were family members who evidently had some personal issues amongst themselves. The appellants' evidence, however, does not support this. They both testified that there were no family issues between them and the witnesses. There could be no reason the appellants would be implicated by the eyewitnesses, much so the second appellant. Furthermore, the appellants were also identified by Mr Naidoo who had no prior involvement with them. The defence of false or mistaken identity does not withstand scrutiny. In any event, the evidence is so overwhelming against the appellants. [20] Both appellants confirmed that the second appellant drove a grey Hyundai i20. A vehicle of the same make was identified by the state witnesses as the one the appellants arrived in, before the shooting took place and that which chased after the deceased’s vehicle, after the shooting. [21] Crucially, the distance between the scene where the shooting first occurred and the scene where the deceased vehicle knocked into the wall was said to be only 220 9 metres apart. The witnesses testified that the deceased was driving his vehicle fast, clearly, in an attempt to get away from the appellants after being shot at. Shortly after the crash at the second scene, the eyewitnesses and the people from the neighbourhood arrived. Thus, there is little room for speculation that there might have been another shooter at the second scene, where the crash occurred. This, too, negates the probability of mistaken or false identification. [22] The appellant's alibi defence that they were at their respective homes when the shooting occurred is also negated by cellphone evidence adduced by the State. Both appellants’ cellphones were cited at 23:19:45 as being near the Parkside Primary Tower. There is therefore corroboration as regards the cellphone tower evidence that the appellants were in the same vicinity at the same time. Both appellants live at different addresses in Lenasia South. The first appellant lived at Brandberg Place, while the second appellant lived at Shaba Crescent. The nearest tower for the first appellant was Lenasia South Tower with Parkside and Cosmos Street Towers to his north and Madiba Primary to the south. The second appellants’ closest towers were Apex Tower with Spoonhill, Saliheen Masjidus, Shari Crest Primary. Therefore, the appellants could not have been at their respective homes. [23] I now turn to the ballistics evidence, which was accepted in part and rejected in part by the trial court. A comparison of the bullets recovered from the deceased’s vehicle was conducted by Captain Blignaut. The trial court found this evidence to be inconclusive and problematic with significant discrepancies. Bearing in mind that ballistic evidence is expert evidence, the principles associated with the acceptance or the rejection of such evidence are applicable. Captain Blignaut conceded that the bullets recovered from the deceased’s vehicle could not have been fired from the second appellant’s personal licenced firearm, a 9mm Parabellum semi-automatic pistol. No cartridges were recovered from the first scene outside Mr Choonie’s home. The eyewitnesses’ evidence was to the effect that some woman by the name of ‘Cynthia’ had picked up all the spent cartridges at the first scene. For some reason, which was not explained, the State failed to investigate this issue or call this witness. The appellants’ counsel submitted in his heads of argument that all these shortcomings pointed to a possibility that there was no shooting at the first scene, and that the deceased was not struck by bullets fired from the second appellant’s firearm. This 10 submission is, however, not sustainable. The manner in which the shooting occurred and the proximity between the first and the second scene leave no room for speculation. [24] The expert evidence was accepted in part as being as such and rejected as the trial court was of the view ‘that [Blignaut] corrected [her] finding after consultation with the state, not to exclude evidence but rather to implicate the [9mm firearm], appears highly suspect.’ An expert witness is not retained to give a favourable opinion on behalf of the party who hired him or her. An expert is not a ‘hired gun’. The expert’s prime duty is to assist the court in coming to a reasonable conclusion on matters which require expert evidence. Thus, a judge would be favourably impressed by an expert’s impartiality who is willing to make reasonable concessions which might be detrimental to the client’s case, provided the concessions are justified in the circumstances.5 Hence, the rejection by the trial court was correct, as it was not bound to accept the expert evidence, if it was not satisfied that the finding of the expert witness was not corroborated by the rest of the evidence. [25] Both the State and the defence conceded that there were discrepancies in the evidence adduced by the eyewitnesses. The trial court also acknowledged this factor. It, however, concluded that ‘although their evidence [of the eyewitnesses] can be criticised as not exactly coinciding, it is also indicative of their independence’. In my view the discrepancies were not material. It is trite that contradictions are to be evaluated in the context of the evidence as a whole. The eyewitnesses were steadfast and unshaken as regards the identity of the appellants as the perpetrators. They may have given different accounts in relation to some aspects of how the incident unfolded, their evidence in relation to the main events was, however, consistent. [26] For these reasons, there is no justification for interfering with the factual findings of the high court and its decision to convict the appellants. The following order is made: The appeal is dismissed. 5 Schneider NO v AA [2010] ZAWCHC 3; 2010 (5) SA 203 (WCC); [2010] 3 All SA 332 at 14-15. 11 __________________ W HUGHES JUDGE OF APPEAL APPEARANCES For the Appellants: Heads of argument prepared by J Muir Instructed by: AVDM Attorneys, Johannesburg Peyper and Botha Attorneys, Bloemfontein. For the Respondent: Heads of argument prepared by J M K Joubert 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: 20 June 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 Moodley and Another v The State (475/2023) [2024] ZASCA 102 (20 June 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing appeal, against the decision of the Gauteng Division of the High Court, Johannesburg (the high court). The matter involved Dinesh Moodley and Ugresen Perumal who were convicted of murder and sentenced to 25 years in prison on 6 September 2019 by the Gauteng Division of the High Court, Johannesburg (the high court and trial court). The conviction was based on eyewitness testimony that identified the appellants as the shooters who killed Avinash Manjanu. The appellants appealed the conviction, arguing that the identification evidence was unreliable and that they were not present at the scene of the crime. The main issue on appeal was whether the State proved the identity of the assailants beyond a reasonable doubt, particularly in light of the witnesses' prior knowledge of the appellants. The appellants contended that the eyewitnesses were biased and that their identification of the appellants was unreliable due to their prior knowledge of the appellants. They also argued that their alibi defence was not properly considered by the trial court. The State, on the other hand, argued that the eyewitnesses' testimony was credible and that the appellants' alibi defence was false. The trial court found that the eyewitnesses identified the second appellant as the shooter and that the first appellant was present at the scene, goading the second appellant to shoot. The court also found that the witnesses' testimony was consistent and that they were not shaken during cross-examination. The high court granted leave to appeal to this Court. The SCA held that the eyewitnesses' identification of the appellants was reliable and credible, given their prior knowledge of the appellants. This Court noted that the witnesses had ample opportunity to observe the appellants, they knew the appellants personally, the lighting was good and the witnesses were not shaken during cross-examination. The SCA referred to Abdullah v The State, stating that the degree of previous knowledge and the opportunity for a correct identification are crucial factors in cases of identification. The SCA also found that the appellants' alibi defence was false and that the State had proved their guilt beyond a reasonable doubt. As a result, the SCA dismissed the appellants' appeal ~~~~ends~~~~

4311

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 312/2023 In the matter between: MICHELLE JACQUELINE SCHOLTZ FIRST APPELLANT MICHELLE JACQUELINE SCHOLTZ NO SECOND APPELLANT and LEON DE KOCK NO FIRST RESPONDENT THE MASTER OF THE HIGH COURT SECOND RESPONDENT LEGAL PRACTICE COUNCIL THIRD RESPONDENT Neutral citation: Scholtz & Another v De Kock NO & Others (312/2023) [2024] ZASCA 132 (02 October 2024) Coram: MAKGOKA, NICHOLLS, HUGHES and MOLEFE JJA and MBHELE AJA Heard: 02 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 02 October 2024. 2 Summary: Deceased estate – whether executrix bears duty to account to beneficiaries for deceased’s monies disbursed during the deceased’s lifetime. Fiduciary relationship – attorney and client – mere deposit of money into attorney’s trust account does not establish fiduciary relationship. Relationship between sisters – whether the nature of their financial arrangement established fiduciary relationship to warrant accounting – whether in fact such accounting occurred. 3 ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Saldanha, Henney and Thulare JJ, sitting as court of appeal): 1 The appeal is upheld with costs including costs of two counsel. 2 The order of the full court is set aside and replaced with the following order: ‘The appeal is dismissed with costs.’ JUDGMENT Makgoka JA and Mbhele AJA (Nicholls, Hughes and Molefe JJA concurring): [1] The main issue in this appeal is whether the first appellant, Ms Jacquline Scholtz, (Ms Scholtz), owed her deceased sister, and by extension the latter’s testamentary beneficiaries, a duty to account for an amount of R5 600 000 which the deceased had received from the Road Accident Fund (the RAF). Ms Scholtz received the amount into her attorney’s trust account, and later transferred it into an investment account managed by her. [2] The full court of the Western Cape Division of the High Court, Cape Town (the full court) held that Ms Scholtz was so obliged to account and overturned an order of a single Judge of that Division (the court of first instance), which had dismissed the application of the first respondent, Mr Leon De Kock (Mr De Kock) to account for the money. Ms Scholtz appeals with the special leave of this Court. [3] Mr De Kock and the deceased, Mrs Nicquelette Veronique de Kock, were married to each other. Their marriage was terminated by her death on 26 September 2018. Two minor children were born of the marriage. The deceased and Ms Scholtz were identical twins. Ms Scholtz is thus Mr De Kock’s former sister-in- 4 law and the aunt of the two minor children. The minor children are the joint heirs in the estate of the deceased (the deceased estate). In terms of the deceased’s Will, Ms Scholtz is the executrix in the deceased estate. She is also a practising attorney. Although she was cited both in her personal capacity and as an executrix, relief was sought against her only in her personal capacity and as an attorney. [4] Before the court of first instance, Mr De Kock brought the application in his nominal capacity as the guardian of his two minor children who, as mentioned, are joint heirs of the estate of their late mother. He based his right to seek the relief on the so-called Beningfield exception.1 Mr De Kock sought an order compelling Ms Scholtz to render an account for the R5 600 000 and for the debatement of that account, and for the payment to the deceased estate of whatever amount was found to be due to it. The application was dismissed by the court of first instance. On appeal to it, the full court upheld Mr De Kock’s appeal. [5] The factual background is briefly this. In November 2014 the deceased was awarded R7 067 736.80 by the RAF following injuries she had sustained in a motor vehicle accident. The funds were paid into the Trust account of her attorneys. On 28 November 2014, the deceased instructed her attorneys to pay over the nett proceeds of R5 600 000 into the trust account of her twin sister, Ms Scholtz. On 2 December 2014, the funds were transferred to an investment account managed by Ms Scholtz. It is the amount of R5 600 000 that formed the basis of Mr De Kock’s application in the court of first instance. [6] Ms Scholtz denied that she had any duty to account to Mr De Kock. She nevertheless, gave the following explanation as to how she disbursed the funds that the deceased entrusted to her. In short, she stated that she too, was involved in the same motor vehicle accident which gave rise to the deceased’s award from the RAF. Her injuries were less serious than those of the deceased. Both their respective claims 1 An exception to the general rule that only an executor of an estate has locus standi in relation to estate assets and transactions was recognized. The exception has its genesis in the English decision in Beningfield v Baxter (1886) 12 AC 167 (PC), and accepted into our law in Gross & Others v Pentz 1996 (4) SA 617 (A) at 628G-H. 5 against the RAF were lodged by their father, also a practising attorney at the time. Their father expended professional time and defrayed their respective medical expenses. [7] Ms Scholtz further explained that a mistake occurred when the RAF processed their claims, because of their almost similar identity numbers. The result was that her claim ‘was effectively lost’ and treated as that of the deceased. In view of this the twin sisters, and their parents, agreed that the deceased’s claim would be pursued and Ms Scholtz’s claim abandoned. Furthermore, upon payment of the award for the deceased, the award would be distributed as follows: (a) R500 000 thereof to their father as compensation for his professional services; (b) the rest to be shared equally between the twin sisters. Pursuant to this agreement, R500 000 was paid to their father and the twin sisters each received R2 550 000. The deceased invested her R2 550 000 portion into an investment venture in which both she and Ms Scholtz participated, which she managed. [8] At the invitation of the court of first instance, Ms Scholtz explained how the deceased’s award was expended. She stated that between December 2016 and December 2017, and on the instructions of the deceased, she paid a total amount of R4 144 250 to the deceased, or to persons nominated by the deceased. Ms Scholtz stated that each such payment was made on the deceased’s specific instructions, and to her satisfaction. Ms Scholtz emphasised that she never acted as the deceased’s attorney in relation to her RAF award. [9] Mr De Kock disputed Ms Scholtz’s explanation as being improbable. In particular, he disputed that the deceased would have donated half of her award from the RAF to Ms Scholtz. He contended that such conduct was irreconcilable with the deceased’s conduct because she had created a testamentary trust for the benefit of their minor children shortly upon receipt of the award from the RAF. He further argued that Ms Scholtz provided no documentary proof evidencing the alleged donation although the facts giving rise to the deceased’s generosity are all capable of objective verification. Mr De Kock demanded production of documents evidencing the nature of injuries suffered by both the deceased and Ms Scholtz, the content of their claim forms 6 with the RAF, the money paid to Ms Scholtz for her medical costs by the RAF and all other documents generated in the process of their claims. [10] Mr De Kock asserted that those documents would confirm whether Ms Scholtz’s injuries were indeed mistakenly attributed to the deceased. He contended that the evidence would reveal that Ms Scholtz’s injuries were minor compared to those of the deceased and that it was improbable that the deceased would have agreed to share her award equally with Ms Scholtz. [11] The court of first instance approached the matter on the basis of Mr De Kock’s allegation that Ms Scholtz owed the deceased’s estate R5 600 000, being the RAF payout. The court therefore proceeded on the footing that, on Mr De Kock’s allegation, Ms Scholtz was a debtor of the deceased’s estate. Relying on this Court’s judgment in ABSA v Janse van Rensburg2 the court of first instance concluded that there was no fiduciary relationship between the deceased’s estate (represented by Mr De Kock) and Ms Scholtz as a debtor of the estate. As to the personal relationship between the sisters, the court was prepared to accept that there could have been a fiduciary relationship between them in relation to the deceased’s monies held in the investment account. In this regard, the court accepted Ms Scholtz’s explanation that she had expended the payments on the specific instructions of the deceased, and that the deceased was satisfied with how the monies were disbursed. Accordingly, the court dismissed Mr De Kock’s application. [12] The full court took a different view. It held that the court of first instance erred in its conclusion that Mr De Kock had failed to establish a duty on Ms Scholtz to account. According to the full court, that duty was two-fold. First, because there was ‘statutory obligation on [Ms Scholtz] to have accounted, as an attorney into whose trust account an amount of R5 600 000 was deposited on behalf of the deceased.’ Second, ‘for the handling of the amounts in the Absa investment account in her name, in which she purportedly assisted the deceased; and the investments she had made.’ 2 Absa Bank Bpk v Janse Van Rensburg [2002] ZASCA 7; 2002 (3) SA 701 (SCA) paras 15-16. 7 [13] The full court held that Ms Scholtz’s explanation as to what happened to the money, was ‘no more than skeletal . . .’, and referred to her explanation as an attempt to ‘circumvent the onus which otherwise rested upon her to prove her explanation in a contested debatement process.’ Consequently, the full court upheld the appeal with costs and ordered Ms Scholtz to provide a full and proper accounting of the amount of R5 600 000, supported by documentary evidence. [14] In this Court, the parties persisted in their respective stances adopted in the two lower courts. The issue remains whether Ms Scholtz was obliged to account for the R5 600 000. It is to that issue we turn. [15] A party who claims delivery of a statement and its debatement must assert their right to receive such an account and the basis for such an entitlement – whether through a contract, a fiduciary relationship or a statutory obligation.3 They must establish any contractual terms or other circumstances which have a bearing on the accounting sought and a failure to render such an account.4 [16] In the present case, Mr De Kock predicated the duty to account on his allegation that Ms Scholtz stood in a fiduciary relationship with the deceased. The nature and basis of a fiduciary relationship was explained by this Court in Robinson v Randfontein Estates Gold Mining Co Ltd 5 as follows: ‘Where one man stands to another in a position of confidence involving a duty to protect the interests of that other, he is not allowed to make a secret profit at the other’s expense or place himself in a position where his interests conflict with his duty. . .There is only one way by which such transactions can be validated, and that is by the free consent of the principal following upon a full disclosure by the agent . . . Whether a fiduciary relationship is established will depend upon the circumstances of each case.’ 3 Absa Bank Bpk v Janse Van Rensburg [2002] ZASCA 7; 2002 (3) SA 701 (SCA) para 15. 4 Doyle and Another v Fleet Motors PE (Pty) Ltd 1971 (3) SA 760 (A) at 762-763. 5 Robinson v Randfontein Estates Gold Mining Co Ltd 1921 AD 168 at 177-178. 8 [17] The existence of a fiduciary duty, its nature and extent, can only be determined after a thorough consideration of the facts.6 Mr De Kock contends that the mere payment of the funds into Ms Scholtz’s trust account qua attorney, without more, established a fiduciary relationship between her and the deceased, and thus an obligation for Ms Scholtz to account to the deceased. This contention found favour with the full court. But this is at odds with this Court’s judgment in Joubert Scholtz Inc v Elandsfontein Beverage Marketing.7 There, it was held that there is no general fiduciary duty on an attorney to account to her or his client merely because of payment into an attorney’s trust account. Such a duty arises where there is an agreement of mandate, and its bounds are determined with reference to the terms of the mandate itself. There is no suggestion that there was such an agreement between the deceased and Ms Scholtz. [18] Furthermore, the argument ignores the fact that the money was kept in Ms Scholtz’s trust account only for four days. To the extent there might have been a fiduciary duty and an obligation to account, she had fully accounted. This is evidenced by the common cause fact that on 28 November 2014 she received R5 600 000 into her trust account and that the same amount was transferred into the investment account on 2 December 2014. Thus, the full amount and the four days during which it was in her trust account, had been accounted for. [19] Once the money was transferred to the investment account, Ms Scholtz’s mandate as an attorney, and any ancillary fiduciary relationship there might have existed, was terminated. Beyond the attorney-client relationship which existed for a short while, there remained a personal relationship between the identical twin sisters with regard to how R5 600 000 was disbursed after it was transferred into the investment account. Ms Scholtz, as the respondent, explained that as per the family agreement, the R500 000 was paid to their father, and the remainder was divided 6 Bellairs v Hodnett and Another 1978 (1) SA 1109 (A) at 1130E-F; Phillips v Fieldstone Africa (Pty) Ltd 2004 (3) SA 465 (SCA) para 27; Gihwala and Others v Grancy Property Ltd and Others [2016] ZASCA 35; [2016] 2 All SA 649 (SCA); 2017 (2) SA 337 (SCA) para 53; National Union of Metalworkers of South Africa obo Nganezi and Others v Dunlop Mixing and Technical Services (Pty) Limited and Others [2019] ZACC 25; 2019 (8) BCLR 966 (CC); (2019) 40 ILJ 1957 (CC); [2019] 9 BLLR 865 (CC); 2019 (5) SA 354 (CC) para 58. 7 Joubert Scholtz Inc and Others v Elandsfontein Beverage Marketing (Pty) Ltd [2012] ZASCA 6; [2012] 3 All SA 24 (SCA) paras 93-94. 9 equally between the deceased and her. This, Mr De Kock disputed. He asserted that it was improbable that the deceased, having just established a testamentary trust for the benefit of her children, would donate half of her award to Ms Scholtz. [20] There was clearly a dispute of fact on the papers. One of the tools available to a court when faced with disputes of fact is to apply the well-known Plascon-Evans .8 The principle is to the effect that an applicant who seeks final relief on motion must in the event of conflict, accept the version set up by the respondent. That is, the respondent’s version must be accepted, unless it is, in the opinion of the court, it is so far-fetched or clearly untenable that the court is justified in rejecting it merely on the papers.9 [21] It is so that a donation is not easily inferred. However, on the facts of the present case, regard must be had to the undeniably strong bond between the identical twin sisters and the fact that Ms Scholtz had abandoned her own claim against the RAF. There is also nothing untenable about the version that R500 000 was paid to their father for his professional services. On these bases, Ms Scholtz’s version that the deceased had paid her father R500 000 for his professional services, and made an irrevocable donation to her, cannot be described as far-fetched or untenable. In all the circumstances, on the application of the Plascon-Evans principle, Ms Scholtz’s version should have been accepted. [22] One of the bases upon which the full court held that Ms Scholtz was obliged to account to Mr De Kock is that she received the awarded funds into her investment account. Assuming for present purposes that such a duty arose, there is nothing to gainsay Ms Scholtz’s explanation of how the funds were expended. What gives credence to her explanation is that she would have managed the funds for almost four years before her death. The funds were paid into her investment account in December 2014, and the deceased passed away on 28 September 2018. The bank 8 Developed by this Court in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634E-635C. 9 Wightman t/a J W Construction v Headfour (Pty) Ltd and Another [2008] ZASCA 6; [2008] 2 All SA 512 (SCA); 2008 (3) SA 371 (SCA) para 12. 10 statements of the relevant account show that Ms Scholtz operated the relevant bank account for approximately four years. [23] The records reveal that the bulk of the money was paid to the deceased. This is a break-down of the transactions. R2 550 000 was received into the account on 2 December 2014. For the period December 2014 and September 2018, the investment account earned R1 287 515 as interest. R3 000 000 was paid to the deceased in tranches of R1 000 000, respectively on 8 December 2016; January 2017, 19 January 2018. The last payment, of R606 735, was made to the deceased shortly before her passing, on 19 July 2018. The rest of the payments, totalling R537 515, were made to various people nominated by, or on the instruction of, the deceased. In sum, between December 2014 and September 2018, the investment account had credits of R3 837 515 and debits of R4 144 250. This left a debit balance of R306 735 as at the time of the deceased’s passing, which, ordinarily, would be a debt against the deceased estate. [24] It is common cause that the twin sisters shared a warm, close and trusting relationship. There is no suggestion that at any stage between the payment of the funds into the investment account and the deceased’s death, the latter had expressed dissatisfaction about how the funds were managed. Similarly, there is no suggestion that by the time she passed away, the deceased had considered that there was any money due to her by Ms Scholtz, or that there was any accounting outstanding on Ms Scholtz’s part. [25] It must be emphasised that the funds were under Ms Scholtz’s control for approximately four years before the deceased’s passing. This is sufficiently long enough for the deceased to have demonstrated her dissatisfaction, if any, about Ms Scholtz’s management of her funds. There is no hint of that. It is also important to bear in mind that the deceased was a person with full mental capacity. She was entitled to dispose of her assets in a manner she deemed fit during her lifetime. Her children, in whose interests Mr De Kock purports to act, have no right at law to question her financial decisions during her lifetime. 11 [26] Accordingly the appeal must succeed. Costs should follow the result. [27] The following order is made: 1 The appeal is upheld with costs including costs of two counsel. 2 The order of the full court is set aside and replaced with the following order: ‘The appeal is dismissed with costs.’ ______________________ T MAKGOKA JUDGE OF APPEAL N M MBHELE ACTING JUDGE OF APPEAL 12 Appearances: For appellants: R W F MacWilliam SC (with him A Van Aswegen) Instructed by: Spamer Triebel Inc., Belville Symington & De Kock Attorneys, Bloemfontein For first respondent: S P Rosenberg SC (with him T Tyler) Instructed by: Snijman & Associates Inc., Cape Town Honey Attorneys Inc., Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 2 October 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 Scholtz & Another v De Kock NO & Others (312/2023) [2024] ZASCA 132 (02 October 2024) Today the Supreme Court of Appeal (SCA) handed down judgment upholding an appeal against an order of the Full Court of the Western Cape Division of the High Court. The Full Court had ordered the appellant, Ms Scholtz, to account to a deceased estate of her late identical twin sister, Mrs De Kock, for a sum of R5 600 000 which the deceased had received from the Road Accident Fund (the RAF) as an award for injuries sustained in a motor vehicle accident. The money was received four years before her passing. It was paid into the appellant’s trust account as an attorney and was transferred four days later into an investment account managed by Ms Scholtz. The respondent, Mr De Kock, and the deceased were married to each other until the latter’s death in September 2018. Two minor children were born of the marriage. After the deceased’s death, Mr De Kock brought an application in his nominal capacity as the guardian of his two minor children who are joint heirs of the estate of the deceased, seeking an order compelling Ms Scholtz to render an account for the R5 600 000 and for the debatement of that account, as well as payment to the estate whatever amount found to be due. Ms Scholtz gave the following explanation of how the R5 600 000 was expended. She and the deceased were involved in the same motor vehicle accident which gave rise to the deceased’s RAF award. Her injuries were minor compared to those sustained by the deceased. A mistake occurred during the processing of her claim by the RAF which resulted in her injuries being attributed to the deceased. Her claim was, as a result, subsumed into that of the deceased. As a result, an agreement was reached between the deceased, herself and their parents that the deceased’s award be distributed as follows: (a) R500 000 to their father as compensation for his professional services in prosecuting the claim against the RAF; and (b) the rest to be shared equally between the twin sisters. The result was that twin sisters received R2 550 000 each. The deceased put her portion of the R2 550 000 into an investment account which she, Ms Scholtz, managed at the request of the deceased. For the period December 2014 to September 2018, the investment account earned R1 287 515 as interest. Over a period of four years, she paid the deceased a total of R3 606 735, and R537 515 to various people nominated by, or on the instructions of, the deceased. These are debits of R4 144 250 as against the credit entries of R3 837 515, leaving a debit balance of R306 735 as at the time of the deceased’s passing, which, ordinarily, would be a debt in the deceased’s estate. These transactions were borne out by the relevant bank statements. 2 About the payment of the money into Ms Scholtz’ attorney’s trust account, the SCA held that there is no general fiduciary duty on an attorney to account to her or his client merely because of payment into an attorney’s trust account. Such a duty arises where there is an agreement of mandate, and its bounds are determined with reference to the terms of the mandate itself. In the present case, there was no suggestion that there was such an agreement between the deceased and Ms Scholtz. The Court also noted that the money was in Ms Scholtz’s trust account for only four days. Even if there was a duty to account for it, Ms Scholtz had done so, by demonstrating that the full amount was paid from the trust account into the investment account. The appellant’s mandate as an attorney, and any ancillary fiduciary relationship that might have existed, was terminated at the time the money was transferred into the investment account. About how the agreement in terms of which the deceased’s award would be distributed, the SCA accepted Ms Scholtz’s explanation about the family agreement referred to above. The Court found that there was nothing far-fetched or clearly untenable about the explanation which justified its rejection merely on the papers, especially given the close and warm relationship between the identical twin sisters. The Court held that to the extent Ms Scholtz was obliged to account to the deceased for the disbursement of the money in the investment account, she had done so during the deceased’s lifetime. She therefore owed no duty of accounting to the deceased’s minor children. The Court noted that up to July 2018, two months before her passing, the deceased had not given any indication of her dissatisfaction with how Ms Scholtz had managed the funds. There was also no evidence that at the time of the deceased’s passing, she considered that there was any money outstanding or due to her. The deceased’s children, in whose interests Mr De Kock was purporting to act, had no right at law to question the financial decisions the deceased made during her lifetime. For these reasons, the Supreme Court of Appeal upheld the appeal with costs, including the costs of two counsel. ***ENDS***

4289

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1337/2022 368/2023 In the matter between THE CITY OF CAPE TOWN APPELLANT and THE SA HUMAN RIGHTS COMMISSION FIRST RESPONDENT THE HOUSING ASSEMBLY SECOND RESPONDENT BULELANI QOLANI THIRD RESPONDENT THE ECONOMIC FREEDOM FIGHTERS FOURTH RESPONDENT THE PERSONS WHO CURRENTLY OCCUPY ERF 544 PORTION, 1 EMFULENI FIFTH RESPONDENT ABAHLALI BASEMJONDOLO MOVEMENT AMICUS CURIAE Neutral citation: City of Cape Town v The South African Human Rights Commission and Others (1337/2022; 368/2023) [2024] ZASCA 110 (10 July 2024) Coram: MOCUMIE, MOTHLE and MEYER JJA and KOEN and COPPIN AJJA Heard: 07 MAY 2024 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 10 July 2024. Summary: Property law – common law defence of counter-spoliation – ambit and requirements of counter-spoliation – whether the interpretation of counter-spoliation adopted by the high court is correct – whether, in the circumstances, the City had a right to counter-spoliate in light of the Bill of Rights, ss 10, 14(c) and 26 (3) of the Constitution of the Republic of South Africa. 3 ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Saldanha, Dolamo and Slingers JJ, sitting as a court of first instance): The appeal is dismissed with costs, including the costs of two counsel where so employed. JUDGMENT Mocumie JA (Mothle JA, Meyer JA, and Koen and Coppin AJJA concurring): [1] This appeal concerns the question whether a municipality, as a local sphere of government1, can counter-spoliate when homeless people invade its unoccupied land. If so, under which circumstances can it justifiably do so without resorting to one of the available remedies under our law.2 Furthermore, whether counter-spoliation requires court supervision. And if so, how or to what extent? The appeal is from the Western Cape Division of the High Court (the high court) with leave of the court a quo. [2] The appeal has its genesis in the City of Cape Town (the City), removing many homeless people who had invaded several pieces of its unoccupied land. The removals took place between April and July 2020 without an order of court. The City’s Anti-Land Invasion Unit (the ALIU) acting on behalf and on instructions of the City, demolished their homes, structures and or dwellings, commonly referred to as shacks, consisting of corrugated iron sheets, and others made of plastic sheets, cardboard boxes and wooden pallets. It also destroyed some of their belongings found inside those structures. Some people were injured in the process, while others were treated in the most undignified and humiliating manner. 1 As contemplated in s 151 (1) of the Constitution of the Republic of South Africa,1996. 2 Mandament van spolie or an ordinary interdict, or a remedy under the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998. 4 [3] On 8 July 2020, as a result of this conduct on the part of the City, the South African Human Rights Commission (the Commission), approached the high court for urgent interlocutory relief, on behalf of the homeless people. Relief was sought in two parts. Part A served before Meer and Allie JJ, who on 25 August 2020 interdicted the City from removing the land occupiers from the land, pending the finalisation of Part B, and directed that certain compensation be paid. In respect of the declaratory relief in Part B, the City sought to justify its conduct with reliance on the common law remedy of counter- spoliation, which, in certain circumstances may permit a party, instanter, to follow up and retrieve possession of that which it has been despoiled of. This is what is on appeal before this Court. The second to fourth respondents thereafter sought and obtained leave to intervene as interested parties in the proceedings. The Abahlali Basemjondolo Movement sought leave to join as amicus curiae, and although initially opposed by the City, their application was granted. [4] The City was partially successful on appeal to this Court in respect of Part A in so far as the order for the payment of compensation was set aside. Part B was heard by a specially constituted court of three judges (Saldanha, Dolamo and Slingers JJ). In a written judgment delivered on 15 July 2022, the high court held as follows: ‘159.1 Prayer 1 of the amended notice of motion and Prayer 4.2 of the relief sought by the intervening applicants 159.1.1 The conduct of the first respondent, the City on the 1st July 2020 is declared to have been both unlawful and unconstitutional in respect of the attempted demolition and eviction of Mr Bongani Qolani from the informal structure that he occupied at Empolweni; 159.1.2 The conduct of the City in the demolition of structures (and effective eviction of persons affected thereby), based on its incorrect interpretation and application of the common law defence of counter spoliation on erf 18332 Khayelitsha (the Empolweni/Entabeni site) in Khayelitsha is declared to have been both unlawful and unconstitutional; 159.1.3 The conduct of the first respondent, the City in respect of the demolition of structures (and the effective eviction of persons affected thereby) on land that belonged to the Hout Bay Development Trust on erf 5144 prior to it having obtained the permission from the Trust to lawfully conduct counter spoliation operations on the property belonging to the Trust is declared to have been both unlawful and unconstitutional; 159.1.4 The conduct of the first respondent, the City is declared to be both unlawful and unconstitutional in respect of the demolition of structures (and the effective eviction of persons 5 affected thereby) on erf 544, Portion Mfuleni prior to having obtained permission from Cape Nature on the 8 July 2020 to assist it with conducting lawful counter spoliation operations; and 159.1.5 The first respondent, the City is ordered to pay the costs of the three applicants and intervening applicants in respect of the relief in prayers, 1.1 to 1.4 inclusive including the costs of two counsel where so employed. 159.1.2 Prayer 2 of the amended notice of motion 159.1.2.1 The relief sought by the applicants and to the extent supported by the intervening applicants against the 4th ,5th and 6th respondents, the police respondents, is dismissed; and 159.2.2 No order as to costs is made in respect of the relief in prayer 2.1 of the amended notice of motion. 159.1.3. Prayer 3 of the amended notice of motion 159.1.3.1 The relief sought in terms of prayer 3 is covered by the order we make in respect of prayer 6 of the amended notice of motion. 159.1.4. Prayer 4 of the amended notice of motion 159.1.4.1 The relief sought in terms of prayer 4 of the amended notice of motion is covered by the order we make in respect of prayer 6 of the amended notice of motion. 159.1.5. Prayer 5 of the amended notice of motion 159.1.6. It is declared that the first respondent (the City)’s ALIU is not per se unlawful provided that, in discharging its mandate to guard the City’s land against unlawful invasions, it acts lawfully. 159.1.7. Prayer 6 of the amended notice of motion 159.1.7.1 We reiterate that counter spoliation, properly interpreted and applied, is neither unconstitutional nor invalid. However, the APPLICATION of counter spoliation, incorrectly interpreted and applied by the City, is inconsistent with the Constitution and invalid insofar as it permits or authorises the eviction of persons from, and the demolition of, any informal dwelling, hut, shack, tent, or similar structure or any other form of temporary or permanent dwelling or shelter, whether occupied or unoccupied at the time of such eviction or demolition. 159.1.8. Prayer 7 of the amended notice of motion 159.1.8.1 The application to review and set aside the decision by the City to issue Tender No 3085/2019/20 and to the extent necessary, any decision to award and implement the tender, on the ground that it is unlawful, arbitrary and/or unreasonable, is dismissed.’ [5] The judgment of the high court has been reported sub nom South African Human Rights Commission (SAHRC) and Others v City of Cape Town and Others 6 (8631/2020).3 It is accordingly not necessary for the facts or litigation history which has been set out therein to be repeated here. [6] In its judgment, the high court, with reference to the ‘instanter’ requirement of counter-spoliation, held that: ‘A narrow interpretation and application of instanter is preferable because it is consistent with the common law and the constitutionally enshrined Rule of Law. The very label of counter spoliation is indicative that its objective is to resist spoliation and that it may be resorted to during the act of spoliation. Furthermore, the description of counter spoliation indicates that it must be part of the res gestae or a continuation of the spoliation - thus giving guidance to what is meant by instanter. Counter spoliation is no more than the resistance to the act of spoliation. Therefore, it follows that once the act of spoliation is completed and [the] spoliator has perfected possession, the window within which to invoke counter spoliation is closed.’4 [7] The high court deemed it unnecessary to decide the issue of the constitutionality of counter-spoliation, as initially sought by the Commission and the intervening parties. Before this Court, counsel agreed that although the Commission approached the high court on that basis (the constitutional attack), the Notice of Motion was amended substantially, and the issue had been narrowed down to whether the City satisfied the requirements of counter-spoliation in the circumstances. The appeal proceeds on that basis. [8] The crisp issue therefore is whether the high court was correct to find that the City applied counter spoliation incorrectly? In other words, that the City had not acted instanter under the circumstances, and thus was not justified to have counter- spoliated under the prevailing circumstances, with the consequential damage to the unlawful occupiers’ homes, structures, property and in some cases, their injuries, and the impairment of their dignity, especially in the case of Mr Qolani, the third respondent. [9] This Court in Tswelopele Non-Profit Organisation and Others v City of Tshwane 3 South African Human Rights Commission and Others v City of Cape Town and Others [2022] ZAWCHC 173; [2022] 4 All SA 475 (WCC); 2022 (6) SA 508 (WCC). 4 Ibid para 62. 7 Metropolitan Municipality,5 when considering whether there was a need to reconsider the mandament van spolie and related remedies in the light of the provisions of the Constitution, stated the following, which remains good law: ‘The Constitution preserves the common law, but requires the courts to synchronise it with the Bill of Rights. This entails that common law provisions at odds with the Constitution must either be developed or put at nought; but it does not mean that every common law mechanism, institution or doctrine needs constitutional overhaul; nor does it mean that where a remedy for a constitutional infraction is required, a common law figure with an analogous operation must necessarily be seized upon for its development. On the contrary, it may sometimes be best to leave a common law institution untouched, and to craft a new constitutional remedy entirely.’ [10] In Silberberg and Schoeman’s The Law of Property,5 the authors state that ‘[a]s a general rule, a possessor who has been unlawfully dispossessed cannot take the law into [their] hands to recover possession. Instead, [they] will have to make use of one of the remedies provided by law, for example the mandament van spolie.6 But if the recovery is forthwith (instanter) in the sense of being still a part of the act of spoliation, then it is regarded as a mere continuation of the existing breach of the peace and is consequently condoned by the law. This is known as counter- spoliation (contra spolie).’ It is thus an established principle that counter- spoliation is not a stand- alone remedy or defence and does not exist independently of a spoliation. [11] As the authors explain, it is clear that counter-spoliation is only permissible where: (a) peaceful and undisturbed possession of the property has not yet been acquired, ie when the taking of possession is not yet complete; and (b) where the counter-spoliation would not establish a fresh breach of the peace. Once a spoliator has acquired possession of the property and the breach of the peace no longer exists, counter-spoliation is no longer permissible. The person who seeks to counter-spoliate, in this case the City, must show two requirements: (a) the (homeless) person was not in effective physical control of the property (the possessory element); and (b) thus, did not have the intention to derive some benefit from the possession (the animus 5 Tswelopele Non-Profit Organisation and Others v City of Tshwane Metropolitan Municipality [2007] ZASCA 70; [2007] SCA 70 (RSA); 2007 (6) SA 511 (SCA) para 20. (Citations omitted). 5 G Muller et al Silberberg and Schoeman’s The Law of Property 6 ed (2019) at 353. 6 Mandament van spolie is a common law possessory remedy which is used to restore possession that was unlawfully lost. It means a person disposed of their possession must approach a court of law first with an application to restore their possession. 8 element). [12] This means, if a homeless person enters the unoccupied land of a municipality with the intention to occupy it, the municipality may counter-spoliate before the person has put up any poles, lines, corrugated iron sheets, or any similar structure with or without furniture which point to effective physical control of the property occupied. If the municipality does not act immediately(instanter) before the stage of control with the required intention is achieved, then it cannot rely on counter-spoliation as it cannot take the law into its own hands. It will then have to seek relief from the court, for example by way of a mandament van spolie, an ordinary interdict, or pursue a remedy under the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (PIE). [13] In the seminal judgment of Yeko v Qana (Yeko),7 this Court referred to: ‘. . . [S]elf-help if it concerns contra spoliation which is instanter resorted to, thus forming part of res gestae in regard to the despoiler’s appropriation of possession, as would be the immediate dispossession of a thief of stolen goods when he was caught in flagrante delicto. . . The very essence of the remedy against spoliation is that the possession enjoyed by the party who asks for the spoliation order must be established. As has so often been said by our Courts the possession which must be proved is not possession in the juridical sense: it may be enough if the holding by the applicant was with the intention of securing some benefit for himself.’ [14] To re-affirm that counter-spoliation remains part of our law, this Court in Fischer v Ramahlele (Fischer)8 stated that: ‘[L]and invasion is itself an act of spoliation. The Constitutional Court has recently reaffirmed that the remedy of the mandament van spolie supports the rule of law by preventing self- help. A person whose property is being despoiled is entitled in certain circumstances to resort to counter spoliation.’ (Emphasis added). [15] In Residents of Setjwetla Informal Settlement v City of Johannesburg: 7 Yeko v Qana 1973 (4) SA 735 (A) at 379C-E. 8 Fischer and Another v Ramahlele and Others [2014] ZASCA 88; 2014 (4) SA 614 (SCA); [2014] 3 All SA 395 (SCA) para 23. 9 Department of Housing, Region E,9 the City of Johannesburg began to demolish the informal structures three days after the occupiers had taken possession of the land and commenced construction. The court found that the unlawful occupiers had acquired possession of the shack sites and that this possession was perfected. Therefore, the City of Johannesburg could not invoke counter-spoliation as a defence. The court reasoned that the occupiers had commenced constructing shacks on the respondent’s land; they had driven poles into the ground; perhaps wrapped corrugated iron around some of those; and perhaps fixed roofing material on top of those. This implied further that the occupiers moved around on the land while they were constructing their structures and that their own movable assets were affixed with a measure of permanence, so that it could afford them effective protection against the elements. [16] This judgment was criticised by academics for not addressing counter- spoliation pertinently,10 and is of not much assistance on the issue before this Court. However, the underlying principle remains; once a person had brought material on the land to manifest their intention to derive some benefit from it, they may have manifested their peaceful and undisturbed possession of the land and the original breach of the peace would have been completed. In such instance, the instanter requirement of counter-spoliation would fail. If the City failed to act instanter, it could not thereafter successfully invoke counter-spoliation as a defence. [17] Before us, counsel for the City submitted that the City was justified to counter unlawful invasions by removing invaders without any order of court: (i) where persons are in the process of seeking to unlawfully occupy land and it takes action to prevent them from gaining access to the targeted land; (ii) where persons have gained access to the land unlawfully and are in the process of erecting or completing structures on the land and it takes action to prevent structures being erected or completed on the land; and (iii) completed structures have been erected on the land and it is clear that 9 Residents of Setjwetla Informal Settlement v City of Johannesburg: Department of Housing, Region E [2016] ZAGPJHC 202; 2017 (2) SA 516 (GJ) paras 11, 12 and 15. 10 J. Scott ‘The precarious position of a landowner vis-à-vis unlawful occupiers: common-law remedies to the rescue?’ (2018) TSAR 2018:(1) 158 at 161. This view is also supported by Muller and Marais in their article: ‘Reconsidering counter-spoliation as a common-law remedy in the eviction context in view of the single-system-of-law principle’ 2020 TSAR 2020:(1) 103 at 110. 10 such structures are unoccupied, and it takes steps to prevent the structures from being occupied. [18] Counsel submitted further that this was the case because counter-spoliation has not been declared unconstitutional and referenced this to the judgment of this Court in Fischer. He submitted that to expect anything more means the City must follow the mandament van spolie route, or an application in terms of PIE; either under s 5 (the urgent application) or s 6, but that by the time the court grants the order, the invaders would have settled on the land. Then the prerequisites of PIE will fall into place. The City will be bound to, amongst others, first provide alternative accommodation for the unlawful occupiers and consult and negotiate, establish whether there are children and women who will be affected, and the many other requirements as provided for in s 4 of PIE. That is more onerous and the City cannot afford any of such options under its current budget. It has a long list of people waiting for houses for the next 70 years. [19] He submitted that on the issue of the discretion to be exercised by the City’s delegates who carry out the evictions; they do so in an as humane as possible manner; under trying and sometimes violent circumstances; and, the presumption must be that their power will not be abused. And the courts must accept that they do so, bearing in mind the warning the Constitutional Court issued in Minister of Health and Another v New Clicks South Africa,11 that there was only limited scope for reviewing the exercise of delegated powers on the grounds of ‘unreasonableness’. [20] He contended that if this Court acknowledges that counter-spoliation remains part of our law and this should be the end of the matter. The next enquiry must then be, should the rule be applied a priori in each and every case regardless of the different circumstances as the high court did on these facts, or rather on a case-by-case basis. He contended that it should be on a case-by-case basis. [21] Counsel for the Commission, and the second and third respondents, submitted that Yeko remains authority to date; that once the occupiers brought building material 11 Minister of Health and Another v New Clicks South Africa (Pty) Ltd and Others [2005] ZACC 14; 2006 (2) SA 311 (CC); 2006 (1) BCLR 1 (CC) para 104. 11 onto the land and the City did not act instanter, the City could not thereafter invoke counter-spoliation. [22] Counsel pointed out one instance, amongst many others which are not necessary to enumerate, that of Erf 5144 Kommetjie Township, Ocean View where the City was not the owner and thus did not have the right to ‘evict’ anyone from that piece of land. The occupiers had been on the land for over three months. Yet, the City’s officials removed them without invoking PIE’s strict requirements. Only thereafter did the City obtain the consent of the lawful owner, the Ocean View Development Trust, through its trustees, to have acted in the owner’s stead. He contended that this anomaly pointed to the difficulty the City will always find itself in as it tends to leave this important function to junior officials to exercise a discretion, which involves balancing the socio-economic rights of vulnerable people in the position of the unlawful occupiers in this case vis-a–vis the City with all its resources. The City has provided no guidelines to these officials to ensure that they do not abuse their powers. The better option, so counsel contended, was to have the City and its officials acting under the supervision of the courts, when acting in land invasion cases. [23] Counsel for the fourth and fifth respondent supported the submissions of the Commission and the other respondents. He submitted in his heads of argument, that although the constitutional attack was abandoned, the respondents maintained that the appeal was about what was a constitutionally appropriate response to what can be interpreted as the lawlessness of the previous regime, under the Prevention of Illegal Squatting Act 52 of 1951. This draconian piece of legislation which provided sweeping measures to control the movement of black people in and around urban areas, was long ousted in its entirety and replaced by progressive legislations. To allow structures to be removed forcibly would, he argued, allow the City to continue acting as local authorities of those times did prior to the dismantling of those draconian and humiliating laws. [24] Counsel submitted that the approach the City wanted to adopt, that of ‘trust us’, cannot be correct. This ‘trust us’ approach meant that the City should be left on its own and without court supervision on how to respond to instances of unlawful occupation of land - even when an invasion had become completed and amounted to ‘peaceful 12 and undisturbed’ possession and/or a structure had become a home. That would be the result if the City was to continue with its ‘demolitions by sight policy’ where its ALIU demolishes what they determine, merely by sight, to be an unoccupied structure. [25] Counsel argued that this approach is bedeviled by the wide exercise of arbitrariness in the decisions of the City. In any event, considering the volatility of every land invasion, where members of the ALIU and the land invaders clash, resultant disputes should be resolved by a court of law. The City cannot be left to be judge and executioner in its own case. Instead, a judicially supervised process of removal of structures would not only be appropriate, but constitutionally mandated, so the argument continued. [26] He submitted that the affidavit of Mr Jason Clive Buchener (Mr Buchener), filed on behalf of the City, did not explain how the City determines what is an occupied or unoccupied structure, except by sight and in the subjective opinion of the ALIU staff. The City is adamant that its staff know what is unoccupied and what is occupied, because they receive training. However, it did not take the court into its confidence about what training it provides to them to determine whether a structure is occupied or not, and whether any due process is observed when the ALIU decides to demolish a structure. [27] Counsel for the amicus curiae (amicus) accepted that counter-spoliation remains a lawful remedy, that is not unconstitutional, and, if applied strictly in accordance with the requirements set out in Yeko, there would be no need to either develop the common law or to declare it unconstitutional. He contended that by bringing building material onto the land and commencing construction of the informal structures, the land occupiers physically manifested their peaceful and undisturbed possession of the land and the original breach of the peace would have been completed and the instanter requirement of counter-spoliation would have lapsed. In other words, if the City or the despoiled failed to act instanter, they could not thereafter invoke counter-spoliation as a defence. Consequently, any act of dispossession from that stage would not be a defence against spoliation but would itself amount to an act of spoliation. 13 [28] Counsel for the amicus contended further that the judgment of the high court accords with the values underpinning the Constitution, the right to dignity and the right to housing. The Constitution makes no distinction between unlawful occupiers as defined in progressive legislation such as PIE, and land invaders. Such an approach would also take into account the socio-economic factors of the most vulnerable of society. This approach, they submitted, ensures that the City will in all cases operate within parameters determined by the judicial oversight of the courts, and not as the City deemed fit, or at the whim of junior officials who have no regard for the plight of marginalised people who have no resources to seek recourse from courts when the City imposes its might on them, as it did in respect of the evictions under consideration. [29] This approach is consistent with the underlying rationale of the mandament van spolie, which is the prevention of self-help and the fostering of respect for the rule of law. It would also encourage the establishment and maintenance of a regulated society, as it limits the period and circumstances within which a party may take the law into his/her own hands.13 [30] Applying the above principles to these facts, the question for determination is, did the City satisfy the two requirements of counter-spoliation when the homeless people moved onto its unoccupied land between April and July 2020. In the founding affidavit of the Commission, deposed to by Mr Andrew Christoffel Nissen (Mr Nissen) dated 3 July 2020, he makes reference to what Mr Buchener, a senior field officer in the ALIU,14 stated under oath. It is important to quote what Mr Buchener stated verbatim: ‘The members of the ALIU were present from the moment the demolition of structures began. Each structure was personally inspected by us before it was demolished. Not a single structure was occupied. None of the unlawful occupiers including the applicants have the protection of section 26(3) of the Constitution of the Republic of South Africa, 1996, Act No 108 of 1996 (“the Constitution”) and the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act, No. 19 of 1998 (“the PIE Act”) in so far as the property is concerned. Some of the structures which were taken down by the contractor were complete and others were still in the process of being erected. Some just had frames while others lacked roofs, doors and/or 13 Op cit fn 9 above para 17. 14 This was the same affidavit used in support of the City’s opposition to the relief sought by Ms Nkuthazo Habile and others, in the urgent application brought in the high court. 14 windows. All of the structures which were taken down at the property by the contractor were either partially built or complete, but none were occupied. One could see that nobody occupied the structures or that it constituted a home. We also saw people carrying items of furniture and placing it in structures while we were present at the property. . . The attempts to erect structures at the property on 8, 9, 11 and 12 April 2020 were part of an orchestrated land grab. The City was able to counter spoliate and this was the only means at its disposal to save the property from being unlawfully occupied. Any undertaking in the form requested by the applicants will result in the City not being able to counter spoliate. This is tantamount to giving the applicants free rein to unlawfully occupy the property while the City’s hands are tied. Had the City not counter spoliated more land would have been lost to the City in addition to those properties described in the affidavit of Pretorius. The structures demolished at the property did not constitute a home within the meaning of the PIE Act or section 26(3) of the Constitution. . . Paragraph 6 of this letter [a reference to a letter by the applicants’ attorneys in that matter] makes the sweeping averment that “a demolition amounts to an eviction”. The statement is not only nonsensical but not borne out by the facts of this matter. Several of the structures demolished by the City at the property were partially built, unfit for habitation and none of the structures were occupied. Self-evidently, no eviction took place. The deponent appears to conflate a demolition with an eviction. I reiterate that no evictions occurred at the property. The structures that were demolished were unoccupied and did not constitute anyone’s home. I have explained the presence of furniture or personal possessions at the property and these averments are denied. The fact that a structure may contain an item of furniture or personal possessions does not mean that it constitutes a home. It bears emphasis that land grabs occur very quickly. Unlawful occupiers often go to great lengths in an attempt to establish that a structure is occupied when in truth and in fact this is not the case. We saw furniture and other possessions being placed into structures while we were busy with the demolition of unoccupied structures on the above dates. These goods were later removed by the unlawful occupiers and appear on some of the pictures. This was clearly orchestrated to in an attempt to make out a case that an eviction had occurred. . . It is denied that the structures demolished by the City at the property constituted homes. The City was entitled to counter spoliate when the property was unlawfully invaded on the said dates in April. It did not require an eviction order to do so.’ (Emphasis added). [31] From this excerpt, and on the City’s own admission, there were structures already erected on the City’s land upon the AILU’s arrival on the land. They moved 15 onto the land to demolish them. This means the possessory element was already completed. The City did not know for how long those structures were there. There was no evidence that the alleged land invaders had just moved on to the land with some materials, but that they had not yet commenced any construction, did not occupy, or did not intend to occupy the structures found there. On the contrary, having regard to the extent of completion of some of the structures, as narrated, if not homes as contemplated in the PIE Act, the structures had assumed permanence and were of a nature consistent only with an intention to occupy permanently, and the invaders were therefore in peaceful possession. [32] What is clear from Mr Buchener’s affidavit is that the demolition by the AILU staff followed upon mere visual impression, in the exercise of their subjective discretion, with no reference to any objective guidelines, or the guidance of superiors perhaps more sensitive to the socio-economic circumstances of marginalised people. Despite finding people occupying some of the structures put up on the City’s land, Mr Buchener and the ALIU staff still dismantled those structures. [33] In Mr Buchener’s own words, some of the structures were well-structured, had furniture, but were, in his opinion, ‘unoccupied’. Other shacks that were demolished were partially constructed. In other instances, as in the case of Erf 5144 Kommetjie Township, Ocean View, as the City conceded, it was not the owner of the land from which it removed the homeless people. It only sought the owner’s consent to act as it did after the removal, to justify its unlawful conduct. In another instance, some members of the police who assaulted some of the homeless people were subsequently internally discipled. In the most glaring of the incidents, Mr Qolani was dragged naked out of his well-structured shack, contradicting Mr Buchener’s sworn declaration that the structures that were demolished were all unoccupied. [34] The picture below shows existing and complete structures being torn down. It leaves no doubt that the City did not act instanter in the captured circumstances. The occupants of the structures were removed from already erected structures, who, like Mr Qolani, regarded them as their homes. 16 [35] Fischer16 made no definitive pronouncement on the constitutionality of counter- spoliation. This is recognised where the learned Justices Wallis and Theron, writing jointly for the unanimous Court, stated: ‘The second issue raised the question of the relationship between PIE and the right of the lawful owner and possessor of land under both s 25(1) of the Constitution and by virtue of the mandament van spolie. There is a potential tension between the two, the resolution of which is by no means easy. In addition it raised the question of how local authorities may respond to conduct constituting a land invasion and the extent to which they or the police may intervene in such situations. Yet these issues were resolved without having been addressed in the papers and without any factual input as to the implications of a decision one way or the other from any party or an amicus curiae. There are many bodies that would be affected by or interested in its resolution and which would have been in a position to assist the court with information and legal submissions. That is evidenced by the fact that in this Court two bodies with conflicting interests and submissions intervened as amici, namely Abahlali Basemjondolo Movement SA, which was assisted by SERI Law Clinic, and the City of Johannesburg Metropolitan Municipality. Courts should not resolve issues of such public importance without affording all interested parties the opportunity to participate in the proceedings so as to ensure that the court is as well-informed as possible about the implications of its decision. The court below appears to have been oblivious to these difficulties. It came to its decision without referring to any of them. That decision, as is apparent from the heads of argument furnished to us, was potentially far-reaching.’ 16 Op cit fn 8 above paras 21 and 22. 17 [36] From the above it is clear, as the high court correctly held, that the problem lies with the application of the principles of counter-spoliation by the City in the context of land incursions/invasions. The appropriateness of the time within which to counter spoliate, is left wholly within the discretion of the City’s employees and agents. This is often capricious and arbitrary and cannot be legally countenanced. In Ngomane and Others v City of Johannesburg Metropolitan Municipality17 this Court stated: ‘What is clear however, is that the confiscation and destruction of the applicants’ property was a patent, arbitrary deprivation thereof and a breach of their right to privacy enshrined in s 14(c) of the Constitution, ‘which includes the right not to have … their possessions seized’. Similarly, on the facts in this appeal, the conduct of the City’s personnel did not only constitute a violation of the occupants’ property rights in and to their belongings, but also disrespectful and demeaning. This obviously caused them distress and was a breach of their right to have their inherent dignity respected and protected. [37] The City has a housing backlog which it must reduce in the next 70 years with a limited budget and an overwhelming demand for housing. That, however, cannot justify the City not satisfying the requirements of counter-spoliation if it wants to invoke same. In the event that the City does not act instanter, as in this instance, it should approach the courts to obtain remedies legally available to it. Furthermore, the City must invest in training and equipping the ALIU and its relevant personnel with sensitivity training, to recognise that people’s rights should be respected and they should not be abused during removals. [38] In sum, and to answer the questions postulated in the opening paragraph of this judgment, at the level of general principle - a municipality, might be able to successfully counter-spoliate when homeless people invade its unoccupied land in certain circumstances. It will be justified to do so, without resorting to the mandament van spolie or an interdict or under PIE, because counter-spoliation is not unconstitutional. It remains part of our law until determined otherwise. However, it must do so instanter within a narrow window period, during which counter-spoliation is legally permissible. The window closes and the recovery is no longer instanter when the despoiler’s possession of the land is perfected. Thereafter, the City must not 17 Ngomane and Others v City of Johannesburg Metropolitan Municipality and Another [2019] ZASCA 57; [2019] 3 All SA 69 (SCA); 2020 (1) SA 52 (SCA) para 21. (Citations omitted). 18 breach the right to privacy enshrined in s 14(c) of the Constitution, ‘which includes the right of persons not to have their possessions seized without due process’. The conduct of the City’s ALIU and relevant personnel (including the members of the SAPS and or SANDF under the instructions of the City) must also not be disrespectful and demeaning, but protective of the unfortunate and vulnerable people’s rights to dignity,18 which must accord with the spirit, purport and objects of the Bill of Rights. Section 26 (3) of the Constitution expressly grants everyone the right not to be evicted from their home, or have their home demolished, without an order of court made, after considering the relevant circumstances. [39] I would be remiss if I do not state the following. When the matter commenced in the high court, the issue was raised whether it was not time in a constitutional democracy to look at the question whether counter-spoliation should continue to be permitted, considering its impact on various provisions of the Constitution. This is against the background of progressive legislation post 1994, which is relevant in this matter, such as PIE. [40] Academics, including Professors Van der Walt, Muller and Marais and Boggenpoel19 have written extensively on this subject. Amongst the proposals made is that the definition of s 1 of PIE be read down to include invaders under the term ‘unlawful occupier(s)’. But that will have huge ramifications for other areas of the law, including property law in general, and cannot be done without input from other branches or agencies of the law, such as the Law Review Commission. It might also require an attack on the constitutionality of PIE, which was not pursued in this case. Ultimately the legislature may intervene of its own accord to, inter alia, change and adapt PIE accordingly. Since these aspects were not addressed before the high court, it would not be appropriate to determine them in this appeal. In the meantime, courts should deal with these matters on a case-by-case basis until those issues are properly raised and dealt with fully, fairly and pertinently. 18 Section 10 of the Constitution of the Republic of South Africa, 1996. 19 A J van Der Walt ‘Property and Constitution’ (2012) at 19 – 24; Muller and Marais op cit at 103 and Z T Boggenpoel ‘Can the journey affect the destination? A single system of law approach to property remedies’ (2016) SAJHR 32 (1) at 71 – 86. 19 [41] Finally, the matter of costs. The amicus seeks costs on an attorney-and-client scale against the City for opposing its application for intervention. As a general rule costs follow the result or outcome. But a court may, in the exercise of its discretion, in light of all the relevant facts and circumstances, deviate from this trite principle after having heard the parties on the matter. [42] The amicus applied to be joined to the proceedings before this Court on appeal. Ultimately amici curiae are there to assist the court and ordinarily are not awarded costs, as they are neither losers nor winners, bar exceptional circumstances, such as where malice is present.20 The objection by the City to their joinder has not been shown to be malicious or otherwise improper. Thus, the threshold has not been met. [43] In the result, the following order issues. The appeal is dismissed with costs, including the costs of two counsel where so employed. _______________________ B C MOCUMIE JUDGE OF APPEAL 20 Hoffmann v South African Airways [2000] ZACC 17; 2001 (1) SA 1; 2000 (11) BCLR 1211; [2000] 12 BLLR 1365 (CC) para 63. 20 Appearances For the Appellant S Rosenberg SC and M Adhikari and K Perumalsamy Instructed by Fairbridges Wertheim Becker, Cape Town McIntyre & Van der Post, Bloemfontein. For the first, second and third Respondents N Arendse SC and E Webber Instructed by Legal Resource Centre, Cape Town Webbers Attorneys, Bloemfontein. For the fourth and fifth Respondents T Ramogale and P Sokhela Instructed by Ian Levitt Attorneys, Johannesburg Lovius Block Inc, Bloemfontein. For the Amicus Curiae J Brickhill Instructed by Seri Law Clinic, Braamfontein 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: 10 July 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 The City of Cape Town v The South African Human Rights Commission and Others (Case no 1337/2022; 368/2023) [2024] ZASCA 110 (10 July 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal, with costs, against an order of the Western Cape Division of the High Court, Cape Town (the high court). The core issues before the SCA were firstly, whether The City of Cape Town, as a local sphere of government (the appellant), could counter-spoliate when homeless people invade its unoccupied land and secondly, under which circumstances it could justifiably do so without resorting to one of the alternative remedies under South African law. Between the period April to July 2020, during the height of the Covid pandemic, the appellant removed homeless people from several pieces of its unoccupied land. The Anti-Land Invasion Unit (ALIU) acting on behalf and on the instructions of the appellant demolished their homes, structures and/or dwellings consisting of corrugated iron sheets commonly known as shacks and others made of plastic sheets, cardboard boxes and wooden pallets. It also destroyed their belongings found inside those structures while some people were injured in the process. While others were treated in the most undignified and humiliating manner. As a result of the appellant’s conduct, the South African Human Rights Commission (the First Respondent) amongst others approached the high court for urgent interlocutory relief. The matter was disposed of in two parts (Part A and Part B). In Part A, the high court interdicted and restrained the appellant’s and any of its authorised agents from evicting persons from and demolishing and informal dwelling, hut, shack, tent or similar structure while the state of disaster remained in place pending the finalisation of Part B. In Part B, the high court declared the various demolitions of structures and effective eviction of persons affected thereby during the period April to July 2020, unlawful and unconstitutional. The high court further declared the appellant’s incorrect interpretation and application of the common law defence of counter-spoliation unlawful and unconstitutional. The appeal was with leave of the court a quo. The SCA held that a municipality as a local sphere of government could counter-spoliate when homeless people invade its unoccupied land under all circumstances and would be justified in doing so without resorting to alternative remedies such as the mandament van spolie, an ordinary interdict or interdict under the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (PIE). The SCA held further that counter- spoliation is not unconstitutional and remains a part of South African law until declared otherwise. 2 The SCA found further that a municipality was however required to exercise its right to counter-spoliate immediately (instanter), within the narrow window period in which counter-spoliation is available. Once the window had closed and recovery was no longer instanter when the despoiler has perfected possession of the land. Thereafter the municipality is required not to breach the despoiler’s rights to dignity, privacy and not to be evicted from their home or have their home demolished without an order of court enshrined in ss 10, 14(c) and 26(3) of the Constitution. Accordingly, the appeal was dismissed. ~~~~ends~~~~

4181

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 888/2021 In the matter between: DIRECTOR OF PUBLIC PROSECUTIONS, KWAZULU-NATAL, PIETERMARITZBURG APPELLANT and XOLANI NDLOVU RESPONDENT Neutral citation: Director of Public Prosecutions, Kwazulu-Natal Pietermaritzburg v Ndlovu (888/2021) [2024] ZASCA 23 (14 March 2024) Coram: PETSE DP, ZONDI, MOKGOHLOA and MABINDLA-BOQWANA JJA and SIWENDU AJA Heard: 06 September 2023 Delivered: 14 March 2024 Summary: Criminal law and procedure – appeal by Director of Public Prosecutions in terms of s 311 of the Criminal Procedure Act 51 of 1977 – import 2 of s 51(1) of the Criminal Law Amendment Act, 105 of 1997 (the 1997 Act) prior to its amendment – on appeal to it, high court concluding that it was bound by this Court's decision in S v Mahlase in which it was held that s 51(1) of the 1997 Act finds no application in circumstances where the rape victim was raped by two or more persons, if not all of the co-perpetrators are before the trial court and have not been convicted of rape – such conclusion constituting a question of law – appeal by Director of Public Prosecutions against such decision competent – appeal upheld and sentence imposed by trial court reinstated. 3 ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Ploos van Amstel J, Bezuidenhout J concurring and Hadebe J dissenting, sitting as court of appeal): 1 The appeal is upheld. 2 The question of law raised by the State is determined in its favour. 3 Paragraph (b) of the order of the high court is set aside and in its place the following order is substituted: '3.1 The appeal against sentence is likewise dismissed.' 4 The sentence of life imprisonment imposed by the trial court is reinstated. 5 The reinstated sentence of life imprisonment is ante-dated to 23 May 2017 in terms of s 282 of the Criminal Procedure Act 51 of 1977. ________________________________________________________________ JUDGMENT ________________________________________________________________ Petse DP (Zondi, Mokgohloa and Mabindla-Boqwana JJA and Siwendu AJA concurring): Introduction [1] A little more than nine years ago and in the rural village called Msunduzi the complainant, NM, a 22 year old female, was kidnapped from her home by three men in the early hours of 29 November 2014. She was forcefully taken to a neighbouring homestead where she was repeatedly sexually molested by her assailants, both vaginally and anally, who took turns to violate her physical integrity and thus invaded the innermost zones of her bodily privacy. After a 4 prolonged ordeal and once the perpetrators had satisfied their sexual lust, they left her locked inside the room, not only stark naked but also with her hands bound together with an electric cord whilst they went to enjoy themselves at a nearby shebeen, blithely indifferent to her plight and mental anguish. Trial Court [2] A couple of days later, on 19 December 2014, the respondent, Mr Xolani Ndlovu who was well known to NM, was apprehended. As a result, charges were laid against him, one for a statutory contravention whilst the other was under the common law. As to the first count, it was alleged that he was guilty of contravening s 3 read with ss 1, 2, 50, 56(1), 56A and 57 – 61 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007 and further read with ss 94, 256 and 261 of the Criminal Procedure Act 51 of 1977 (the CPA). The prosecution also invoked ss 51(1) and 51(2) of the Criminal Law Amendment Act 105 of 1997 read with Part I of Schedule 2 thereto insofar as it related to the offence of rape. [3] It bears emphasising that both the charge sheet and the regional magistrate (the latter at the commencement of the trial) made explicit reference to s 51(1) of the Criminal Law Amendment Act 105 of 1997 (the 1997 Act). Section 51(1) now, as it was the case even at the time material to the respondent's trial, specifies under ss 51(3) and (6) that in the absence of what is termed 'substantial and compelling circumstances' justifying a lesser sentence, an accused convicted of an offence referred to in Part I of Schedule 2 is liable to a mandatory sentence of life imprisonment. 5 [4] In count 2, the respondent was charged with kidnapping, it being alleged that on 29 November 2014 he unlawfully and intentionally removed NM from her home with intent to deprive her of her liberty of movement. [5] At the trial that ensued before the Pietermaritzburg Regional Court (the regional court), the respondent, who featured as the only accused, pleaded not guilty to the two counts. There was no dispute as to the misfortune that befell NM on the fateful night. What was contested was solely the issue of whether the respondent was one of the perpetrators. His identification had become an issue only because during the course of the perpetrators' criminal escapades, NM, induced by fear, had pretended not to know the respondent whose face was unmasked throughout the ordeal. As for his two cohorts, NM testified that their faces were concealed. That the respondent was indeed known to NM before the rape incident was, on the evidence before the regional court, beyond question. [6] At the conclusion of the trial, the regional magistrate was satisfied that the State had proved its case beyond reasonable doubt. Consequently, the respondent was convicted on both counts as charged. After hearing both the defence and prosecution on mitigation and aggravation of sentence, the regional magistrate sentenced the respondent to imprisonment for life on the rape count in accordance with s 51(1) of the 1997 Act. Insofar as the second count of kidnapping is concerned, the respondent was sentenced to three years' imprisonment. [7] I pause here to mention that in regard to count 1, the regional magistrate found that there were no substantial and compelling circumstances warranting a departure from the prescribed mandatory sentence of life imprisonment. In addition, the respondent was, after having been afforded the opportunity to 6 address the trial court, declared unfit to possess a firearm in line with the dictates of s 103 of the Firearms Control Act 60 of 2000. High Court [8] Dissatisfied with the regional court's verdict in relation to both counts, the respondent appealed to the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court) against his convictions and resultant sentences upon leave granted by the high court after the regional magistrate had refused leave. [9] On appeal to it, the high court by a majority (per Ploos van Amstel J with Bezuidenhout J concurring) dismissed the appeal against the convictions, but upheld it in relation to sentence in respect of the count of rape. In upholding the appeal against sentence, the majority in essence held that the regional magistrate had erred in sentencing the respondent to life imprisonment. In reaching this conclusion the majority relied on the decision of this Court in Mahlase v The State.1 Mahlase, who was indicted in the high court on several counts, one of which was rape, was sentenced to life imprisonment on the rape count. '[T]he basis on which the sentence of life imprisonment was imposed by the trial court in respect of the rape count', the majority found, 'was that the victim had been raped by more than one person'. [10] However, on appeal to it, this Court found in Mahlase that this constituted a material misdirection. This was, so the majority of the Full Court held, because this Court had found in Mahlase that 'the trial judge had overlooked the fact that the other person who had raped the victim was not before the trial court and had not been convicted of the rape.' Thus, the majority held that 'in those 1 Mahlase v The State [2013] ZASCA 191 delivered on 29 November 2013 (Mahlase). 7 circumstances it could not be held that the rape fell within the provisions of Part I of Schedule 2…, with the result that the minimum sentence for rape was not applicable.' Consequently, taking its cue from this Court in Mahlase, the majority set aside the term of life imprisonment imposed by the regional magistrate and substituted it with a sentence of 15 years' imprisonment. [11] Before substituting the sentence imposed by the regional magistrate, the majority surveyed a number of decisions of this Court and various Divisions of the High Court.2 The majority was rightly cognisant that it was bound by decisions of this Court, in particular Mahlase which was on point. Nevertheless it went on to observe that the 'circumstances of the rape were horrendous' and that a sentence of life imprisonment would otherwise have been justly deserved. However, it also opined that it could not impose such a sentence because the penal jurisdiction of the regional magistrate at the material time was limited to 10 years' imprisonment, which the regional magistrate could not, in terms of s 51(2) of the 1997 Act, exceed by more than five years. Therefore, concluded the majority, they were also precluded from imposing 'a sentence in excess of what the regional court could have imposed.' Thus, unsurprisingly the majority gave the submission advanced by the State that Mahlase was wrong short shrift, finding that whatever view it took of the matter it had no room to manoeuvre as it was bound by Mahlase. [12] With respect to the decision of the Full Court in Khanye (penned by Carelse J and in which Kubushi and Twala JJ concurred) the majority stated that the reasoning in Khanye was fundamentally flawed principally because the court in 2 See S v Cock; S v Manuel [2015 ZAECGHC 3; 2015 (2) SACR 115 (ECG) para 19 (S v Cock; S v Manuel); Khanye v The State [2017] ZAGPJHC 320 (13 March 2017) (Khanye); S v Legoa 2003 (1) SACR 13 (SCA) (Legoa); Blaauwberg Meat Wholesalers CC v Anglo Dutch Meats (Exports) Ltd 2004 (3) SA 160 (SCA) and the cases referred to in para 20 of that judgment; Nyaku v S (A212/2018) [2018] ZAFSHC 208 (22 November 2018). 8 Khanye seemingly 'overlooked the fact that it was dealing with an appeal from a regional court.' Thus, it concluded that the application of Part I of Schedule 2 could not be triggered in circumstances where the victim had been raped by more than one person 'unless [all] of them have been convicted.' Properly understood, so held the majority, the 'effect of Mahlase is that it cannot be said that the victim had been raped by more than one person unless all of the perpetrators have been convicted.' [13] For its part, the minority (per Hadebe J) likewise accepted that the appeal against the convictions fell to be dismissed. However, insofar as the appeal against the sentence of life imprisonment is concerned, it took a diametrically opposed view. Whilst cognisant that she was bound by Mahlase, the learned Judge in effect curiously called into question the underlying reasoning in Mahlase explicitly stating that she found herself 'in great difficulty to agree with the reasoning in Mahlase.' She continued and stated that the learned Judges of Appeal in Mahlase misunderstood the import of s 51 (of the 1997 Act) and misstated the factual findings of the trial court which, as a general rule, can be upset on appeal only if shown to be demonstrably wrong or otherwise attributable to material misdirection. Ultimately, the minority held that absent any material misdirection it would have dismissed the appeal against the sentence of life imprisonment too. This Court [14] It is apposite at this juncture to mention that this appeal has been brought to this Court by the Director of Public Prosecutions under s 311 of the CPA. In Director of Public Prosecutions, Gauteng Division, Pretoria v Moloi,3 delivered on 2 June 2017, this Court held by a majority of three Judges against two, that an 3 Director of Public Prosecutions, Gauteng Division, Pretoria v Moloi [2017] ZASCA 78. 9 appeal under s 311 on a question of law against a decision of the Full Court of any Division of the High Court does not require special leave to appeal.4 In short, the Director of Public Prosecutions therefore enjoys an automatic right of appeal to this Court. The correctness of that decision is not in issue in this appeal. Whether the issue brought on appeal by the State constitutes a question of law, is a matter for this Court to determine on a case by case basis. Unsurprisingly, because of the potential ramifications of the appeal, the respondent is opposing the appeal. [15] In Director of Public Prosecutions, Gauteng v Grobler 5 I had occasion to observe that the right of the State to appeal under s 311 of the CPA is explicitly regulated by this statutory provision. Thus, s 311 alone deals with the issue confronting us in this case to the exclusion of the Superior Courts Act,6 to the extent that the latter statute deals with appeals.7 The Superior Courts Act8 finds no application in matters of the kind contemplated in s 311. Moreover, in the same case I alluded to the fact that in circumstances where a Division of the High Court substitutes a sentence imposed by a lower court on appeal to it and thereby gives a decision in favour of the convicted person on a question of law, this Court would have the legal competence to determine whether the decision of the high court in favour of the convicted person came about as a result of an error relating to a question of law.9 Issues 4 See para 70-71. 5 Director of Public Prosecutions, Gauteng v Grobler [2017] ZASCA 82; 2017 (2) SACR 132 (SCA) para 16. 6 Superior Courts Act 18 of 2013. 7 See s 1 of the Superior Courts Act 10 of 2013 which provides: 'appeal' in Chapter 5, does not include an appeal in a matter regulated in terms of the Criminal Procedure Act, 1977 (Act 51 of 1977), or in terms of any other criminal procedural law. 8 Superior Courts Act 18 of 2013. 9 Cf: S v Seedat [2016] ZASCA 153; 2017 (1) SACR 141 (SCA) paras 29-30. 10 [16] In this case the State relied on three principal grounds it asserted constituted questions of law. These are: '2.1 Whether the court a quo was correct in holding that it was bound by Mahlase (supra) notwithstanding the factual distinction between Mahlase (supra) and the present case, in that in Mahlase (supra) the primary motive for the attack was robbery whereas in the present case the primary motive was specifically for the gang to kidnap and rape the complainant; 2.2 Whether the court a quo was correct in overlooking the ratio decidendi contained in the dictum of S v Legoa 2003(1) SACR 13 (SCA) that upon the jurisdictional facts having been proved prior to the verdict, a court is obliged to impose the prescribed minimum sentence as contained in the CLAA unless substantial and compelling circumstances are established; 2.3 Whether the court a quo was correct in overlooking that firstly, in terms of the principle enunciated in Legoa (supra) and secondly, in terms of the ordinary words and meaning of the CLAA, neither of which were addressed in Mahlase, the Mahlase dictum was rendered per incuriam as the jurisdictional facts that had to be proved in order to invoke the provisions contained in Section 51(1) and Part 1(a)(ii) of Schedule 2 of the CLAA were simply and without qualification: i) That the complainant was raped more than once whether by the accused or by any co-perpetrator or accomplice; ii) By more than one person, where such persons acted in the execution of the furtherance of a common purpose or conspiracy.' Statutory framework [17] It is timely at this stage to make reference to s 311 of the CPA. It provides: '(1) Where the provincial or local division on appeal, whether brought by the attorney-general or other prosecutor or the person convicted, gives a decision in favour of the person convicted on a question of law, the attorney-general or other prosecutor against whom the decision is given may appeal to the Appellate Division of the Supreme Court, which shall, if it decides the matter in issue in favour of the appellant, set aside or vary the decision appealed from and, if the matter was brought before the provincial or local division in terms of- 11 (a) section 309(1), re-instate the conviction, sentence or order of the lower court appealed from, either in its original form or in such a modified form as the said Appellate Division may consider desirable;. . .' [18] There is also s 51 of the 1997 Act read with Part I of Schedule 2 that bears mentioning. This is a critical provision which is at the heart of this appeal. To the extent relevant for present purposes – before its amendment by the Criminal Law (Sexual Offences and Related Matters) Amendment Act 12 of 2021 (Act 12 of 2021) – it provided as follows: '(1) Notwithstanding any other law, but subject to subsections (3) and (6), a regional court or a High Court shall sentence a person it has convicted of an offence referred to in Part I Schedule 2 to imprisonment for life. . . . (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: Provided that if a regional court imposes such a lesser sentence in respect of an offence referred to Part I of Schedule 2, it shall have jurisdiction to impose a term of imprisonment for a period not exceeding 30 years. . . . (6) This section does not apply in respect of an accused person who was under the age of 16 years at the time of the commission of an offence contemplated in subsection (1) or (2).' [19] On the other hand, Part I of Schedule 2 in relevant part reads: 'Rape as contemplated in section 3 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 2007 – (a) when committed – (i) in circumstances where the victim was raped more than once whether by the accused or by any co-perpetrator or accomplice; (ii) by more than one person, where such persons acted in the execution or furtherance of a common purpose or conspiracy.' 12 [20] To the extent here relevant, paragraphs (a)(i) and (ii) of Part I of Schedule 2 were amended by Act 12 of 2021 by the insertion of, inter alia, the following words: '(i). . .accused is convicted of the offence of rape and evidence adduced at the trial of the accused proves that the victim was also raped by– (aa) any co-perpetrator or accomplice; or (bb) a person, who was compelled by any co-perpetrator or accomplice, to rape the victim, as contemplated in section 4 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act, 2007, irrespective of whether or not the co-perpetrator or accomplice has been convicted of, or has been charged with, or is standing trial in respect of, the offence in question; (ii) in the circumstances where the accused is convicted of the offence of rape on the basis that the accused acted. . .and evidence adduced at the trial of the accused proves that the victim was raped by more than one person who acted in the execution or furtherance of a common purpose or conspiracy to rape the victim, irrespective of whether or not any other person who so acted in the execution or furtherance of a common purpose or conspiracy has been convicted of, or has been charged with, or is standing trial in respect of, the offence in question.' Discussion [21] This amendment took effect on 28 January 2022. As is readily apparent from the text of the amendment, its manifest object was to address the aftermath of the Mahlase decision. However, as the incident to which this appeal is a sequel occurred some eight years before the amendment took effect, the amendment has no bearing on what is at issue in this appeal. It therefore goes without saying that this appeal falls to be determined with reference to legislation that was in operation at the time when the rape of which the respondent was convicted on 9 September 2016 was committed. 13 [22] Accordingly, the cardinal issue confronting this Court is whether the majority decision of the high court is correct and therefore unassailable. On this score, it will be recalled that the majority decision in effect held that the import of s 51(1) read with Part I of Schedule 2 was that when the rape was, for example, committed, the convicted person may be sentenced as follows: (i) a first offender, to imprisonment for a period not less than 15 years; and (ii) a second offender of any such offence, to imprisonment for a period not less than 20 years. But if only one of the perpetrators is charged – in the absence of his or her co-perpetrators – and convicted of rape, s 51(1) finds no application. True, in reaching this conclusion the majority, like the Full Court in S v Cock; S v Manuel, rightly understood the dictum in paragraph 9 of Mahlase as an authoritative statement on the subject by which it was bound. [23] At this point it is necessary to digress somewhat. The point I want to make is this. It is no exaggeration to say that the decision of this Court in Mahlase caused consternation amongst some of the Judges in certain Divisions of the High Court. Some, although expressing misgivings about its correctness, nevertheless rightly considered themselves bound by it, in keeping with the doctrine of stare decisis. Others, however, expressed their disinclination to follow it even in circumstances where there was no tenable legal basis to avoid its reach. In certain instances, Judges resorted to employing ingenious ways to distinguish cases serving before them from Mahlase. [24] Therefore, it is necessary to say something about the fundamental importance of precedent and the doctrine of stare decisis. In S v Cock; S v Manuel, Pickering J, who penned the unanimous judgment of the court, was cognisant of the intrinsic value of precedent when he rightly noted that: 14 'a deviation from a Supreme Court of Appeal decision can only be justified on one of three possible grounds. Firstly, where the case before the Judge is on the facts so distinguishable that the rationes decidendi of the Supreme Court of Appeal does not find application, however this requires a careful factual analysis and [is] a ground that must be ventured into carefully so as not [to] undermine the principle of stare decisis on perceived differences that are more contrived than real. Secondly a decision of the Supreme Court of Appeal can be deviated from if it is rendered per incuriam. Per incuriam does not refer to an instance where a lower court deems the Supreme Court of Appeal to have erroneously interpreted the law. It refers to the situation where the Supreme Court of Appeal overlooked legislation governing the case. Thirdly, a decision of the Supreme Court of Appeal is rendered nugatory or obsolete due [to] subsequent legislative development. '10 [25] And the Constitutional Court unambiguously tells us in Camps Bay Ratepayers' and Residents' Association & another v Harrison and another11 that: 'Observance of the doctrine has been insisted upon, both by this court and by the Supreme Court of Appeal. And I believe rightly so. The doctrine of precedent not only binds lower courts, but also binds courts of final jurisdiction to their own decisions. These courts can depart from a previous decision of their own only when satisfied that that decision is clearly wrong. Stare decisis is therefore not simply a matter of respect for courts of higher authority. It is a manifestation of the rule of law itself, which in turn is a founding value of our Constitution. To deviate from this rule is to invite legal chaos. '12 [26] It is necessary to emphasise that judgments of this Court are, in terms of the hierarchical structure of our courts, binding not only on this Court but also all other courts below it. This Court has consistently emphasised respect for precedent.13 True Motives 84 was cited with approval and endorsed by the 10 See in this regard: Hahlo & Khan The South African Legal System and its Background (1968 ed) at 245-257. 11 Camps Bay Ratepayers' and Residents' Association & another v Harrison and another [2010] ZACC 19; 2011 (4) SA 42 (CC). 12 Paras 28-30. 13 True Motives 84 (Pty) Ltd v Madhi and Others [2009] ZASCA 4; 2009 (4) SA 153 (SCA) para 100 (True Motives 84). 15 Constitutional Court in Turnbull-Jackson v Hibiscus Court Municipality and others.14 [27] But this Court has the legal competence to overturn its own previous decisions. However, it can do so only if it is convinced that they are clearly wrong.15 It has repeatedly been emphasised that without adherence to precedent, the law would be uncertain and unpredictable thereby undermining the rule of law itself which is a foundational value of the Constitution.16 [28] As already alluded to above, much judicial attention was devoted to Mahlase. And there have also been a number of decisions17 of certain Divisions of the High Court in which they grappled with the implications of the Mahlase judgment as to the import of s 51(1) of the 1997 Act as it was couched at the material time. Indeed, it is, with respect, no exaggeration to say that Mahlase caused much consternation generally and, unsurprisingly, generated widespread critical judicial commentary. As already indicated, there has not been a confluence of judicial views on this subject. In some of the cases the various Judges, being cognisant that Mahlase was binding, sought to circumvent its effect by either distinguishing it on less than persuasive grounds. In instances where the trial was in the high court, the trial Judges would take refuge in their inherent penal jurisdiction in terms of which it was open to them to impose any sentence they considered appropriate in light of the peculiar circumstances of each case, even including imprisonment for life. 14 Turnbull-Jackson v Hibiscus Court Municipality and others [2014] ZACC 24; 2014 (6) SA 592 (CC); 2014 (11) BCLR 1310 (CC) para 57. 15 See, in this regard: Bloemfontein Town Council v Richter 1938 AD 195 at 232. 16 See, in this regard: s 1(c) of the Constitution which provides that the Republic of South Africa is founded on values such as 'Supremacy of the Constitution and the rule of law'. 17 S v Cock; S v Manuel 2015 (2) SACR 115 (ECG); Khanye v The State [2017] ZAGPJHC 320; 2020 (2) SACR 399 (GJ); S v Legoa 2003 (1) SACR 13 (SCA) relied upon in Khanye as its foundation for its conclusion that it was authority for the proposition that s 51(1) read with Part I of Schedule 2 was triggered. 16 [29] However, others erroneously thought that they were at liberty to simply ignore the effect of Mahlase on the basis that Mahlase's correctness was at the very least open to grave doubt. This, of course, was inconsistent with judicial comity and, most fundamentally, the doctrine of stare decisis. This must be deprecated. [30] Nevertheless, it must be stated that I have derived great benefit from those judgments and one must readily acknowledge that there is much to be said about the valuable insights gained from them. Be that as it may, I do not propose to analyse all of them in this judgment. To do so would render it unpalatable and tortuous for the reader. I shall therefore confine my discussion to only two of those cases. [31] The first of the two judgments is the decision of the Full Court of the Eastern Cape Division penned by Pickering J, concurred in by Plasket and Smith JJ. It dealt with two appeals against judgments of two different Judges, sitting as courts of first instance, in two unrelated cases in which the appellants were, in both instances, convicted of rape that implicated s 51(1) of the 1997 Act read with Part I of Schedule 2. What emerges from the judgment is that both appellants were co-perpetrators who had raped the same victim. The one appellant, Mr Cock, appeared before Dilizo AJ, charged with, inter alia, rape that implicated s 51(1) of the 1997 Act to which he pleaded guilty. During January 2013 the trial Judge convicted him in accordance with his plea. And having found that there were no substantial and compelling circumstances justifying a lesser sentence than the statutorily ordained one, namely, life imprisonment, he sentenced the accused to life imprisonment. 17 [32] The other appellant, Mr Manuel, was apprehended long after Mr Cock had already been convicted and sentenced and was indicted before Malusi AJ on two counts, one of which was rape. In respect of the latter count, the State invoked s 51(1) of the 1997 Act. Similarly, the accused pleaded guilty to both counts and was duly convicted in accordance with his plea. He was likewise sentenced to life imprisonment in respect of the rape count as the trial Judge had found that there were no substantial and compelling circumstances present. Mr Cock and Mr Manuel were subsequently granted leave to appeal against their respective sentences of life imprisonment. [33] When the two appeals were heard together by the Full Court, the Full Court was confronted with the decision of this Court in Mahlase, referred to earlier. This, by reason of the fact that they had not been charged together and convicted. Accordingly, the sole issue was, ultimately, whether the prescribed minimum sentence of life imprisonment as ordained by s 51(1) was applicable because the complainant was admittedly raped by more than one person acting in the execution or furtherance of a common purpose. [34] In the course of his judgment, Pickering J turned his focus to the cardinal issue under consideration and quoted a passage from Mahlase in which this Court said: 'The second misdirection pertained to the sentence imposed for the rape conviction. The court correctly bemoaned the fact that Ms D M was apparently raped more than once and in front of her colleagues. The learned judge however overlooked the fact that because accused 2 and 6, who were implicated by Mr Mahlangu, were not before the trial court and had not yet been convicted of the rape, it cannot be held that the rape fell within the provisions of Part 1 Schedule 2 of the Criminal Law Amendment Act (where the victim is raped more than once) as the high 18 court found that it did. It follows that the minimum sentence for rape was not applicable to the rape conviction and the sentence of life imprisonment must be set aside. '18 [35] Later in his judgment the learned Judge said: 'A sentence of 15 years' imprisonment was substituted for that of life imprisonment. I should mention that the reference in paragraph 9 to accused no 6 not being before the trial Court is incorrect. As appears from the judgment of Makgoba AJ appellant was in fact accused no 6. The charges against accused no 1, Mahlangu, were withdrawn as he became a State witness, and accused 2, 3, 5 and 7 were not before the Court. Accused no 4, who was charged together with the appellant, was not convicted of rape but of robbery and various counts of kidnapping. Reverting to what is stated in paragraph 9, I have, with the greatest respect, considerable difficulty in understanding the basis upon which the conclusion was reached that the rape did not fall within the provisions of Part 1, Schedule 2 of the Act where the complainant had been raped more than once by more than one person. '19 [36] He continued: 'The complainant’s evidence was accepted as being credible by Makgoba AJ whose findings in this regard were not challenged by the appellant on appeal, the appeal being only against sentence. The complainant's evidence did not, with respect, consist of mere "allegations" of an "apparent" gang rape. On the contrary, her evidence established beyond a reasonable doubt that she had indeed been raped more than once by two men, one of whom was the accused. Once that evidence was accepted, as it was by Makgoba AJ, then the fact that one of the men who raped her had not yet been apprehended and convicted of the rape appears to me, with respect, to be entirely irrelevant. The finding that the complainant was raped more than once by two men was a factual finding based on the evidence led at the trial. The accused was accordingly convicted of an offence referred to in Part 1 of Schedule 2 of the Act and the matter, on the face of it, therefore fell squarely within the provisions of s 51(1) of the Act. A trial court is obliged to sentence an accused who appears before it on the basis of the facts which it found to have been proven when convicting the accused. The Mahlase dictum, 18 Mahlase fn 1 para 9. 19 S v Cock; S v Manuel fn 24 paras 22 and 23. 19 however, gives rise, with respect, to the illogical situation that a trial court, having found beyond reasonable doubt that the complainant was raped more than once by two men and having convicted the accused accordingly, must, for purposes of the Act, disregard that finding and proceed to sentence the accused on the basis that it was not in fact proven that she was raped more than once; that the provisions of the Act relating to the imposition of the prescribed minimum sentence of life imprisonment are therefore not applicable; and that the minimum sentence applicable in terms of the Act is one of only ten years imprisonment. '20 [37] He then crystallised the issue and concluded: 'I do not understand on what basis the credible and cogent evidence of the complainant that she was raped by two men, one of whom was identified as being the accused, should be disregarded, not only to the prejudice of the victim and of the State, but also, by way of contrast, to the benefit of the accused on the arbitrary basis that he happened to be the first of the gang to have been arrested and convicted. This in itself gives rise to the anomalous situation that, whereas the first accused to be convicted and sentenced (the appellant Cock in this matter) is liable to a minimum prescribed sentence of only ten years imprisonment, any other accused who is thereafter convicted as having been part of the gang which raped the complainant, (the appellant Manuel in this matter) would be liable to the prescribed minimum sentence of life imprisonment, it now having been established in terms of Mahlase supra that complainant had indeed been raped more than once, by two men. '21 [38] In my view, the Full Court in S v Cock; S v Manuel said all that could possibly be said about the effect of Mahlase. It remains merely to add a further example to underscore the potential anomaly that is likely to arise were the conclusions reached in Mahlase to be left undisturbed. Take, for instance, a situation where a rape victim is raped by several perpetrators, but only one of them is apprehended, prosecuted and convicted whilst his cohorts are at large. The effect of Mahlase is that such an accused would not be liable to be sentenced 20 Ibid paras 25 and 26, underlining in the original text. 21 Ibid paras 27 and 28. 20 to life imprisonment as ordained in Part I of Schedule 2, notwithstanding overwhelming evidence that the victim was raped by several perpetrators. This, purely because the co-perpetrators are still at large, having managed to evade justice. And assuming they are apprehended a couple of years later, prosecuted and convicted. Would they be liable to be sentenced to life imprisonment in the absence of substantial and compelling circumstances? Ordinarily they would be liable to be sentenced to life imprisonment pursuant to s 51(1) read with Part I of Schedule 2 because the other member of the gang has already been charged, convicted and sentenced. But it is a well-settled principle of our law that persons convicted of the same offence must, as a general rule, receive the same punishment, of course making allowance for individualised sentences, and taking into account differences in the personal circumstances of each accused.22 One can readily conceive of other plausible imponderables likely to give rise to anomalies of the kind foreshadowed in S v Cock; S v Manuel. [39] It is now generally accepted that sentencing courts should strive for reasonable uniformity of sentences even where co-perpetrators have been charged separately. The rationale for this salutary and enduring principle was explained by Rogers J in S v Smith 23 thus: 'Generally one should strive to punish co-perpetrators equally unless there are circumstances justifying differential treatment. Justice must not only be done but be seen to be done. The imposition of unequal sentences on equally guilty perpetrators violates one's sense of justice. This principle applies even where co-perpetrators have been tried separately. Where there is a disturbing disparity in sentences, and the degrees of participation are more of less equal, and there are not personal circumstances warranting the disparity, appellate interference may be warranted on the ground that the harsher sentence is disturbingly inappropriate. This is subject to the important qualification that the milder sentence should not have been unreasonably 22 See in this regard: S v Dombeni 1991 (2) SACR 241 (A) at 245c-d. 23 S v Smith 2017 (1) SACR 520 (WCC). 21 lenient. If the milder sentence was clearly inappropriate, an appeal against the harsher sentence would have to be assessed on its own merits and subject to the usual restraints on appellate interference (see S v Marx 1989 (1) SA 222 (A) at 225B-226B. )'24 [40] I have taken the liberty to quote copiously from the judgment of Pickering J because, on the view I take of the matter, it neatly captures the crux of what is at the core of this appeal as will become apparent later. Despite having emphatically expressed his views on the matter as encapsulated above, the learned Judge was cognisant of the fact that the Full Court was bound by Mahlase in conformity with the doctrine of stare decisis. In the event, with this insurmountable obstacle on its path and conscious of the gravity of the rape charge and the circumstances appertaining thereto, the Full Court invoked its common law penal jurisdiction and re-imposed life imprisonment on Mr Cock – which it had set aside in light of Mahlase – and dismissed Mr Manuel's appeal against the sentence of life imprisonment imposed by the trial court. [41] The second case meriting scrutiny is the judgment of a Full Bench of three Judges in the Gauteng Local Division, Johannesburg penned by Carelse J with whom Kubushi and Twala JJ agreed.25 The salient facts of the case, which I shall for the sake of brevity not traverse, are comparable to those of the first judgment discussed above except that the appeal emanated from the regional court. Apropos this decision, the Full Bench, although taking issue with the correctness of Mahlase readily accepted that it was bound by it. But, unlike the Full Court's judgment in S v Cock; S v Manuel, the Full Bench realised that if s 51(1) was not open for invocation to the regional court, the regional court's penal jurisdiction would be limited to 15 years' imprisonment. However, having regard to the 24 Ibid para 109. See also DPP, Gauteng v Tsotetsi 2017 92) SACR 233 (SCA) in which this Court said (para 19) that the 'general principle is that if justice is to be done and seen to be done, where a number of people are convicted of the same crime, there ought to be reasonable uniformity in respect of sentences imposed on them, due regard being given to respective mitigating and aggravating circumstances.' 25 Khanye fn 2. 22 horrendous nature of the so-called 'gang rape', the court held that a sentence of 15 years' imprisonment would be woefully inappropriate and that, in fact, life imprisonment would best serve the interests of justice. [42] Confronted by this conundrum, the court invoked the decision of this Court in Legoa.26 On this score, Carelse J then said: 'Although Mahlase binds this court, S v Legoa equally binds this court . . . S v Legoa was never considered by Pickering J in Cock v S, Thompson AJ in S v Nkosinathi Standford Mejeni and the Supreme Court of Appeal in S v Mahlase. I have no doubt that had Legoa been considered, it may have resulted in a different finding. '27 [43] After quoting certain passages from Legoa 28 the learned Judge continued: 'The Criminal Law Amendment Act does not create new offences but creates jurisdictional factors which will trigger the provisions of section 51(1) or (2) read with Parts 1 or 2 of Schedule 2. Consequently if a court upon a proper evaluation of the evidence is satisfied that the State has proven the jurisdictional fact which is required to trigger the provisions of section 51(1) or (2) of the Criminal Law Amendment Act, that finding sets the basis for the approach to sentencing. In Jaga v Dönges No and Another; Bhana v Dönges NO and Another Schreiner JA remarked as follows at 662G: "Certainly no less important than the oft repeated statement that the words and expressions used in a statute must be interpreted according to their ordinary meaning is the statement that they must be interpreted in the light of their context". This approach has been confirmed by the Constitutional Court in Bato Star Fishing (Pty) Ltd v Minister of Home Affairs and Others.29 In my view section 51(1) read with Part 1 of schedule 2 properly construed does not mean that more than one person must be convicted to trigger the provisions of section 51(1) of the Act. The approach in Mahlase, with respect, reads words into the section which are not there, in conflict with the principles 30 of contextual interpretation. '31 26 Legoa fn 2. 27 Khanye para 28. 28 Paras 13 and 18. 29 Bato Star Fishing (Pty) Ltd v Minister of Home Affairs and Others [2004] ZACC 15; 2004 (4) SA 490 (CC) (Bato Star) para 89. 30 These are explained in the judgment of Schreiner JA in Jaga v Dönges No and Another; Bhana v Dönges NO and Another 1950 (4) SA 653(A) at 662G-663A. 31 Khanye para 30. 23 [44] With respect, I do not subscribe to the views expressed by the learned Judge in Khanye. They are not borne out by what this Court said in Legoa. Quite at the outset, in Legoa this Court, after alluding to what the case was all about, proceeded to say: 'Two questions are in issue: the meaning of "value" in the minimum sentencing legislation; and whether at the trial of an accused charged with dealing the state is entitled to prove the value [of dagga valued at more than R50 000 that attracted a mandatory minimum sentence of 15 years] in question after conviction but before sentencing, so as to invoke the minimum sentences. '32 [45] In Legoa the value of the dagga found in the possession of the appellant was the only disputed issue. Accordingly, there can be little doubt that in the passages 33 quoted from Legoa and heavily relied upon by the Full Bench in Khanye, Cameron JA (who wrote for a unanimous court) sought to underscore the fact that in the context of the facts of that case and the nature of the charge, the value of the dagga constituted one of the elements of the offence charged. Thus, as Legoa makes plain, it was incumbent upon the prosecution to present evidence as to the value of the dagga before conviction for the regional court to acquire 'an enhanced penalty jurisdiction.' To my mind, whatever else was said by Cameron JA (in paras 13-18 of Legoa) was no more than a substratum for his ultimate conclusion that the value of the dagga had a bearing not just on sentence but, fundamentally, also in respect of the elements of the offence itself that the State was obliged to prove in order to procure a conviction. [46] In contrast, the question that pertinently arose for determination in Mahlase was whether it was competent for the trial Judge to invoke s 51(1) of the 1997 Act read with Part I of Schedule 2 and, as a result, impose a sentence of life 32 Khanye para 1. 33 See Legoa fn 2 paras 13 and 18. 24 imprisonment in circumstances where two other members of the gang that raped the complainant 'were not before the trial court and had not yet been convicted of rape.' This Court answered that question in the negative and held that in such circumstances '[i]t cannot be held that the rape fell within the provisions of Part I of Schedule 2 of the Criminal Law Amendment Act (where the victim is raped more than once)…'. Consequently, this Court concluded and said that: '[I]t follows that the minimum sentence for rape was not applicable to the rape conviction and the sentence of life imprisonment must be set aside. '34 [47] Indeed, in Legoa this Court, cognisant of the central issue before it, emphasised that the jurisdiction to impose the enhanced penalty is acquired only if all the elements of the offence, as described in the 1997 Act, are proved before conviction and the trial court concludes that they are present.35 This theme was further clarified in S v Gagu 36 where this Court reiterated that: 'the "elements" of the offence must be established before conviction, and the conviction must encompass all the elements of the particular offence as set out in Schedule 2. '37 [48] Nevertheless, I must hasten to add that the Full Bench in Khanye was undoubtedly correct in its observation that 'section 51(1) read with Part I of Schedule 2 properly construed does not mean that more than one person must be convicted to trigger the provisions of section 51(1) of the Act. The approach in Mahlase, with respect, reads words into the section which are not there, in conflict with the principles of contextual interpretation. '38 (Emphasis added.) Fundamentally, the conclusion reached in Mahlase diminishes the effectiveness 34 Mahlase fn 1 para 9. 35 Legoa para 18. 36 S v Gagu 2006 (1) SACR 547 (SCA). 37 Ibid para 7. 38 Khanye fn 3 para 30. 25 of s 5(1) read with Part I of Schedule 2 and the overarching object of the 1997 Act. Analysis [49] I now turn my focus to the text of s 51(1) of the 1997 Act read with Part I of Schedule 2 thereto. These statutory provisions have already been quoted in paragraph 18 above. However, for convenience I shall quote them again. In its original formulation (ie prior to its amendment by Act 12 of 2021 in the wake of the Mahlase decision) s 51(1), in relevant part, read: '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.' [50] However, Part I of Schedule 2 was not affected by the amendment nor itself amended. The relevant part thereof read: '(a) when committed— (i) in circumstances where the victim was raped more than once whether by the accused or by any co-perpetrator or accomplice: (ii) by more than one person, where such persons acted in the execution or furtherance of a common purpose or conspiracy>: (iii) by a person who has been convicted of two or more offences of rape, but has not yet been sentenced in respect of such convictions: or (iv) a person, knowing that he has the acquired immune deficiency syndrome or the human immunodeficiency virus: (b) where the victim— (i) is a girl under the age of 16 years; (ii) is a physically disabled woman who, due to her physical disability, is rendered particularly vulnerable: or (iii) is a mentally ill woman as contemplated in section 1 of the Mental Health Act. 1973 (Act No. 18 of 1973): or (c) involving the infliction of grievous bodily harm ' 26 [51] And by way of the amendment that came into operation on 28 January 2022, as alluded to in paragraph 20 above, the following words were inserted in Part I of Schedule 2, namely: '"(a) when committed— (i) in the circumstances where the accused is convicted of the offence of rape and evidence adduced at the trial of the accused proves that the victim was also raped by— (aa) any co-perpetrator or accomplice; or (bb) a person, who was compelled by any co-perpetrator or accomplice, to rape the victim, as contemplated in section 4 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act, 2007, irrespective of whether or not the co-perpetrator or accomplice has been convicted of, or has been charged with, or is standing trial in respect of, the offence in question; (ii) in the circumstances where the accused is convicted of the offence of rape on the basis that the accused acted in the execution or furtherance of a common purpose or conspiracy and evidence adduced at the trial of the accused proves that the victim was raped by more than one person who acted in the execution or furtherance of a common purpose or conspiracy to rape the victim, irrespective of whether or not any other person who so acted in the execution or furtherance of a common purpose or conspiracy has been convicted of, or has been charged with, or is standing trial in respect of, the offence in question; (iii) by the accused who— (aa) has previously been convicted of the offence of rape or compelled rape; or (bb) has been convicted by the trial court of two or more offences of rape or the offences of rape and compelled rape, irrespective of— (aaa) whether the rape of which the accused has so been convicted constitutes a common law or statutory offence; (bbb) the date of the commission of any such offence of which the accused has so been convicted; (ccc) whether the accused has been sentenced in respect of any such offence of which the accused has so been convicted; (ddd) whether any such offence of which the accused has so been convicted was committed in respect of the same victim or any other victim; or 27 (eee) whether any such offence of which the accused has so been convicted was committed as part of the same chain of events, on a single occasion or on different occasions; or (iv) by a person, knowing that he has the acquired immune deficiency syndrome or the human immunodeficiency virus; (b) where the victim— (i) is a person under the age of [16] 18 years; (iA) is an older person as defined in section 1 of the Older Persons Act, 2006 (Act No. 13 of 2006); (ii) is a [physically disabled] person with a disability who, due to his or her [physical] disability, is rendered [particularly] vulnerable; [or] (iii) is a person who is mentally disabled as contemplated in section 1 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act, 2007; or (iv) is or was in a domestic relationship, as defined in section 1 of the Domestic Violence Act, 1998, with the accused; or (c) involving the infliction of grievous bodily harm"; and (d) by the substitution for paragraphs (a), (b) and (c) of the offence "Compelled rape as contemplated in section 4 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act, 2007" of the following paragraphs: "(a) when committed— (i) in the circumstances where the accused is convicted of the offence of compelled rape and evidence adduced at the trial of the accused proves that the victim was also raped— (aa) as contemplated in section 3 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act, 2007, by any co-perpetrator or accomplice; or (bb) by a person, who was compelled by any co-perpetrator or accomplice, to rape the victim, irrespective of whether or not the co-perpetrator or accomplice has been convicted of, or has been charged with, or is standing trial in respect of, the offence in question; (ii) in the circumstances where the accused is convicted of the offence of compelled rape on the basis that the accused acted in the execution or furtherance of a common purpose or conspiracy and evidence adduced at the trial proves that the victim was raped by more than one person who acted in the execution or furtherance of a common 28 purpose or conspiracy to rape the victim, irrespective of whether or not any other person who so acted in the execution or furtherance of a common purpose or conspiracy has been convicted of, or has been charged with, or is standing trial in respect of, the offence in question; (iii) by the accused who— (aa) has previously been convicted of the offence of compelled rape or rape; or (bb) has been convicted by the trial court of two or more offences of compelled rape or the offences of compelled rape and rape, irrespective of— (aaa) whether the rape of which the accused has so been convicted constitutes a common law or statutory offence; (bbb) the date of the commission of any such offence of which the accused has so been convicted; (ccc) whether the accused has been sentenced in respect of any such offence of which the accused has so been convicted; (ddd) whether any such offence of which the accused has so been convicted was committed in respect of the same victim or any other victim; or (eee) whether any such offence of which the accused has so been convicted was committed as part of the same chain of events, on a single occasion or on different occasions; or (iv) under circumstances where the accused knows that the person who is compelled to rape the victim has the acquired immune deficiency syndrome or the human immunodeficiency virus; (b) where the victim— (i) is a person under the age of [16] 18 years; (iA) is an older person as defined in section 1 of the Older Persons Act, 2006 (Act No. 13 of 2006); (ii) is a [physically disabled] person with a disability who, due to his or her [physical] disability, is rendered [particularly] vulnerable; [or] (iii) is a person who is mentally disabled as contemplated in section 1 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act, 2007; or (iv) is or was in a domestic relationship, as defined in section 1 of the Domestic Violence Act, 1998, with the accused; or 29 (c) involving the infliction of grievous bodily harm."' (Emphasis added.) [52] However, as the incident giving rise to the criminal prosecution of the respondent (and his resultant conviction and sentence) occurred some seven years prior to the amendment, the current formulation of Part I of Schedule 2 has no bearing on what is at issue in this appeal. Accordingly, the issue raised in this appeal falls to be decided with reference to the legislation that was in operation at the time of the commission of the rape of which the respondent was convicted. Statutory interpretation [53] The fate of this appeal therefore hinges entirely on the wording of s 51(1) read with Part I of Schedule 2 at the relevant time. Thus, we are here dealing with the perennial question of statutory interpretation. The principles to be applied in the interpretive process are now well settled. [54] More than a decade ago it was stated that: 'The present state of the law can be expressed as follows. Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective not subjective. A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document. Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used. To do so in regard to a statute or statutory instrument is to cross the divide between interpretation and legislation. In a contractual context it is to make a contract for the parties other than the one they in fact made. The "inevitable 30 point of departure is the language of the provision itself", read in context and having regard to the purpose of the provision and the background to the preparation and production of the document.' [55] That was said by Wallis JA in Natal Joint Municipal Pension Fund v Endumeni Municipality.39 Therefore, the inevitable point of departure is the language used in the provision under consideration in the light of the overall scheme of the legislation and the context.40 Endumeni has been consistently followed in this Court ever since 41 and endorsed in a couple of judgments of the Constitutional Court.42 [56] The proper approach to statutory interpretation that is consistent with the Constitution is usefully summarised in a recent decision of the Constitutional Court in Road Traffic Management.43 For the sake of brevity, I do not deem it necessary to quote the relevant paragraphs in this judgment. Suffice it to say that in general the process of interpretation pays due regard to the fact that interpretation of documents is a unitary exercise, taking into account the text, context and the purpose of the instrument under consideration.44 39 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18 (Endumeni). 40 See, in this regard, the judgment of Schreiner JA in Jaga v Dönges No and Another; Bhana v Dönges NO and Another 1950 (4) SA 653(A) at 662G-663A whose approach was endorsed by the Constitutional Court in Bato Star para 72 and 89-91. 41 See, for example, Shoprite Checkers (Pty) Ltd v Mafate [2023] ZASCA 14; [2023] 2 All SA 332 (SCA) para 18; Transnet National Ports Authority v Reit Investments (Pty) Ltd and Another [2020] ZASCA 129 para 56. 42 See, for example, Airports Company South Africa v Big Five Duty Free (Pty) Limited and Others [2018] ZACC 33; 2019 (5) SA 1 (CC) para 29; Road Traffic Management Corporation v Waymark Infotech (Pty) Limited [2019] ZACC 12; 2019 (5) SA 29 (CC) paras 29-30 (Road Traffic Management). 43 Road Traffic Management fn 47 above paras 29-32. 44 Department of Land Affairs and Others v Goedgelegen Tropical Fruits (Pty) Ltd [2007] ZACC12; 2007 (10) BCLR 1027 (CC); 2007 (6) SA 199 (CC); Chisuse and Others v Director-General, Department of Home Affairs and Another [2020] ZACC 20; 2020 (10) BCLR 1173 (CC); 2020 (6) SA 14 (CC) para 52; Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) para 25. 31 [57] It is as well to remind oneself of the exhortation by Marais JA in Malgas 45 that the 'situation [precipitating the enactment of the 1997 Act] was and remains notorious: an alarming burgeoning in the commission of crimes of the kind specified [a reference to, inter alia, Part I of Schedule 2] resulting in the government, the police, prosecutors and the courts constantly being exhorted to use their best efforts to stem the tide of criminality which threatened and continues to threaten to engulf society . . . The very fact that this amending legislation has been enacted indicates that parliament was not content with that and that it was no longer to be "business as usual" when sentencing for the commission of the specified crimes. '46 [58] The learned Judge of Appeal continued: 'In what respects was it no longer to be 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… as the sentence which should ordinarily be imposed for the commission of the listed crimes in the specified circumstances. In short, the legislature aimed at ensuring a severe, standardised, and consistent response from the courts to the commission of such crimes. '47 [59] Equally instructive is the observation by the same learned Judge of Appeal that the '. . . provisions [a reference to, inter alia, s 51(1)] are to be read in light of the values enshrined in the Constitution and, unless it does not prove possible to do so, interpreted in a manner that respects those rights. '48 (Emphasis added.) 45 S v Malgas [2001] ZASCA 30; [2001] 3 All SA 220 (A); 2001 (2) SA 1222 (A). 46 Ibid para 7. 47 Ibid para 8. 48 Ibid para 7. See also the analysis of legislative interpretation under the Constitution undertaken in Road Traffic Management paras 29-32. 32 [60] Bearing in mind the basic principles of statutory interpretation alluded to above, I now turn to a consideration of what is at the heart of this appeal. To my mind, the way in which s 51(1) of the 1997 Act was couched (prior to its amendment by Act 12 of 2021) was clear enough. In unambiguous terms, it provided that 'a regional court or a high court should sentence a person it has convicted of an offence referred to in Part I of Schedule 2 to imprisonment for life.' And, crucially, Part I of Schedule 2 lists the circumstances in which a sentence of life imprisonment was ordained which is, in the words of Marais JA, 'not to be departed from lightly and for flimsy reasons which could not withstand scrutiny. '49 [61] Read together, as they must, both s 51(1) and Part I of Schedule 2 could not be clearer. They mean precisely what they say, namely that insofar as the offence of rape is concerned a sentence of life imprisonment must ordinarily be imposed on a person convicted of rape: '(a) when committed— (i) in circumstances where the victim was raped more than once whether by the accused or by any co-perpetrator or accomplice: (ii) by more than one person, where such persons acted in the execution or furtherance of a common purpose or conspiracy>: (iii) by a person who has been convicted of two or more offences of rape, but has not yet been sentenced in respect of such convictions: or (iv) a person, knowing that he has the acquired immune deficiency syndrome or the human immunodeficiency virus: (b) where the victim— (i) is a girl under the age of 16 years; (ii) is a physically disabled woman who, due to her physical disability, is rendered particularly vulnerable: or 49 Malgas para 9. 33 (iii) is a mentally ill woman as contemplated in section 1 of the Mental Health Act. 1973 (Act No. 18 of 1973): or (c) involving the infliction of grievous bodily harm ' [62] This then brings me to the point where the judgment of this Court in Mahlase must now be carefully analysed to determine whether it bears close scrutiny. The judgment itself is, with respect, relatively terse. The foundation for the conclusion reached is contained in a single paragraph. When one reads the relevant paragraph, one is immediately struck by want of any underlying reasoning to bolster the conclusion reached. All that this paragraph says is, in essence, that because two members of the criminal gang who raped the victim 'were not before the trial court and had not yet been convicted of the rape, it cannot be held that the rape fell within the provisions of Part I of Schedule 2.' (Emphasis added.) But wait! Part I of Schedule 2 does not contain this requirement. Significantly, the italicised words are not borne out by the language of the provision. Indeed, the dictum is at odds with the clear and unequivocal wording of the provision. And the weight of its authority is substantially reduced, if not eviscerated, by absence of reasons in support of the conclusion reached. [63] Yet, crucially, the conclusion in Mahlase is subversive of the manifest purpose of the statutory provision in question which was designed to bring within its reach those found guilty of the listed crimes and in the circumstances enumerated, and to single them out for the most severe sentence that a court may, in the absence of substantial and compelling circumstances, impose. [64] It bears emphasising that the text of Part I of Schedule 2 at the material time was clear and unambiguous. Moreover, it was a provision of considerable 34 breadth. Thus, I can conceive of no rational basis to limit the ambit of the provision in the manner in which this was done in Mahlase. [65] Accordingly, to the extent that Mahlase held that the so-called 'other rape incidents' had to be proved before s 51(1) of the 1997 Act could be invoked, that conclusion is, with respect, clearly wrong. In my judgement, what s 51(1) before its amendment by Act 12 of 2021 in truth required was no more than evidence, established beyond reasonable doubt, that the rape victim was raped more than once whether by the solitary accused on trial or any co-perpetrator or accomplice regardless of whether or not the co-perpetrator or accomplice has been prosecuted and convicted of the rape committed during the same incident. [66] I digress at this point to observe that both the Constitutional Court and this Court have come to accept that when an amendment of existing legislation that seeks to remedy obscurities or address cases where existing legislation fails to fully capture the purpose or the mischief that it was designed to serve or prevent in the first place, it is permissible to take a peek at the amending legislation purely as a guide to the legislature's understanding of the purpose of the existing legislation.50 [67] It is as well to remember that courts are, as a general rule, enjoined to heed the constitutional injunction in s 39(2) of the Constitution 51 when interpreting legislation, namely to 'promote the spirit, purport and objects of the Bill of Rights'. Keeping that injunction at the forefront of one's mind, there can therefore 50 Patel v Minister of the Interior and Another 1955 (2) SA 485 (A) at 493A-D; National Education Health & Allied Workers Union (NEHAWU) v University of Cape Town and Others [2002] ZACC 27; 2003 (2) BCLR 154; 2003 (3) SA 1 (CC) para 66. 51 Bato Star fn 33 para 72. 35 be no doubt that the interpretation espoused in this judgment is consistent with this constitutional imperative. In addition, such interpretation is consistent with the purposive approach to interpretation of statutes which has received universal approval from both the Constitutional Court 52 and this Court.53 Relief [68] Where the conclusion reached in the preceding paragraph leaves us is the obvious question that now arises. It is therefore our task to determine the nature of the relief to which the appellant is entitled. Having found in favour of the prosecution with respect to the last of the three questions of law relied upon by the State, this Court is consequently enjoined to invoke s 311 of the CPA. To the extent here relevant, s 311(1) provides that if the matter was brought before the provincial or local division in terms of s 309(1) of the CPA, this Court may 're-instate the conviction, sentence or order of the lower court appealed from, either in its original form or such modified form as this Court may consider desirable. '54 [69] It is trite that no appeal by the State is legally permissible where a court has erred in evaluating the evidence and drawing inferences therefrom, even in circumstances where such error is grave. This is what this Court reiterated in Director of Public Prosecutions, Transvaal v Mtshweni55 with reference to 52 Cool ldeas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869 (CC) para 28. See also Dengetenge Holdings (Pry) Ltd v Southern Sphere Mining and Development Company Ltd and Others [2013] ZACC 48; 2014 (3) BCLR 265 (CC) paras 84-6 and Department of Land Affairs and Others v Goedgelegen Tropical Fruits (Pty) Ltd [2007] ZACC 12; 2007 (6) SA 199 (CC); 2007 (10) BCLR 1027 (CC) para 5 for purposive interpretation. 53 See North East Finance (Pty) Ltd v Standard Bank of South Africa Ltd [2013] ZASCA 76: 2013 (5) SA 1 (SCA) at para 24; KPMG Chartered Accountants (SA) v Securefin Ltd and Another [2009] ZASCA 7; 2009 (4) SA 399 (SCA) para 39 and Bhana v Dőnges NO and Another 1950 (4) SA 653 (A) at 664E-H for proper contextualisation; Natal Joint Municipal Pension Fund v Endumeni Municipality (2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18 (Endumeni). 54 Compare: Director of Public Prosecutions, Gauteng Division, Pretoria v Buthelezi [2019] ZASCA 170; 2020 (2) SACR 113 (SCA). 55 Director of Public Prosecutions, Transvaal v Mtshweni [2006] ZASCA 165; [2007] 1 All SA 531 (SCA); 2007 (2) SACR 217 (SCA). 36 Magmoed v Janse Van Rensburg and Others.56 In the latter case Corbett CJ made plain that it is not competent, for example, for the State to raise as a question of law, in terms of s 319 of the CPA under consideration in that case, the issue whether a reasonable court could not have acquitted the accused which is essentially a question of fact.57 [70] In the context of the peculiar facts of this case, there can be little doubt that the high court committed a grave error of law when it held that on any reckoning the sentence of life imprisonment was plainly incompetent because of the decision of this Court in Mahlase. [71] In this case the regional court sentenced the respondent to life imprisonment in terms of s 51(1) of the 1997 Act. He appealed against both his conviction and sentence to the high court. The appeal against the conviction failed but succeeded with respect to the sentence which the high court set aside, substituting it with a sentence of 15 years' imprisonment. It is necessary to emphasise that the appeal against the sentence of life imprisonment was upheld solely on the basis that it was not competent for the regional magistrate to impose such a sentence in the face of what Mahlase – by which the magistrate was bound – had previously decreed. Thus, s 311(1) is implicated. [72] Faced with this stark reality, counsel for the respondent soon realised, understandably so, that in the context of the facts of this case he would be hard pressed to contend for a lesser sentence than the mandatory one of life imprisonment. In these circumstances the interests of justice as well as basic notions of fairness dictate that in view of the gravity of the offence of rape, its 56 Magmoed v Janse Van Rensburg and Others [1992] ZASCA 208; 1993 (1) SA 777 (AD); [1993] 4 All SA 175 (AD); [1993] 1 All SA 396 (A). 57 Ibid at 806H-I. 37 prevalence, the interests of society at large and those of the victim, the respondent's lack of remorse, and the gratuitous violation of the victim's rights to liberty, physical integrity, privacy, personal dignity coupled with society's interests in having rape adequately punished, the sentence of life imprisonment ordained by the legislature imperatively requires nothing short of condign punishment to express society's revulsion at the enormity of this sort of crime. Conclusion [73] Rape is an utterly despicable, selfish, deplorable, heinous and horrendous crime. It gains nothing for the perpetrator, save perhaps fleeting gratification, but inflicts lasting emotional trauma and, often, physical scars on the victim. More than two decades ago, Mohamed CJ, writing for a unanimous court, aptly remarked that: 'Rape is a very serious offence, constituting as it does a humiliating, degrading and brutal invasion of the privacy, the dignity and the person of the victim. The rights to dignity, to privacy, and the integrity of every person are basic to the ethos of the Constitution and to any defensible civilization. Women in this country are entitled to the protection of these rights. They have a legitimate claim to walk peacefully on the streets, to enjoy their shopping and their entertainment, to go and come from work, and to enjoy the peace and tranquility of their homes without the fear, the apprehension and the insecurity which constantly diminishes the quality and enjoyment of their lives. '58 [74] In similar vein Nugent JA, writing for a unanimous court, in equal measure described rape in these terms: 'Rape is a repulsive crime, it was rightly described by counsel in this case as an invasion of the most private and intimate zone of a woman and strikes at the core of her personhood and dignity. '59 58 S v Chapman [1997] ZASCA 45; 1997 (3) SA 341 (SCA) (Chapman) paras 3-4. 59 S v Vilakazi 2009 (1) SACR 552 (SCA) para 1. 38 [75] In Tshabalala v S (Commissioner for Gender Equality and Centre for Applied Legal Studies as Amici Curiae); Ntuli v S 60 the Constitutional Court once again underscored the gravity of the crime of rape and its attendant repulsive consequences. In the same case, Khampepe J, writing separately, said that 'rape is not rare, unusual and deviant. It is structural and systemic. '61 [76] In Masiya v Director of Public Prosecution Pretoria and Another (Centre for Applied Legal Studies and another as Amici Curiae)62 the Constitutional Court said the following of rape: 'Today rape is recognised as being less about sex and more about the expression of power through degradation and concurrent violation of the victim's dignity, bodily integrity and privacy. '63 Regrettably, 26 years, since the decision of this Court in Chapman, the scourge of rape has shown no signs of abating. On the contrary, it appears to be on an upward trajectory. Order [77] In the result, the following order is made: 1 The appeal is upheld. 2 The question of law raised by the State is determined in its favour. 3 Paragraph (b) of the order of the high court is set aside and in its place the following order is substituted: '3.1 The appeal against sentence is likewise dismissed.' 4 The sentence of life imprisonment imposed by the trial court is reinstated. 60 Tshabalala v S (Commissioner for Gender Equality and Centre for Applied Legal Studies as Amici Curiae); Ntuli v S [2019] ZACC 48; 2020 (2) SACR 38 (CC). 61 Ibid para 76. 62 Masiya v Director of Public Prosecution Pretoria and another (Centre for Applied Legal Studies and another as Amici Curiae) [2007] ZACC 9; 2007 (5) SA 30 (CC); 2007 (8) BCLR 827 (CC); 2007 (2) SACR 435 (CC). 63 Ibid para 51. 39 5 The reinstated sentence of life imprisonment is ante-dated to 23 May 2017 in terms of s 282 of the Criminal Procedure Act 51 of 1977. ___________________ X M PETSE DEPUTY PRESIDENT SUPREME COURT OF APPEAL 40 Appearances For the appellant: C Kander Instructed by: Director of Public Prosecutions, Pietermaritzburg Director of Public Prosecutions, Bloemfontein For the respondent: V E Ngwenya Instructed by: Legal Aid South Africa, Pietermaritzburg Legal Aid South Africa, 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 March 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 Director of Public Prosecutions, Kwazulu-Natal Pietermaritzburg v Ndlovu (888/2021) [2024] ZASCA 23 (14 March 2024) Today, the Supreme Court of Appeal (SCA) upheld an appeal from the Kwa-Zulu Natal Division of the High Court, Pietermaritzburg (high court). The order of the high court was substituted with an order dismissing the appeal against the sentence imposed by the regional court, and reinstated the sentence of life imprisonment that the regional court had imposed as a court of first instance. The appeal revolved around the imposition of a life sentence for the brutal rape of a young woman. She was gang raped by three men, but only the respondent appeared before the trial court. Upon appeal to the high court, the court dismissed the appeal against convictions but upheld the appeal against the sentence of life imprisonment based on reasoning emanating from a previous judgment of the SCA, Mahlase v The State [2013] ZASCA 191 (Mahlase). Mahlase was premised upon the SCA's interpretation of s 51 of the Criminal Law Amendment Act 105 of 1997 (the 1997 Act), namely that a minimum sentence of life imprisonment must be imposed for rape, if the victim had been raped more than once either by a lone perpetrator or several perpetrators. The SCA in Mahlase found that the minimum sentence for rape was not applicable where the rape was perpetrated by more than one person, but only one of them was before court. Accordingly, the high court, in keeping with the doctrine of stare decesis, which enjoins courts to follow past decisions and also those of courts above them, substituted the sentence of life imprisonment with one of 15 years. The cardinal issue before the SCA was whether its previous decision in Mahlase was correct. This Court examined the principles relating to interpretation of statutes, as well as the doctrine of precedent and held that the SCA can overturn its own decisions, but only if it is convinced that the decision was clearly wrong. Furthermore, this Court recognised that the implications of Mahlase caused consternation throughout the various Divisions of the High Court, as judges understood the dictum to be binding, although subject to trenchant criticism. After considering case law on the matter, this Court held that the appeal hinged on the wording of s 51 at the relevant time and examined the matter from this perspective (the 1997 Act had been amended in the meantime). This Court emphasised the importance of statutory interpretation and the correct approach to interpretation of legislation by considering the language used in the provision in light of the overall scheme of the legislation and its context. This Court considered s 51 in light of the prevailing South African context, namely one where the scourge of rape and sexual violence showed no signs of abating, as well as in light of the values enshrined in the Constitution of the Republic. The Court held that, in light of the aforementioned, the manner in which s 51 was couched was clear: it provided that a sentence for life imprisonment was to be imposed for certain specified offences and that the imposition of a life sentence was not to be departed from ‘lightly and for flimsy reasons which could not withstand scutiny’. This Court, after having carefully and thoroughly analysed Mahlase, found that it could not withstand scrutiny and concluded that the judgment and its reasoning was clearly wrong. 2 In the result, the SCA upheld the appeal and substituted the order of the high court with one dismissing the appeal also against the sentence imposed by the regional court and reinstating the sentence of life imprisonment. ~~~~ends~~~~

4258

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 194/2023 In the matter between: NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS APPELLANT and SIJOYI ROBERT MDHLOVU RESPONDENT Neutral citation: The National Director of Public Prosecutions v Sijoyi Robert Mdhlovu (Case no 194/2023) [2022] ZASCA 85 (03 June 2024) Coram: HUGHES, MATOJANE and GOOSEN JJA and DAWOOD and BAARTMAN AJJA Heard: 3 May 2024 Delivered: 3 June 2024 This judgment was handed down electronically by circulation to the parties’ legal representatives via e-mail, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down is deemed to be 11h00 on 03 June 2024. 2 Summary: Application for leave to appeal – referral for oral evidence in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013 – whether reasonable prospect of success and compelling reasons for appeal established. Actio Inuiriarum – malicious prosecution – whether the absence of reasonable cause to prosecute and intention to cause injury or harm established. ORDER On appeal from: Mpumalanga Division of the High Court, Mbombela (Sieberhagen AJ, sitting as a court of first instance): (a) The application for leave to appeal is granted with costs. (b) The appeal is upheld. (c) The order of the high court is set aside and replaced with the following: ‘The plaintiff’s claim is dismissed with costs’. (d) The respondent is ordered to pay the costs of the appeal. JUDGMENT Matojane JA (Hughes and Goosen JJA and Dawood and Baartman AJJA concurring): Introduction [1] This is an application by the National Director of Public Prosecutions (appellant) for leave to appeal against the whole of the judgment and order of the Mpumalanga Division of the High Court, Mbombela (per Sieberhagen AJ) (the high court) handed down on 24 May 2022, in which the appellant was held liable to Mr Sijoyi Robert Mdhlovu (respondent) for malicious prosecution. The National Director of Public Prosecutions (the NDPP) is not only seeking leave to 3 appeal but also requests that, if granted, this Court consider and make a decision on the merits of the appeal. [2] In accordance with s 17(2)(d)1 of the Superior Courts Act 10 of 2013, this Court directed that the application be referred for oral argument. Furthermore, both parties involved in the matter were instructed to be prepared to argue the substantive issues of the case should the court require them to do so during the hearing. [3] On 26 April 2024, the Registrar sent an e-mail to the respondent’s legal representatives, Meintjies and Khoza Inc. (Meintjies). The purpose of the communication was to notify them that the respondent had not filed heads of argument and the required practice note for the hearing scheduled for 3 May 2024. [4] On 30 April 2024, the respondent’s attorneys sent a letter to the Registrar requesting a postponement of the hearing for the application for leave to appeal. This marked the initial instance of such a request being made. The Registrar forwarded Meintjies’ letter to the appellant’s legal representatives, who responded by expressing their opposition to any postponement. Despite the respondent’s lawyers being provided with the Court order and a notice of the hearing date, the respondent did not bring a substantiative application for a postponement and failed to attend Court on the day of the scheduled hearing. Accordingly, the hearing proceeded without the respondent’s presence. Background 1 Section 17(2)(d) of the Superior Courts Act provides: . . . ‘(d) 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.’ 4 [5] On 12 June 2015, the respondent decided to withdraw charges against accused individuals in cases under investigation by Sergeant Nkambule (the investigating officer). The charges included armed robbery, murder, and illegal possession of a firearm. The investigating officer brought witnesses to the respondent’s office for consultations in preparation for the trial that was due to start. The respondent informed the investigating officer that he would be withdrawing the charges due to a discrepancy in the ballistics report. He told him that the report showed that the firearm analysed by forensics experts had a serial number, whereas the firearm found in the possession of the accused did not have one. [6] The investigating officer indicated to the respondent that this issue could have been raised earlier, as the respondent had the dockets with him all along. He assured the respondent that the firearm sent for ballistics examination was the same one found in the accused’s possession and suggested calling an expert to confirm this. [7] The respondent agreed to postpone the matter to allow the investigating officer to obtain a supplementary affidavit from the ballistics expert to remedy the discrepancy. However, later that day, the respondent withdrew the charges without informing the investigating officer. In his testimony, the respondent stated that he informed the investigating officer that the cases were not trial-ready due to issues with the chain of evidence concerning the firearms identification in the four cases. He claimed that the forensic investigation department had failed to properly identify the firearm, leading him to withdraw the charges in court. He stated that he was not aware of the practice in Mbombela, which obliges prosecutors to obtain authorisation of their seniors before withdrawing charges. 5 [8] The investigating officer subsequently lodged a complaint against the respondent with his superiors at the South African Police Service (SAPS). The complaint alleged that the respondent breached an earlier agreement to postpone the matter, allowing formal chain evidence relating to the firearm to be obtained. The complaint and associated documents were forwarded to Advocate Moonsamy, the Deputy Director of Public Prosecutions in Mpumalanga (the DDPP), for further review. [9] After an investigation, which included consultation with five further legal professionals, the DDPP took the decision to prosecute the respondent on two counts of fraud and, as an alternative, defeating the ends of justice. This was pursuant to the Director of Public Prosecutions (the DPP) for the Gauteng Division, Pretoria, confirming in a memorandum dated 28 December 2015 that there was a prima facie case against the respondent on those charges. [10] In August 2017, the respondent was charged with two counts of fraud and, in the alternative, defeating the ends of justice. The charges stemmed from accusations that he had deliberately provided false information to the Department of Justice and Constitutional Development or the investigating officer. Specifically, it was alleged that the respondent had falsely stated that an accused person had no link to the charges brought against them in court and that the complainant was unable to identify the property that had been stolen in relation to those charges. [11] Furthermore, it was alleged that the respondent had falsely claimed that an accused, Mr Nonyane, was only implicated in the charges based on the testimony of his co-accused. However, the respondent was aware that Mr Nonyane had admitted to committing the offence for which he was charged and that some of 6 the stolen property had been found in his possession. Additionally, the complainants positively identified the recovered property as belonging to them. [12] The respondent pleaded not guilty, and the trial commenced in the Mbombela Regional Court on 29 August 2017. On 30 August 2017, at the close of the State’s case, the respondent was discharged on all counts in terms of s 174 of the Criminal Procedure Act 51 of 1977 (the CPA).2 [13] Aggrieved by his prosecution, on 15 March 2018, the respondent issued a summons against the NDPP for malicious prosecution in the high court. He contended that the prosecution was motivated by malice, initiated without reasonable and probable cause, and ultimately failed. The appellant opposed the claim, maintaining that the prosecution was legally justified. The high court found against the NDPP. Leave to appeal [14] On 20 July 2022, the appellant filed a notice of application for leave to appeal in the high court, which was accompanied by an application for condonation for the late filing of the said notice. The court refused to entertain the application for condonation, stating that it was an issue that had to be dealt with by the appeal court. In refusing to entertain the application for condonation, the court misconstrued its role in terms of Uniform Rule 49(1)(b), which provides for the process to be followed in seeking leave to appeal when it was not originally requested at the time of the initial judgment or order. 2 Section 174 of the Criminal Procedure Act 51 of 1977 provides: ‘Accused may be discharged at close of case for prosecution If, at the close of the case for the prosecution at any trial, the court is of the opinion that there is no evidence that the accused committed the offence referred to in the charge or any offence of which he may be convicted on the charge, it may return a verdict of not guilty.’ 7 [15] The condonation application has become moot since the high court explicitly granted it by considering the merits of the leave to appeal application and dismissing it. The matter before us is an order denying leave to appeal. The application was submitted within the prescribed time limits and was referred for oral argument. The evidence suggests that the appeal has a reasonable chance of success, and there are compelling reasons to grant leave to appeal. The high court’s findings [16] After a separation of issues in terms of Uniform Rule 33(4),3 the high court dealt only with the merits and not the quantum of the respondent’s claim. Two issues were identified: (a) whether the prosecution was initiated without reasonable and probable cause, and (b) whether it was actuated by ‘malice’ in the sense of animus iniuriandi on the part of the appellant. [17] The high court found that both issues were in favour of the respondent. It held that the DDPP had acted with animus iniuriandi in that she subjectively foresaw the possibility that she was acting wrongfully in prosecuting the respondent but nevertheless continued recklessly as to the consequences. The court found that she lacked reasonable and probable cause for the prosecution, as she was not in possession of evidence showing a reasonable prospect of a conviction at the time. The appeal 3 Uniform Rule 33(4) provides: ‘Special cases and adjudication upon points of law: . . . . (4) If, in any pending action, it appears to the court mero motu that there is a question of law or fact which may conveniently be decided either before any evidence is led or separately from any other question, the court may make an order directing the disposal of such question in such manner as it may deem fit and may order that all further proceedings be stayed until such question has been disposed of, and the court shall on the application of any party make such order unless it appears that the questions cannot conveniently be decided separately.’ 8 [18] In order to succeed in a claim for malicious prosecution, the plaintiff is required to prove: (a) the defendant set the law in motion (instigated or instituted the proceedings), (b) the defendant acted without reasonable and probable cause, (c) the defendant was actuated by malice or animus iniuriandi and (d) the prosecution failed.4 [19] The key issues on appeal are whether the respondent discharged the burden of proving the lack of reasonable and probable cause to prosecute him and that the prosecution was instituted animo iniuriandi (i.e. with the intention to injure the respondent). The appellant submits that the high court erred in its assessment and application of the law on both points. If either element is not established, the delict of malicious prosecution is not made out. Reasonable and probable cause [20] In Prinsloo and Another v Newman,5 this Court discussed the concept of reasonable and probable cause for prosecution in the context of malicious prosecution. The Court held that the test for reasonable and probable cause is an objective one.6 It is not based on the subjective beliefs or motives of the prosecutor. Reasonable and probable cause exists if a reasonable person would have concluded that the accused was probably guilty on the facts available to the prosecutor at the time.7 [21] It follows that a prosecutor need not have evidence establishing a prima facie case or proof beyond a reasonable doubt when deciding to initiate a 4 Minister of Justice and Constitutional Development and Others v Moleko [2008] ZASCA 43; [2008] 3 All SA 47 (SCA); 2009 (2) SACR 585 (SCA) para 8. 5 Prinsloo and Another v Newman 1975 (1) SA 481 (A). 6 Ibid at 509B. 7 Ibid at 484B. See also Relyant Trading (Pty) Ltd v Shongwe and Another [2006] ZASCA 162; [2007] 1 All SA 375 (SCA) para 14; Beckenstrater v Rottcher and Theunissen 1955 (1) SA 129 (A) at 136A-B. 9 prosecution. Suspicion of guilt on reasonable grounds suffices. The question is what a reasonable prosecutor would have done in light of the information available at the relevant stage. [22] The high court found that the NDPP failed to apply the correct test at all by focusing only on a prima facie case. Further, the NDPP did not present evidence to the court showing that the DDPP’s decision was supported by reasonable and probable cause. [23] A thorough review of the evidence that was before the DDPP when she decided to prosecute establishes objective probable cause to prosecute, notwithstanding that the respondent was discharged at the trial. In paragraph 17.4 of the judgment, the high court stated: ‘Nothing in the form of the contents of the case dockets concerning the plaintiff, considered by Adv Moonsamy, was put before me on behalf of the defendant, establishing reasonable and probable cause to prosecute the plaintiff. Indeed, Adv Moonsamy testified that, in her view it was not necessary for her to have had reasonable and probable cause to institute the prosecution and all that she had to establish was whether a prima facie case could be established from the information and evidence considered by her. Even if she was correct, which she was not, neither she nor the defendant adduced any evidence whereon she made her decision. The high water mark of her evidence was that she resolved that, on the contents of the case dockets put before her, a prima facie case against the plaintiff existed.’ [24] The high court criticised the DDPP for presuming that a prima facie case sufficed but failed to properly assess whether the evidence in the form of statements and other information the DDPP relied on provided reasonable and probable cause or not. The evidence available when the decision was taken is relevant in establishing probable cause rather than the evidence accepted by the court when deciding the eventual outcome. 10 [25] The absence of the docket from the evidence before the court ought not to have been held against the NDPP. As the plaintiff, the respondent bore the overall onus and should have sought to compel its production to challenge the evidence of the DDPP. By concentrating on the prosecution’s ultimate failure, the high court erroneously diverted attention from scrutinising reasonable and probable cause. [26] During the trial, the DDPP testified that she considered various pieces of evidence when making her decision. This included a statement from the investigating officer, which detailed how the suspect, Mr Nkosi, was implicated in a business robbery and murder by his co-accused and that an unlicensed firearm was discovered buried at his residence. The investigating officer stated that the respondent reneged on an undertaking to postpone the cases for further investigation and scuppered the prosecution of serious criminal matters. While the investigating officer’s opinion could not bind the respondent in the exercise of his prosecutorial discretion, his account raised a reasonable suspicion of impropriety that warranted further investigation as it suggests possible misconduct by the respondent in handling serious criminal cases. [27] Additionally, Mr Nkosi’s own confession in his warning statement admitted to the charge of possession of an unlicensed firearm. This evidence directly corroborates part of the investigating officer’s account. It lends credibility to the allegation that the respondent improperly withdrew charges against a suspect who had confessed to a serious crime. While not conclusive, this evidence strengthens the case for reasonable and probable cause to investigate and prosecute the respondent. The DDPP also considered an affidavit from the respondent’s supervisor, Ms Mashapa, which stated that the respondent had withdrawn serious charges, including murder charges, without authorisation and against standard practice. This evidence, coming from the respondent’s own 11 supervisor, carries significant weight in suggesting that his actions were improper and warranted scrutiny. [28] The DDPP testified that she consulted multiple prosecutors and advocates, who expressed the prima facie view that criminal charges against the respondent were justified. Most significantly, the DPP himself confirmed in writing that the dockets disclosed grounds for prosecution, albeit requesting further evidence be obtained before a final decision was made. While the DPP's confirmation was not an unequivocal endorsement, it provides strong evidence that the DDPP's decision was not baseless or wholly unsupported by the available evidence. While not binding, these opinions from legal professionals with knowledge of prosecutorial standards and practices lend additional support to the reasonableness of the DDPP's assessment of the evidence and decision to prosecute. The fact that the DDPP sought out multiple opinions suggests a diligent and good-faith effort to assess the merits of the case before proceeding. The high court unequivocally accepted the DDPP’s evidence as credible. [29] Viewed holistically and in context, the information at the DDPP’s disposal at the time she decided to prosecute established reasonable and probable cause in the form of grounds for suspicion of guilt on which she was entitled to act. As the Supreme Court of Canada opined in Miazga v Kvello Estate 2009 SCC 51,8 ‘the reasonable and probable cause inquiry comprises both a subjective and an objective component’. The prosecutor must subjectively have a belief in the existence of reasonable and probable cause, and that belief must be justifiable from an objective point of view. The objective component requires the existence of sufficient evidence for a reasonable person to conclude that the accused was probably guilty. 8 Miazga v Kvello Estate, 2009 SCC 51 [2009] 3 S.C.R. 339 at 341. 12 [30] The fact that the respondent was subsequently discharged does not negate the earlier existence of reasonable and probable cause. Also, the DDPP’s statement that she believed there was a prima facie case but not enough evidence for a corruption charge does not imply that there was no probable cause for the actual charges of fraud and defeating the ends of justice brought forth by the prosecution. The high court’s conclusion that there was no reasonable and probable cause is thus not properly substantiated by the evidence. Lack of animo iniuriandi [31] Proof of animus iniuriandi, in the sense of intention to injure, is an essential element of the actio iniuriarum on which a malicious prosecution claim is based. The DDPP had to intend to prosecute the respondent with the consciousness of wrongfulness. Negligence or even gross negligence is insufficient - there must be dolus, at minimum, in the form of dolus eventualis.9 [32] To show animus iniuriandi, the respondent had to demonstrate that the DDPP foresaw the possibility that initiating the prosecution was wrongful in that reasonable grounds for it were lacking but that she acted recklessly as to that consequence. The high court’s analysis took an unduly narrow view of the evidence. [33] An improper motive alone is insufficient to establish animus iniuriandi for a malicious prosecution claim.10 As noted above, the prosecution must also have been initiated without reasonable and probable cause.11 Given my finding that there was an objectively reasonable basis to prosecute the respondent, any 9 Moleko fn 4 above para 64. 10 National Director of Public Prosecutions v Zuma [2009] ZASCA 1; 2009 (2) SA 277 (SCA); 2009 (1) SACR 361 (SCA); 2009 (4) BCLR 393 (SCA); [2009] 2 All SA 243 (SCA) para 37. 11 Ibid para 37. 13 improper motive does not render the prosecution wrongful. Moreover, the desire to set an example that prosecutors will be held accountable for unjustified decisions is not in itself an improper motive for a prosecution that is otherwise justified. Ensuring the integrity of the prosecutorial process is a valid and important consideration. While the phrasing of the NDPP’s memo was perhaps ill-advised, it does not establish the required intention to injure the respondent through baseless proceedings. [34] The high court placed undue emphasis on the DDPP’s statement in a memorandum that she did not believe that the available evidence could prove the respondent’s corruption. This was taken to show she foresaw the prosecution was ill-founded. However, the charges actually brought were fraud and alternatively defeating the ends of justice. It does not follow that the DDPP doubted the sustainability of those charges merely because she did not consider a corruption case winnable. [35] As discussed above, the DDPP did not act unilaterally but after extensive consultation and upon receiving the NDPP’s written confirmation that the dockets disclosed a prima facie case justifying prosecution. It bears noting that the DDPP had no personal connection to the respondent, as she had been appointed to the office from another province just a month prior. These factors reduce the likelihood of a malicious motive. Her conduct, viewed objectively, is incompatible with a consciousness of wrongfulness, recklessness or animus iniuriandi. Proving malicious prosecution requires egregious conduct, not just flawed reasoning. The high court here was too quick to impute animus iniuriandi without clear evidence thereof. 14 [36] Importantly, as noted in Moleko,12 If the DDPP had reasonable and probable cause to initiate the prosecution, any improper motive she may have had, such as seeking to punish or make an example of the accused, is irrelevant. The "sending a message" language used in the DDPP's memo, although ill-advised, seems to be intended to convey the seriousness of the allegations and the importance of holding prosecutors accountable rather than a desire to punish the respondent unfairly. The language does not negate the objective evidence supporting the decision to prosecute. Furthermore, it does not necessarily prove malice, as animus iniuriandi requires the DDPP to have both intended to cause harm and been aware of the wrongfulness of her actions13. [37] Overall, the evidence falls short of establishing on a balance of probabilities that the DDPP acted with the requisite animus iniuriandi. Indeed, the indications are that she genuinely believed the respondent’s prosecution was legally justified and appropriate in light of the seriousness of the investigating officer’s complaint and the nature of the underlying criminal matters. More is required to prove animus inuiriandi than an error of judgement or misplaced zeal. [38] Finally, and flowing from the above, the high court did not give sufficient regard to the constitutional imperatives of prosecutorial independence and discretion in its evaluation. Prosecutors must be free to pursue cases they believe have merit without undue fear of adverse consequences, provided they act rationally, honestly and without improper motives. Conclusion [39] For these reasons, I am satisfied that the respondent did not discharge the onus of proving the essential elements of his malicious prosecution claim. The 12 Moleko fn 4 para 57. 13 Relyant Trading fn 7 para 5. 15 high court erred in its evaluation and application of the legal requirements and its assessment of the evidence as a whole. The appellant succeeded in showing that the appeal would have a reasonable prospect of success and that it constitutes compelling reasons why leave to appeal should be granted. [40] The application for leave to appeal and the appeal must thus succeed. I see no reason to depart from the ordinary rule that costs should follow the result in both this Court and the high court below. [41] In the result the following order is made: (a) The application for leave to appeal is granted with costs. (b) The appeal is upheld. (c) The order of the high court is set aside and replaced with the following: ‘The plaintiff’s claim is dismissed with costs’. (d) The respondent is ordered to pay the costs of the appeal. K E MATOJANE JUDGE OF APPEAL 16 APPEARANCES For appellant: H Epstein SC (with him T V Mabuda) Instructed by: The State Attorney, Pretoria The State Attorney, Bloemfontein For respondent: No Appearance

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGEMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 03 June 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 judgement of the Supreme Court of Appeal The National Director of Public Prosecutions v Sijoyi Robert Mdhlovu (Case no 194/2023) [2022] ZASCA 85 (03 June 2024) __________________________________________________________________________ Today, the Supreme Court of Appeal, per Matojane JA (Hughes and Goosen JJA and Dawood and Baartman AJJA) has overturned a High Court ruling that found the National Director of Public Prosecutions (NDPP) liable for malicious prosecution in a case brought by Mr. Sijoyi Robert Mdhlovu, a former prosecutor. In 2017, Mr. Mdhlovu was charged with fraud and defeating the ends of justice for allegedly providing false information to the Department of Justice and Constitutional Development and an investigating officer regarding criminal cases he had withdrawn. He was later discharged, and subsequently sued the NDPP for malicious prosecution. The High Court had ruled in favour of Mr. Mdhlovu, finding that the prosecution lacked reasonable and probable cause and was motivated by malice. However, the Supreme Court of Appeal determined that the High Court erred in its assessment of the evidence and application of the law. The Supreme Court found that the Deputy Director of Public Prosecutions (DDPP) who decided to prosecute Mr. Mdhlovu had sufficient evidence at the time to establish reasonable and probable cause for the prosecution. The Court also held that the evidence did not support a finding that the DDPP acted with malice or intent to injure Mr. Mdhlovu. The Supreme Court emphasized the importance of prosecutorial independence and discretion, stating that prosecutors should be able to pursue cases they believe have merit without undue fear of adverse consequences, provided they act rationally, honestly, and without improper motives. The appeal was upheld, the High Court's order was set aside, and Mr. Mdhlovu's claim was dismissed with costs.

4194

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not reportable Case no: 384/2023 In the matter between: PRASA CORPORATE REAL ESTATE SOLUTIONS (CRES) APPELLANT and COMMUNITY PROPERTY COMPANY (PTY) LTD FIRST RESPONDENT ETHEKWINI MUNICIPALITY SECOND RESPONDENT Neutral citation: PRASA v Community Property Company (Pty) Ltd and Another (384/2023) [2024] ZASCA 35 (28 March 2024) Coram: GORVEN, MATOJANE and GOOSEN JJA Heard: 7 March 2024 Delivered: 28 March 2024 2 Summary: Contractual claim for payment of amount paid to settle outstanding electricity consumption charges levied by municipality – no contractual relationship established – alternative claim based on unjustified enrichment – essential elements of enrichment claim not established – appeal upheld. 3 ORDER On appeal from: The KwaZulu-Natal Division of the High Court, Durban (Sibiya J, sitting as a court of first instance): 1 The appeal is upheld with costs. 2 The order of the high court is set aside and replaced with the following order: ‘The application is dismissed with costs.’ JUDGMENT Goosen JA (Gorven and Matojane JJA concurring): [1] The Community Property Company (Pty) Ltd (CPC), brought an application in the KwaZulu-Natal Division of the High Court, Durban (the high court) in which it claimed re-imbursement by the Passenger Rail Agency of South Africa (PRASA), of approximately R3,2 million CPC had paid to settle amounts due to the eThekwini Municipality (eThekwini) for electricity consumed by PRASA.1 The claim was based on an alleged contract between CPC and PRASA. In an alternative claim, CPC relied upon the unjustified enrichment of PRASA at CPC’s expense. 1 The claim was brought against the PRASA Corporate Real Estate Solutions (PRASA Cres), which was described as a division of PRASA. The case was, however, conducted on the basis that the contractual relationships were with PRASA and that PRASA had consumed the electricity for which payment was sought. The difference in corporate identity was not raised by PRASA Cres as a defence. In the circumstances, nothing turns upon any distinction that there may be between PRASA Cres and PRASA. 4 [2] The high court, per Sibiya J, found in favour of CPC on its contractual claim. It found, however, that the claim for the amounts accrued between October 2013 and June 2014 had prescribed. It ordered PRASA to pay an amount of R2 607 472.05, together with interest and 75% of CPC’s costs. The appeal is with the leave of the high court. Background [3] During 2007, Crowie Projects (Pty) Ltd (Crowie Projects), a property development company, entered into a joint venture agreement with eThekwini to develop a tract of land, owned by eThekwini, in the northern part of Durban. The land was situated approximately 17 kilometres from the Durban City Centre, opposite an industrial area and adjacent to the KwaMashu Highway. [4] The development envisaged the construction of an underground railway station, a retail shopping centre, residential apartments and a bus and taxi rank, in what was to be known as the Bridge City precinct. The shopping centre was to be constructed above the underground railway station and the residential apartments above the shopping centre. It was envisaged that the bus and taxi rank would be constructed adjacent to the shopping centre. The development was to take place in phases as a sectional title scheme registered under the Sectional Titles Act, 95 of 1996. [5] Crowie Projects purchased two portions of the land from eThekwini. These portions were consolidated as Portion 121 of Erf 8, Bridge City and Crowie Projects took transfer of the property on 1 November 2007. On 14 December 2007, Crowie Projects entered into the Railway Co-ordination and Operation Agreement (the Co-ordination Agreement) with the erstwhile South African Rail Commuter 5 Corporation, to which PRASA is the successor. The agreement regulated the construction and operation of an underground railway station and the business of the shopping centre at Bridge City. Crowie Projects undertook to construct a ‘void’ (essentially an underground chamber) beneath the shopping centre. Upon completion of the void and concourse area, PRASA would take transfer of the railway component, construct the railway station within the void and fit out the concourse for its purposes. [6] A key element of the Co-ordination Agreement concerned the interrelationship between the different components of the development scheme. Crowie Projects and PRASA recognised that the operation of a railway station with ready access to the shopping centre via the concourse, would positively enhance trade in the shopping centre. It was therefore agreed that PRASA would be entitled to share in potential ‘upside income’, namely the additional income generated from the shopping centre because of the development of the railway station. A formula by which this additional income would be calculated was agreed. [7] On 12 September 2008, Crowie Projects, and CPC entered into a sale of business agreement (the SOB),2 in which Crowie Projects sold the Bridge City shopping centre business to CPC for a purchase consideration of approximately R738 million. The Bridge City shopping centre business consisted of the rental income to be derived from tenants occupying units within the shopping centre. At the time of the conclusion of the SOB, the shopping centre had not yet been 2 The agreement included a third party, namely Azarin Properties 9 (Pty) Ltd (Azarin), a wholly owned subsidiary of Crowie Projects. Azarin’s participation in the agreement related to the potential acquisition of a minority share in the shopping centre business, CPC agreed to sell 20% of the shopping centre business to Azarin, which sale would take effect on the date of transfer of the sections. The sale of 20% of the business to Azarin was subject to a suspensive condition requiring the provision of an irrevocable bank guarantee 30 days before the date of transfer. In the event of a failure to deliver the guarantee, the sale of the share would lapse and the purchase price for the shopping centre business would reduce by R20 million. It appears from the deed of transfer that the purchase price was in fact reduced. Azarin therefore did not acquire a share of the business. 6 constructed. It was anticipated that construction would be completed, and transfer given by 2 November 2009. Provision was, however, made for potential delays in which event the last trading commencement date would be 30 April 2010. Registration of transfer of sections 2, 3, 4 and 5 (which comprised the shopping centre unit) of the Terminus3 sectional title scheme occurred on 31 March 2010. The circumstances giving rise to the claim made by CPC against PRASA, suggest that PRASA operations commenced in 2013. The claim [8] The dispute arose in July 2017 when CPC presented an invoice to PRASA for payment of R3 413 539.53 for consumption charges for electricity from October 2013. This was met by the suggestion that the amount should be set-off against the ‘upside income’ due to PRASA, which was then the subject of negotiations. CPC objected to this on the basis that the agreement made no provision for set-off. Extensive email correspondence followed until, on 28 February 2018, a meeting was held to attempt to resolve the dispute. An agreement was reached. The agreement was, however, subsequently cancelled. [9] CPC initiated its claim against PRASA by notice of motion on 1 April 2019. It claimed payment of the amount it alleged was due and, if payment was not made, an order entitling it to disconnect the electricity supply to the PRASA section ‘situated within the…shopping centre’. This latter claim was not pursued. CPC founded its claim upon the SOB agreement and clause 17 of the Co-ordination Agreement. It averred it had concluded a service agreement with eThekwini to 3 Whereas the Co-ordination Agreement referred to the envisaged sectional title scheme as the Bridge City scheme, the scheme was in fact registered as The Terminus. The deed of transfer indicates that the purchase price was R718 million, indicating that the purchase of a share of the business by Azarin did not proceed. 7 supply electricity to the shopping centre. Electricity was supplied to the portion occupied by PRASA via a sub-meter. PRASA was obliged, in terms of clause 17, to pay for service consumption charges and since those had been paid by CPC it was entitled to recover the amount from PRASA. In its founding affidavit, CPC expressly disavowed any reliance upon the subsequently cancelled agreement to settle the dispute and an acknowledgement of debt as causes of action. [10] Its alternative claim was premised on the allegation that PRASA was unjustifiably enriched at the expense of CPC because of its consumption of electricity without payment. CPC was impoverished to the extent that it had paid eThekwini. On this basis, CPC claimed that it was entitled to be compensated by PRASA for the cost of the electricity consumed by PRASA over the period. [11] PRASA raised the following defences.4 The first was that clause 17 of the Co-ordination Agreement was a term of agreement between Crowie Projects and PRASA. CPC therefore did not, in the absence of a cession, have any contractual right to claim the money from PRASA. It alleged that, in any event, since the claim related to charges raised since October 2013, a substantial portion of it had become prescribed. Secondly, on the merits of the claim, PRASA asserted that it had paid all amounts due to eThekwini and that it was not in arrears. Finally, in relation to the alleged enrichment claim, it averred that any such claim lay against eThekwini. 4 One other defence pleaded in limine was based upon an obvious error in the founding affidavit. CPC had stated that the SOB was concluded on 12 September 2018, whereas it was plainly concluded on 12 September 2008. PRASA nevertheless framed a challenge to CPC’s locus standi to institute a claim which had arisen prior to 2018. It was not pursued before the high court. 8 The appeal [12] Only two issues arise for consideration in this appeal. The first is whether CPC has a claim in contract to recover the costs of electricity consumed by PRASA for which CPC had paid. The second, is whether CPC has an alternative claim founded on unjustified enrichment. PRASA’s pleaded reliance upon prescription remained alive until the hearing. However, counsel for PRASA correctly accepted that a claim based on clause 17 of the Co-ordination Agreement, could only have arisen when CPC paid eThekwini and presented to PRASA its invoice for payment. The facts indicate that payment was made to eThekwini in 2018. Prescription therefore simply did not arise. The same applied in relation to the alternative enrichment claim. The contractual claim [13] Clause 17 of the Co-ordination Agreement reads as follows: ‘17.1 [PRASA] shall pay for – 17.1.1 all electricity and water used by it in or on the [PRASA] component; 17.1.2 all refuse removal fees and special refuse removal fees relating to the [PRASA] component; 17.1.3 any other consumable item or service which [PRASA] may use. 17.2 As the amounts payable in terms of clause 17.1 will be levied or assessed by a separate meter or a separate sub-meter in respect of the [PRASA] component only, the liability of [PRASA] shall be to pay the amount so levied or assessed. 17.3 If [PRASA] fails to pay any costs referred to in clause 17.1 and 17.2 within 7 days of due date, then, without prejudice to any other rights Crowie may have, Crowie shall be entitled to pay such charges and recover them from [PRASA] provide that Crowie’s claims will be supported by invoices (if available) in respect of the charges so paid.’ [14] CPC relied upon clause 17.3. It contended that the SOB and Co-ordination Agreement properly understood conferred upon it the rights set out in clause 17. Counsel for CPC accepted that there had been no cession, assignment, or delegation 9 of rights by Crowie Projects, save those rights and obligations which had specifically been ceded in terms of the SOB. Its case was, therefore, not based on any form of cession. It was, rather, that upon a construction of the SOB and Co-ordination Agreement, the rights conferred by clause 17 formed part of the business sold to it. [15] Clause 3.4 of the SOB referred to the development and operation of the railway station as provided in the Co-ordination Agreement. It provided in relevant part that: ‘3.4.2 Certain of [Crowie Projects’] rights and obligations contained in the [Co-ordination Agreement] will be ceded (as an out-and-out cession), transferred and made over to [CPC], whilst [Crowie Projects] will retain certain other rights and obligations.’ [16] The only out and out cessions contained in the SOB, were those provided for in clauses 30 and 31. Clause 30 concerned the cession of Crowie Projects’ rights to all lease agreements and any other contracts of lease and tenancy in respect of the shopping centre. Clause 31 provided for the cession of rights to builder’s liens, guarantees and warranties and rights accrued in cleaning and security agreements concluded by Crowie Projects. [17] Clause 3.4.3 of the SOB envisaged that CPC, as the pending owner of the shopping centre, and PRASA, as the pending owner of the void and railway station, would ‘need to enter into agreements to govern and regulate the development and operation of the Void and Railway Station’. Clause 3.4.7, in turn, envisaged a tripartite agreement between Crowie Projects, CPC and PRASA which would 10 regulate the operation of the railway station and would cover the ‘costs and expenses relating thereto.’5 [18] Clause 25.15 states: ‘It is recorded that [CPC] and [PRASA] may agree to a cession (out-and-out), assignment, delegation and transfer to [CPC] of the rights and obligations of [Crowie Projects] and [PRASA] as contained in the [Co-ordination Agreement]. In such event [CPC] hereby agrees and undertakes to consent to and to sign all such agreements and documents as may be necessary to give effect to the cession contemplated in this clause 25.15…’ [19] Clause 25.16 stipulates that: ‘The agreement/s referred to in 25.136 above between [Crowie Projects], [CPC] and [PRASA] shall be tripartite agreement/s that shall specify inter alia – 25.16.1 which rights and obligations [CPC] shall take cession, assignment, and delegation of; 25.16.2 which rights and obligations [Crowie Projects] shall remain liable for, to [PRASA]; and 25.16.3 the manner in which the rights and obligations referred to in 25.16.1 and 25.16.2 shall be executed.’ [20] In light of these clear and unequivocal provisions of the SOB, there is no scope for a construction of the agreement as having necessarily encompassed the acquisition of the rights conferred by clause 17. It was common ground that none of the envisaged agreements and deeds of cession were executed. CPC did not seek to suggest that there existed an oral or, despite its argument, a tacit cession of the rights conferred by clause 17 of the Co-ordination Agreement. The non-variation clauses 5 Clause 25.13 of the SOB specified the matters to be dealt with in the envisaged tripartite agreement/s. These included an agreement on the operational aspects that affect or impact both the shopping centre and the railway station, and agreement on the financial aspects that affect both, including possible pro rata cost sharing. 6 The reference to clause 25.13 appears in context to be an error and may have been intended to be a reference to clause 25.15. 11 62 and 63 of the SOB would militate against any oral agreement by which the terms were varied.7 [21] The clauses of the SOB dealing with the envisaged cession of rights make it clear that the parties contemplated one or more cessions, to facilitate the effective implementation of the agreement. The existence of such intention is not sufficient. The parties agreed that the cession/s would take place in a specified form to ensure that the subject of the cession was properly identified, and its effect clarified.8 They were bound to act in accordance with that agreement. There is therefore no scope for reliance upon any tacit cession. [22] Clause 17 was a term of agreement between Crowie Projects and PRASA. It follows that CPC was not entitled to rely on it to claim any amount from PRASA. The high court’s finding to the contrary cannot stand. The enrichment claim [23] The enrichment claim was framed in the broadest of terms. Apart from the assertion that PRASA had been enriched by its consumption of electricity without payment from 2013 to 2017, and that CPC in turn had been impoverished to the extent of its payment of the costs of such consumption to eThekwini, the founding affidavit made no attempt to address the elements of enrichment liability. Counsel for CPC submitted that it was unnecessary to formulate the claim within the 7 See Yarram Trading CC t/a Tijuana Spur v Absa Bank Limited [2006] ZASCA 132; 2007 (2) SA 570 (SCA) para 24. 8 See Lief NO v Dettman 1964 (2) SA 252 (A) at 275D-E where Wessels JA said: ‘In my opinion, however, it is not sufficient to show that the parties contemplated a cession; it must be shown that they effected a cession. It must appear that the parties took legally effective steps, where such are required, to transfer the subject matter of the cession from the cedent to the cessionary, so that the former is divested of his rights, which thereafter vest exclusively in the cessionary.’ (Emphasis added). 12 framework of the recognised condictiones, since this Court had recognised ‘a general enrichment claim’. [24] This Court has accepted, in principle, that there may be scope for the recognition of enrichment liability which may not fall within the strict ambit of specific condiction actions. This much is clear from the judgments in McCarthy Retail Ltd v Shortdistance Carriers CC (McCarthy),9 and First National Bank of Southern Africa Ltd v Perry NO and Others (Perry).10 It is, however, appropriate to highlight what was said in these cases. Schutz JA, who authored both judgments, observed in McCarthy: ‘However, if this Court is ever to adopt a general action into modern law, it would be wiser, in my opinion, to wait for that rare case to arise which cannot be accommodated within the existing framework and which compels such recognition. If once a general action is accepted much less energy, hopefully, will be devoted to the correct identification of a condictio or an action than at present and more time to the identification of the elements of enrichment. This does not mean, however, that the old structure’s relatively few distinctive rules applying only to particular forms of action, such as the requirement in the condictio indebiti that the mistake should be reasonable, will disappear.’11 [25] Perry was decided upon exception. First National Bank had paid out on a forged cheque. It sought to recover from several parties on various causes of action. As against Nedbank, the receiving bank, it relied upon an enrichment-based claim. The central question on appeal was whether the turpitude of a defendant in a claim based on the condictio ob turpem vel iniustam causa was to be established at the time of transfer. Schutz JA referred to the desirability of a more general focus upon 9 McCarthy Retail Ltd v Shortdistance Carriers CC 2001 (3) SA 482 (SCA). 10 First National Bank of Southern Africa Ltd v Perry NO and Others 2001 (3) SA 960 (SCA). 11 McCarthy para 10. 13 the elements of enrichment.12 However, Schutz JA found support in several old authorities for the conclusion that knowledge of the illegality of the transaction, which is acquired after the transfer, may found the condictio. The learned judge held that to the extent that these authorities did not go far enough, an extension of the condictio to cover such situation would be appropriate.13 Since the excipient bore the onus to establish that the particulars did not disclose a cause of action upon any interpretation, the exception ought to have been dismissed.14 [26] These judgments are therefore not authority for the proposition that a plaintiff is now entitled to rely upon general assertions to support a claim for unjustified enrichment. They recognise the need, where necessary, to focus attention on the essential elements which may give rise to liability. They by no means excuse a plaintiff from pleading and establishing a proper basis upon which enrichment liability made be founded. That is the approach adopted in several cases which have come before this Court. In each instance it has considered whether the requirements of one or other of the established condictiones, upon which reliance was placed, were met, or could be met by extension.15 [27] Enrichment liability is premised upon four essential elements: the defendant must be enriched; the plaintiff must be impoverished; the defendant’s enrichment must be at the expense of the plaintiff; and the enrichment must be without cause (sine causa).16 What is the essence of the claim advanced by CPC against PRASA? 12 Perry para 23. 13 Ibid para 28. 14 Ibid paras 6 and 30. 15 See Afrisure CC and Another v Watson NO and Another [2008] ZASCA 89; 2009 (2) SA 127 (SCA) para 4; Capricorn Beach Home Owners Association v Potgieter t/a Nilands and Another [2013] ZASCA 116; 2014 (1) SA 46 (SCA) para 20 – 21 (Capricorn Beach); Van Niekerk v Liberty Group Limited [2020] ZASCA 65 para 28 – 31. 16 McCarthy (per Harms JA para 2) at 496E; Capricorn Beach para 20. 14 It is this: CPC supplied PRASA with electricity for which CPC was obliged to pay in terms of a service agreement it had concluded with eThekwini. PRASA’s failure to pay what CPC for the electricity it consumed, caused it to be enriched at the expense of CPC when CPC paid what it was obliged to pay to eThekwini. [28] Nothing is known about the basis upon which CPC supplied electricity to PRASA. That conduct is inconsistent with clause 17, to the extent that clause 17 envisaged that PRASA would contract with eThekwini directly. What is known is that it was anticipated that agreements would be concluded between CPC and PRASA to address the situation which has now arisen. For reasons which are unknown, those agreements were not concluded despite the lapse of more than a decade since the factual necessity arose in 2013. Facts which explain the circumstances in which and the reasons for the underlying transfer sine causa, would, in my view, need to be considered in order to determine whether enrichment liability is established. In this case there are none. But even if it was accepted that, notionally, a case has been made out that PRASA’s retention of the benefit of the supply of electricity without payment means that it was enriched sine causa, CPC’s reliance upon a species of enrichment must fail at the level of the failure to prove that it was impoverished. [29] The SOB included an indemnity provided by Crowie Projects to CPC in relation to costs or expenses incurred by CPC in consequence of the operation of the railway station by PRASA. I have referred to clauses 3.4.3 and 3.4.7 of the Co-ordination Agreement which envisaged the conclusion of agreements between CPC and PRASA to regulate the operation of the railway station, including costs and expenses. The SOB records that it was initially intended that these agreements be concluded before the SOB took effect and that they would serve as suspensive 15 conditions. The agreement records, however, that CPC waived the requirement. In recognition that by so doing, CPC had exposed itself to risk if agreement was not reached with PRASA, clause 3.4.6 provided that: ‘[Crowie Projects] has agreed to be liable to [CPC] for certain agreed expenses (such as those in clause 3.4.8), that may have to be incurred in respect of matters upon which [CPC] and [PRASA] are unable to agree on, in the manner contemplated in this Agreement.’ [30] The matters referred to in clause 3.4.8 are ‘all cleaning, operational and security expenses that are incurred and which are directly or indirectly attributable to the Void’.17 It is not necessary to conclude definitively that the expenses incurred by CPC in defraying the costs of electricity consumed by PRASA, would fall within the ambit of the liability undertaken by Crowie Projects. No obvious impediment suggests itself. That, however, is not the point. In the context of seeking to establish a claim based upon enrichment, the onus to establish the elements of liability rested upon CPC. In the light of the contractual indemnity provided by Crowie Projects, CPC was required to establish that such claim was not available to it. In the absence of such averment or proof, it cannot be found that CPC has been impoverished. [31] It follows that even if this Court was inclined to countenance CPC’s claim as one of enrichment (which we do not hold), it could not succeed. In the circumstances the appeal must be upheld. [32] The following order will issue: 1 The appeal is upheld with costs. 17 My emphasis. 16 2 The order of the high court is set aside and replaced with the following order: ‘The application is dismissed with costs.’ __________________ G GOOSEN JUDGE OF APPEAL 17 Appearances For the appellants: D J Saks Instructed by: Woodhead Bigby Attorneys Incorporated, La Lucia Lovius Block Inc, Bloemfontein For the first respondent: M C Erasmus SC, N J Khooe and A Efstratiou-Jooste Instructed by: Mark Efstratiou Incorporated, 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: 28 March 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 PRASA Corporate Real Estate Solutions v Community Property Company Ltd and Another (384/2023) [2024] ZASCA 35 (28 March 2024) The Supreme Court of Appeal (SCA) today upheld an appeal against an order of the KwaZulu-Natal Division of the High Court, Durban per Sibiya J (the high court), which ordered the Passenger Rail Agency of South Africa (PRASA) to pay an amount of R2 607 472.05 to the Community Property Company (Pty) Ltd (CPC) for electricity consumption charges. The appeal was with the leave of the high court. The claim brought by CPC against PRASA arose from PRASA’s consumption of electricity between October 2013 and July 2017 at premises it owned and occupied at the Bridge City precinct to the north of the Durban city centre. CPC based its claim upon an alleged contract concluded with PRASA. It alleged that it had entered into an electricity supply agreement with eThekwini Municipality (eThekwini)for the supply of bulk electricity to the Bridge City shopping centre which CPC owned. It claimed that it had supplied electricity to the PRASA premises via a sub-meter. The contract term upon which CPC relied, placed an obligation upon PRASA to pay for all services supplied by eThekwini. CPC was entitled to claim payment of the amounts that it paid on behalf of PRASA. In the alternative, CPC claimed that PRASA was unjustifiably enriched at its expense by failing to pay for the electricity it consumed. The claim by CPC arose in the following context. During 2007, Crowie Projects (Pty) Ltd (Crowie Projects) entered into a joint venture agreement with eThekwini to develop a tract of land owned by eThekwini. The development envisaged the construction and operation of an underground railway station at the Bridge City precinct; the construction of a shopping centre; the construction of approximately 700 residential apartments on multiple levels above the shopping centre; and the construction of a bus and taxi rank adjacent to the shopping centre. It was envisaged that the underground railway station would be constructed and be operated by the South African Rail Commuter Corporation (to which PRASA is the successor). It would be located beneath the shopping centre. The development was to be undertaken in phases as a sectional title scheme registered in terms of the Sectional Titles Act, 95 of 1996. To facilitate the development, Crowie Projects purchased two portions of the land owned by eThekwini. These were consolidated to enable the registration of the sectional title scheme (The Terminus) and to open a sectional title register. On 14 December 2007, Crowie Projects entered into a Railway Co-ordination and Operation Agreement (the Co-operation Agreement) with PRASA’s predecessor. The agreement regulated the development and operation of the railway station. It provided that Crowie Projects would construct a ‘void’ beneath the shopping centre which was to be built. It provided for a railway concourse on the ground floor of the shopping centre building. Upon completion of the ‘void’ and concourse, PRASA would acquire 2 ownership of that section of the sectional title scheme. PRASA would construct the railway station within the void. On 12 September 2008, Crowie Projects entered into a sale of business agreement (the SOB) in terms of which it sold the Bridge City shopping centre to CPC as a going concern. Although the shopping centre business was not yet constructed, CPC acquired the rights to rental income to be generated by letting portions of the shopping centre. It also acquired ownership of the section comprising the shopping centre. The SOB anticipated that Crowie Projects would cede certain rights it held in terms of the Co-ordination Agreement to CPC. It provided that the agreements of cession would, where necessary, involve Crowie Projects, PRASA and CPC. The dispute between CPC and PRASA arose in 2017 when CPC presented to PRASA and invoice for payment of an amount of approximately R3,2 million for electricity charges due to eThekwini. An attempt to settle the dispute through negotiation foundered. CPC then launched and application claiming payment of the amount it had paid to eThekwini. In doing so it relied upon a clause PRASA disputed the contractual claim on the basis that the Co-ordination Agreement had been concluded between Crowie Projects and PRASA. Since there had been no cession of rights to CPC nor cession of the claim, CPC was not entitled to rely upon the alleged contractual relationship. PRASA also disputed that PRASA was enriched without lawful cause at the expense of CPC. The high court found that CPC had established its contractual claim on the basis that the Co-ordination Agreement had been concluded between CPC and PRASA. It found, however, that the claims relating to consumption charges between October 2013 and June 2014 had become prescribed. Before the SCA PRASA abandoned reliance upon the prescription of portions of the claims. It conceded that, to the extent that the claims were contractual they only arose upon payment of the amounts due to eThekwini. That had occurred in 2018. In relation to the contractual claim the SCA found that the SOB make specific provision for the cession of rights held by Crowie Projects in terms of the Co-ordination Agreement. Other than those rights which were ceded in terms of the SOB, no other cession had occurred. Nor were any of the anticipated tripartite agreements concluded. The clause of the Co-ordination Agreement upon which CPC relied did not feature in any of the out and out cessions in terms of the SOB. In light of the fact that the SOB stipulated a particular form in which the cession of rights would occur, there was no room for reliance upon a tacit cession. The SCA therefore found that CPC had failed to establish a contractual basis for the claim. In relation to its unjustified enrichment claim, the SCA observed that even if it were to be assumed in favour of CPC that the transaction gave rise to enrichment of PRASA, CPC was unable to establish that it was impoverished. The SCA found that the SOB had incorporated a general indemnity provision in terms of which Crowie Projects undertook to compensate CPC for any loss it might suffer arising from PRASA’s operations which PRASA and CPC could not agree upon. In light of the indemnity clause CPC was required to establish that its claim was not one that fell within the ambit of the indemnity clause. In the absence of such proof, CPC had failed to establish an essential element of enrichment liability. The SCA accordingly upheld the appeal, set aside the high court order, and replaced it with an order dismissing the application with costs. --------ends-------

4195

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1192/2022 In the matter between: LEAD HV (PTY) LTD FIRST APPELLANT BARRY LOMBAARD SECOND APPELLANT and HV TEST (PTY) LTD RESPONDENT Neutral citation: Lead HV (Pty) Ltd and Another v HV Test (Pty) Ltd (1192/2022) [2024] ZASCA 36 (2 April 2024) Coram: Ponnan, Mbatha and Goosen JJA and Coppin and Tolmay AJJA Heard: 11 March 2024 Delivered: 2 April 2024 Summary: Appeal against grant of a final interdict – concerns factual findings – no basis for interference and due to effluxion of time – appeal moot. 2 ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Ternent J, sitting as court of first instance): 1 The appeal is dismissed. JUDGMENT Tolmay AJA (Ponnan, Mbatha and Goosen JJA and Coppin AJA concurring): [1] This is an appeal, with the leave of this Court, against the grant of a final interdict by the Gauteng Division of the High Court, Johannesburg (per Ternent J) (the high court). Lead HV (Pty) Ltd (the first appellant) and HV Test (Pty) Ltd (the respondent) are both suppliers of goods and services in the medium, high and extra high voltage electrical engineering field and are in direct competition with each other. Mr Lombaard (the second appellant) is the general manager of the first appellant. During 2020 two of the respondent’s former employees, Ms Sheik (Sheik) and Mr Ledwaba (Ledwaba), who were subject to a restraint of trade agreement with the respondent, obtained employment with the first appellant. [2] An Anton Piller interdict was obtained against Sheik, Ledwaba and the appellants on 10 September 2020 and confidential information that belonged to the respondent was found in possession of Sheik and Ledwaba. The respondent alleged that they provided the appellants with this information in breach of the restraint of trade. The respondent said this information was used to advance the business of the appellants to the detriment of the respondent. 3 [3] This prompted the respondent to launch an urgent application against the appellants, Sheik and Ledwaba, seeking an interdict to prevent them from dealing with its confidential information, approaching its clients and/or disclosing the identities of any party with whom the confidential information may have been shared. The respondent also sought to enforce the restraint of trade against Ledwaba and Sheik. Only the appellants opposed the urgent application. An order was granted by default against Sheik and Ledwaba on 13 November 2020. The application against the appellants was struck from the urgent roll for want of urgency. [4] The matter against the appellants thereafter proceeded in the ordinary course and was ultimately heard on 14 April 2021 in the opposed motion court. On 12 August 2021, a final interdict was granted restraining the appellants from utilizing the confidential information of the respondent.1 1 The order that issued reads: 102.1 The first and fourth respondents are interdicted and/or restrained from: 102.1.1 utilising, communicating or publicising any of the applicant’s confidential information comprising of the applicant’s: (a) customer lists; (b) training lists; and (c) follow quotes lists, (“the confidential information”); 102.1.2 utilising or publicising customer contact details of persons with whom the applicant deals; 102.1.3 approaching directly or indirectly (or assisting any other person in approaching directly or indirectly, any customer or employee of the applicant in order to unlawfully compete with the applicant, for their benefit or the benefit of any other person in respect of any contract with which the applicant has tendered, bid or was negotiating at any time up to and including 13 November 2020; 102.1.4 accessing or utilising the confidential information which has come into their possession in consequence of their employment of the second and third respondents. 102.2 Ordering Lead HV to disclose, with sufficient particularity, the details of any person, close corporation, company or partnership with whom they have attempted or have conducted business utilising the confidential information. 102.3 Ordering the first and fourth respondents to dispose, delete and destroy the applicant’s confidential information, however stored, and to inform the app that they have done so within 10 (ten) days of this order. 102.4 Ordering the first and fourth respondents to pay the costs of this application on the attorney and client scale, jointly and severally, the one paying the other to be absolved.’ 4 [5] It is unclear why leave to appeal was granted to this Court. The facts reveal that Ledwaba and Sheik, who were under a restraint of trade, were in possession of information that they were not at liberty to have or use. They took up employment with the appellants, who were direct competitors of the respondent. It cannot be said that the high court misdirected itself on the facts or the law, and as counsel was constrained to concede no basis exists for interference by this Court on appeal. [6] This should be the end of the matter, but the appellant faces a further insurmountable obstacle, namely whether there still exists a live dispute between the parties on appeal. The relevant incidents occurred during 2020 and the order was granted during August 2021. Whatever harm was done to the respondent and whatever rights the appellants still seek to protect have become academic due to the effluxion of time. The proverbial horse has bolted. Courts exist to determine live disputes and ‘. . . will not adjudicate an appeal if it no longer presents an existing or live controversy’.2 Once again as counsel was forced to accept, there no longer exists any live dispute as between the parties. [7] In the result, appeal is dismissed. ___________________________ R G TOLMAY ACTING JUDGE OF APPEAL 2 Police and Prisons Civil Rights Union v South African Correctional Services Workers' Union and Others [2018] ZACC 24; [2018] 11 BLLR 1035 (CC); 2018 (11) BCLR 1411 (CC); (2018) 39 ILJ 2646 (CC); 2019 (1) SA 73 (CC) para 43. See also Minister of Tourism and Others v Afriforum NPC and Another [2023] ZACC 7; 2023 (6) BCLR 752 (CC) para 23. 5 Appearances For appellants: J Vorster Instructed by: L A Stuart Inc. Attorneys, Pretoria Van der Berg Van Vuuren Attorneys, Bloemfontein For respondent: A W Pullinger Instructed by: Van Zyl Johnson Inc., Johannesburg Kramer Weihmann 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: 2 April 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 Lead HV (Pty) Ltd and Another v HV Test (Pty) Ltd (1192/2022) [2024] ZASCA 36 (2 April 2024) Today the Supreme Court of Appeal (SCA) dismissed an appeal against a final interdict granted by the Gauteng High Court (Johannesburg) against the appellant to refrain from using the respondent’s confidential information. The appellant and the respondent are both suppliers of goods and services in the medium, high and extra high voltage electrical engineering business and are in direct competition with each other. The appellant employed two former employees of the respondent who were subject to a restraint of trade. After an Anton Piller interdict was obtained confidential information belonging to the respondent was found in the possession of the two employees. The respondent alleged that this information was supplied to the appellant by the employees and was used by the appellant to advance its business to the detriment of the respondent. On 12 August 2021 a final interdict was granted restraining the appellant from utilizing the confidential information of the respondent. The appeal was dismissed on the basis that it cannot be said that the high court misdirected itself on the facts or the law and that no live dispute remains between the parties. The incidents occurred during 2020, whatever harm was done and whatever rights the appellants seek to protect have become academic due to the effluxion of time. ~~~~ends~~~~

4291

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 492/2023 In the matter between: GANNET WORKS (PTY) LTD FIRST APPELLANT IARC CC SECOND APPELLANT UNMANNED SA (PTY) LTD THIRD APPELLANT CDS ANGLING SUPPLIERS CC FOURTH APPELLANT CEG PROJECTS (PTY) LTD FIFTH APPELLANT and MIDDLETON SUE NO FIRST RESPONDENT MINISTER OF FORESTRY, FISHERIES AND THE ENVIRONMENT SECOND RESPONDENT Neutral citation: Gannet Works (Pty) Ltd and Others v Middleton Sue NO and Another (Case no 492/2023) [2024] ZASCA 112 (16 July 2024) Coram: MOKGOHLOA, HUGHES, MEYER and WEINER JJA and COPPIN AJA Heard: 22 May 2024 Delivered: The judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal 2 website and release to SAFLII. The date and time for hand-down is deemed to be 16 July 2024 at 11h00. Summary: Environmental law – Marine Living Resources Act 18 of 1998 (the Marine Act) – whether the use of remote-controlled motorised equipment for purposes of recreational angling is authorised by the Marine Act and its regulations. 3 ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Maumela J sitting as court of first instance): The appeal is dismissed with costs. JUDGMENT Mokgohloa JA (Hughes, Meyer and Weiner JJA and Coppin AJA concurring): Introduction [1] The appellants brought an application in the Gauteng Division of the High Court, Pretoria (the high court) seeking an order that: (a) a declarator be issued that the use of drones, bait carrying remote controlled boats and other remotely operated devices, are not prohibited in terms of the Marine Living Resources Act 18 of 1988 (the Marine Act) and the regulations published pursuant thereto; (b) the first respondent publicly withdraws the public notice published on 24 February 2022; and (c) the first respondent declares that the aforesaid public notice is of no legal effect or consequences. The high court dismissed the application. The appeal is with leave of this Court. The facts [2] The appellants are business entities who manufacture, import, market and sell angling equipment, such as bait carrying drones and other remote-controlled bait-carrying devices. The first respondent is the Deputy Director-General for 4 Fisheries Management of the Department of Forestry, Fisheries and the Environment (the DDG). The second respondent is the Minister of Forestry, Fisheries and the Environment (the Minister). [3] On 24 February 2022, the DDG published a notice in which members of the public, recreational anglers and suppliers of fishing equipment were advised that the ‘use of motorised devises, such as, but not limited to, bait-carrying drones, bait-carrying remote-controlled boats and other remotely operated vehicles, as well as motorised electric reels’ are prohibited for angling. [4] The appellants alleged that the publication of the notice by the DDG had a devastatingly adverse and negative effect on their businesses. They experienced a rapid decline in the demand for the drones and other bait-carrying devices. In some instances, orders which had previously been placed for drones were cancelled and other clients demanded that they be reimbursed for past purchases. In the high court [5] The appellants contended that the notice issued by the DDG is unlawful as, neither the Marine Act, nor the regulations prohibit the use of motorised devices such as drones in fishing. They contended that the Minister/DDG seeks to amend the Marine Act without following the correct procedure. They submitted further that the word ‘angling’, only appears in the regulations and not in the Marine Act. [6] In explaining the use of a drone, the appellants contended that the use of a remote-controlled bait-carrying device such as drones does not derogate from the fact that the anglers who use these devises apply the old, recognised method of fishing by manually operating a rod, reel and a line with hooks, swivels and sinkers attached to the line. The drone enables the angler to fly the bait to the area 5 where he requires his bait to be dropped. The bait is attached to a hook which is attached to the fishing line that forms part of the fishing rod and reel. Once the bait is released, the bait carrying device (drone) returns to the shore, and it plays no further role in the fishing activity. Therefore, so the contention went, angling does not exclude the use of drones to drop the bait. [7] The respondents opposed the application and contended that the notice issued by the DDG does not amount to a new law. It is a notification to the public that the use of motorised devices such as drones, are not permitted when undertaking recreational angling. According to the respondents, lawful recreational angling may only be conducted by manually operating a rod, reel and line on one or more separate lines to which no more than ten hooks are attached per line. They argued that the interpretation of the statutory requirement for lawful recreational fishing endorsed for angling alleged by the appellants conflicts with the purposive interpretation of the provisions of the Marine Act and its regulations. [8] The respondents contended that the regulations prescribe the different categories and methods of fishing which may be authorised under the Marine Act. They contended that ‘recreational fishing’ is recognized as a discreet fishing category, subject to the acquisition of a recreational fishing permit, which is then endorsed with the type or method of fishing permitted. Angling falls within this definition. The endorsement of the permit issued for recreational fishing, so the contention went, determines what method of fishing is authorised in terms thereof. The method of recreational fishing and the type of permit required is chosen by indicating either ‘angling’ or ‘spearfishing’ or ‘cast/throw net’ on the application form. 6 [9] According to the respondents, as angling is defined in regulation 1 to mean ‘recreational fishing by manually operating a rod, reel and line or one or more separate lines to which no more than ten hooks are attached per line’, any method that falls outside of the ‘manual operation’ of a rod, reel and line is not and cannot be permitted as recreational fishing endorsed for angling. [10] The respondents requested the high court to appreciate that the subject matter of fisheries management is a policy-laden and polycentric provision that entails a degree of specialist knowledge and expertise that very few judges may be expected to possess. They contended that a court has no discretion to declare that the lawful obligations imposed by the relevant legislation should not be complied with. [11] In dismissing the application, the high court held as follows: ‘In this case, conditions and circumstances involving fishing have come into scrutiny. The legislature has not left room for any ambivalence where it regards what constitute “legally permissible fishing”.’ The high court continued and concluded that: ‘Consideration of judicial deference also comes leaning towards a purposive interpretation of the word “angling” in the “Regulations”. That, coupled with the fact that the definition of “this Act” in section 1 of the Act “includes any regulation or notice made or issued under this Act” has the effect that the court inclines towards dismissing this Application with costs’. In this Court [12] The issue to be determined is whether the appellants have made out a case for the declaration that the use of remote-controlled motorised equipment such as drones, for purposes of recreational angling is authorised by the Marine Act and therefore that the notice issued by the DDG was unlawful and should be set aside. 7 [13] The appellants allege that the high court erred in identifying the nature of the application as similar to review rather than the one requiring interpretation of the Marine Act. They contend that, had the high court engaged upon an interpretive exercise, it would have found that the prohibitions listed in s 44 of the Marine Act1 do not include bait-carrying drones or other bait-carrying devices. [14] The key question to determine is whether the Marine Act and its regulations prohibit the use of bait-carrying drones for purposes of recreational angling. To answer this question, an interpretive exercise is required. [15] The principles applicable to statutory interpretation are trite. Regard must be had to the text, context and purpose of the provision, and the provision must be within the lens of the Constitution.2 Furthermore, the historical context within which the provision was enacted may be relevant to the process of interpretation. I find it apposite to outline the relevant sections in the Marine Act that provide for fishing, the background and the purpose of those sections. [16] Fishing activity in South Africa is regulated by the Marine Act and its regulations. Section 24(b) of the Constitution imposes a legal obligation on the Minister to protect the environment for the benefit of the present and future generations through reasonable legislative and other measures that ‘prevent ecological degradation; promote conservation; and to secure ecologically 1 Prohibited fishing methods 44. (1) No person shall- (a) use, permit to be used, or attempt to use any explosive, fire-arm, poison or other noxious substance for the purpose of killing, stunning, disabling or catching fish, or of in any way rendering fish to be caught more easily; (b) carry or have in his or her possession or control any explosive, fire-arm, poison or other noxious substance for any of the purpose referred to in paragraph (a); or (c) engage in a fishing or related activity by a method or in a manner prohibited by the Minister by notice in the Gazette. (2) No person shall land, sell or possess any fish taken by any means in contravention of this Act. 2 Cool Ideas 1186 CC v Hubbard [2014] ZACC 16; SA 2014 (4) SA 474 CC; 2014 (8) BCLR 869 (CC). 8 sustainable development and use of natural resources while promoting justifiable economic and social development’. [17] Section 2 of the Marine Act outlines the objectives and purpose of the Act as follows: ‘The Minister and any organ of the state shall in exercising any power under this Act, have regard to the following objectives and principles: (a) The need to achieve optimum utilisation and ecologically sustainable development of marine living resources; (b) the need to conserve marine living resources for both present and future generations; (c) the need to apply precautionary approaches in respect of the management and development of marine resources; (e) the need to protect the ecosystem as a whole, including species which are not targeted for exploitation; (f) the need to preserve marine biodiversity; . . . (j) the need to restructure the fishing industry to address historical imbalances and to achieve equity within all branches of the fishing industry.’ To achieve this statutory obligation, the Minister has to put reasonable legislative measures in place, such as the statutory system of fisheries management provided in the Marine Act and its regulations. This would include the manner in which the fishing activities are performed. This is done to ensure that the effects of fishing are such that the fish populations remain stable for the benefit of all South Africans. With this prelude, I now set out the statutory systems for fishing activities and their definitions. [18] The Marine Act defines fishing to mean: ‘(a) searching for, catching, taking or harvesting fish or an attempt to any such activity; (b) engaging in any other activity which can reasonably be expected to result in the locating, catching, taking or harvesting of fish; 9 (c) placing, searching for or recovering any fish aggregating devise or associated gear, including radio beacons; (d) any operation in support or in preparation of any activity described in this definition, or (e) the use of an aircraft in relation to any activity described in this definition. . .’ [19] ‘Aircraft’ is defined as ‘any craft capable of self-sustained movement through the atmosphere and includes a hovercraft’. ‘Recreational fishing’ is defined as ‘any fishing done for leisure or sport and not for sale, barter, earnings or gain’. ‘Angling’, on the other hand, is defined in the regulations as ‘recreational fishing by manually operating a rod, reel and line or one or more separate lines to which no more than ten hooks are attached per line’. [20] The appellants contend that the word angling is foreign as it is not mentioned in the Marine Act. Whilst this is correct, the definition of ‘this Act’ in section 1 of the Marine Act ‘includes any regulation or notice made or issued under this Act’. This therefore means that, although angling is defined in the regulations and not in the Marine Act, its definition is deemed to be included in the Marine Act. [21] The key word in the definition of angling which differentiates the fishing activity of angling from other fishing activities is, in my view, ‘manually’. The Oxford Dictionary defines manually to mean ‘by hand rather than automatically or electronically.’ [22] Section 13 of the Marine Act provides that: (1) ‘No person shall exercise any right granted in terms of s18 or perform any other activity in terms of this Act unless a permit has been issued by the Minister to such person to exercise that right or perform that activity.’ (2) Any permit contemplated in subsection (1) shall – (a) … 10 (b) be issued subject to the conditions determined by the Minister in the permit;’ [23] Once the fisherman chooses a permit for angling as the type of fishing, the method to perform angling, as defined in the regulations, comes into play. The respondents contend that a permit for recreational fishing endorsed for angling authorizes only fishing by manually operating a rod, reel and line. They point out that a method for ‘recreational angling’ is clearly defined in very specific terms as the ‘manual operation’ of a rod, reel or line. This definition implicitly excludes the use of remote-controlled, motorized equipment, such as drones. [24] Counsel for the appellants argues however that once a fishing permit has been issued to an angler, the angler is then at liberty to engage in any form of fishing activity using whatever methods that may be available, provided the method used is not specifically prohibited in terms of the Marine Act or the regulations. He contends that the activity of fishing, by definition, includes the use of aircraft such as drones. [25] In my view, the above argument is ill-conceived. First, the Marine Act and its regulations not only specify the type of fishing activity, but also the method to be used in performing such fishing activity. Second, lawful fishing can only be authorised by means of a s13 permit. As stated earlier, once the angler has been issued with the permit for angling, the angler is not at liberty to use any method other than the one that is provided for in the regulations that is, fishing by manually operating a rod, reel and line or one or more separate lines to which no more than ten hooks are attached per line. To use any other method other than the authorised one would be unlawful. 11 [26] For these reasons, I find that the appellants failed to make out a case for the relief sought. Therefore, the appeal must fail. [27] In the result, the following order is made: The appeal is dismissed with costs. ____________________ F E MOKGOHLOA JUDGE OF APPEAL 12 Appearances For the appellant: R Stockwell SC with W Carstens Instructed by: Otto Krause Inc Attorney, Roodepoort Honey Attorneys, Bloemfontein For the respondent: J Rust SC Instructed by: The State Attorney, Pretoria The State Attorney, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 16 July 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 Gannet Works (Pty) Ltd and Others v Middleton Sue NO and Another (Case no 492/2023) [2024] ZASCA 112 (16 July 2024) Today the Supreme Court of Appeal (SCA) dismissed an appeal with costs. The appeal emanated from the Gauteng Division of the High Court, Pretoria (the high court) wherein the high court dismissed an application launched by the appellants in which they sought an order that: (a) a declarator be issued that the use of drones, bait carrying remote-controlled boats and other remotely operated devices, are not prohibited in terms of the Marine Living Resources Act 18 of 1988 (the Marine Act) and the regulations published pursuant thereto; (b) the first respondent publicly withdraw the public notice published on 24 February 2022; and (c) the first respondent declares that the aforesaid public notice is of no legal effect or consequences. The appellants are business entities who manufacture, import, market and sell angling equipment, such as bait carrying drones and other remote-controlled bait-carrying devices. The first respondent is the Deputy Director-General for Fisheries Management of the Department of Forestry, Fisheries and the Environment (the DDG). The second respondent is the Minister of Forestry, Fisheries and the Environment (the Minister). On 24 February 2022, the DDG published a notice in which members of the public, recreational anglers and suppliers of fishing equipment were advised that the ‘use of motorised devises, such as, but not limited to, bait-carrying drones, bait-carrying remote-controlled boats and other remotely operated vehicles, as well as motorised electric reels’ are prohibited for angling. The appellants alleged that the publication of the notice by the DDG had a devastatingly adverse and negative effect on their businesses. They experienced a rapid decline in the demand for the drones and other bait-carrying devices. In the high court, the appellants contended that the notice issued by the DDG was unlawful as, neither the Marine Act, nor the regulations prohibited the use of motorised devices such as drones in fishing. They contended that the Minister/DDG sought to amend the Marine Act without following the correct procedure and that the word ‘angling’, only appears in the regulations and not in the Marine Act. In explaining the use of a drone, the appellants contended that the use of a remote-controlled, bait-carrying device such as drones does not derogate from the fact that the anglers who use these devises apply the old, recognised method of fishing by manually operating a rod, reel and a line with hooks, swivels 2 and sinkers attached to the line. In essence, the appellants contended that angling does not exclude the use of drones to drop the bait. The respondents opposed the application and contended that the notice issued by the DDG does not amount to a new law, it was a notification to the public that the use of motorised devices such as drones, are not permitted when undertaking recreational angling. According to the respondents, lawful recreational angling could only be conducted by manually operating a rod, reel and line on one or more separate lines to which no more than ten hooks were attached per line. They argued that the interpretation of the statutory requirement for lawful recreational fishing endorsed for angling alleged by the appellants conflicted with the purposive interpretation of the provisions of the Marine Act and its regulations. The respondents contended that the regulations prescribed the different categories and methods of fishing which could be authorised under the Marine Act. They contended that ‘recreational fishing’ was recognized as a discreet fishing category, subject to the acquisition of a recreational fishing permit, which was then endorsed with the type or method of fishing permitted and angling fell within this definition. According to the respondents, as angling was defined in regulation 1 to mean ‘recreational fishing by manually operating a rod, reel and line or one or more separate lines to which no more than ten hooks are attached per line’, any method that fell outside of the ‘manual operation’ of a rod, reel and line was not and could not be permitted as recreational fishing endorsed for angling. They contended that a court had no discretion to declare that the lawful obligations imposed by the relevant legislation should not be complied with. The issue before the SCA was whether the appellants had made out a case for the declaration that the use of remote-controlled motorised equipment such as drones, for purposes of recreational angling was authorised by the Marine Act and therefore, that the notice issued by the DDG was unlawful and should be set aside. In coming to a conclusion, the SCA reasoned that the contention by the appellants, that once a fishing permit has been issued to an angler, the angler was then at liberty to engage in any form of fishing activity using whatever methods that may be available, provided the method used was not specifically prohibited in terms of the Marine Act or the regulations was ill-conceived because: Firstly, the Marine Act and its regulations not only specify the type of fishing activity, but also the method to be used in performing such fishing activity. Secondly, lawful fishing can only be authorised by means of a s 13 permit and that, once the angler has been issued with the permit for angling, the angler was not at liberty to use any method other than the one that is provided for in the regulations – to use any other method other than the authorised one would be unlawful. In the result, the SCA dismissed the appeal with costs. --------oOo--------

4192

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 468/2023 In the matter between: GLOWING ROOMS (PTY) LTD APPELLANT and ARTHUR LEVIN N O FIRST RESPONDENT ALAN MARK LOCKETZ N O SECOND RESPONDENT MICHAEL LARRY NOVOS N O THIRD RESPONDENT SEYMOUR MICHAEL ABRAHAMS N O FOURTH RESPONDENT (Respondents cited in their capacities as trustees for the time being of The Woodlands Trust) Neutral citation: Glowing Rooms (Pty) Ltd v Levin N O & Others (468/2023) [2024] ZASCA 33 (28 March 2024) 2 Coram: NICHOLLS, MBATHA, MABINDLA-BOQWANA, WEINER and KGOELE JJA Heard: 20 February 2024 Delivered: 28 March 2024 Summary: Contract law – whether the eviction order was properly granted – whether the respondents had a right to cancel the lease agreement – whether their conduct amounted to repudiation of the agreement – whether court should have developed the common law in accordance with constitutional norms and values to refuse the eviction. 3 ORDER On appeal from: Western Cape Division of the High Court, Cape Town (Savage J, sitting as court of first instance): 1 The appeal is dismissed with costs, save for the variation of the date of eviction. 2 The order of the high court is substituted with the following: ‘1. The respondent, Glowing Rooms (Pty) Ltd, as well as its employees, agents, assigns and any other person/s that may occupy Unit 16 Gallery, Turf Club Drive, Milnerton, Western Cape (“the premises”) are to vacate the premises on or before 30 June 2024. 2. Should the respondent, as well as its employees, agents, assigns and any other person/s that occupy the premises vis-á-vis the respondent, fail to vacate the premises voluntarily as set out in paragraph 1 above, the sheriff is authorised to evict the respondent, its employees, agents, assigns and any other person/s that may occupy the premises vis-á-vis the respondent on 1 July 2024, or as soon thereafter as possible. 3. The respondent is to pay the costs of this application on the scale as between attorney and client.’ 4 JUDGMENT Nicholls JA (Mbatha, Mabindla-Boqwana, Weiner & Kgoele JJA concurring): [1] This is an appeal against a judgment of the Western Cape Division of the High Court, Cape Town (the high court), which granted an eviction order against the appellant from a commercial property, pursuant to a notice of termination in terms of a lease. The central issue in this appeal is whether the eviction order was properly granted or whether the respondents repudiated the lease agreement, and whether on proper interpretation of the agreement as a whole, the respondents had a right to ‘unilaterally’ cancel the agreement. In addition, whether the court should have developed the common law in accordance with constitutional norms and values, to refuse the eviction. [2] The appellant is Glowing Rooms (Pty) Ltd (Glowing Rooms). On 2 July 2016, Glowing Rooms entered into a lease agreement with the Woodlands Trust (the Trust) (the first agreement) in terms of which it leased a unit in a retail development, the Gallery, located in an industrial area near the Milnerton Race Course in Cape Town (the premises). The premises were utilised as an indoor 3D mini golf course, which operated only on Saturdays and Sundays. The trustees of the Woodlands Trust are the respondents herein. The first agreement of lease was for a period of three years, commencing on 1 September 2016 and terminating on 31 August 2019. A second lease agreement was entered into on 27 February 2020 for another three years, commencing on 1 September 2019 and terminating on 31 August 2022. In July and August 2022, the parties attempted to negotiate a new lease agreement. 5 [3] It was disputed between the parties whether pursuant to these negotiations, a new lease came into existence. Glowing Rooms insisted that the parties had entered into a new lease agreement on the same terms as the previous one. That a new lease agreement had been concluded was disputed by the Trust, which alleged that once the second lease agreement was terminated by the effluxion of time, the negotiations for a new lease agreement during July and August 2022 had been unsuccessful. [4] Because, at least on the Trust’s version, no agreement had been reached, it entered into a lease agreement with a third party, Tambudzai Perky Umera, commencing on 1 September 2022. Ms Umera leased not only the premises in question, but also two other units in the Gallery. As a director of a non-profit educational institution, she intended to set up a school. To this end, the Trust agreed to undertake renovations and to give Ms Umera vacant occupation of the premises on 1 January 2023. [5] Glowing Rooms refused to vacate the premises and denied that it had any legal obligation to do so. It claimed that a lease agreement had been concluded on 26 August 2022, pursuant to the acceptance of an offer made by the Trust. As a result, on 6 October 2022, the Trust instituted an urgent application to evict Glowing Rooms from the premises on the basis that the second lease agreement had been terminated by the effluxion of time and that Glowing Rooms was accordingly in unlawful occupation of the premises. Glowing Rooms pleaded that a further lease agreement had been entered into on the same terms and conditions as the second lease agreement, which had commenced on 1 September 2019. [6] On 28 October 2022, the high court (per Kusevitsky J), dismissed the eviction application (the first eviction application). No reasons were provided for the order, 6 but it is common cause between the parties that the basis for the dismissal of the eviction application was that the high court found that the parties had entered into a new lease agreement pursuant to the negotiations in July and August 2022, despite it not having been reduced to writing. [7] The trustees, apparently having accepted the court’s ruling, as indeed they were obliged to, then proceeded on the basis that there was an extant lease agreement on the same terms and conditions as the second lease agreement, as contended for by Glowing Rooms. Of particular significance is clause 2.1 of the lease agreement, which provides that the duration of the lease will be three years ‘subject to the Lessor’s right to cancel this agreement on one month’s notice’. Clause 2.2 provides that the lessee shall have an option to renew the lease on two months’ written notice. It is common cause that Glowing Rooms did not give two months’ written notice to renew the second lease agreement. [8] On the same day, and immediately after Kusevitsky J’s ruling in the first eviction application, on 28 October 2022, the Trust sent a notice to Glowing Rooms terminating the lease agreement in terms of clause 2.1, on one month’s notice, and requiring Glowing Rooms to vacate by not later than 30 November 2022. The third paragraph of the notice reads as follows: ‘Insofar as Glowing Rooms (Pty) Ltd (“Glowing Rooms”) allege that the parties have entered into a new lease agreement, on the same terms and conditions as the previous lease agreement dated 27 February 2020, save for the change in Glowing Rooms’ rental obligation [the Trust] hereby gives Glowing Rooms notice, in terms of clause 2.1. of the alleged agreement, that it has elected to CANCEL the alleged agreement, and this letter serves as notice thereof.’ (Emphasis added.) 7 [9] Again, Glowing Rooms refused to vacate in terms of the notice, which resulted in the Trust instituting the present proceedings, seeking eviction for the second time. In the second eviction application, which is the subject matter of this appeal, the Trust based its case on its contractual right to evict in terms of clause 2.1 of the lease agreement. [10] The high court, per Savage J, granted the eviction application but determined that the eviction should take place on or before 31 December 2022, instead of 30 November 2022. In the exercise of its discretion to determine a reasonable date for the eviction, the high court took into consideration that Glowing Rooms had been a tenant for many years and would require some time to relocate. The high court refused an application for leave to appeal by Glowing Rooms. Leave to appeal was granted by this Court. [11] Glowing Rooms’ appeal is based on four grounds. In this appeal, as in the high court, Glowing Rooms’ primary defence is that public policy considerations mitigate against the enforcement of clause 2.1. Aligned to this, is the duty to negotiate in good faith. The next aspect of Glowing Rooms’ argument is that the Trust repudiated the lease agreement and was therefore not in a position to assert a contractual right in terms thereof. The third point related to the validity of the notice to terminate. Finally, Glowing Rooms contended that on a proper interpretation of the lease agreement, clause 2.1 should be seen as part of the whole agreement, which incorporated several other clauses providing for termination on notice, in defined circumstances. By relying on it in isolation, the Trust impermissibly abrogated to itself an unfettered discretion to terminate the lease on one month’s notice. 8 [12] The starting point should be whether the Trust repudiated the lease agreement, as this would be dispositive of its claim for eviction. The basis for Glowing Rooms’ argument is that in the first eviction application, the Trust contended that no lease was concluded after the second lease agreement expired, on 31 August 2022, through the effluxion of time. It could not, therefore, rely on a term of an agreement, which it alleged did not exist, to evict Glowing Rooms without expressly disavowing its initial stance. The notice in terms of clause 2.1 also referred to an ‘alleged agreement’ indicating, according to Glowing Rooms, that the Trust had not accepted that there was an extant lease agreement, thereby repudiating the lease agreement. In fact, argued Glowing Rooms, nothing short of a written acceptance of an extant lease agreement would suffice, absent which this Court should find that the Trust had repudiated the lease agreement. [13] What this contention overlooks is that the Trust’s first application for eviction had been dismissed by Kusevitsky J, on the basis that there was an extant lease agreement. That these were the grounds for the high court’s dismissal of the eviction application, was emphasised repeatedly by Glowing Rooms. Once the trustees accepted the decision of the high court, as they were compelled to do, their denial of the existence of the lease in the first eviction application could have no bearing on their subsequent conduct in utilising the terms of the lease to procure an eviction in this application. After the decision of the high court apparently based on an extant lease agreement, the only avenue open to the Trust, in order to evict Glowing Rooms, was to do so in terms of the lease agreement. There is, therefore, nothing to prevent the Trust from relying on a contractual right to cancel the lease agreement. 9 [14] This Court, in Datacolour International (Pty) Ltd v Intamarket,1 held that repudiatory conduct must be objective. The proper test is whether a notional reasonable person would conclude that proper performance (in accordance with a true interpretation of the agreement) will not be forthcoming. The conduct must be clear cut and unequivocal, as repudiation is not lightly presumed. The Court further held that repudiation occurs ‘where one party to a contract, without lawful grounds, indicates to the other party in words or by conduct a deliberate and unequivocal intention no longer to be bound by the contract.’2 Repudiation is not a matter of intention, but rather of perception and the perception being that of the reasonable person. [15] The use of the words ‘insofar as Glowing Rooms allege that the parties have entered in to a new lease agreement . . .’ cannot amount to an unequivocal intention not to be bound by the lease agreement, particularly once a court had for all intents and purposes held that there was an existing lease agreement, to which the Trust was bound. While the Trust might have initially denied the existence of the agreement, the very fact that it brought its second eviction application in terms of the lease agreement after the first eviction application was dismissed, points to conduct which is the exact opposite of a party refusing to perform in terms of a contract. As such, the defence of repudiation is unsustainable. [16] The next question is whether the notice of termination was valid. Glowing Rooms’ contention, in this regard, is that the notice, by the use of the words ‘insofar as’ and the reference to an ‘alleged’ agreement being concluded, implied that it did 1 Datacolour International (Pty) Ltd v Intamarket 2001 (2) SA 284 (SCA); [2001] 1 All SA 581 (A) paras 16, 17 and 18. 2 Ibid para 16, quoting Corbett JA in Nash v Golden Dumps 1985 (3) SA 1 (A) at 22 D-F. 10 not consider itself to be bound by the agreement. It was submitted that where there is no clear and unequivocal intention to be bound by the agreement, a notice of termination is invalid. For this contention, reliance was placed on Kragga Kamma Estates CC and Another v Flanagan (Kragga Kamma)3 and Sweet v Ragerguhara NO and Others (Sweet),4 both dealing with the sale of immovable property. In Kragga Kamma, the plaintiff claimed that non-payment of a portion of the purchase price constituted a repudiation of the sale agreement, which repudiation the seller accepted. This Court held that the notice of demand was a conditional demand and was incapable of placing the defendant in mora as it was subject to some uncertain future event. But even if it were, the plaintiff had, for other reasons, not validly cancelled the sale. The notice was framed in the alternative. It was not clear and unambiguous. In the present matter, the written notice is clear and unambiguous, it is not conditional or contradictory. [17] Similarly, the facts in Sweet are distinguishable. There, the applicant sought an order that an agreement of sale had been lawfully cancelled on the basis that the respondent had not given vacant possession of the property in question. A notice was sent to remedy the defective performance by giving vacant possession. The court found that the defaulting party was entitled to know how to respond to the notice, but in that instance, it was equivocal and inconsistent. Here, there is no demand that Glowing Rooms remedy its breach, as clause 2.1 is not dependent upon a breach of the agreement. 3 Kragga Kamma Estates CC and Another v Flanagan 1995 (2) SA 367 (A); [1995] 1 All SA 486 (A) at 374 H-J – 375 A-E. 4Sweet v Ragerguhara NO and Others 1978 (1) SA 131 (D) at 139 E-G. 11 [18] There can be no suggestion that the notice sent to Glowing Rooms is in any manner contradictory or confusing. The notice clearly and unambiguously states that the Trust is exercising a contractual right in terms of clause 2.1 to terminate the lease agreement on one month’s notice. The reference to an ‘alleged’ agreement does not detract from that. [19] I now deal with Glowing Rooms’ argument relating to the interpretation of the lease agreement. It proceeds along the following lines. By relying on clause 2.1, the Trust impermissibly utilised its unfettered discretion to terminate the lease, when clause 2.1 should have been interpreted in light of the contract as a whole. This was in circumstances where there are other clauses in the lease agreement which provide for longer notice periods in different scenarios. For example, in terms of clause 18.1, the Trust can terminate on three months’ written notice in the case of the building being sold; clause 18.2 provides for three months’ written notice in the case of substantial renovations, reconstruction or redevelopment of the building; clauses 18.3 and 18.4 provide 60 days’ written notice, where the lessee is to be moved to alternative premises in consequence of renovations being carried out; and clause 18.7 provides for three months’ written notice, if the parties fail to reach agreement within 30 days on an alternative lease providing for relocation of the business of the lessee. Clause 22 affords the Trust the right to terminate in the case of destruction of property or damage which renders it unlettable, upon 60 days’ notice. [20] In its answering affidavit, Glowing Rooms stated that the lease agreement grants the Trust an array of unilateral contractual powers as set out in clauses 18 and 22, without any qualification that they be exercised in accordance with the judgment of a reasonable person. As such, all these clauses were contrary to public policy and invalid, not only clause 2.1. Further, Glowing Rooms contended that this is 12 disproportionate and does not take into account the rights and interests of both parties. [21] Significantly, it was not Glowing Rooms’ case in the high court that it ought to have been given a longer notice period, in line with the other clauses. Nor did it contend on appeal before this Court, that these other clauses were themselves, contrary to public policy. In this Court, counsel for Glowing Rooms specifically stated that clause 2.1 per se is not unlawful and contrary to public policy. Rather, it was the interpretation and implementation thereof that was the fundamental problem, thus linking the interpretation of the contract to whether it was contrary to public policy. Glowing Rooms argued that a contract which provides for a unilateral right to terminate by written notice and ‘to implement a contracting party’s act of repudiation’, amounts to ‘abuse of a contractual right’. It was further argued that the Trust’s abuse of the contractual right to further an act of repudiation or breach, is contrary to public policy. [22] This argument is difficult to understand. Our courts have repeatedly confirmed that public policy demands that contracts freely and consciously entered into must be honoured.5 The principle of pacta sunt servanda (agreements must be kept) gives effect to ‘central constitutional values of freedom and dignity’. The qualification is that, in our constitutional dispensation, it is not the only principle to be applied. Furthermore, where constitutional rights and values are implicated, there 5 Barkhuizen v Napier [2007] ZACC 5; 2007 (5) SA 323 (CC); 2007 (7) BCLR 691 (CC); Beadica 231 CC and Others v Trustees for the time being of the Oregon Trust and Others [2020] ZACC 13; 2020 (5) SA 247 (CC); 2020 (9) BCLR 1098 (CC); Botha v Rich N.O. [2014] ZACC 11; 2014 (4) SA 124 (CC); 2014 (7) BCLR 741 (CC); AB v Pridwin Preparatory School [2018] ZASCA 150; 2019 (1) SA 327 (SCA). 13 must be a careful balancing act.6 While there is recognition of the role of equity (encompassing the notions of good faith, fairness and reasonableness), as a factor in assessing the terms and enforcement of a contract, it has been emphasised that a court cannot refuse to enforce contractual provisions on the basis that to do so would be unfair, unreasonable or unduly harsh.7 [23] In our present contractual regime, the starting point is that a contracting party is entitled to specific performance of any contractual right. Notions of good faith and fairness have not been elevated to substantive rules of contract. While these values play an important role in our law of contract, they do not provide a free-standing basis on which a court may interfere in contractual relationships. It is only where a term is so unfair, unreasonable or unjust that it is contrary to public policy that a court may refuse to enforce it.8 This Court has held that to coerce a lessor to conclude a lease agreement with a party it no longer wants as a tenant would be contrary to public policy.9 [24] Applying the above principles to the facts of this case, Glowing Rooms voluntarily entered into a commercial lease in 2016. It was renewed in 2019 and, as was successfully argued by Glowing Rooms in the first eviction application, it was renewed yet again. Clause 2.1 featured in all the agreements. At no point did Glowing Rooms object to the inclusion of the clause, on the grounds that it was too onerous or in any manner unfair. It accepted all the clauses of the lease agreement 6 Beadica 231 CC and Others v Trustees for the time being of the Oregon Trust and Others [2020] ZACC 13; 2020 (5) SA 247 (CC); 2020 (9) BCLR 1098 (CC) (Beadica) para 83, quoting Barkhuhizen v Napier [2007] ZACC 5; 2007 (5) SA 323 (CC); 2007 (7) BCLR 691 (CC) para 57. 7 Beadica para 80. 8 Ibid para 79 and 80. 9 Rozaar CC v Falls Supermarket CC [2017] ZASCA 166; [2018] 1 All SA 438 (SCA); 2018 (3) SA 76 (SCA) para 24. 14 without demur. It was not disputed that the case it advanced in the first eviction application was that the lease agreement should be accepted in all its terms. It is not open to Glowing Rooms now to assert that the exercise of the terms of the lease agreement is contrary to public policy and therefore of no force and effect. Despite Glowing Rooms’ averment that the eviction constitutes an unlawful infringement of their constitutional right to ‘practice [their] trade and occupation as business persons’, this is a purely commercial lease. There is no element of contractual oppression or disproportionate bargaining power. There are no grounds for finding that clause 2.1 is contrary to public policy. [25] On the aspect of good faith, Glowing Rooms contends that where a lease agreement provides that the lessor has the unilateral right to terminate the lease, this should give rise to a duty to negotiate in good faith. Such a duty, as a bare minimum, should preclude a party from purporting to unilaterally cancel without first presenting a formal written lease agreement for acceptance. Glowing Rooms calls on this Court to develop the common law in this regard. [26] This, too, is premised on a misconception of the Court’s right to develop the common law. In Everfresh Market Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd (Everfresh),10 the applicant sought to develop the law of contract in light of s 39(2) of the Constitution, so that the common law would require parties who undertake to negotiate a new rental for a renewed term of the lease to do so in good faith. The majority refused the invitation. It held that only where the common law is deficient are the courts under a general obligation to develop it. The first inquiry is whether the common law viewed in the light of s 39(2) requires development, and if so, the 10 Everfresh Market Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd [2011] ZACC 30; 2012 (1) SA 256 (CC); 2012 (3) BCLR 219 (CC). 15 second inquiry is how.11 Litigants who seek to invoke provisions of s 39(2) must plead their case in the court of first instance. The applicant in Everfresh did not plead dire consequences, commercial or otherwise, that might ensue if the lease were not renewed. Nor did it suggest that it had lacked proper legal representation or that it was poorly advised or indeed suffered from any form of vulnerability springing from unequal bargaining power. The Constitutional Court, while acknowledging that where there is a contractual obligation to negotiate, it would be unimaginable that constitutional values would not require that the negotiations be in good faith, drew a distinction where the dispute was of a purely commercial nature. This is to be distinguished from Carmichele v Minister of Safety and Security (Carmichele),12 where fundamental rights were at stake. [27] So, too, this matter, is purely a commercial dispute about commercial premises. No fundamental rights are implicated. Glowing Rooms makes no case that if it loses these premises, it will be unable to find any other, or that these premises are of any special value or importance. Quite the contrary, during negotiations in July 2022, Glowing Rooms’ director wrote to the Trust saying: ‘[w]e are [al]ready in negotiations with various agents/landlords and there is a lot of free space available for a much lower rate at very good locations.’13 Furthermore, because Glowing Rooms was obliged to ‘redo/freshen-up’ the mini golf course, ‘a move to another premises would solve that problem as well.’ This suggests a willingness to relocate. Nothing on the facts of this matter indicates that there is a need to develop the common law. There is no contractual duty to negotiate and any reliance on a general duty to negotiate in good faith is misplaced. 11 Ibid para 30 quoting Carmichele v Minister of Safety and Security [2001] ZACC 22; 2001 (4) SA 938 (CC); 2001 (10) BCLR 995 (CC) (Carmichele) paras 39-40. 12 Carmichele. 13 See respondent’s heads of argument para 11. 16 [28] For the above reasons, the appeal must fail. All that remains is whether this Court should use its discretion to extend the date of eviction to enable Glowing Rooms to relocate to new premises. Counsel for the trustees, without conceding, accepted that it would not be unreasonable to grant Glowing Rooms a three months’ notice of eviction. Insofar as costs are concerned, the scale of costs in the high court was on the attorney and client scale as governed by the lease agreement. There is no reason to grant attorney and client costs in this appeal. [29] In the result, the following order is made: 1 The appeal is dismissed with costs, save for the variation of the date of eviction. 2 The order of the high court is substituted with the following: ‘1. The respondent, Glowing Rooms (Pty) Ltd, as well as its employees, agents, assigns and any other person/s that may occupy Unit 16 Gallery, Turf Club Drive, Milnerton, Western Cape (“the premises”) are to vacate the premises on or before 30 June 2024. 2. Should the respondent, as well as its employees, agents, assigns and any other person/s that occupy the premises vis-á-vis the respondent, fail to vacate the premises voluntarily as set out in paragraph 1 above, the sheriff is authorised to evict the respondent, its employees, agents, assigns and any other person/s that may occupy the premises vis-á-vis the respondent, on 1 July 2024, or as soon thereafter as possible. 3. The respondent is to pay the costs of this application on the scale as between attorney and client.’ 17 __________________________ C E HEATON NICHOLLS JUDGE OF APPEAL 18 Appearances For the appellant: H J O (Wallis) Roux Instructed by: Brits & Matthee Attorneys, Somerset West Brits & Matthee Inc, Bloemfontein For the respondent: F S G Sievers SC Instructed by: Smith Tabata Buchanan Boyes, Cape Town Webber Attorneys Inc, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 28 March 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 Glowing Rooms (Pty) Ltd v Levin N O & Others (468/2023) [2024] ZASCA 33 (28 March 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal against the order of the Western Cape Division of the High Court, Cape Town (the high court). The appellant leased a unit, from The Woodlands Trust (the Trust), for its 3D mini golf course. The first lease agreement was for a period of three years from 01 September 2016 to 31 August 2019. Following this, a second lease agreement was entered into on 27 February 2020, for another three years commencing on 1 September 2019 to 31 August 2022. In July and August 2022, the parties were in negotiations for a new lease agreement. The Trust disputed that these negotiations resulted in the conclusion of a new lease and alleged that the second lease agreement was terminated by the effluxion of time. The Appellant, on the other hand, claimed that a lease agreement had been concluded on the same terms and conditions as the second lease agreement and refused to vacate the premises. As a result, the Trust instituted an urgent eviction application. The high court dismissed the eviction application, having found that the parties had entered into a new lease agreement pursuant to the negotiations in July and August 2022, despite it not having been reduced to writing. Immediately after the high court’s ruling, the Trust sent a notice to the appellant, terminating the lease agreement on one month’s notice in accordance with clause 2.1 of the lease agreement. Once again the appellant refused to vacate the premises, and the Trust instituted another eviction application. This time, the high court granted the eviction application and refused an application for leave to appeal by the appellant, which leave to appeal was granted by the SCA. The core issues for determination by the SCA were whether the Trust repudiated the lease agreement; whether the notice of termination was valid; whether clause 2.1 of the lease agreement was contrary to public policy; and whether the SCA should have developed the common law in accordance with constitutional norms and values to refuse the eviction. The SCA found that the argument that the Trust repudiated the lease agreement ignored the fact that the Trust’s initial attempt to evict was dismissed by the high court, confirming the existence of the extant lease agreement. With this ruling, the Trust was limited to eviction through the terms of the lease agreement, allowing them to exercise their contractual right to terminate the lease. In respect of the validity of the notice of termination, the SCA found that the notice was valid as it was not contradictory or confusing. The notice clearly and unambiguously stated that the Trust was exercising a contractual right in terms of clause 2.1 to terminate the lease agreement on one month’s notice. 2 In the SCA, unlike the high court, the appellant did not argue that clause 2.1 was contrary to public policy per se but merely the implementation thereof was contrary to public policy. The SCA held that public policy demands that contracts freely and consciously entered into must be honoured and there was nothing in the implementation of clause 2.1 that was contrary to public policy. The appellant argued that when a lease agreement grants the lessor a unilateral right to terminate the lease, it implies a duty to negotiate in good faith. At the very least, this duty should prevent a party from unilaterally cancelling without first providing a formal written lease for acceptance. The appellant called on the SCA to develop the common law in this regard. The SCA held that this was premised on a misconception of the SCA’s right to develop the common law. Only where the common law is deficient are the courts under a general obligation to develop it. The SCA found that this matter was purely a commercial dispute about commercial premises. There were no fundamental rights implicated. The SCA held that nothing on the facts of this matter indicated that there was a need to develop the common law. There was no contractual duty to negotiate and any reliance on a general duty to negotiate in good faith was misplaced. As a result, the SCA dismissed the appeal with costs. However, it varied the date of eviction granting the appellant a period of three months to find other premises. ~~~~ends~~~~

4253

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 64/2023 In the matter between: GEORGE HLAUDI MOTSOENENG APPELLANT and SOUTH AFRICAN BROADCASTING CORPORATION SOC LTD FIRST RESPONDENT SPECIAL INVESTIGATING UNIT SECOND RESPONDENT SOUTH AFRICAN BROADCASTING CORPORATION PENSION FUND THIRD RESPONDENT Neutral citation: George Hlaudi Motsoeneng v South African Broadcasting Corporation Soc Ltd and Others (Case no 64/2023) [2024] ZASCA 80 (27 May 2024) Coram: PONNAN, HUGHES and MEYER JJA and TLALETSI and MBHELE AJJA Heard: 15 May 2024 Delivered: 27 May 2024 Summary: Application in terms of s 17(2)(f) of the Superior Courts Act 10 of 2013 – absence of exceptional circumstances – application dismissed. 2 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Khan AJ, sitting as court of first instance): (a) The application for condonation is dismissed with costs. (b) The applicant for condonation is ordered to pay the costs incurred by the respondents in opposing the lapsed appeal. (c) In both instances (a) and (b) the costs shall include the costs of two counsel. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Ponnan JA (Hughes and Meyer JJA and Tlaletsi and Mbhele AJJA concurring): [1] The appellant, George Hlaudi Motsoeneng, is the former Chief Operating Officer of the first respondent, the national broadcaster, the South African Broadcasting Corporation (Soc) Ltd (SABC). By virtue of his employment with the SABC, Mr Motsoeneng became a member of the third respondent, the South African Broadcasting Corporation Pension Fund (the Fund). After the judgment of this Court in the matter of South African Broadcasting Corporation Soc Ltd and Others v Democratic Alliance and Others1 (which I commend to the reader), the then SABC board came to be reconstituted, whereupon a disciplinary enquiry against Mr Motsoeneng was convened. Following the disciplinary enquiry, Mr Motsoeneng’s employment was terminated on 12 June 2017, whereafter he became entitled to the payment of a withdrawal benefit from the Fund in accordance with its rules. [2] On 24 July 2017, and shortly after the termination of Mr Motsoeneng’s employment, the audit department of the SABC discovered that Mr Motsoeneng had been paid a success fee to which he allegedly was not entitled. The payment came to be made in the following circumstances: On 19 August 2016, Mr James Aguma, the 1 South African Broadcasting Corporation Soc Ltd and Others v Democratic Alliance and Others [2015] ZASCA 156; [2015] 4 All SA 719 (SCA); 2016 (2) SA 522 (SCA). 3 former Group Chief Executive Officer, made oral representations to the Governance and Nominations Committee (the GNC) of the SABC requesting their approval for the payment of a success fee to Mr Motsoeneng, ostensibly on the basis that he had raised an amount of R1,19 billion for the benefit of the SABC. The GNC approved payment and the sum of R11 508 549.12 came to be paid in two instalments on 12 and 13 September 2016. [3] Asserting that the GNC had no authority or mandate to pay Mr Motsoeneng a success fee, the SABC addressed a letter to the Chief Executive and Principal Officer of the Fund on 20 July 2017 requesting that: (a) it withhold payment of the accumulated pension benefit due to Mr Motsoeneng, until such time as a judgment issued in the civil proceedings that it contemplated instituting against him; and, (b) in the event of a judgment issuing against Mr Motsoeneng, the Fund make a deduction from any benefit due to him in satisfaction of the judgment. The Fund refused to accede to the request, instead after first seeking and obtaining further particularity from the SABC, the Principal Officer of the Fund wrote on 28 July 2017: ‘[i]n order to withhold the pension benefit from Mr Motsoeneng, the Fund is obliged to request that the relevant application to interdict the Fund from paying out the benefit be served on the Fund on or before 4 August 2017’. [4] This prompted the SABC to issue an urgent application out of the Gauteng Division of the High Court, Johannesburg on 4 August 2017. Relief was sought in two parts. Under Part A, the SABC sought an order restraining the Fund from paying out any benefit due to Mr Motsoeneng to the tune of R11 508 549.12, pending the determination of Part B. The SABC also sought a ‘[c]onditional declarator of unconstitutionality in respect of section 37D of the Pension Fund Act 108 of 1996’. Why the additional relief was sought was far from clear. It, however, necessitated the joinder of the Minister of Finance and the Registrar of Pension Funds, both of whom filed affidavits in opposition. In the event, the SABC subsequently chose to abandon the constitutional challenge and tendered the costs occasioned thereby in its replying affidavit. [5] In support of the relief sought, it was stated on behalf of the SABC: ‘10 This application is predicated on the following grounds: 4 10.1 the second respondent, as a former employee of the applicant was a member of the first respondent and had made contributions during the tenure of his employment; 10.2 in accordance with section 37D of the Pension Fund Act 24 of 1956 (“the Pension Fund Act”) a registered pension fund may deduct from any benefit payable to a member (the second respondent) to the employer (the applicant) for damage caused to the employer by reason of theft, dishonesty, fraud or misconduct; 10.3 in accordance with Rule 15.2 of the SABC Pension Fund Rules (“Pension Rules”), the trustees have the requisite power to withhold payment of the benefit, where the employer has instituted legal proceedings in a court of law and/or laid a criminal charge against the member, until the matter has been finally determined by a competent Court of Law or has been settled or formally withdrawn; 10.4 the applicant, through the Interim Board sanctioned an audit investigation which has revealed that the second respondent received an unlawful/unauthorized payment in the sum of R11 508 549.12 (eleven million five hundred and eight thousand five hundred and forty nine rand and twelve cents) from the applicant which was termed a ‘success fee’ by the applicant’s Board’s Governance and Nominations Committee (“G & N Committee”); 10.4.1 in this regard I annex hereto, a copy of the Final Report on the “Success Fee” . . . ; 10.5 the investigation further revealed a clear misconduct in the procedure and approval of the award made to the second respondent by the said committee; 10.6 resultantly, the applicant will seek an order directing the first respondent to withhold the payment of that the sum of R11 508 549.12 (eleven million five hundred and eight thousand five hundred and forty nine rand and twelve cents) until the review court has pronounced on the intended review application as set out in Part B of this application. 11 The applicant also approaches this court on an urgent basis acting on the strength of the first respondent’s letter urging the applicant to serve this urgent application on or before Friday, 4 August 2017. I deal with this aspect below. 12 The applicant reasonably anticipates that should the money be paid to the second respondent or alternatively to another fund, it will not be able to reclaim payment of the money unlawfully paid to him (second respondent) emanating from a decision of the G & N Committee to award or approve the 2.4% of R1,19 billion.’ [6] Somewhat surprisingly, the Fund filed several affidavits in opposition to the application. It also raised, in addition to the opposition on the merits, a range of preliminary procedural complaints. This, in circumstances where it was open to it to simply abide the decision of the court. Mr Motsoeneng chose not to file an affidavit in opposition to the relief sought under Part A. Instead, he contented himself with a notice 5 under rule 6(5)(d)(iii) that he would be raising various questions of law at the hearing of the matter. Part A came before Maier-Frawley AJ on 6 December 2018. On 18 January 2018, she issued an interim interdict restraining the Fund from paying out the pension fund benefit standing to the credit of Mr Motsoeneng, pending the finalisation of the matter. [7] In reaching that conclusion, Maier-Frawley AJ held: ‘22. . . . The factual allegations which underpin the SABC’s claims remain largely if not wholly undisputed on the papers. Motsoeneng elected not to engage with the substantive allegations made by the SABC in its papers. Nor did he put up any version to the contrary. . . . 47. The factual allegations in the founding papers prima facie demonstrate that Motsoeneng had accepted and retained payment of an unlawful, unauthorised and unwarranted success fee in the amount of R11 508 549.12, this, in circumstances where: (i) an investigation conducted by the SABC’s audit department revealed that the requisite Board approval had not been sought or obtained in relation to such payment, (which fact would support an inference that it had deliberately not been disclosed by any members of the SABC’s Governance and Nominations Committee (‘GNC’) to the Board); (ii) payment of the amount of R11 508 549.12 had been made in full by way of lump sum payments on 12 and 13 September 2016 in circumstances where, to the knowledge of the GNC, the SABC’s financial circumstances did not allow for a lump sum payment thereof and where the GNC had in fact resolved that payment would be made by way of instalments over a period of three years; (iii) transcripts of the GNC deliberations that preceded the taking of the decision to award Motsoeneng a success fee, evidenced that GNC members were aware that the payment to Motsoeneng was irregular; (iv) the terms of reference of the GNC included, amongst others, to ‘[p]revent any Human Capital practices that will result in unauthorised, irregular, fruitless and wasteful expenditure. . .’; (v) a paper audit trail in relation to the payment had been deliberately concealed, in conflict with established norms and values that demand open transparency in the exercise of public power; (vi) neither Motsoeneng’s service agreement nor the SABC’s governing policy documents made provision for payment to him of a success fee; (vii) the duties of Executive Directors (of which Motsoeneng was one) included, amongst others, the giving of advice on governance related matters; and (viii) the SABC had expressly relied on the provisions of section 57 of the Public Finance Management Act 1 of 1999 (‘PFMA’), the Public Protector’s report, and the final audit report (relating to the outcome of the audit investigation conducted by the SABC’s internal audit department) in support of its case. 6 . . . 88. The allegations made in the SABC’s affidavits appear to prima facie point to the fact that Motsoeneng unlawfully received payment of a success fee in the amount of R11 508 549.12 in circumstances where (a) he allegedly knew or ought to have known (in his role as Chief Operating Officer and in any event, as executive member of the GNC) of the irregularity by which the payment of such amount to him was tainted and to which he was therefore not legally entitled, but which he nonetheless accepted and retained, exacerbated by his failure to disclose same (until uncovered by an audit investigation) and (b) in contravention of his undisputed duties in terms of s 57 of the PFMA to ensure that the system of financial management and internal controls established for the SABC are carried out and to take effective and appropriate steps to prevent any irregular or fruitless and wasteful expenditure within his area of responsibility. His dishonesty is said to lie in knowingly and intentionally accepting a payment that was on the face of it irregular and invalid, without disclosing same (which served to unjustly enrich him) and then appropriating it to himself, thereby acting in his own self-interest and in breach of his fiduciary duty of good faith owed to the SABC under s 76(2)(a) of the Companies Act. 89. The evidence put up by the SABC is sufficient to prima facie point to Motsoeneng’s intentional misappropriation of public funds – the SABC’s allegations support the inference that Motsoeneng knowingly acted in his own self-interest in appropriating to himself, for his own use, public funds entrusted to his care as public functionary, to which he was not legally entitled, which caused the SABC to suffer loss. Bearing in mind that the SABC is a major public entity in terms of Schedule 2 of the PFMA and that it is funded through the public purse, it is enjoined to recover the losses it suffered from Motsoeneng as a result of his unlawful conduct. It is also constitutionally enjoined to do so. And it is in the interests of the public and for the SABC to do so.’ [8] On 29 June 2020, and after the grant of the interim interdict, the second respondent, the Special Investigating Unit (the SIU), sought and obtained leave to intervene in the application.2 The involvement of the SIU arose as a result of investigations conducted by it into the affairs of the SABC. This, following a referral on 1 September 2017 by the President of the Republic of South Africa of allegations of impropriety in connection with the affairs of the SABC to the SIU for investigation in 2 The Special Investigating Unit is an Organ of State established by Proclamation No. R.118 of 2001 (Government Gazette No 22531 dated 31 July 2001) issued pursuant to the provisions of s 2(1)(a) of the Special Investigating Unit and Special Tribunals Act 74 of 1996. 7 accordance with the terms of reference set out in Proclamation No. R29 of 2017.3 According to the SIU, after having conducted the authorised investigations, it was satisfied that it had sufficient grounds to institute proceedings against Mr Motsoeneng, as it was empowered to do by virtue of ss 4(1)(c) and 5(5) of the Special Investigating Unit and Special Tribunals Act 74 of 1996. It thus joined in the application and made common cause with the SABC’s self-review. [9] Ms Mariette Amanda Dreyer, a Chief Forensic Investigator at the SIU, who deposed to the supporting affidavit on its behalf, had this to say: ‘18 At the outset, I refer to the affidavit deposed to by Mr Vusumuzi Goodman Moses Mavuso (“Mavuso”) . . . Mavuso was a Non-Executive Director at the SABC from 25 September 2013 to 13 October 2016. During his tenure at the Board of the SABC, he also served as a member of various Board Committees including Human Resource and Remunerations Committee specifically during 2016. 19 Mavuso confirms in his affidavit and with specific reference to section 14.3 of the Board Charter dated 26 April 2010 . . . and Table 15 of the Delegation of Authority Framework of 26 April 2016 . . . that there was no approved commission and/or success fee policy applicable to Executive Directors such as Motsoeneng during his (Mavuso) tenure at the SABC. He confirms that any new policy would have had to be approved by the Board but that in this case, no such policy was ever approved by the Board during his tenure. 20 What is fatal to any opposition to this application is what Mavuso states in paragraphs 21.1 to 21.7 of his affidavit. He states that in the Board meeting of 19 August 2016, a proposal was made by Professor Tshidzumba to reward SABC employees for doing their job such as negotiating contracts. Mavuso objected to this, contending that the SABC performance management systems were sufficient to reward staff. This objection was upheld by the Board, meaning the proposal by Tshidzumba was not approved. He attaches the attendance register, the Board minutes and the Board meeting transcript of 19 August 2016 as annexures . . . There are three factors to be distilled from his affidavit and these annexures. First, these annexures show that the members of the GNC who had earlier on the same day took a resolution approving the Commission Policy of the SABC to include success fee to Executive Directors and specifically to pay Motsoeneng success fee were present in that meeting but did not disclose their resolution or their intention to pay Motsoeneng success fee to the Board. They had a fiduciary duty to disclose to the Board. Second, even after rejection of 3 Proclamation No. R.29 of 2017 published in Government Gazette No 41086, 1 September 2017. 8 Tshidzumba’s proposal in this meeting, the GNC members failed to halt the payment of the success fee to Motsoeneng. 21 Third, Motsoeneng himself was part of this Board meeting. He was aware that the GNC had earlier discussed payment of the success fee to him but did not disclose this to the Board when he had a fiduciary duty as an Executive Director to do so. Not only did he not disclose but went on to receive payment of the success fee when he ought to have rejected this payment. His conduct and/or omissions in this regard was clearly fraudulent or at the very least dishonest. 22 Motsoeneng’s contract of employment is attached to Mavuso’s affidavit . . . I ask that its contents be incorporated herein. It regulated Motsoeneng’s terms of employment. Clause 9 records the duties of the Executive. Clause 12.2 makes provision for performance bonuses. Clause 12.2.1 provides that annual performance bonuses are not guaranteed and may be granted at the sole and absolute discretion of the Board which will take into account, without limitation, the performance of the SABC and that of the COO measured against the key performance indicators and/or areas set out in the performance agreement. Mavuso confirms that no Performance Agreement was concluded between the SABC and Motsoeneng. Other than this bonus, the contract does not make any other provision for other rewards such as a success fee.’ [10] Part B of the relief sought came before Khan AJ on 26 May 2021. On 15 December 2021, the learned judge issued the following order: ‘1. The decision by the SABC on 19 August 2016, through its Governance and Nominations Committee, to award Motsoeneng a success fee and paying him R11 508 549.12, is declared invalid and set aside. 2. Motsoeneng is ordered to repay to the SABC, the amount of R11 508 549.12 paid to him as a success fee with interest [a tempore morae] per annum calculated from 13 September 2016 to date of payment, within 7 (seven) days from the date of service of this order. 3. The Pension Fund is to pay to the SABC an amount of R11 508 549.12 from the pension proceeds that have accumulated to the benefit of Mr H R Motsoeneng, in favour of the SABC, alternatively to pay the full pension proceeds of Mr H R Motsoeneng, in the event that they do not equal R11 508 549.12, in the event that the Second Respondent fails to pay within 7 (seven) days from date of service of this order. 4. Ordering the Second Respondent to pay the costs of this application, which costs will include the reserved costs in respect of Part A and the costs of 2 Counsel where employed. 9 5. Ordering the First and Second Applicants to pay the Respondents costs in respect of the costs of the abandonment of the wasteful and irregular expenditure claim.’ [11] On 15 July 2022, Khan AJ dismissed Mr Motsoeneng’s application for leave to appeal. He thereafter petitioned this Court for leave to appeal on 15 August 2022. The two judges who considered the petition dismissed it on 19 January 2023. Like Khan AJ, they also took the view that the envisaged appeal lacked reasonable prospects of success and that there was no other compelling reason why the appeal should be heard, as contemplated by s 17(1) of the Superior Courts Act 10 of 2013 (the Act). Mr Motsoeneng then applied in terms of s 17(2)(f) of the Act to the President of this Court for the reconsideration of the refusal of his petition. Petse AP referred the decision dismissing Mr Motsoeneng’s application for leave to appeal to the Court for reconsideration and directed the parties to be prepared, if called upon to do so, to address the court on the merits of the appeal. [12] After the record had been filed in the matter, the appeal lapsed for failure on the part of Mr Motsoeneng to prosecute it by timeously filing his heads of argument. Thus, the initial question that is before us is whether the default by him should be condoned and the appeal revived. Factors which usually weigh with this Court in considering an application for condonation include the degree of non-compliance, the explanation therefor, the importance of the case, a respondent’s interest in the finality of the judgment of the court below, the convenience of this Court and the avoidance of unnecessary delay in the administration of justice.4 Here, the delay is not excessive – the heads were late by some eight days as a result of a miscalculation of the dies on the part of Mr Motsoeneng’s attorney. The application for condonation was filed within a week of the attorney becoming aware of the necessity for one. I am also willing to assume in Motsoeneng’s favour that the matter is of substantial importance to him and accept in his favour that there has been no or minimal inconvenience to the Court. However, on the merits, which must be weighed against the other factors and to which I presently turn, one cannot be as charitable to Mr Motsoeneng. On that score, the scales are tipped firmly against condoning the default and reviving the appeal, thereby entitling us to refuse the indulgence of condonation. 4 Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and Development Company Ltd and Others [2013] ZASCA 5; [2013] 2 All SA 251 (SCA) para 11. 10 [13] Section 17(2) of the Act provides: ‘(a) Leave to appeal may be granted by the judge or judges against whose decision an appeal is to be made or, if not readily available, by any other judge or judges of the same court or Division. (b) If leave to appeal in terms of paragraph (a) is refused, it may be granted by the Supreme Court of Appeal on application filed with the registrar of that court within one month after such refusal, or such longer period as may on good cause be allowed, and the Supreme Court of Appeal may vary any order as to costs made by the judge or judges concerned in refusing leave. (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, 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.’ [14] It is important to distinguish between an application for leave to appeal and an application under subsection (2)(f). The latter is an application to the President for the referral to the Court for reconsideration of the considered decision of the two judges refusing leave to appeal. The necessary prerequisite for the exercise of the President’s discretion is the existence of ‘exceptional circumstances’. If the circumstances are not truly exceptional, that is the end of the matter. The application under subsection 2(f) must fail and falls to be dismissed. If, however, exceptional circumstances are found to be present, it would not follow, without more, that the decision refusing leave to appeal must be referred to the court for reconsideration. The President may, in the 11 exercise of her discretion, nonetheless decline to do so. If the President refers the decision of the two judges for reconsideration, the court effectively steps into the shoes of the two judges. Upon reconsideration, it may grant or refuse the application and, if the former, vary the order of the two judges dismissing the application to one granting leave either to this Court or the relevant high court.5 [15] In this regard, it is important to recognise that we are concerned with a proviso, the purpose of which is ordinarily to take out of the purview of the provision something that would otherwise be a part of it. This was emphasised in National Director of Public Prosecutions, KwaZulu-Natal v Ramdass in these terms: ‘Furthermore, it is a basic rule of interpretation of statutes that a proviso must be read and considered in relation to the principal matter to which it is a proviso. It is not a separate and independent enactment and the words of the proviso are dependent on the principal enacting words, to which they are attached as a proviso. The words of the proviso cannot be read as divorced from their context. In Mphosi v Central Board for Co-operative Insurance Ltd 1974 (4) SA 633 (A) at 645B-F, the following was stated: ‘This argument altogether overlooks the true function and effect of a proviso. According to Craies, Statute Law, 7th ed., at p. 218 – "the effect of an excepting or qualifying proviso, according to the ordinary rules of construction, is to except out of the preceding portion of the enactment, or to qualify something enacted therein, which but for the proviso would be within it; and such proviso cannot be construed as enlarging the scope of an enactment when it can be fairly and properly construed without attributing to it that effect”.’6 [16] In its consideration of s 17(2)(f), the Constitutional Court pointed out in Liesching and Others v S (Liesching II): ‘As with section 18(1), section 17(2)(f) prescribes a departure from the ordinary course of an appeal process. Under section 17, in the ordinary course, the decision of two or more Judges refusing leave to appeal is final. However, section 17(2)(f) allows for a litigant to depart from this normal course, in exceptional circumstances only, and apply to the President for reconsideration of the refusal of leave to appeal. 5 See by way of example Ntlanyeni v S [2016] ZASCA 3; 2016 (1) SACR 581 (SCA) and Mathekola v State [2017] ZASCA 100. 6 Director of Public Prosecutions, KwaZulu-Natal v Ramdass [2019] ZASCA 23, 2019 (2) SACR 1 (SCA) para 14. 12 In Ntlemeza, the requirement of exceptional circumstances is viewed as a “controlling measure”. In terms of section 17(2)(f), the President has a discretion to deviate from the normal course of appeal proceedings – such discretion can only be exercised in exceptional circumstances. The requirement of the existence of exceptional circumstances before the President can exercise her discretion is a jurisdictional fact which may operate as a controlling or limiting factor.’7 [17] It has long been accepted that it is ‘undesirable to attempt to lay down any general rule’ in respect of ‘exceptional circumstances’ and that each case must be considered upon its own facts.8 In MV Ais Mamas Seatrans Maritime v Owners, MV Ais Mamas and another, Thring J summarised the approach to be followed. He said that ‘what is ordinarily contemplated by the words “exceptional circumstances” is something out of the ordinary and of an unusual nature; something which is excepted in the sense that the general rule does not apply to it; something uncommon, rare or different’.9 [18] In Avnit v First Rand Trading, Mpati P stated that ‘the overall interests of justice will be the determinative feature’ for the exercise of the President’s discretion under s 17(2)(f), adding: ‘In the context of s 17(2)(f) the President will need to be satisfied that the circumstances are truly exceptional before referring the considered view of two judges of this court to the court for reconsideration. I emphasise that the section is not intended to afford disappointed litigants a further attempt to procure relief that has already been refused. It is intended to enable the President of this Court to deal with a situation where otherwise injustice might result. An application that merely rehearses the arguments that have already been made, considered and rejected will not succeed, unless it is strongly arguable that justice will be denied unless the possibility of an appeal can be pursued. A case such as Van der Walt10 may, but not 7 Liesching and Others v S [2018] ZACC 25; 2018 (11) BCLR 1349 (CC); 2019 (1) SACR 178 (CC); 2019 (4) SA 219 (CC) paras 136-137. 8 Norwich Union Life Insurance Society v Dobbs 1912 AD 395 at 399. 9 MV Ais Mamas Seatrans Maritime v Owners, MV Ais Mamas, and another 2002 (6) SA 150 (C) at 156H-J. 10 Where two Judges of the Supreme Court of Appeal dismissed Mr Van der Walt’s application for leave to appeal. A day later two other Judges granted an application in an identical matter brought by Mr Kgatle. Subsequent events showed that the error lay in the grant of leave to appeal to Mr Kgatle. (See Van der Walt v Metcash Trading Ltd [2002] ZACC 4; 2002 ([2002] ZACC 4; 4) SA 317 (CC); 2002 (5) BCLR 454 (CC) and Kgatle v Metcash Trading Ltd 2004 (6) SA 410 (T). 13 necessarily will, warrant the exercise of the power. In such a case the President may hold the view that the grant of leave to appeal in the other case was inappropriate. A useful guide is provided by the established jurisprudence of this court in regard to the grant of special leave to appeal. Prospects of success alone do not constitute exceptional circumstances. The case must truly raise a substantial point of law, or be of great public importance or demonstrate that without leave a grave injustice might result. Such cases will be likely to be few and far between because the judges who deal with the original application will readily identify cases of the ilk. But the power under section 17(2)(f) is one that can be exercised even when special leave has been refused, so ‘exceptional circumstances’ must involve more than satisfying the requirements for special leave to appeal. The power is likely to be exercised only when the President believes that some matter of importance has possibly been overlooked or a grave injustice will otherwise result.’11 [19] Regrettably, the parties misconceived the true nature of the enquiry. In the heads of argument filed on behalf of both, the sole focus was wrongly on the correctness of the judgment of Khan AJ, and whether or not there were reasonable prospects of success in the contemplated appeal against that judgment. Counsel appeared not to appreciate that the requirement of the existence of exceptional circumstances is a jurisdictional fact that had to first be met, and that absent exceptional circumstances, the s 17(2)(f) application was not out of the starting stalls. At the Bar, counsel sought to rehash the arguments that had already been advanced before the high court and before the two judges of this Court, who dismissed the application for leave to appeal. But those contentions had been considered and found to be wanting in a detailed judgment of the high court. In dismissing the petition, the two judges of this Court had self-evidently taken the view that there were no reasonable prospects of an appeal against that judgment succeeding. As Innes ACJ made plain in Norwich Union Life Insurance Society v Dobbs: ‘. . . when a statute directs that a fixed rule shall only be departed from under exceptional circumstances, the Court, one would think, will best give effect to the intention of the Legislature by taking a strict rather than a liberal view of applications for exemption, and by carefully examining any special circumstances relied upon.’12 11 Avnit v First Rand Bank Ltd (20233/14) [2014] ZASCA 132 (23 September 2014) paras 6-7. 12 Norwich fn 7 above at 399. 14 [20] An independent perusal of the record reveals that neither the conclusion reached by Khan AJ, nor that of the two judges of this Court, can be faulted. As Lewis JA, in dealing with the test for the grant of special leave to appeal, observed in Stu Davidson v Eastern Cape Motors: ‘There is no legal question to be determined. There is no factual dispute that requires reconsideration. There is no reason why an appellate court should determine any matter arising from the first appeal further. Again, it is trite that where there has been no manifest denial of justice, no important issue of law to be determined, and the matter is not of special significance to the parties, and certainly not of any importance to the public generally, special leave should not be granted.’13 That holds true for this matter as well. Given that there are no reasonable prospects of success in the contemplated appeal, much less special circumstances, the application hardly meets the higher ‘exceptional circumstances’ threshold set by s 17(2)(f). It must accordingly fail. [21] In the result: (a) The application for condonation is dismissed with costs. (b) The applicant for condonation is ordered to pay the costs incurred by the respondents in opposing the lapsed appeal. (c) In both instances (a) and (b) the costs shall include the costs of two counsel. ________________ V M PONNAN JUDGE OF APPEAL 13 Stu Davidson and Sons (Pty) Ltd v Eastern Cape Motors (Pty) Ltd [2018] ZASCA 26 para 19. 15 Appearances For the appellant: T Masuku SC, K Mathipa and T Ngubeni Instructed by: Bokwa Law Inc., Pretoria Bokwa Attorneys, Bloemfontein For the first & second respondents: J Motepe SC and B Lukhele Instructed by: Werksmans 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: 27 May 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 George Hlaudi Motsoeneng v South African Broadcasting Corporation Soc Ltd and Others (64/2023) [2024] ZASCA 80 (27 May 2024) Today the Supreme Court of Appeal (SCA) delivered judgment dismissing an application for condonation by Mr George Hlaudi Motsoeneng, the former Chief Operating Officer of the South African Broadcasting Corporation (Soc) Ltd (SABC), with costs, including those of two counsel. Mr Motsoeneng had sought condonation and the reinstatement of his appeal that had lapsed. The SCA also ordered Mr Motsoeneng to pay the costs, including those of two counsel, incurred by the SABC in opposing the lapsed appeal. The issue before the SCA was whether the failure by Mr Motsoeneng to prosecute his appeal by timeously filing his heads of argument should be condoned and the appeal revived. As an employee of the SABC, Mr Motsoeneng had become a member of the third respondent, the South African Broadcasting Corporation Pension Fund (the Fund). After the SABC board had come to be reconstituted, a disciplinary enquiry against Mr Motsoeneng was convened. Following the disciplinary enquiry, Mr Motsoeneng’s employment was terminated on 12 June 2017, whereafter he became entitled to the payment of a withdrawal benefit from the Fund in accordance with its rules. On 24 July 2017, the audit department of the SABC discovered that Mr Motsoeneng had been paid a success fee to which he allegedly was not entitled, following approval by the Governance and Nominations Committee (the GNC) of the SABC on the basis that Mr Motsoeneng had raised an amount of R1,19 billion for the benefit of SABC. The GNC approved (with no authority or mandate) a payment in the sum of R11 508 549.12. On 20 July 2017, the SABC addressed a letter to the Chief Executive and Principal Officer of the Fund requesting that: (a) it withhold payment of the accumulated pension benefit due to Mr Motsoeneng, until such time as a judgment issued in the civil proceedings that it intended instituting against him; and, (b) in the event of a judgment issuing against Mr Motsoeneng, the Fund make a deduction from any benefit due to him in satisfaction of the judgment. The Fund refused to accede to the request. On 4 August 2017, the SABC issued an urgent application out of the Gauteng Division of the High Court, Johannesburg seeking relief in two parts. Under Part A, the SABC sought an order restraining the Fund from paying out any benefit due to Mr Motsoeneng to the tune of R11 508 549.12, pending the determination of Part B. On 18 January 2018, Maier-Frawley AJ issued an interim interdict 2 restraining the Fund from paying out the pension fund benefit standing to the credit of Mr Motsoeneng, pending the finalisation of the matter. Part B of the relief sought came before Khan AJ on 26 May 2021. On 15 December 2021, the learned judge issued an order declaring the success fee awarded to Mr Motsoeneng in the sum of R11 508 549.12 invalid and ordered him to repay the amount to the SABC with interest a tempore morae. In the event that Mr Motsoeneng fails to pay, the Fund was directed to pay the amount to the SABC from the pension proceeds that have accumulated to the benefit of Mr Motsoeneng. On 15 July 2022, Khan AJ dismissed Mr Motsoeneng’s application for leave to appeal. On 19 January 2023, two judges of this Court also dismissed Mr Motsoeneng’s application for leave to appeal. Mr Motsoeneng then applied in terms of s 17(2)(f) of the Superior Courts Act 10 of 2013 (the Act) to the President of this Court for the reconsideration of the refusal of his petition. The application was referred by the President to the court. The SCA held that the necessary prerequisite for the exercise by the President of the discretion under s 17(2)(f) is the existence of ‘exceptional circumstances’. The SCA took the view that the contentions advanced on behalf of Mr Motsoeneng, had been considered and found to be wanting in the detailed judgment of Khan AJ. The two judges who considered and dismissed his application for leave to appeal, evidently agreed with Khan AJ that there were no reasonable prospects of success in the contemplated appeal. In the result, the ‘exceptional circumstance’ threshold set by s 17(2)(f) had not been met. Consequently, Mr Motsoeneng’s application had to fail. --------oOo--------

4250

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 76/2023 In the matter between: JOHNATHAN RICHARD SCHULTZ APPELLANT and MINISTER OF JUSTICE AND CORRECTIONAL SERVICES FIRST RESPONDENT DIRECTOR GENERAL: DEPARTMENT OF JUSTICE AND CORRECTIONAL SERVICES SECOND RESPONDENT DIRECTOR OF PUBLIC PROSECUTIONS, GAUTENG LOCAL DIVISION, JOHANNESBURG THIRD RESPONDENT NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS FOURTH RESPONDENT 2 Neutral citation: Schultz v Minister of Justice and Correctional Services and Others (76/2023) [2024] ZASCA 77 (23 May 2024) Coram: MOTHLE, HUGHES and MABINDLA-BOQWANA JJA and SEEGOBIN and KEIGHTLEY AJJA Heard: 15 March 2024 Delivered: 23 May 2024 Summary: International law – extradition – Constitution – Extradition Act 67 of 1962 – whether power to make extradition request to a foreign State vests with the Minister of Justice or National Prosecution Authority. 3 ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Janse van Nieuwenhuizen J, sitting as court of first instance): 1 The appeal is upheld with costs, including the costs of two counsel, where so employed. 2 The order of the high court is set aside and replaced with the following: ‘It is declared that only the first respondent in his capacity as a member of the national executive of the Republic of South Africa, has the power to make an extradition request for the extradition of the applicant from the United States of America.’ JUDGMENT Mabindla-Boqwana JA and Keightley AJA (Mothle and Hughes JJA and Seegobin AJA concurring): Introduction [1] The crisp issue in this appeal is whether the power to request the extradition of a person from the United States of America (the US) to stand trial in the Republic of South Africa (the Republic/ South Africa) vests in the executive authority of the Minister of Justice and Constitutional Development (the Minister), or whether it vests in the National Prosecuting Authority (the NPA). The question was considered by the Gauteng Division of the High Court, Pretoria (the high court). The high court 4 held that the authority to make an extradition request from the US vested in the NPA and not in the Minister. The decision comes to this Court on appeal with leave of the high court. Background facts [2] The appellant, who was the applicant in the high court, is Johnathan Richard Schultz. He is a South African citizen who has resided in the US since 2019. In November of that year the South African Police Service (the SAPS) made several arrests of persons accused of offences related to the alleged theft and sale of unwrought precious metals. The SAPS also obtained and executed six search warrants. The affidavit supporting the application for the warrants mentioned the appellant as an active member of one of the companies alleged to have been involved in the commission of the offences. In March 2022, when the arrested accused appeared in court, the prosecution sought a postponement on the ground, among others, that the NPA intended to request the appellant’s extradition from the US. [3] Having been alerted to this fact, the appellant instructed his South African attorneys to communicate with, among other authorities, the Minister, the National Director of Public Prosecutions (the NDPP), the NPA and the Director of Public Prosecutions, Johannesburg (the DPP). In their letter, dated 14 April 2022, the appellant’s attorneys made the following submissions and request: ‘It is our view that an extradition request by South Africa to the US in respect of our client may be unconstitutional, unlawful and invalid on various different bases. In particular, the State official who makes the extradition request must indeed be authorised under the Constitution or legislation to do so. In this respect, we hereby request you to advise us as to which official you may be of the view is empowered and authorized to submit an extradition request on behalf of South Africa to the US.’ 5 [4] On 21 April 2022 the Minister’s spokesperson, Mr Phiri, responded by way of an email. He advised that as the spokesperson it is ‘unlikely that [he] would be involved in all the administrative processes that pertain to extraditions or any other administrative issue generally’. He suggested that the appellant’s attorneys should contact the relevant officials dealing with the administration of extradition requests, namely Ms Lujiza and Mr Botes. The DPP’s response, also by way of email, was terse. It read: ‘Kindly keep the NDPP and the ministry out of this matter’. The NPA responded later, saying that ‘pertaining to the extradition proceedings that are envisaged, this office can assure you that due process will be followed, and your client will be able to exhaust his rights in this regard’. In the high court [5] On the premise that extradition proceedings against him were envisaged by the NPA, the appellant approached the high court for urgent relief. His first substantive prayer was for an order declaring that he had a right to submit representations to the Minister, and the DPP in relation to any extradition request that may be sought. The appellant’s second substantive prayer was for an order: ‘Declaring that only the Minister, in his capacity as a member of the national executive of the Republic of South Africa, has the power to submit a request for the extradition of the applicant from the United States of America.’ [6] It is this second declarator, which was refused by the high court, which forms the subject matter of this appeal. The appellant did not pursue an appeal against the high court’s refusal of the first declaratory prayer,1 which consequently falls outside the scope of this judgment. 1 That he has the right to submit representations to the Minister and the DPP. 6 [7] It is relevant also to highlight at this stage that the declarator is specific to the power to submit a request for extradition from the US. On 16 September 1999, the Government of South Africa entered into an Extradition Treaty with the Government of the US (the Treaty) in terms of the Extradition Act. The Treaty was signed by the then Minister of Justice and Constitutional Development, Dr Penuel Maduna, on behalf of the Government of South Africa. In terms of Article 1 of the Treaty, the parties agreed to extradite to each other, pursuant to the provisions of the Treaty, persons whom the authorities in the requesting State have charged with or convicted of an extraditable offence. It is the exercise of power in terms of this Treaty which the appellant says vests in the Minister. [8] As is evident from the citation of this appeal, the appellant cited several respondents in his application. The first respondent and second respondent, being the Minister, and the Director General: Department of Justice and Correctional Services (the DG) opposed the application. Mr Botes, who was referred to in Mr Phiri’s email, deposed to the answering affidavit on their behalf. The DPP and the NDPP, being the third and fourth respondents, also opposed the application. The deponent to the affidavit filed on their behalf, was Ms le Roux, a senior State advocate in the office of the DPP. She is the prosecutor in the criminal case relevant to the appellant’s possible extradition. The respondents made joint submissions to both the high court and to this Court on appeal. [9] In their respective affidavits both Mr Botes and Ms le Roux explained the current procedure that is followed in giving effect to an extradition request from the Republic to foreign States, including the US. They described substantially the same process. It is the individual prosecutor who initiates the request by identifying the 7 need for extradition and preparing the relevant documentation. This includes, as part of the Treaty, a warrant of arrest and a charge sheet. These preparatory documents are forwarded to the Deputy Director in the DPP’s office in charge of extraditions. If he is satisfied that the documentation is correct, it is forwarded to the DPP, who signs off on the final document. It then goes to the NDPP for her perusal and, if she is satisfied, it is forwarded to the DG. Mr Botes and Ms le Roux described the DG as being the designated Central Authority for extradition requests. [10] Crucially, Mr Botes and Ms le Roux were at pains to explain that the Department of Justice and Correctional Services’ (the Department) role in an extradition request is simply to function as a conduit to channel the request to the Department of International Relations and Co-operation (the DIRCO) from where it is dispatched to the US. According to Ms le Roux, the role of the Department is ‘to go through the documents to satisfy themselves as to the authority of the magistrate that authorised the warrant of arrest, etc’. According to the respondents’ evidence, the entire process is prosecution-driven, with the Ministry playing no more than an administrative role. What is more, as Mr Botes explained, ‘it is not the Minister in person who deals with the extradition or considers the extradition’. [11] The appellant argued before the high court that the process described by the respondents was unlawful in that it is the Minister, and not the NPA, who has the authority to deal with extradition requests to the US. The high court dismissed the appellant’s submission. It drew a distinction between the treatment of extradition requests to the Republic (incoming requests) in the Extradition Act 67 of 1962 (the Extradition Act), and those made by the Republic (outgoing requests) to a foreign State. While the Minister has a range of express powers in respect of incoming 8 requests, the Extradition Act is silent as regards the Minister’s powers in respect of outgoing requests. The high court agreed with the respondents that while the Minister, through the Department, has some role to play in requests for extradition to the Republic, this is a limited administrative function. [12] In essence, the high court found that s 179 of the Constitution, read with ss 20 and 33 of the National Prosecuting Authority Act 32 of 1998 (the NPA Act), vests the NPA with the power to institute and conduct criminal proceedings on behalf of the State. Section 179(2) also empowers the NPA to ‘carry out any necessary functions incidental to instituting criminal proceedings’. Under this statutory scheme, prosecutions fall within the exclusive domain of the NPA. This includes the power to decide whether an extradition request to the US should be made. To find in favour of the appellant would be contrary to this scheme. It would permit the Minister to enter the exclusive terrain of the NPA by giving him the power to overrule its prosecutorial decisions. Consequently, the high court refused to grant the declaratory relief sought by the appellant. In this Court [13] For purposes of the appeal, it is important to clarify the precise substance of the appellant’s declarator. Both the appellant and the respondents agree that the Department, ‘submits’ the extradition request to the US via the DIRCO. To this extent, at face value, the declarator may seem to be uncontentious. However, the wording of the declarator masks the real issues at stake. The point of contention is which authority, the NPA or the executive, has the power to decide whether, how and when an extradition request should be submitted. Inherent in this, is the question of the role and power of the Minister. 9 [14] The appellant submits that the source of this power is derived from the Constitution, the Extradition Act and customary international law. All three sources vest the power in the Minister alone. The Treaty confirms that the power lies with the Minister. According to the appellant, the high court erred in finding that s 179(2) of the Constitution empowers the NPA to make extradition requests to the US on behalf of the Republic. It is not a power necessarily implied by the NPA’s power to prosecute. Were it so implied, it would give the NPA the power to act on behalf of the Republic in the international sphere, which function lies exclusively within the realm of the executive. [15] The respondents contend that the high court was correct in identifying the source of the power as the NPA Act, and the NPA as the repository of the power. To hold otherwise, they submit, would be to accord to the Minister the power to thwart a request for the extradition of a person to stand trial in the Republic. This would constitute an impermissible transgression into the exclusive prosecutorial authority of the NPA recognised under the Constitution. Declaratory relief [16] We are satisfied that this Court’s jurisdiction to consider the declaratory relief sought by the appellant is properly engaged. Although no extradition request has yet been submitted in respect of the appellant, it is common cause that the NPA intends on charging him and that it will have to seek his extradition to the Republic if he is to stand trial. His right to liberty is accordingly clearly threatened by the real prospect of a request for his extradition. Once this is so, the declaratory relief he seeks on 10 appeal is not abstract or academic.2 Further, the appeal raises an important legal issue which will affect extradition requests in the future. Finally, the decision of the high court which is on appeal before this Court is inconsistent with the judgment of the Western Cape Division of the High Court in Spagni v Acting Director of Public Prosecutions, Western Cape.3 Although Spagni came before this Court on appeal,4 that appeal was dismissed on the basis that it was moot. This Court expressly noted that it made no pronouncement on the appeal’s merits. It is important, therefore, that this Court now considers the merits of the issues in dispute. Who has the power to make the extradition request to the US? [17] To answer this question, we discuss conferral of powers in the Constitution, the application of international law and the Extradition Act. The starting point for considering the parties’ competing submissions on the merits of the appeal is the doctrine of legality, an incident of the rule of law, which entails that no power may be exercised beyond that which is conferred by law. Power should therefore be sourced in law. It is thus necessary ‘first, to identify the source of power . . . and, second, to determine to whom that power accrues’.5 [18] To identify the source of power requires an exploration of what extradition is about. Extradition is ‘the surrender by one State, at the request of another, of a person within its jurisdiction who is accused or has been convicted of a crime committed 2 West Coast Rock Lobster Association v The Minister of Environmental Affairs and Tourism [2010] ZASCA 114; [2011] 1 All SA 487 (SCA) para 45. See also Association for Voluntary Sterilization of South Africa v Standard Trust Limited and Others [2023] ZASCA 87 para 12. 3 Spagni v Acting Director of Public Prosecutions, WC and Others, unreported (Case No. 17224/2021, delivered on 6 April 2022). 4 Spagni v The Director of Public Prosecutions, Western Cape and Others [2023] ZASCA 24 para 27. 5 Minister for Justice and Constitutional Development v Chonco and Others [2009] ZACC 25; 2010 (2) BCLR 140 (CC); 2010 (4) SA 82 (CC) paras 27 and 28. 11 within the jurisdiction of the other State’.6 There are three fundamental elements involved. These are: acts of sovereignty between two States; a request by one State to another State for the delivery to it of an alleged criminal; and the delivery of the person requested for the purposes of trial or sentence in the territory of the requesting State.7 [19] The procedure governing extradition operates at both the international and domestic level. Internationally, a request from one foreign State to another for the extradition of a particular individual and the response to the request will be governed by the rules of public international law, including customary international law. Domestically, States are regulated by their own domestic laws, which they are free to prescribe, before extraditing an individual.8 We should add that the same would apply in respect of outgoing requests for extradition, the regulation of which, to the extent that this concerns internal matters, may be regulated by domestic law. A further point to note is that if a State has entered into extradition treaties with other States, both internal and external requests will also be governed by those treaties in respect of requests from or to the reciprocal States. [20] In terms of our domestic law, extraditions are regulated by the Extradition Act. Section 2 gives the President the power to enter into agreements with foreign States for the surrender on a reciprocal basis of persons accused or convicted of the 6 President of the Republic of South Africa and Others v Quagliani, and two similar cases (Quagliani) [2009] ZACC 1; 2009 (4) BCLR 345 (CC); 2009 (2) SA 466 (CC) para 1. 7 Mohamed and Another v President of the Republic of South Africa and Others (Society for the Abolition of the Death Penalty in South Africa and Another Intervening) [2001] ZACC 18; 2001 (7) BCLR 685 (CC); 2001 (3) SA 893 (CC) para 29. 8 Harksen v President of the Republic of South Africa and Others 2000 (2) SA 825 (CC); 2000 (1) SACR 300 (CC) para 4. 12 commission of an extraditable offence9 within the jurisdiction of the Republic. Section 3 provides that a person accused or guilty of an offence included in the extradition agreement and committed within the jurisdiction of a foreign State shall be liable to be surrendered to such State in accordance with the terms of such an agreement. [21] The Extradition Act includes several provisions expressly giving the Minister powers in respect of extraditions from the Republic to a foreign State. These include s 4 which provides: ‘(1) Subject to the terms of any extradition agreement any request for the surrender of any person to a foreign State shall be made to the Minister by a person recognized by the Minister as a diplomatic or consular representative of that State or by any Minister of that State communicating with the Minister through diplomatic channels existing between the Republic and such State. (2) Any such request received in terms of an extradition agreement by any person other than the Minister shall be handed to the Minister. . . .’ (Emphasis added.) As far as requests to the Republic are concerned, these are dealt with on a ministerial level. Similarly, s 5 provides that upon receipt of a notification from the Minister, concerning receipt of an extradition request, any magistrate may issue a warrant of arrest. This is consistent with other legislation dealing with international matters.10 [22] Crucially, for purposes of the current dispute, the Extradition Act has only two provisions expressly dealing with extradition requests made by the Republic to 9 In terms of s 1 of the Extradition Act, ‘Extraditable offence means any offence which in terms of the law of the Republic and of the foreign State concerned is punishable with a sentence of imprisonment or other form of deprivation of liberty for a period of six months or more, but excluding any offence under military law which is not also an offence under the ordinary criminal law of the Republic and of such foreign State’. 10 See also reference to the role of the Minister or Cabinet Member responsible for Justice, in International Co-operation in Criminal Matters Act 75 of 1996 and Implementation of the Rome Statute of The International Criminal Court Act 27 of 2002. 13 a foreign State for purposes of prosecution in our courts. These are sections 19 and 20 which, respectively, provide: ‘19. No person surrendered to the Republic by any foreign State in terms of an extradition agreement or by any designated State shall, until he or she has been returned or had an opportunity of returning to such foreign or designated State, be detained or tried in the Republic for any offence committed prior to his or her surrender other than the offence in respect of which extradition was sought or an offence of which he or she may lawfully be convicted on a charge of the offence in respect of which extradition was sought, unless such foreign or designated State or such person consents thereto: Provided that any such person may at the request of another foreign or designated State and with a view to his or her surrender to such State, be detained in the Republic for an extraditable offence which was so committed, provided such detention is not contrary to the laws of the State which surrendered him or her to the Republic. 20. The Minister may at the request of any person surrendered to the Republic return such person to the foreign State in or on his way to which he was arrested, if – (a) in the case of a person accused of an offence, criminal proceedings against him are not instituted within six months after his arrival in the Republic; or (b) he is acquitted of the offence for which his surrender was sought.’ (Emphasis added.) [23] As to the authority in whom the power vests in relation to incoming extradition requests from a foreign State, the Extradition Act is clear. In that instance, the Minister would receive the request. Section 11(a) expressly gives the Minister the power to determine whether the person sought by the foreign State will be extradited to that requesting State. In addition, ss 8, 11 and 15 describe other far-reaching powers for the Minister to, for example, direct a magistrate to cancel a warrant of arrest issued under the Act;11 direct that a person arrested under a warrant be discharged forthwith;12 order that the person concerned shall not be surrendered to 11 Section 8(2)(a). 12 Section 8(2)(b). 14 the foreign State seeking their extradition;13 and to cancel a warrant and order the release of a person where the Minister is satisfied that the offence in respect of which surrender is sought is political in character.14 [24] There are no equivalent provisions in the Extradition Act in respect of outgoing extradition requests. The respondents submit that this absence underlines the fact that, unlike in the case of incoming extradition requests, the Minister does not have any decision-making powers in respect of outgoing requests. [25] What the respondents’ submission overlooks is that extradition operates at the international level as well as the domestic level. Further that, as noted earlier, one of the essential elements of extradition is that it involves an act of sovereignty between two States. As such, it necessarily implicates foreign relations, in respect of which powers are bestowed on the executive. [26] This was affirmed by the Constitutional Court in Kaunda and Others v President of the Republic of South Africa.15 Although there were three judgments by the court in the matter, all three were unanimous that the conduct of foreign relations is a matter for the executive. Kaunda concerned South African citizens who were held in Zimbabwe on various charges. They feared that they might be extradited from Zimbabwe to Equatorial Guinea at the risk of being accused as mercenaries and plotting a coup against the President of Equatorial Guinea. They contended that if this were to happen, they would not get a fair trial and if convicted, may face the risk of being sentenced to death. They, accordingly, sought an order compelling the 13 Section 11(b). 14 Section 15. 15 Kaunda and Others v President of the Republic of South Africa [2004] ZACC 5; 2004 (10) BCLR 1009 (CC); 2005 (4) SA 235 (CC). 15 Government to make certain representations to the Governments of Zimbabwe and Equatorial Guinea to take steps to ensure their rights to dignity, freedom and security of their person and fair conditions of detention, among other things. [27] In his minority judgment, Ngcobo J stated: ‘The conduct of foreign relations is a matter which is within the domain of the executive. The exercise of diplomatic protection has an impact on foreign relations. Comity compels states to respect the sovereignty of one another; no state wants to interfere in the domestic affairs of another. The exercise of diplomatic protection is therefore a sensitive area where both the timing and the manner in which the intervention is made are crucial. The state must be left to assess foreign policy considerations and it is a better judge of whether, when and how to intervene. It is therefore generally accepted that this is a province of the executive. . .’16 [28] In another minority judgment, O’Regan J observed: ‘It is clear, though perhaps not explicit, that under our Constitution the conduct of foreign affairs is primarily the responsibility of the Executive. That this is so, is signified by a variety of constitutional provisions including those that state that. . . the national executive is responsible for negotiating and signing international agreements. The conduct of foreign relations is therefore typically an executive power under our Constitution. This is hardly surprising. Under most, if not all constitutional democracies, the power to conduct foreign affairs is one that is appropriately and ordinarily conferred upon the executive, for the executive is the arm of government best placed to conduct foreign affairs.’17 [29] Although Kuanda does not deal directly with extradition powers, it confirms that State conduct implicating foreign relations falls within the ambit of executive authority. This is consistent with customary international law, which recognises that foreign functions of State are conducted by the executive. It is presumed in 16 Ibid para 172. 17 Ibid para 243. 16 international law that where the State acts, it does so through its executive officials. This is so because when an official makes undertakings on behalf of the State or performs such acts, he or she must have authority to do so, as such acts have binding consequences for the State.18 Article 7(2) of the Vienna Convention on the Law of Treaties, codifies this international norm: ‘In virtue of their functions and without having to produce full powers, the following are considered as representing their State: (a) Heads of State, Heads of Government and Ministers for Foreign Affairs, for purposes of performing all acts relating to the conclusion of a treaty.’19 (Emphasis added.) [30] The Constitution is consistent with this international customary law principle. Section 231(1) of the Constitution provides that ‘the negotiating and signing of all international agreements is the responsibility of the national executive’. While s 2 of the Extradition Act confers the power on the President, it was held in President of the Republic of South Africa and Others v Quagliani, and Two Similar Cases (Quagliani),20 that the President was empowered to delegate the power to enter into extradition agreements to the Minister, and that this is entirely consistent with the conferral of the power to the national executive by s 231(1) of the Constitution.21 [31] The force of customary international law in our legal systems is underlined in two further provisions of the Constitution. In terms of s 232, customary international law is law in the Republic unless it is inconsistent with the Constitution or an Act of 18 Nuclear Tests (Australia v. France; New Zealand v. France), Judgment, 1974 I.C.J. para 46. See also ILC, Guiding Principles applicable in unilateral declarations of States capable of creating legal obligations, Principle I, U.N. Doc. A. 19 United Nations (1969), “Vienna Convention on the Law of Treaties” Treaty Series 1155, 331, article 7(2). See also Arrest Warrant of 11 April 2000 (Democratic Republic of Congo v. Belgium), Judgment, I.C.J. Reports 2002, at 21-22, para 53. 20 Quagliani fn 6 above. 21 Ibid para 25. 17 Parliament. In addition, courts are enjoined by s 233, when interpreting legislation to prefer any reasonable interpretation consistent with international law over any alternative interpretation that is inconsistent with it. [32] A request for extradition by one State to another necessarily operates at the international level. This must apply in respect of both incoming and outgoing requests. Implicitly, and consistent with international customary law and the Constitution, both forms of request engage the executive sphere of power. To hold, as the respondents argue, that it is the NPA and not the executive that has decision-making power in respect of outgoing extradition requests would be contrary to established international law principles: it would accord to a non-executive domestic organ of state, an executive function at a State-to-State level. An intention so to depart from established international law principles would require clear expression in the Extradition Act. It cannot be implied simply from the absence of express provisions according to the Minister’s decision-making powers in outgoing extradition requests. [33] The respondents’ submission is also unsustainable given what the Constitutional Court said in Quagliani in relation to this issue: ‘The Act, read with other legislation such as the Criminal Procedure Act, thus gives the executive branch all the required statutory powers to be able to respond to a request for extradition from a foreign State and for the executive branch to be able to request the extradition of individuals who are in foreign States. It should be added that although the power to request extradition to the Republic from a foreign country is not expressly provided for in the Act, it is necessarily implicit in sections 19 and 20. Both deal with requests for surrender, and indeed, s 19 expressly envisages extradition being requested in terms of an extradition treaty. . . . 18 To the extent that Mr Goodwin’s appeal is based on similar challenges, it also cannot succeed. Mr Goodwin contended further that the Act gave no power to anybody within this country to request an extradition of someone who is in the United States. The answer is that the Act by implication does confer authority to make the request by reason of the provisions concerning reciprocity, as well as sections 19 and 20. Mr Goodwin’s appeal accordingly fails.’22 (Emphasis added.) [34] Quagliani thus confirms that under the Extradition Act it is the executive that is empowered not only to respond to an incoming request for extradition but also to make an outgoing request. Importantly, the judgment recognises that the absence, in the Extradition Act, of an express power on the part of the executive to make an outgoing extradition request does not signify an absence of that power. The executive power to make an outgoing request is to be implied from the principle of reciprocity, which lies at the very heart of extradition. [35] The respondent’s contention that bestowing that power on the Minister would permit executive interference with the NPA’s constitutionally guaranteed prosecutorial independence does not withstand scrutiny. The respondents’ interpretation of s 179(2) is tantamount to suggesting that the NPA has the power to conduct foreign relations and to bind the Republic on a State-to-State level. This is inconsistent with the principles articulated in Kaunda and of customary international law. It is also inconsistent with the separation of powers and the constitutional recognition of matters involving foreign relations as falling within the preserve of the executive. [36] A further difficulty for the respondents is that for their contention to succeed, they would have to show that the decision-making power in respect of outgoing 22 Ibid paras 44 and 55. 19 extradition requests is a power necessarily implied from their authority to prosecute. In GNH Office Automation CC and Another v Provincial Tender Board, Eastern Cape,23 this Court outlined the test for whether a power is ‘necessarily implied’ as follows: ‘Powers may be presumed to have been impliedly conferred because they constitute a logical and necessary consequence of powers which have been expressly conferred, because they are reasonably required in order to exercise the powers expressly conferred, or because they are ancillary or incidental to those expressly conferred.’ (Emphasis added.) [37] As we have noted, the express power relied on by the respondents is the authority to prosecute. However, extradition necessarily involves an international act, invoking executive authority. In these circumstances, there can be no necessity that requires s 179(2) to be construed as logically entrusting the NPA with the exercise of the power to make outgoing extradition requests. In fact, it would be constitutionally untenable to have both the executive authority and the NPA exercise the power. This would lead to South Africa speaking with two voices in the conduct of its foreign affairs24 in relation to extradition, which is an undesirable consequence. [38] The real nub of the issue is the demarcation of functions between the NPA and the Minister. In other words, where the line is drawn between the NPA’s power to prosecute and to do things necessarily incidental thereto, on the one hand, and the power of the executive to act in matters involving foreign affairs, on the other. The NPA clearly has the power to enter into a plea and sentence agreement with an 23 GNH Office Automation CC and Another v Provincial Tender Board, Eastern Cape 1998 (3) SA 45 (SCA) at 51G-H. 24 Harksen v President of the Republic of South Africa and Others 1998 (2) SA 1011 (C) para 13. 20 accused.25 In contrast, a clear example of a demarcated power, is that involved in issuing a warrant of arrest. That power is incidental to the criminal proceedings, but the function and decision-making power that goes with it vests in the judicial officer and not the prosecutor. By analogy, the fact that extradition is sought for criminal proceedings to take place, does not necessarily imply a decision-making power for the NPA to engage with other States internationally. It is thus important to distinguish between a decision to prosecute, which can only be made by the NPA, and a decision to request the extradition, from another State, of the person who is to be prosecuted. Those are two distinct powers. [39] The importance of distinguishing between functions in the extradition context (albeit in relation to incoming requests) was highlighted in Khama v Director of Public Prosecutions, Gauteng Local Division, Johannesburg and Others26 as follows: ‘An extradition inquiry and criminal proceedings are not the same in all respects. Extradition proceedings are aimed at determining whether there is a reason to remove the person to foreign state – not to determine whether the person concerned is or is not extraditable. The hearing before the magistrate is but a step in the proceedings: “extradition is deemed a sovereign act, its legal proceeding are deemed sui generis, and its purpose is not to adjudicate guilt or innocence but to determine whether a person should properly stand trial where accused or be returned to serve a sentence properly imposed by another state”.’27 [40] In its role as the prosecuting authority, the NPA has the important function of determining who is to be prosecuted and what the charges are to be. The Minister 25 It was held in Wickham v Magistrate, Stellenbosch and Others 2016 (1) SACR 273 (WCC) para 81, that ‘[w]here the prosecution enters into a plea and sentence agreement with an accused person it fulfils a function incidental to the institution of criminal proceedings in terms of s 179(2) of the Constitution, on behalf of the State. . .’ 26Khama v Director of Public Prosecutions, Gauteng Local Division, Johannesburg and Others [2023] 3 All SA 193 (GJ); 2023 (2) SACR 588 (GJ). 27 Ibid para 20. 21 has no role or power in the exercise of this prosecutorial function. However, if an identified accused is in a foreign State, this triggers the engagement of executive authority, as the NPA must seek assistance from the executive to make the extradition request to the foreign State. [41] Under the Treaty, a request to the US must be in writing, supported by prescribed documents, including, among others, a copy of the warrant of arrest, the charge sheet, information relating to the facts of the offence and the procedural history of the case, and a statement of the law relating to the relevant offence.28 This information all falls within the knowledge and preserve of the NPA, which must compile and provide the documents to the executive for inclusion in the extradition request. However, no matter how necessary this role of the NPA is, it does not imply a power to make the extradition request, and to decide when and whether to do so. [42] The respondents acknowledge that there is some role for the Department to play in making a request for extradition. Their contention, however, is that it is a limited role, does not involve the Minister, nor the exercise of any decision-making power by the Department. As noted earlier, the current process involved in making outgoing extradition requests is described in the affidavits filed on behalf of the respondents. Significantly, the Minister does not consider the request. [43] In addition, it seems that the Minister of International Relations and Co-operation also does not consider the request. The involvement of the DIRCO in the process does not take the matter any further. It really talks to nothing more than the administrative process involved. 28 Article 9. 22 [44] The described process does not satisfy the principle of legality, which requires the identification of the source of power and the functionary responsible for the exercise of that power. As things currently stand, there is no identified functionary, even within the NPA, who exercises the decision-making power to make the extradition request. Is it the prosecutor, or the DPP, or a functionary within the NDPP’s office or the NDPP herself who does so? The respondents do not tell us, nor does the NPA Act. [45] To the extent it is suggested that this role might be fulfilled by the DG as the Central Authority, this contention is not helpful. We were not directed to any law that designates the DG as the Central Authority for extradition purposes. In any event, it is clear from the respondents’ description of the role played by the Department that it involves no decision-making power. As we have already stated, the question of who has the power to make outgoing extradition requests and the process involved should not be conflated. [46] The Minister is the executive authority who represented the government of the Republic in concluding the Treaty. Accordingly, he has the power to represent the State in requests made under it. Moreover, under the Treaty, it is the executive authority who acts on the part of a requested State. [47] The role of the NPA in the outgoing extradition process does not stretch to dictating to the Minister how to exercise this power, as this would be destructive of the separation of powers. Contrary to the respondents’ submissions, this demarcation of powers and functions between the NPA and the Minister does not impinge on the NPA’s prosecutorial powers. This is because the principle of legality defines the 23 ambit of the Minister’s lawful powers. While he has the power to decide whether and when to make an outgoing extradition request, he cannot do so in a manner that undermines prosecutorial independence. Whether he has acted within the realms of his authority will depend on the circumstances of the extradition request in question in any given case. [48] We conclude that it is clear that the Minister is central to the administration and implementation of the Extradition Act. Critically, the decision-making power in respect of all extradition requests vests in him. The reciprocal obligations that arise with extradition are to be dealt with by the Minister on behalf of the Republic. This not only applies to incoming extradition requests, as expressly provided for in the Extradition Act, but also, by implication, to outgoing requests to the US. This conclusion is reinforced by international law and by the Constitution. [49] Accordingly, the finding by the high court that an extradition request is incidental to the functions of the NPA cannot be sustained. The appeal must therefore be upheld as the appellant was entitled to the declarator sought. [50] In the result, the following order issues: 1 The appeal is upheld with costs, including the costs of two counsel, where so employed. 2 The order of the high court is set aside and replaced with the following: ‘It is declared that only the first respondent in his capacity as a member of the national executive of the Republic of South Africa, has the power to make an extradition request for the extradition of the applicant from the United States of America.’ 24 __________________________ N P MABINDLA-BOQWANA JUDGE OF APPEAL _________________________ R M KEIGHTLEY ACTING JUDGE OF APPEAL 25 Appearances For the appellant: A Katz SC and K Perumalsamy Instructed by: Ian Levitt Attorneys, Johannesburg Pieter Skein Attorneys, Bloemfontein For the respondents: C F J Brand SC Instructed by: The State Attorney, Pretoria The State Attorney, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 23 May 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 Schultz v Minister of Justice and Correctional Services and Others (76/2023) [2024] ZASCA 77 (23 May 2024) Today the Supreme Court of Appeal (SCA) upheld with costs, including the costs of two counsel where so employed, an appeal against the decision of the Gauteng Division of the High Court, Pretoria (the high court). The crisp issue in the appeal was whether the power to request the extradition of a person from the United States of America (the US) to stand trial in the Republic of South Africa (the Republic/ South Africa) vests in the executive authority of the Minister of Justice and Constitutional Development (the Minister), or whether it vests in the National Prosecuting Authority (the NPA). The high court held that the authority to make an extradition request from the US vested in the NPA and not in the Minister. The decision came to the SCA on appeal with leave of the high court. The appellant, Johnathan Richard Schultz was the applicant in the high court. He is a South African citizen who has resided in the US since 2019. In November of that year, the South African Police Service (the SAPS) made several arrests of persons accused of offences related to the alleged theft and sale of unwrought precious metals. The SAPS also obtained and executed six search warrants. The affidavit supporting the application for the warrants mentioned the appellant as an active member of one of the companies alleged to have been involved in the commission of the offences. In March 2022, when the arrested accused appeared in court, the prosecution sought a postponement on the ground, among other things, that the NPA intended to request the appellant’s extradition from the US. On the premise that extradition proceedings against him were envisaged by the NPA, the appellant approached the high court for urgent relief. His first substantive prayer was for an order declaring that he had a right to submit representations to the Minister, and the DPP in relation to any extradition request that may be sought. The appellant’s second substantive prayer was for an order: ‘[d]eclaring that only the Minister, in his capacity as a member of the national executive of the Republic of South Africa, has the power to submit a request for the extradition of the applicant from the United States of America’. It was this second declarator, which was refused by the high court, which formed the subject matter of the appeal. On 16 September 1999, the Government of South Africa entered into the Extradition Treaty with the Government of the US (Treaty). The Treaty was signed by the then Minister of Justice and Constitutional Development, Dr Penuel Maduna on behalf of the Government of South Africa. In terms of Article 1 of the Treaty, parties agreed to extradite to each other, pursuant to the provisions of the Treaty, persons whom the authorities in the requesting State have charged with or convicted of an 2 extraditable offence. It is the exercise of power in terms of this Treaty which the appellant says vests in the Minister. The high court held that s 179 of the Constitution, read with ss 20 and 33 of the National Prosecuting Authority Act 32 of 1998 (the NPA Act), vests the NPA with the power to institute and conduct criminal proceedings on behalf of the State. Section 179(2) also empowers the NPA to ‘carry out any necessary functions incidental to instituting criminal proceedings’. Under this statutory scheme, prosecutions fall within the exclusive domain of the NPA. This includes the power to decide whether an extradition request to the US should be made. It further stated that, to find in favour of the appellant would be contrary to this scheme; it would permit the Minister to enter the exclusive terrain of the NPA by giving him the power to overrule its prosecutorial decisions. Consequently, the high court refused to grant the declaratory relief sought by the appellant. The SCA discussed the conferral of powers in the Constitution, the application of international law and the Extradition Act. It found the starting point to be the doctrine of legality, an incident of the rule of law, which entails that no power may be exercised beyond that which is conferred by law. To identify the source of power requires an exploration of what extradition is about. It involves three fundamental elements. These are acts of sovereignty between two States; a request by one State to another State for the delivery to it of an alleged criminal; and the delivery of the person requested for the purposes of trial or sentence in the territory of the requesting State. The procedure governing extradition operates at both international and domestic level. Extradition necessarily involves an international act, invoking executive authority. At international law it will be governing by rules of public international law including, customary international law. Domestically by domestic law. In South Africa, it will be the Extradition Act. Drawing from Constitutional Court judgments, the SCA held that extradition powers implicate foreign relations. In international law, it is presumed that where a State acts, it does so through its executive officials. This is in line with Article 7(2) of the Vienna Convention on the Law of Treaties. This is so because when an official makes undertakings on behalf of the State or performs such acts, he or she must have authority to do so, as such acts have binding consequences for the State. Section 231(1) of the Constitution provides that ‘the negotiating and signing of all international agreements is the responsibility of the national executive’. In terms s 232, customary international law is law in the Republic unless it is inconsistent with the Constitution or an Act of Parliament. In addition, courts are enjoined by s 233, when interpreting legislation, to prefer any reasonable interpretation consistent with international law over any alternative principle that is inconsistent with it. To hold that it is the NPA and not the executive that has decision-making power in respect of outgoing extradition requests would be contrary to established international law principles: it would accord to a non-executive domestic organ of state, an executive function at a State-to-State level. An intention so to depart from established international law principles would require clear expression in the Extradition Act. The SCA held that the real nub of the issue is the demarcation of functions between the NPA and the Minister. In other words, the line is drawn between the NPA’s power to prosecute and to do things necessarily incidental thereto, on the one hand, and the power of the executive to act in matters involving foreign affairs, on the other. In its role as the prosecuting authority, the NPA has the important function of determining who is to be prosecuted and what the charges are to be. The Minister has no role or power in the exercise of this prosecutorial function. However, if an identified accused is in a foreign State, this triggers the engagement of executive authority, as the NPA must seek assistance from the executive to make the extradition request to the foreign State. 3 The SCA held that the role of the NPA in the outgoing extradition process does not stretch to dictating to the Minister how to exercise this power, as this would be destructive of the separation of powers. It also held that this demarcation of powers and functions between the NPA and the Minister does not impinge on the NPA’s prosecutorial powers. This is because the principle of legality defines the ambit of the Minister’s lawful powers. While he has the power to decide whether and when to make an outgoing extradition request, he cannot do so in a manner that undermines prosecutorial independence. Whether he has acted within the realms of his authority will depend on the circumstances of the extradition request in question in any given case. The SCA concluded that it is clear that the Minister is central to the administration and implementation of the Extradition Act and the decision-making power in respect of all extradition requests vests in him. The reciprocal obligations that arise with extradition are to be dealt with by the Minister on behalf of the Republic. This not only applies to incoming extradition requests, as expressly provided for in the Extradition Act, but also, by implication, to outgoing requests to the US. This was stated by the Constitutional Court in President of the Republic of South Africa and Others v Quagliani, and Two Similar Cases [2009] ZACC 1; 2009 (4) BCLR 345 (CC); 2009 (2) SA 466 (CC). This conclusion is reinforced by international law and by the Constitution. ~~~~ends~~~~

4304

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No:602/2023 In the matter between: HEROLD GIE & BROADHEAD INC APPELLANT and RICHARD TIMOTHY HARRIS N O FIRST RESPONDENT PHYLLIS MARY EARLY SECOND RESPONDENT OSCAR WALTER & ALAN LEAONARD THIRD RESPONDENT HARVIE BROADHURST N O FOURTH RESPONDENT ANNELISIE JANSEN VAN RENSBURG-HATTINGH N O FIFTH RESPONDENT MICHELE ANN WALLIS N O SIXTH RESPONDENT SANTAM LIMITED THIRD PARTY Neutral citation: Herold Gie & Broadhead Inc v Harris N O and Others (602/2023) [2024] ZASCA 125 (13 September 2024) Coram: DAMBUZA, NICHOLLS and MABINDLA-BOQWANA JJA, and TOLMAY and MBHELE AJJA Heard: 03 May 2024 Delivered: 13 September 2024 2 Summary: Statutory interpretation – s 6(4) of the Housing Development Schemes for Retired Persons Act 65 of 1988 (HDSA) does not provide basis for a claim by a purchaser of a housing interest in a development scheme, to claim refund of purchase price entrusted to a legal practitioner under s 6(3)(a) of the HDSA, where the practitioner has disbursed the entrusted amount to the developer of the scheme, prior to the developer’s insolvency. 3 ORDER On appeal from: Western Cape Division of the High Court, Cape Town: (Le Grange ADJP, sitting as a court of first instance): 1 The appeal is upheld with costs. 2 Save for the decision on the second question, the order of the high court is set aside and replaced with the following: ‘2.1 The first question is decided in favour of the defendant. 2.2 The third question is referred back to the high court for determination. 2.3 The costs stand over for determination together with the remaining issues.’ 3 The case is referred back to the high court for determination of the remaining issues. JUDGMENT Dambuza JA (Nicholls and Mabindla-Boqwana JJA, and Tolmay and Mbhele AJJA concurring) Introduction [1] This appeal is against a judgment of the Western Cape Division of the High Court, Cape Town (the high court), given in six consolidated actions. Each action relates to cancellation of a life rights agreement concluded by each of the respondents as purchasers, with the St Leger Trust No IT 953/2008 (the developer or the trust)1, as the developer and seller of the life rights. The main issue is whether on insolvency of the developer, the purchasers had a claim in terms of s 6(4) of the Housing Development Schemes for Retired Persons Act 65 of 1988 1 also described in the agreement as the ‘grantor’ or ‘nominee’. 4 (the HDSA), for repayment of the purchase price by the appellant, Herold Gie and Broadhead Incorporated (HGB). This, in circumstances where HGB, into whose trust account the purchase price for the life rights was paid, had disbursed the purchase price to the trust before it became insolvent. The high court determined this issue in favour of the purchasers. It found that the purchasers had a valid claim in terms of s 6(4) of the HDSA for refund of the purchase price by HGB, and that the assertions made in their summons supported such a claim. HGB appeals against the high court judgment with the leave of that court. The background [2] Each of the six purchasers bought a ‘life right’ or a ‘housing interest’ in respect of a specific suite in the St Leger Retirement Hotel located in Muizenberg, Cape Town.2 Some of the life rights included garages. All the purchasers were retired persons as contemplated in the HDSA.3 Save for the different purchase prices paid by the purchasers, and the sizes of the properties to which each life right related, the facts pertaining to the conclusion and cancellation of the life rights agreements are similar. [3] The developer established the retirement hotel as a ‘development scheme’ as envisaged in s 1 of the HDSA. Under that section, read with s 1 of the Sectional Titles Act 95 of 1986 (Sectional Titles Act), a ‘development scheme’: ‘means a scheme in terms of which a building or buildings situated or to be erected on land within the area of jurisdiction of a local authority is or are, for the purposes of selling, letting or otherwise dealing therewith, to be divided into two or more sections, or as contemplated in the proviso to section 2 (a) [of the Sectional Titles Act]’. 2 In the life rights agreements a life right is defined as: ‘the housing interest as defined in the Act [the HDSA], and in this agreement is the right of the occupant and occupant’s spouse where applicable, to occupy the Suite and use the Garage, mentioned in the Covering Schedule, for the remainder of the life of the occupant, and subject to the provisions of Section 7 of the Act, for the life of the Occupant’s Spouse and in any event subject to the terms and conditions of this agreement.’ 3 In s 1 of the HDSA a retired person is a person who is 50 years of age or older. 5 [4] In addition to payment of the purchase price, the purchasers had to pay to the developer a specified monthly service fee or levy.4 The levy was payable until termination of the life right. On termination of the agreement a portion of the purchase price would be repaid by the developer to the purchaser, or to the purchaser’s estate, subject to certain conditions.5 Clause 16.4 of the agreement specified the formula for computation of the amount of the purchase price refundable to each purchaser or the executor of their estate, on termination of the agreement. The purchasers would also be entitled to 50% of the interest earned on the re-sale of their life rights. [5] On payment of the purchase price the purchasers took occupation of their units during the period June 2009 to November 2011. During June and July 2009, the purchasers authorised HGB, in writing, to pay to the developer all the moneys that had been entrusted to it as the purchase price in respect of the life rights. HGB released the funds to the developer accordingly. [6] In a letter dated 24 October 2014, the purchasers cancelled their life rights agreements and each demanded a refund of their purchase price. They alleged that they had not been furnished with the certificates of compliance contemplated under s 6(1)(a) of the HDSA6 and s 14(1)(a) of the National Building Regulations 4 Clause 7.1 of the Life Right Agreement. 5 Clauses 15.1 and 15.2. P27 In terms of Clause 15.2 the first condition for repayment was the return of the Certificate of Life Rights to the trust or an affidavit furnished by the purchaser or the executor of purchaser’s estate stating that: (a) the deponent is the legal holder of the Certificate of Life Rights, (b) the certificate got lost or destroyed, and that (c) despite a diligent search for the certificate, it had not been found. The second condition was vacation of the suite by the occupant and by his/her spouse where applicable. The third was that (to the satisfaction of the trust) the suite had been reinstated to the same condition it was in when the occupant (and spouse) took occupation. The last condition was resale of the suite and the purchase price and all amounts payable prior to occupation of the suite by the new purchase had been paid to and received by the trust. 6Section 6(1)(a) of the HDSA provides that: (1) Subject to subsection (3) and notwithstanding any other law, no developer may by virtue of a contract receive any consideration or any part thereof, unless— (a) an architect or a quantity surveyor has issued a certificate that the housing development scheme concerned has been erected substantially in accordance with any applicable officially approved building plans and town planning scheme and applicable local authority by-laws, and is sufficiently completed for the purposes of utilization of the housing interest concerned; 6 Standards Act 103 of 1977 (the NRBA)7. They alleged that the developer failed to inform them, prior to the conclusion of the agreement, that use and occupation of the retirement hotel, as contemplated in the agreement, would not be ‘legally possible’, despite being aware that the required certificates could not be issued. [7] On 17 February 2016, the developer was placed under provisional sequestration, and an order of final sequestration was granted on 9 March 2016.8 The purchasers duly lodged their claims for refund of the purchase price with the trustees of the insolvent developer’s estate. They received concurrent dividends.9 In October 2017, they instituted action proceedings against HGB, claiming a refund of the purchase prices which had been paid into HGB’s trust account. Proceedings in the high court [8] The purchasers’ claims for reimbursement of the purchase prices was founded on the provisions of s 6(4) of the HDSA. This section entitles a purchaser in a scheme developed in terms of the same Act, to a refund of the purchase price held in a legal practitioner’s trust account, where the developer of the scheme becomes insolvent. [9] In addition to pleading that when the developer became insolvent it had not met its obligation to furnish them with the s 6(1)(a) certificates, the purchasers 7 This section provides that: (1) A local authority shall within 14 days after the owner of a building of which the erection has been completed, or any person having an interest therein, has requested it in writing to issue a certificate of occupancy in respect of such building— (a) issue such certificate of occupancy if it is of the opinion that such building has been erected in accordance with the provisions of this Act and the conditions on which approval was granted in terms of section 7, and if certificates issued in terms of the provisions of subsection (2) and, where applicable, subsection (2A), in respect of such building have been submitted to it. 8 The high court stated that the trust was provisionally sequestrated on 17 February 2016. However, it was not in dispute that the application for sequestration was filed in court on 10 December 2015. 9 Mrs Parry-Davies whose estate is represented by the first respondent, her executor, received R988 836.15. The second respondent, Mrs Phyllis Early received R R433 384.61, the third respondent, Mr Oscar Walter and Alan Leonard Harvey Boadhurst NO – R390 495.60, the fourth respondent Mr Jansen van Rensburg-Hatting – R278 756 50, Mr Clifford Keet (now represented by the fourth respondent, Ms Michelle Ann Wallis NNO, and the sixth respondent, Mr Edgar Grondel received R397 036.07. 7 also pleaded that they cancelled their life rights agreements as communicated in the letter dated 24 October 2014 from their attorneys, Biccari Bollo Mariano Incorporated. In their replication the purchasers contended that they were not ‘bound’ by the written authority to release the funds which each of them had signed. They maintained that HGB was not entitled to rely on the authorisations. [10] HGB filed a special plea asserting that the purchasers’ claims had prescribed. This was because the purchasers instructed HGB to pay the purchase prices to the developer during June and July 2009. HGB had immediately acted on the instructions. However, the summons were served on HGB on 4 October 2017, more than three years after the claimed debts had arisen. Furthermore, Mrs Parry-Davies10 died on 18 June 2013, resulting in full discharge from exercise of rights and performance of obligations under the life rights agreements. Therefore, the executor of her (Mrs Davies’) estate had no locus standi to claim refund of moneys under the agreement, HGB contended. [11] Of relevance in this appeal is the plea by HGB, that s 6(4) of the HDSA finds no application in this case because by the time the trust became insolvent they had paid to the developer all the moneys that had been entrusted to them by the purchasers. There were therefore no moneys ‘kept in trust’ as specified in s 6(4) of HDSA. [12] Pursuant to a request by the parties, the high court separated three questions for anterior determination as points of law in terms of Rule 33(4) of the Uniform Rules of Court. The first point of law was formulated as follows: ‘“Whether Section 6(4) of the Housing Development Schemes for Retired Persons Act 65 of 1988 (the ‘HDSA’) can found an action by a purchaser of a ‘housing interest’ from a 10 The estate of the late Mrs Parry-Davies is represented in these proceedings by the first respondent in his capacity as the executor of Mrs Davies’ estate. Her husband Dr Davies predeceased her. 8 ‘developer’ for repayment by a ‘practitioner’ of an amount entrusted as contemplated in Section 6(3)(a) of the HDSA, by the purchaser to such ‘practitioner’ by virtue of a ‘contract’, where, in the absence of compliance with the provisions of Section 6(1) of the HDSA and prior to the ‘developer’ having become an insolvent, as it subsequently did, the ‘practitioner’ disbursed, to or for the account of the developer’, from the trust account of such ‘practitioner’, an amount equivalent to the amount so entrusted to the ‘practitioner’, as purported released to the ‘developer’ of the amount so entrusted to the ‘practitioner”.’ [13] The second point of law was: ‘“Whether Section 6(4) of the HDSA can found an action by a purchaser of [a] ‘housing interest’ from a developer’ of an amount entrusted as contemplated in Section 6(3)(a) of the HDSA, by the purchaser to such ‘practitioner’ by virtue of [a] ‘contract’ where, prior to the ‘developer’ having become insolvent, as it subsequently did, the purchaser cancelled the ‘contract’”.’ [14] The third question was: ‘“Whether, if Section 6(4) of the HDSA does not apply, the averments in the particulars of claim, read with the averments in the Defendant’s plea that are admitted by the Plaintiff(s), are sufficient to sustain an action”.’ [15] The high court determined all three questions in favour of the purchasers. It found that the argument made by HGB, that the purchasers could not rely on s 6(4) in the circumstances, was inconsistent with the purpose for which s 6 of HDSA was enacted, i.e. the protection of elderly persons against ‘possible exploitation or misfortune by a developer’. The conclusion reached by the high court was also premised on s 78 of the Attorneys Act 53 of 1979, relating to regulation of attorneys’ trust accounts. The court found that the purchasers were the trust creditors of HGB. Consequently, by releasing to the developer the entrusted moneys that were the equivalent of the purchase prices entrusted to it by purchasers, HGB had ‘violated an entrustment under s 6(3)(a) of the HDSA’. 9 The court held that s 6(4) confers a statutory right of action on the purchasers to claim reimbursement of the purchase price in the circumstances. [16] Thus, the high court held that s 6(4) of the HDSA confers a right of action on a purchaser who had entrusted purchase price funds to a practitioner, where such funds or an equivalent of the funds are released to the developer prior to compliance with s 6 (1) of that Act. Discussion (i) The issues referred for separate determination [17] Rule 33(4) provides that: ‘Special cases and adjudication upon points of law. — If, in any pending action, it appears to the court mero motu that there is a question of law or fact which may conveniently be decided either before any evidence is led or separately from any other question, the court may make an order directing the disposal of such question in such manner as it may deem fit and may order that all further proceedings be stayed until such question has been disposed of, and the court shall on the application of any party make such order unless it appears that the questions cannot conveniently be decided separately.’ [18] The purpose of this rule is to determine the plaintiff’s claim without the costs of delays of a trial. The rule facilitates convenient and expeditious disposal of litigation.11 Against this background, this Court has warned on many occasions that a decision under Rule 33(4) must be considered carefully.12 The issue(s) which are to be decided separately must be clearly defined. This is because in many cases, at first sight, there might appear to be discrete issues that may be considered separately. However, when properly considered, the issues will be 11 Denel (Edms) Bpk v Vorster 2004 (4) SA 481 (SCA); 25 ILJ 659; [2005] 4BLLR 313 para 3. 12 The City of Tshwane Metropolitan Municipality v Blair Atholl Homeowners Association [2018] ZASCA 176; [2019] 1 All SA 291 (SCA); 2019 (3) SA 398 (SCA) para 15. 10 found to be inextricably linked with the rest of the issues that arise in a particular case.13 ‘And even where the issues are discrete the expeditious disposal of the litigation is often served by ventilating all the issues at one hearing, particularly where there is more than one issue that might be readily dispositive of the matter. It is only after careful thought has been given to the anticipated course of the litigation as a whole that it will be possible properly to determine whether it is convenient to try the issue separately’.14 Therefore the trial court must give careful consideration to whether a contemplated separation of issues will result in a convenient, expeditious disposal of the case before it. Where it appears that separation of issues will not result in a convenient and prompt finalisation of litigation the court must refuse to order separate adjudication.15 [19] In this case, as stated, HGB filed a special plea of prescription that remains undetermined. Furthermore, the purchasers pleaded their cancellation of the life rights agreements. In addition HGB sought to repel the claim for repayment by relying on the authorisations to release the purchase price. It seems to me that the separated questions might be inextricably linked to these issues. Furthermore, the first question is framed in a complicated manner. Apart from this, the factual context and the legal framework within which the identified points of law arise in this case are complex, and have not received much consideration by our courts. It would have been more convenient to have all the issues fully ventilated in the same hearing. Nevertheless, we are constrained to considering the appeal on the issues determined by the high court. 13 Denel supra para 3. 14 Ibid. 15 Denel (Pty) Ltd v Vorster [2004] ZASCA 4; [2005] 4 BLLR 313 (SCA); 2004 (4) SA 481 (SCA); (2004) 25 ILJ 659. 11 (ii) Whether s 6(4) of the HDSA is applicable [20] In the summonses the purchasers set out the salient terms of the life agreements. They also pleaded the provisions of ss 6(1) and (b), 6(3)(a) and (b), and 6(4) of the HDSA. Their cause of action was framed in the following terms: ’15 No certificate in terms of s 6(1)(a) of the HDSA was ever furnished to [the purchasers], nor was any guarantee of the kind mentioned in s 6(3)(b) of the HDSA ever furnished to [the purchasers]. 16 [HGB] was at all times aware that the SLRH was a ‘development scheme’ as contemplated in s 1 of the HDSA and that the payments into its said trust account mentioned in 10 above were payments contemplated in s 6(3)(a) of the HDSA. 16A By letter dated 24 October 2014 from attorneys Biccari Bollo Mariano Inc. to SLT, a copy of which is annexure “Y” to the defendant's plea, the plaintiff lawfully cancelled the LRA on the grounds set out in the letter, including non-compliance with the provisions of s 6(1) of the HDSA, and demanded reimbursement of the purchase price paid under the LRA. 17 Through attorneys Biccari Bollo Mariano Inc., the plaintiff demanded payment from the defendant by 24 October 2016 of the amount of R2,4 million, being the sum of the amounts mentioned in 10 above, with interest on R220,000 thereof from 8 May 2009 and on R2,18 million thereof from 2 June 2009. 18 The defendant has refuted liability to make such payment’. [21] The HDSA regulates sales of life rights in housing development schemes built for retired persons. A right of occupation is defined in s 1 of the HDSA as: ‘the right of a purchaser of a housing interest- (a) which is subject to the payment of a fixed or determinable sum of money by way of a loan or otherwise, payable in one amount or instalments in addition to or in lieu of a levy, and whether or not such a sum is in whole or in part refundable to the purchaser or any other person or to the estate of the purchaser or of such other person; and (b) which confers the power to occupy a portion in a housing development scheme for the duration of a lifetime of the purchaser or, subject to section 7, any other person mentioned in the contract in terms of which the housing interest is acquired, but without conferring the power to claim transfer of ownership of the portion to which the housing interest relates.’ 12 [22] Section 6(4) of the HDSA, on which the purchasers’ claims are founded, must be interpreted within the context of the other provisions of s 6. Section 6(1) restricts the developer’s entitlement to receipt of the purchase price as follows: ‘6 Restriction on receipt of consideration (1) Subject to subsection (3) and not withstanding any other law, no developer may by virtue of a contract receive any consideration or any part thereof, unless- (a) An architect or a quantity surveyor has issued a certificate that the housing development scheme concerned has been erected substantially in accordance with any applicable officially approved building plans and town planning scheme and applicable local authority by-laws, and is sufficiently completed for the purposes of utilization of the housing interest concerned; (b) A copy of that certificate has been furnished to the purchaser concerned; (c) In the case where a housing interest includes a right of occupation, a practitioner has issued a certificate that the title deed of the land to which the right of occupation has been endorsed as contemplated in section 4 C, in so far as endorsement is required by that section, and a copy of that certificate has been furnished to the purchaser concerned.’ [23] In relation to this appeal s 6(1)(a) therefore prohibited receipt by the developer of moneys paid as the purchase prices for the life rights, under the HDSA, until two conditions had been met. First, an architect or estate agent had to furnish a certificate that guaranteed that the housing development scheme had been built substantially in accordance with applicable, approved building plans, the town planning scheme, and the applicable local authority by-laws. In addition, the certificate had to confirm that the housing unit to which the life right related, was suitable for the purposes of utilisation of the housing interest.16 Secondly, a copy of the certificate had to be furnished to the purchaser. [24] Section 6(2) is not relevant for determination of this appeal. Section 6(3) excludes the restriction on release of the purchase price to the developer (imposed 16 Subsections 6(1)(a) and (b) of the HDSA. 13 in terms of s 6(1)) in circumstances where the purchase price is paid to a legal practitioner, an estate agent or the developer. The section reads as follows: ‘Subsection (1) shall not apply to the receipt of any amount- (a) which the purchaser by virtue of a contract entrusts to a practitioner or an estate agent in his capacity as such, to be kept, for the benefit of a developer, in the trust account of the practitioner or estate agent until the provisions of subsection (1) have been complied with; or (b) which by virtue of a contract is paid to the developer if, before such payment, the purchaser was furnished with an irrevocable and unconditional guarantee by a banking institution registered otherwise than provisionally under the Banks Act, 1965 (Act No 23 of 1965), a mutual building society registered otherwise than provisionally under the Mutual Building Societies Act, 1965 (Act No 24 of 1965), a building society registered otherwise than provisionally under the Building Societies Act, 1986 (Act No 82 of 1986), or a registered insurer as defined in s 1 of the Insurance Act, 1943 (Act No 27 of 1943 (Act No 27 of 1943), in terms of which the banking institution, mutual, building society, building society or insurer undertakes to repay the said amount - to the purchaser, if the provisions of subsection (1) are not being complied with.’ [25] The exclusion under s 6(3) is premised on the purchase price being kept in a practitioner’s account, for the benefit of the developer, until the provisions of subsection 1 have been complied with. It is not in dispute that in this case the purchasers entrusted the moneys to HGB on this basis. [26] Section 6(4) empowers a practitioner to immediately repay to the purchaser the moneys entrusted and kept by him or her as provided in s 6(3). The section provides that: ‘If, in the circumstances contemplated in subsection (3), the developer becomes an insolvent before the provisions of subsection (1) have been complied with, any amount kept in a trust account in terms of paragraph (a) of subsection (3) or the repayment of which was guaranteed in terms of paragraph (b) of that subsection, shall immediately become payable to the purchaser concerned by the practitioner, estate agent, banking institution, mutual building society, building society or insurer concerned.’ 14 [27] The meaning and purpose of s 6(4) within the context of s 6 is clear. It is the protective measure provided to safeguard the interests of elderly purchasers in instances where a developer of a retirement home becomes insolvent before the guarantees on the suitability of the life right housing unit are in place as provided in s 6(1). Section 6(4) empowers the practitioner or estate agent to immediately release to the elderly purchaser, the purchase price that is kept in the trust account, thus protecting the purchaser from having to compete in the concursus creditorum. The section is triggered by the developer’s insolvency, in the circumstances where the purchase price, or a portion of the price, that was entrusted to the practitioner or an estate agent is ‘. . . kept, . . . in the trust account of the practitioner . . . ’ as provided under s 6(3)(a).17 [28] The facts of this case are comparable to those in Cierenberg en Andere v Rorich, Wolmarans18 & Luderitz. In that case too, the applicants in the high court were retired persons who had bought life rights in terms of the HDSA. The purchase prices were paid into trust accounts of two firms of attorneys, to be kept on behalf of the seller. When the seller was liquidated the applicants claimed a refund from the attorneys of the purchase price funds. Their claims for refund were founded on s 6(4), the practitioner having released the purchase in the absence of the s 6(1) certificates. It was not in dispute that the purchasers had been aware for more than three years that the attorneys had paid the moneys to the seller. And the court applications in terms of which the refunds were claimed, were served on the attorneys more than three years after the seller was liquidated. There the high court upheld the plea of prescription on the basis that the cause of action was complete because, pending the fulfilment of the s 6(1) conditions there was a statutory obligation on the attorneys to refund the purchase price to the 17 Section 6(3)(a) of HDSA. 18 Cierenberg en Ander v Rorich, Wolmarans & Luderitz 2003 (1) SA 40. 15 applicants upon the seller’s insolvency. The period of prescription was completed before service of the application on the practitioners. [29] It does not appear to me that the court in Cierenberg undertook a deliberate interpretative exercise of s 6(4), perhaps because it was clear on all accounts that the claims by the purchasers had prescribed. And the court in that case considered directly, the issue of prescription. On a proper interpretation, s 6(4) is not an open-ended statutory foundation for claims of repayment to purchasers, of moneys entrusted to practitioners under the HDSA. It is confined to instances where the developer becomes insolvent while there are moneys held in trust by a practitioner, for the developer’s benefit. [30] The high court’s conclusion, that the purchasers were HGB’s trust creditors, is inconsistent with the language of s 6(3)(a). Under that section the purchase price is entrusted to the practitioner, ‘to be kept for the benefit of the developer . . .’. Consequently, under ss 6(3) and (4), it is the developer rather than the purchaser, that is the practitioners’ trust creditor. Ordinarily, on sequestration of the developer, the purchase price funds would become part of the developer’s insolvent estate. Had this not been the case it would have been unnecessary to protect the purchasers from the concursus creditorum as provided in s 6(4). Are the averments in the particulars of claim, read with the averments in the Defendant’s plea that are admitted by the Plaintiff(s), sufficient to sustain an action? [31] The high court did not consider this point because, in its view, the purchasers could validly claim refund in terms of s 6(4). The issue whether a pleading lacks averments which are necessary to sustain an action or defence, is regulated under Rule 23 of the Uniform Rules of Court, under the heading ‘Exceptions and applications to strike out’. Under this Rule an excipient bears the 16 responsibility of establishing that, upon any construction of the particulars of claim, no cause of action is disclosed. Exceptions are not to be dealt with in an over-technical manner, and as such a court looks benevolently instead of over-critically at a pleading. 19 In addition a court has the power to defer consideration of an exception to the trial, particularly where the issue raised in the exception appears ‘interwoven’ with the evidence that will be led at the trial.20 These are some of the guiding principles that were not ventilated in the high court in relation to the pleading in this case because of the manner in which the issues were dealt with in the high court. It would be improper to decide this issue on appeal. The decision of the high court on this issue must, also be set aside, and the issue must properly considered together with the rest of the contested issues. [32] Consequently: 1 The appeal is upheld with costs. 2 Save for the decision on the second question, the order of the high court is set aside and replaced with the following: ‘2.1 The first question is decided in favour of the defendant. 2.2 The third question is referred back to the high court for determination. 2.3 The costs stand over for determination together with the remaining issues.’ 3 The matter is referred back to the high court for determination of the remaining issues. ___________________ N DAMBUZA JUDGE OF APPEAL 19 Erasmus and Van Loggerenberg; Superior Court Practice; Vol 2 D1-294. 20 Ibid at D1-301 including the authorities referred to therein. 17 Appearances: Counsel for the appellant: S Olivier SC with him JP White Instructed by: Clyde & CO, Cape Town Lovius Block Inc, Bloemfontein. Counsel for the respondents: J Rogers Instructed by: Biccari Bollo Mariano Inc, Cape Town McIntyre Van Der Post Inc, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 13 September 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 Herold Gie & Broadhead Inc v Harris N O and Others (602/2023) [2024] ZASCA 125 (13 September 2024) Today the Supreme Court of Appeal (SCA) upheld with costs an appeal against an order granted by the Western Cape Division of the High Court, in terms of which it found that a group of retired persons (the purchasers) had a valid claim in terms s 6(4) of the Housing Development Schemes for Retired Persons Act 65 of 1988, for refund of the purchase prices for life rights (also known as housing interests), which they had bought from a developer, the St Leger Trust. The life rights related to housing suites in the St Leger Retirement Hotel, Muizenberg, Cape Town. All the purchasers were retired persons as contemplated in the HDSA. On payment of the purchase prices into the trust account of Herold Gie & Broadhead Inc attorneys (HGB), the purchasers took occupation of their units during the period June 2009 to November 2011. During June and July 2009, the purchasers authorised HGB, in writing, to pay to the developer all the moneys that had been entrusted to them as the purchase prices in respect of the life rights. HGB released the funds to the trust accordingly. In October 2014, the purchasers cancelled their life rights agreements and each demanded a refund of their purchase price. They alleged that they had not been furnished with the certificates of compliance as per the provisions of s 6(1) of the HDSA and certain provisions of the National Building Regulations Standards Act 103 of 1977. On 17 February 2016, the developer was placed under provisional sequestration, and an order of final sequestration was granted on 9 March 2016. The purchasers lodged their claims for refund of the purchase prices with the trustees of the developer’s insolvent estate. They received concurrent dividends. 2 In 2017 the purchasers instituted court proceedings in the high court, against HGB claiming refund of the purchase prices. For their entitlement to repayment of these moneys they relied on s 6(4) of the HDSA. That section entitles a purchaser of a housing interest in a development scheme, to refund of purchase price paid into a practitioner’s trust account in terms of s 6(3)(a) of the HDSA, where the developer becomes insolvent. Part of the basis of the purchasers’ claim was that HGB released the funds before the certificates of occupation required under s 6(1) of the HDSA were issued and handed to them. HGB pleaded, amongst other things, that the purchasers’ claims had prescribed and that s 6(4) of the HDSA was not a proper basis for their claims when the funds were no longer in their trust account, and had been released the funds to the developer The high court found that the argument made by HGB, that the purchasers could not rely on s 6(4) in the circumstances, was inconsistent with the purpose for which s 6 of HDSA was enacted - the protection of elderly persons against ‘possible exploitation or misfortune by a developer’. On appeal the SCA reversed this finding, holding that s 6(4) could not sustain the purchasers’ claim for refund. It held that the purpose of the section was to protect the purchasers from a creditorum concursus if and when the developer became insolvent, by authorising the practitioner in whose trust account the purchase price was paid, to release the funds to the purchaser. Where the purchase price has been released to the developer the basis of a purchaser’s claim for refund cannot be s 6(4) of the HDSA. The SCA held that on a proper interpretation, s 6(4) is not an open-ended statutory foundation for claims of repayment by purchasers of purchase price moneys entrusted to practitioners under the HDSA. The application of the section is limited to instance where a developer becomes insolvent while the purchase price is still being kept in the practitioner’s trust account. The SCA ordered that the case revert to the high court for determination of the rest of the issues arising from the pleadings. ~~~~ends~~~~

4186

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1175/2022 In the matter between: THE STANDARD BANK OF SOUTH AFRICA LIMITED APPELLANT and PYGON TRADING CLOSE CORPORATION RESPONDENT (Case no. 14097/2020 in the court a quo) and in the matter between: THE STANDARD BANK OF SOUTH AFRICA LIMITED APPELLANT and JCICC NETWORK 100 CLOSE CORPORATION RESPONDENT (Case no. 4293/2021 in the court a quo) and in the matter between: THE STANDARD BANK OF SOUTH AFRICA LIMITED APPELLANT and JEROME BENJAMIN SWARTZ FIRST RESPONDENT LUCILLE SWARTZ SECOND RESPONDENT 2 (Case no. 4294/2021 in the court a quo) Neutral citation: Standard Bank of South Africa Limited v Swartz and Others (Case no 1175/2022) [2024] ZASCA 28 (22 March 2024) Coram: MBATHA, GORVEN and MOLEFE JJA and BLOEM and KEIGHTLEY AJJA Heard: 29 February 2024 Delivered: 22 March 2024 Summary: Practice and procedure – application for business rescue – no leave given to intervene and bring such application – no application before court – order placing close corporation in business rescue and allied orders not competent. Practice and procedure – application for business rescue – any such application withdrawn – order placing close corporation in business rescue and allied orders not competent. Practice and procedure – compromise – court has no jurisdiction to decide compromised dispute. Practice and procedure – court order – binding nature – order to be enforced. 3 __________________________________________________________________ ORDER ______________________________________________________________________________On appeal from: Western Cape Division of the High Court, Cape Town (Goliath DJP, sitting as court of first instance): 1 The appeal is upheld with costs. 2 The orders of the court a quo are set aside and the following orders are substituted: In case number 14097/2020 ‘The provisional order of liquidation granted on 18 May 2021 is made final.’ In case number 4293/2021 ‘The provisional order of liquidation granted on 9 June 2021 is made final.’ In case number 4294/2021 ‘The provisional order of sequestration of the joint estate granted on 10 June 2021 is made final.’ __________________________________________________________________ JUDGMENT __________________________________________________________________ Gorven JA (Mbatha and Molefe JJA and Bloem and Keightley AJJA concurring) [1] If the errors and their consequences were not so serious, this appeal could be said to arise from a comedy of errors. It concerns three related applications. They were heard simultaneously in the Western Cape Division of the High Court, Cape Town (the high court) by Goliath DJP. The first was an application for the liquidation of Pygon Trading CC (Pygon). The second for the liquidation of JCICC Network 4 100 CC (JCICC). And the third sought the sequestration of the joint estate of Dr Jerome Benjamin Swartz and Mrs Lucille Swartz (the joint estate). [2] Dr and Mrs Swartz were married to each other in community of property. I shall refer to Dr Swartz as Swartz for the sake of brevity. The joint estate held a 100 percent members’ interest in both Pygon and JCICC (the CCs). Swartz was the controlling mind of the CCs and of a number of other entities. The CCs and the joint estate held various commercial accounts with The Standard Bank of South Africa Limited (the bank). [3] The essential background follows. The application to liquidate Pygon was launched by The Body Corporate of the Montana Sectional Title Scheme (the Montana BC) on 2 October 2020. On 3 February 2021,1 the bank was granted leave to intervene and the application was postponed to 17 March. On 16 March, Swartz launched a business rescue application in respect of Pygon but withdrew it on 14 May. The Montana BC withdrew from the application on 18 May, on which date a provisional order liquidating Pygon, and returnable on 15 June, was granted at the instance of the bank. [4] JCICC was provisionally liquidated on 9 June. On 10 June, a provisional sequestration order was issued against the joint estate. On 14 June, Swartz launched an application for leave to intervene in the Pygon application so as to seek an order placing it in business rescue. That application closely mirrored the earlier application withdrawn by Swartz. The application for leave to intervene was stayed until a provisional trustee in the joint estate had been appointed. On 9 July, provisional 1 After this point, all the dates referred to are 2021 dates unless otherwise indicated. 5 trustees were appointed to the joint estate. The application for leave to intervene and to launch a business rescue application, the liquidation applications and the sequestration application were all ultimately directed to be heard together on 25 October and the various rules nisi were extended to that date. [5] The provisional trustees of the joint estate put up a report dated 21 October analysing the financial statements, assets and liabilities of Pygon. They concluded that it was hopelessly insolvent, both actually and commercially. They reported that there was no prospect of rescuing Pygon. Accordingly, they did not support the application to intervene or to seek leave to launch the intended business rescue application. They also declined to grant Swartz permission to launch such application himself. [6] On 23 November, a settlement agreement was concluded. On the same date Goliath DJP made it an order of court. This provided, in essence: (a) that the business rescue application in respect of Pygon was withdrawn; (b) that the application for the final liquidation of Pygon was postponed and the rule nisi extended to 10 February 2022; (c) that by no later than seven calendar days before 10 February 2022, an amount of R18 million plus VAT would be paid to the conveyancing attorneys appointed by the liquidators of Pygon in terms of a sale agreement envisaged to be concluded between the liquidators and Zylec Investments (Pty) Ltd (Zylec); (d) for the distributions to creditors to be made from that amount; (e) that if the payment and distributions were made as indicated, the provisional liquidation orders in respect of Pygon and JCICC and the provisional sequestration order in respect of the joint estate would be discharged on the return date; 6 (f) that if the payment and/or distributions were not made as indicated, final liquidation orders in respect of Pygon and JCICC and a final sequestration order of the joint estate would be granted on the return date. [7] The bank put up a supplementary affidavit deposed to on 24 January 2022 to inform the court of what had transpired in the interim. It annexed the sale agreement in which a signed offer in the sum of R18 million was ostensibly made on 21 November by Zylec for three sections in the Montana Sectional Title Scheme which were owned by Pygon. The offer was accepted by the joint liquidators for Pygon on 25 November. The sale agreement provided for payment of a deposit of R1,8 million within 48 hours from acceptance. The affidavit explained that the deposit had not been paid timeously. Due to non-performance by Zylec, the provisional liquidators for Pygon cancelled the sale agreement. [8] The bank’s affidavit set out allegedly fraudulent behaviour on the part of the person who had been on record as the attorney for the joint estate and the two CCs. This person was said to have forwarded supposed proofs of the payments of both the deposit and the full purchase price into an account of the conveyancers held with Nedbank Limited (Nedbank). Not only that but he claimed that the amount for the deposit had been paid by Zylec into his trust account. Nedbank put up an affidavit showing that both documents purporting to show that deposits had been made were fraudulent and that the moneys concerned had not in fact been deposited into any account held with it. A letter was also put up from the relevant Legal Practice Council which stated that it had ‘no record that [the person who had been on record as attorney was] a practising/non-practising member of the Legal Practice Council . . .’. It is common ground that no payment of R18 million was made by the due date or at all. 7 [9] The bank submitted that, since the R18 million had not been paid, the consent order of 23 November should be put into effect. As such, final liquidation orders should be granted in respect of Pygon and JCICC and the joint estate should be finally sequestrated. [10] On 10 February 2022, at the commencement of the hearing, counsel for the CCs and the joint estate handed up from the Bar an affidavit deposed to by Swartz. This did not in any way contradict the events following the grant of the order set out in the supplementary affidavit of the bank. He acknowledged the settlement agreement of 23 November and that it had been made an order of court by consent. He agreed that the amount of R18 million had not been paid on the due date or at all. He nevertheless contended that the two provisional liquidation orders and the provisional sequestration order should not be made final, as had been agreed to and ordered. The essential reason was that it had been envisaged that the R18 million was to be paid to Pygon as proceeds from a sale agreement concluded between the liquidators of Pygon and Zylec but that such agreement was never concluded. No criticism was levelled at the bank, nor was any averment made that the bank had in any way been involved in the conclusion or failure of the sale agreement. The only criticism was of Zylec and the person who Swartz had instructed to represent the CCs and the joint estate. [11] After hearing argument, the high court reserved judgment. It was handed down on 4 May 2022. The upshot was an order which discharged the provisional liquidation order for JCICC and the provisional sequestration order, placed Pygon in business rescue and granted allied orders appointing a business rescue practitioner and suspending the liquidation proceedings against Pygon in terms of s 131(6) of the 8 Companies Act 71 of 2008. In addition, the bank was ordered to pay the costs of all the proceedings. [12] The judgment of the high court did not mention or deal with the settlement agreement. It likewise did not mention or deal with the consent order of 23 November providing that the business rescue application had been withdrawn and that the two final liquidation orders and the final sequestration order had been consented to should payment not be made. The gist of the judgment was that the financial woes of the CCs and joint estate were brought about by the unreasonable conduct of the bank in closing the accounts held with it by the CCs and the joint estate. [13] The bank sought the leave of the high court to appeal but this was refused. As will be detailed below, in the judgment refusing leave, the settlement agreement was mentioned in passing and the order not at all. The appeal before us is with the leave of this court. [14] As regards the business rescue application, the position on 10 February 2022 was that the application for business rescue had never been launched. This because, in the first place, it was Swartz, a non-party to the Pygon application, who wished to do so. It was therefore necessary, before a business rescue application served before the court, for him to obtain leave to intervene in the Pygon application. The launch of the business rescue application required Swartz to have been granted such leave. No such leave was ever granted. As a result, the proposed business rescue application was never launched. 9 [15] In the second place, even if it could be said that Swartz had been given such leave, the first provision of the agreement and order of 23 November was that the business rescue application was withdrawn. By 10 February 2022, therefore, there was no business rescue application in existence. [16] On no basis can it thus be said that a business rescue application served before the high court on 10 February 2022. Goliath DJP granted an order on a non-existent application. It need hardly be said that doing so was impermissible and incompetent. Clearly, therefore, whatever the outcome of the balance of the relief granted by the high court, the order placing Pygon in business rescue, and the orders which flowed from it, cannot stand. [17] The balance of the relief granted by the high court now arises for consideration. This involves the liquidation applications and the application to sequestrate the joint estate. That dispute had been resolved by the settlement agreement of the parties on 23 November. That settlement amounted to a transactio, which is a compromise. It finally settles disputed or uncertain rights or obligations.2 The outcome of the applications in question was agreed upon. If payment was made, the provisional orders in each matter would be discharged. If payment was not made, the provisional orders in each matter would be made final. [18] A transactio is an absolute defence to the matter compromised, having the effect of res judicata.3 The object of a compromise is to ‘end, or to destroy, or to 2 The Road Accident Fund v Taylor and other matters [2023] ZASCA 64; 2023 (5) SA 147 (SCA) para 36 (Taylor). 3 Per Innes CJ in Western Assurance Co v Caldwell’s Trustee 1918 AD 262 at 270. 10 prevent a legal dispute’.4 In Taylor, a prior dictum of this court was approved to the effect that once ‘the parties have disposed of all disputed issues by agreement inter se, it must logically follow that nothing remains for a court to adjudicate upon or determine’.5 Taylor concluded: ‘To sum up, when the parties to litigation confirm that they have reached a compromise, a court has no power or jurisdiction to embark upon an enquiry as to whether the compromise was justified on the merits of the matter or was validly concluded.’6 [19] In addition, the settlement agreement was made an order of court. When a settlement agreement is embodied in a court order, the effect: ‘. . . is to change the status of the rights and obligations between the parties. Save for litigation that may be consequent upon the nature of the particular order, the order brings finality to the lis between the parties; the lis becomes res judicata (literally, “a matter judged”). It changes the terms of a settlement agreement to an enforceable court order.’7 Needless to say, that dictum applies foursquare to the present matter. [20] The power to make a settlement agreement an order of court derives from a long-standing practice of courts to assist parties to give effect to their compromise. It does not derive from any jurisdiction over the issues in the settled dispute due to the nature of a transactio explained above. There are three considerations which determine whether a court should make a settlement agreement an order.8 Presumably the high court was satisfied on all three scores since the settlement agreement was made an order of court. There was certainly no attack launched against the grant of the consent order of 23 November. 4 Estate Erasmus v Church 1927 TPD 20 at 26. 5 Taylor para 39. The reference is to Legal-Aid South Africa v Magidiwana and Others [2014] ZASCA 141; 2015 (2) SA 568 (SCA) para 22. 6 Taylor para 51. 7 Eke v Parsons [2015] ZACC 30; 2016 (3) SA 37 (CC) para 31 (Eke). References omitted. 8 Eke paras 25-26. 11 [21] An order once made may not generally be altered. The only bases of which I am aware to prevent the enforcement of a court order are if it is set aside or abandoned. A party in whose favour an order has been granted has the power to abandon it. The procedures available to set aside an order are stringent and few. The power to do so arises on appeal and by way of rescission or amendment. Grounds to rescind are narrow, the reasons for which were explained in Zuma v Secretary of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector Including Organs of State and others (Council for the Advancement of the South African Constitution and another as amici curiae): ‘It is trite that orders of this Court are final and immune from appeal. They are, however, rescindable, and the Legislature has carefully augmented the common-law grounds of relief by expressly providing for narrow grounds of rescission by crafting rule 42. Narrow those grounds are, for good reason, for the very notion of rescission of a court order constitutes the exception to the ordinary rule that court orders, especially those of this Court, are final. By its nature the law of rescission invites a degree of legal uncertainty. So, to avoid chaos, the grounds upon which rescission can be sought have been deliberately carved out by the Legislature.’9 The Constitutional Court gave reasons why orders cannot be interfered with other than on those narrow grounds: ‘Once a Judge has fully exercised his or her jurisdiction, his or her authority over the subject matter ceases. The other equally important consideration is the public interest in bringing litigation to finality. The parties must be assured that once an order of Court has been made, it is final and they can arrange their affairs in accordance with that order.’10 9 Zuma v Secretary of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector Including Organs of State and others (Council for the Advancement of the South African Constitution and another as amici curiae) [2021] ZACC 28; 2021 (11) BCLR 1263 (CC) para 82, citing with approval Vilvanathan v Louw NO 2010 (5) SA 17 (WCC); [2011] 2 All SA 331 (WCC) at 28J-29C. 10 Zondi v MEC for Traditional and Local Government Affairs and Others [2005] ZACC 18; 2006 (3) SA 1 (CC); 2006 (3) BCLR 423 (CC) para 28. See also Firestone SA (Pty) Ltd v Genticuro AG 1977 (4) SA 298 (A) at 306F-G. 12 [22] Setting the matter down for an order to be granted which gives effect to a prior consent order has been recognised by the Constitutional Court as a form of enforcement and is unobjectionable: ‘The type of enforcement may be execution or contempt proceedings. Or it may take any other form permitted by the nature of the order. That form may possibly be some litigation the nature of which will be one step removed from seeking committal for contempt; an example being a mandamus.’11 [23] That is what took place here. The consent order, which embodied the settlement agreement, had to be enforced if it was not set aside. No application was launched to rescind or appeal the consent order. Nor was it abandoned. It was of full force and effect. As such, the high court was not entitled to ignore it and to enter the terrain of the previous lis between the parties. The court had no jurisdiction to do anything other than give effect to the consent order. The only additional information required was whether or not the amount of R18 million had been paid timeously or at all. That undisputed information was before it. In the circumstances, it was obliged to make the final orders sought by the bank. [24] Therefore, the position on 10 February 2022 regarding these three applications was as follows. An order had been granted that if the R18 million was paid by the due date, it would be distributed as agreed and the provisional orders discharged. If not, the provisional orders would be made final. The court no longer had jurisdiction to determine the settled disputes in the three applications. There was no longer a lis between the parties concerning those issues. The court’s only jurisdiction was to grant the orders which were agreed to and embodied in the order of 23 November. 11 Eke para 31. 13 Which of those orders was to issue depended solely on the payment or otherwise of the R18 million. [25] Despite having no jurisdiction to do so, the high court simply ignored the consent order and purported to enter into the merits of the settled liquidation and sequestration applications. What is of more concern is that the judgment did not even mention the settlement agreement or the court order let alone attempt to provide any grounds in law which entitled the high court to refuse to give effect to the latter. In addition, the judgment did not consider, or in any way deal with, the lack of jurisdiction of the high court to determine the compromised disputes. [26] The high court accordingly made two fundamental errors. It granted an order on a non-existent application. It then assumed jurisdiction to adjudicate or determine issues which had been disposed of by agreement and over which it had no jurisdiction. [27] The bank had squarely raised the existence of, and had sought to rely on, the settlement agreement, both in the main application and in that for leave to appeal. The only reference to the settlement agreement made by the high court was in the judgment on the application for leave to appeal, in the following terms: ‘Standard Bank also relied on a settlement agreement entered between the parties which provided that the application for business rescue of Pygon was withdrawn subject to the sale of property for 18 Mill. It was subsequently discovered that the person who had negotiated the contract was a fraud, and I concluded that the agreement was no longer binding on the parties.’ Apart from failing to give reasons why that conclusion was open to her, and the failure to even mention, let alone consider, the law concerning transactio, Goliath DJP did not even mention that a court order had been granted pursuant to the 14 agreement. More significantly, she did not mention or deal with the fact that she herself granted the consent order or why it should not have been enforced. [28] Courts are not entitled to simply wish away previous orders or to ignore them totally when they bear on a matter at hand. In addition, where there is no application to set aside the order or the agreement, it is not acceptable to deal with either in the kind of offhand manner as was done in the judgment refusing leave to appeal. The entire approach taken to the matter by the high court must regrettably be deprecated in the strongest possible terms. [29] All of this means that, in regard to the liquidation and the sequestration applications, the high court lacked the jurisdiction to grant the orders in question. Since it also granted relief on a non-existent application for business rescue, none of the orders granted by the high court were competent. It is thus clear that the appeal must succeed and the orders of the high court must be set aside. Effect must be given to the order of 23 November whereby the CCs are to be placed in final liquidation and the joint estate finally sequestrated. As was canvassed during the hearing, the relevant legislation provides that the costs of litigation leading to such orders form part of the costs of administration in insolvency. As such, no orders relating to costs need be made, either on appeal or in the high court substituted orders. [30] In the result, the following order issues: 1 The appeal is upheld with costs. 2 The orders of the court a quo are set aside and the following orders are substituted: In case number 14097/2020 ‘The provisional order of liquidation granted on 18 May 2021 is made final.’ 15 In case number 4293/2021 ‘The provisional order of liquidation granted on 9 June 2021 is made final.’ In case number 4294/2021 ‘The provisional order of sequestration of the joint estate granted on 10 June 2021 is made final.’ ____________________ T R GORVEN JUDGE OF APPEAL 16 Appearances For the appellant: B J Manca SC (Heads of argument drawn up by B J Manca SC with A H Cowlin) Instructed by: Edward Nathan Sonnenbergs Incorporated, Cape Town MM Hattingh Attorneys Incorporated, Bloemfontein For the respondents: W A Fisher Instructed by: Sylvester Vogel Attorneys, Cape Town Ryan Ishmail Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 22 March 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 Standard Bank of South Africa Ltd v Swartz and Others (Case no 1175/2022) [2024] ZASCA 28 (22 March 2024) Today the Supreme Court of Appeal upheld an appeal from a judgment of the Western Cape Division of the High Court, Cape Town (the high court) in which Goliath DJP considered three related applications brought by the Standard Bank of South Africa Ltd (the bank). The first was an application for the liquidation of Pygon Trading CC (Pygon). The second for the liquidation of JCICC Network 100 CC (JCICC). And the third sought the sequestration of the joint estate of Dr Jerome Benjamin Swartz and Mrs Lucille Swartz (the joint estate). Dr Swartz (Swartz) was the guiding mind of the two close corporations in question (the CCs) and of other entities. During the course of litigation, provisional liquidation orders in respect of the CCs were granted as was a provisional sequestration order for the joint estate. After the latter order was granted, Swartz sought leave to intervene in the Pygon application in order to launch an application for the business rescue of Pygon. The application to intervene was never adjudicated on. The disputes between the parties were settled and the settlement agreement was made an order of court by Goliath DJP. The essence of the settlement and order was that the application for business rescue was withdrawn. It was agreed that payment of R18 million was to be made to the bank. If made by a certain date, the provisional orders in question would be discharged on the return date. If not, the provisional orders would be made final. 2 The R18 million was not paid on due date or at all. On the return date, the bank requested that the consent order be put into effect by way of final liquidation orders in respect of the CCs and a final sequestration order in respect of the joint estate. However, after reserving judgment, Goliath DJP placed Pygon in business rescue and granted allied orders. She also discharged the provisional liquidation order in respect of JCICC as well as the provisional sequestration order in respect of the joint estate. Her judgment did not mention the settlement agreement or the consent order which she had previously granted. The Supreme Court of Appeal held that Goliath DJP had failed to appreciate that the application for business rescue had never been launched because Swartz had not been given leave to intervene and, if it had been launched, it had been withdrawn in the settlement agreement. She accordingly granted an order on a non-existent application. In addition, she failed to appreciate that the lis between the parties concerning the liquidation and sequestration applications had been compromised and that, as a result, she had no jurisdiction to deal with the merits of those applications. She thus granted orders concerning those applications where she had no jurisdiction to do so. The Supreme Court of Appeal thus set aside the orders of the high court and substituted orders finally liquidating the two CCs and finally sequestrating the joint estate. ~~~~ends~~~~

4333

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 548/2023 In the matter between: JOYCE SEABERRY BRITTON APPELLANT and MINISTER OF JUSTICE AND FIRST RESPONDENT CORRECTIONAL SERVICES DIRECTOR OF PUBLIC PROSECUTIONS, SECOND RESPONDENT WESTERN CAPE MAGISTRATE, PRETORIA THIRD RESPONDENT ADDITIONAL MAGISTRATE, CAPE TOWN FOURTH RESPONDENT Neutral citation: Britton v Minister of Justice and Correctional Services and Others (548/2023) [2024] ZASCA 148 (31 October 2024) Coram: ZONDI DP and NICHOLLS and KGOELE JJA and HENDRICKS and MASIPA AJJA Heard: 16 August 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down of the judgment is deemed to be 14h00 on 31 October 2024. Summary: Section 5(1)(a) of the Extradition Act 67 of 1962 – finding of constitutional invalidity does not apply retrospectively – held that Constitutional Court’s order was prospective in effect. 2 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Sher J, sitting as court of first instance): The appeal is dismissed with costs including the costs of two counsel, where so employed. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Nicholls JA (Zondi DP and Kgoele JA and Hendricks and Masipa AJJA concurring): Introduction [1] This appeal concerns the extradition of Joyce Seaberry Britton (Ms Britton), a citizen of the United States of America (USA), to her country of origin. Ms Britton faces various counts of tax evasion in the State of Illinois, where she formerly practised as an attorney. She fled the USA and has been living in Cape Town since approximately October 2002. The central issue for determination is whether the finding by the Constitutional Court in Smit v Minister of Justice and Correctional Services and Others (Smit),1 that s 5(1)(a) of the Extradition Act 67 of 1962 (the Act), is unconstitutional and invalid, is retrospective in effect. If this is the case, then the notice of extradition and the warrant of arrest issued in terms of that section, in respect of Ms Britton, falls to be declared unlawful and set aside. [2] The Constitutional Court in Harksen2 detailed the three bases upon which extradition may be sought in South Africa under the Act.3 The first, and which this 1 Smit v Minister of Justice and Correctional Services and Others [2020] ZACC 29; 2021 (3) BCLR 219 (CC); 2021 (1) SACR 482 (CC) (Smit). 2 Harksen v President of the Republic of South Africa and Others [2000] ZACC 29; 2000 (2) SA 825 (CC); 2000 (1) SACR 300; 2000 (5) BCLR 478. 3 Ibid para 5; Gueking v President of South Africa [2002] ZACC 29; 2003(3) SA 34 (CC); 2004 (9) BCLR 895 (CC); 2003 (1) SACR 404 (CC) (Gueking) para 12. 3 appeal is concerned with, is where the person is accused of an extraditable offence committed in the jurisdiction of a foreign state with which South Africa has an extradition agreement. The second is where there is no extradition agreement with the foreign state but the President has consented to the person being extradited. The third is where the foreign state has been ‘designated’ by the President. [3] The extradition process itself has different stages.4 Once there exists an extradition treaty between a foreign state and the Republic of South Africa, as is the case here, the Minister of Justice and Correctional Services (the Minister), after receiving an extradition request from the foreign state, has the power to notify a magistrate of such a request. In terms of s 5(1)(a) the notification empowers the magistrate to issue a warrant for the arrest of such a person regardless of their whereabouts. [4] Therefore, the first stage in the extradition process is the arrest of the person concerned under s 5(1)(a) or s 5(1)(b). The second stage is the holding of an enquiry under s 9(1),5 where the magistrate makes a finding in terms s 10,6 whether the evidence is sufficient to have the person surrendered to the foreign state. If such a 4 Gueking para 13 -17; Smit v Minister of Justice and Correctional Services and Others [2020] ZACC 29; 2021 (3) BCLR 219 (CC); 2021 (1) SACR 482 (CC) paras 49-50. 5 Section 9(1) of the Extradition Act 67 of 1962 (the Act) provides that: ‘Any person detained under a warrant of arrest or a warrant for his further detention, shall, as soon as possible be brought before a magistrate in whose area of jurisdiction he has been arrested, whereupon such magistrate shall hold an enquiry with a view to the surrender of such person to the foreign State concerned’. 6 Section 10 of the Act provides that: ‘(1) If upon consideration of the evidence adduced at the enquiry referred to in section 9 (4) (a) and (b) (i) the magistrate finds that the person brought before him or her is liable to be surrendered to the foreign State concerned and, in the case where such person is accused of an offence, that there is sufficient evidence to warrant a prosecution for the offence in the foreign State concerned, the magistrate shall issue an order committing such person to prison to await the Minister's decision with regard to his or her surrender, at the same time informing such person that he or she may within 15 days appeal against such order to the Supreme Court. (2) For purposes of satisfying himself or herself that there is sufficient evidence to warrant a prosecution in the foreign State the magistrate shall accept as conclusive proof a certificate which appears to him or her to be issued by an appropriate authority in charge of the prosecution in the foreign State concerned, stating that it has sufficient evidence at its disposal to warrant the prosecution of the person concerned. (3) If the magistrate finds that the evidence does not warrant the issue of an order of committal or that the required evidence is not forthcoming within a reasonable time, he shall discharge the person brought before him. (4) The magistrate issuing the order of committal shall forthwith forward to the Minister a copy of the record of the proceedings together with such report as he may deem necessary.’ 4 finding is made, the Minister then has a discretion under s 11,7 to order the surrender of the person to the foreign state. It is the initial stage that is at issue in this appeal, namely the arrest of Ms Britton under s 5(1). [5] Section 5 of the Act provides that: ‘(1) Any magistrate may, irrespective of the whereabouts or suspected whereabouts of the person to be arrested, issue a warrant for the arrest of any person- (a) upon receipt of a notification from the Minister to the effect that a request for the surrender of such person to a foreign State has been received by the Minister; or (b) upon such information of his or her being a person accused or convicted of an extraditable offence committed within the jurisdiction of a foreign State, as would in the opinion of the magistrate justify the issue of a warrant for the arrest of such person, had it been alleged that he or she committed an offence in the Republic.’ Background [4] The charges against Ms Britton date back to the period between 1999 to 2002. The allegations made against Ms Britton are as follows. She was employed through the Department of Children and Family Services to provide legal services to the State of Illinois for which she received approximately $4,1 million. This was based on fraudulent billing. She claimed to have been working on cases for prospective adoptive parents, when in fact no work had been done. She evaded income tax and instructed 7 Section 11 of the Act provides that: ‘The Minister may- (a) order any person committed to prison under section 10 to be surrendered to any person authorized by the foreign State to receive him or her; or (b) order that a person shall not be surrendered- (i) where criminal proceedings against such person are pending in the Republic, until such proceedings are concluded and where such proceedings result in a sentence of a term of imprisonment, until such sentence has been served; (ii) where such person is serving, or is about to serve a sentence of a term of imprisonment, until such sentence has been completed; (iii) at all, or before the expiration of a period fixed by the Minister, if he or she is satisfied that by reason of the trivial nature of the offence or by reason of the surrender not being required in good faith or in the interests of justice, or that for any other reason it would, having regard to the distance, the facilities for communication and to all the circumstances of the case, be unjust or unreasonable or too severe a punishment to surrender the person concerned; or (iv) if he or she is satisfied that the person concerned will be prosecuted or punished or prejudiced at his or her trial in the foreign State by reason of his or her gender, race, religion, nationality or political opinion.’ 5 her secretary to destroy all her records. She then liquidated $2,5 million of her assets which she deposited in a Swiss bank account and fled to South Africa. [5] Two indictments were filed against Ms Britton, one in the Circuit Court of Cook County in 2005 and the other in the US District Court, Northern District of Illinois in 2006. She was charged with offences of theft by deception, theft by unauthorised control over property, and various income tax related charges concerning the evasion of the payment of taxes and the failure to submit tax returns over a period of four years. A warrant for her arrest was issued. She was disbarred by the Supreme Court of Illinois in January 2005. It is not disputed that the offences with which Ms Britton was charged are extraditable offences in terms of the extradition treaty between South Africa and the USA. [6] Ms Britton first learnt in 2007 that the authorities in the USA were intent on seeking her extradition. On 4 February 2009 she appeared in the Cape Town Magistrates Court for the purposes of holding an inquiry in terms of the Act. She successfully challenged the lawfulness of those extradition proceedings in the Western Cape High Court (the high court). Unbeknownst to Ms Britton, the USA government sent through another request for her extradition in 2011. As far as Ms Britton was concerned, nothing further occurred until some eight years later when in October 2017 she was advised by a member of the South African Police Services that a request had been received for her extradition. It is these extradition proceedings that are the subject of this appeal. [7] The current extradition process commenced on 27 February 2017, when the USA sent a diplomatic note to the Department of International and Foreign Affairs in South Africa to request the extradition of Ms Britton. The National Director of Public Prosecutions was informed of the request, and on 20 June 2017 the Minister issued a notice for her extradition in terms of s 5(1) of the Act. On 18 July 2017, the magistrate issued a warrant for her arrest in terms of the s 5(1)(a) of the Act. She was subsequently arrested on 12 October 2017 and immediately released on bail. 6 In the high court [8] In 2018 Ms Britton launched proceedings in the high court claiming the following relief: ‘1. Declaring that section 5(1) of the Extradition Act 67 of 1962 (the Extradition Act) is inconsistent with the Constitution of the Republic of South Africa, 1996 (the Constitution) and invalid. 2. Declaring that the notification dated 20 June 2017, purportedly issued in terms of section 5(1)(a) of the Extradition Act by the First Respondent to the effect that he had received a request for the surrender of the Applicant to the United States of America (the notification) is inconsistent with the Constitution and invalid. 3. Reviewing and setting aside the First Respondent’s decision to issue the notification. 4. Declaring that the warrant of the Applicant’s arrest purportedly issued in terms of section 5(1)(a) of the Extradition Act by the Third Respondent on 18 July 2017 (the warrant of arrest) is inconsistent with the Constitution and invalid. 5. Reviewing and setting aside the Third Respondent’s decision to issue the warrant of arrest. 6. Declaring the Applicant’s arrest on 12 October 2017 to be inconsistent with the Constitution, unlawful and invalid. 7. . . . ’ By the time the matter was heard in the high court the primary issue for determination was whether Ms Britton was entitled to relief consequent upon Smit which had been delivered on 18 December 2020, more than three years after the warrant for her arrest had been issued and executed. The high court dismissed her application but granted leave to appeal to this Court. [9] The majority in Smit8 found s 5(1)(a) to be inconsistent with the Constitution, in that, when issuing a warrant of arrest, all that was required of the magistrate to issue a warrant was a notification from the Minister. The magistrate did not have to apply his or her mind in any way, nor was there any exercise of a discretion. Instead, a magistrate was obliged to act on the mere say-so of the Minister. As the section implicated the right in s 12(1)(a) of the Constitution not to be arbitrarily deprived of freedom, it had to satisfy both a substantive and a procedural component. The Constitutional Court found that the substantive facet of the section was satisfied by the 8 Smit fn 1 paras 103-107, 111-114, 147 and 151. 7 need to arrest for the purposes of fulfilling international obligations and of considerations of reciprocity and comity among nations. [10] However, the majority found that this was not the case with the procedural facet of s 5(1)(a), which required that no one be deprived of their liberty unless fair and lawful procedures had been followed. This, said Mdlanga J, writing for the majority, meant that the magistrate should play the oversight role of an independent arbiter, rather than merely rubberstamp what a member of the executive places before her. Unlike s 5(1)(b), which requires the magistrate to weigh up facts and to reach a decision on them, thereby affording the magistrate the opportunity ‘to act as a magistrate’, s 5(1)(a) did not permit a magistrate to exercise any judicial discretion. [11] On this basis the Constitutional Court declared s 5(1)(a) to be inconsistent with the Constitution and invalid. Without giving reasons therefor, it ordered that the declaration of invalidity ‘takes effect from the date of this order’.9 The date of that order was 18 December 2020. This was after the arrest of Ms Britton on 12 October 2017 but while her extradition was pending. [12] The high court rejected the argument that despite its prospectivity, the order was applicable to Ms Britton. It reasoned: ‘49. The fact that the learned judge failed to comment in this regard, or to expressly set out his rationale for making an order which was prospective in effect, as opposed to one which was retrospective, in accordance with the default position, does not mean that this aspect was not considered. As was pointed out in Cross-Border, judges must be taken to be ‘well-appraised’ of the consequences of a declaration of constitutional invalidity, and their ‘silence’ when making such a declaration must not readily be understood to mean that there was ‘judicial inadvertence’ on their part. 50. In my view, considering the context of the minority and majority judgments in Smit as a whole, one must conclude that the selfsame considerations as those which motivated the minority against the default position being implemented in respect of the declaration of constitutional invalidity pertaining to s 63 of the Drugs Act, must have motivated the determination in paragraph 10 of the order of the majority, that the declaration of constitutional invalidity in respect of s 5(10)(a) of the EA was also to be prospective. 9 Ibid para 155. 8 51 In this regard, making a default order which was retrospective would have nullified all extradition proceedings and orders for extradition which had been previously made, since the time when the Constitution came into operation i.e since 1997, and would have invalidated all pending extradition proceedings where extraditees had been arrested in terms of s 5(1)(a), which had not been finalized as at the date of the decision. This would obviously have caused immeasurable chaos and disruption in international relations between SA and partner states with whom it had entered into extradition treaties and would have damaged its international standing and reputation. It would, at least in regard to pending extraditions, have resulted in convicted foreign criminals and fugitives being rendered non-extraditable, resulting in a wholesale failure of justice.’ (Citations omitted.) In this Court [13] In this Court, the challenge to Ms Britton’s notice of extradition and warrant of arrest crystallised into two points, namely whether Smit applied retrospectively and what was described by Ms Britton’s counsel as the ‘rubberstamping’ argument. The question of the previous extradition applications and the delay in bringing the current extradition application was one of the main challenges to Ms Britton’s arrest in the heads of argument. However, it was accepted that this Court was bound by McCarthy v Additional Magistrate, Johannesburg and Others.10 There, it was held that a delay of approximately nine years before a third warrant was issued, was not sufficient grounds for an indefinite stay of proceedings of an enquiry in terms of ss 9 and 10 of the Act. This was with a view to surrendering the appellant in that case to the USA. In any event, said the court, the significance of the delay would be a matter for consideration at a later stage when the Minister, in his discretion would decide whether, in terms of s 11 of the Act, to surrender the person to the foreign state. I now deal with the two arguments before this Court. Rubber-stamping [14] This was an argument that counsel for Ms Britton informed us he had thought of the night before the hearing. It was not raised in the heads of argument and the state had not had an opportunity to consider it. As a result, it was agreed that supplementary heads would be filed by both parties on this point. The notion of 10 McCarthy v Additional Magistrate, Johannesburg [2000] ZASCA 191; [2000] 4 All SA 561 (A) paras 30, 43 and 46. 9 rubberstamping espoused by the Constitutional Court was taken further and in a different context. It was contended that not only did the Pretoria Magistrate fail to exercise an independent mind when he issued the warrant for Ms Britton on the say-so of the Minister (in line with the majority finding in Smit), but that he also did no more than merely rubberstamp the draft warrant that was placed before him. This is allegedly evidenced from the text of the warrant and the magistrate’s own affidavit. [15] The warrant of Ms Britton reads as follows: ‘. . . WHEREAS a request under Section 4(1) of the Extradition Act 67 of 1962, has been received and a notification under Section 5(1)(a) has been issued for the surrendering of one FATIMA JOYCE BRITTON @ JOYCE SEABERRY BRITTON date of birth 27 August 1950, United State National, Passport number 201726793. WHEREAS I am in receipt of information under oath that a warrant of arrest has been issued in the UNITED STATE OF AMERICA and she is wanted on Two (2) counts of theft by deception, in violation of chapter 720, Two (2) counts theft by unauthorized control over property, in violation of Chapter 720, section 5/16-1 (a) of the IIinois Compiled Statues and counts five (5) through eight (8) she willful failure to file income tax returns for the years 2000, 2001, 2002 and 2023 in violation of Chapter 35, Act 5 Section 1301 of Illinois Compiled States. AND WHEREAS I am also of the opinion, based upon information placed before me, that the issuing of a warrant of arrest in respect of FATIMA JOYCE BRITTON @ JOYCE SEABERRY BRITTON. Would have been justified on charge of theft by deception, contrary to chapter 720 and willful failure to file income tax return contrary to United States Code 7203, had it been alleged that he committed the said offences in the Republic, and that he is a person liable to be surrendered to the UNITED STATE OF AMERICA. You are hereby directed to arrest him and bring him before a lower court in accordance with the provisions of Section 50 of the Criminal Procedure Act, 1977 (Act 51 of 1977). . . . ’ [16] The magistrate in his affidavit stated that the decision to issue a warrant of arrest in terms of s 5(1)(a) does not involve the exercise of any discretion on his part. Instead, he must determine objectively whether the Minister has issued a s 5(1)(a) 10 notification for the surrender of a person to a foreign state. If there is such a notice, said the magistrate, he has no discretion to refuse to issue a warrant. If there is no such notice then the magistrate has the discretion to refuse to issue the warrant, alternatively to satisfy himself that the requirements of s 5(2) have been met. [17] It was argued that, in addition, the magistrate could not have considered the documents before him, nor the exact terms of the draft order provided to him. The basis for this is said to be found in the text of the warrant in the following respects: Ms Britton pointed out that there is a reference to s 4(1)(b) although there is no evidence to that effect placed before the magistrate; the pronouns used for Ms Britton are male in the third paragraph of the warrant; the warrant uses phraseology found in s 5(1)(b) even though the magistrate was not required to issue a warrant in terms of that section; and, there is a reliance on the USA statutory offences instead of referring to their South African equivalents. It is submitted that from a cursory look at the warrant it is apparent that the magistrate did not apply his mind to the actual warrant but merely signed the draft warrant which the police had placed before him, unaccompanied by a written request. [18] What is clear is that the magistrate did not believe that he had a discretion to refuse to issue a warrant in terms of s 5(1)(a) once the jurisdictional requirements stated by the minority in Smit were present. These are a notification by the Minister; that the Minister has received a request from a foreign state; that the request is for the surrender of the person to the foreign state; that the offence is in respect of an extraditable offence.11 As such the warrant in this respect fell into the category which was criticised and found to be unconstitutional by the majority in Smit. But what is not apparent is that from the text alone, the magistrate can be accused of merely rubberstamping the warrant without reading it properly or applying his mind to it. [19] Many of the latter complaints were not raised in the pleadings. The use of male pronouns in the third paragraph of the warrant was raised for the first time in reply and the magistrate did not have an opportunity to explain the error. The correct pronoun is used in the second paragraph of the warrant although not in the third paragraph. The 11 Smit fn 1 above para 113. 11 undisputed fact is that the magistrate was aware of Ms Britton’s gender. The use of s 5(1)(b) phraseology was not raised in the papers. In any event this is irrelevant as the magistrate explained in his affidavit that notwithstanding the use of terminology of s 5(1)(b) the warrant of arrest was clearly sought and granted in terms of s 5(1)(a). [20] The magistrate also said that when issuing a warrant, he considered the offences for which the person is sought in the requesting state and then determined whether those would be offences in South Africa. The magistrate stated that if Ms Britton had committed the offence of ‘theft by deception contrary to chapter 720 and wilful failure to file income tax return[s] contrary to United States Code 7203’ then a warrant could have been issued in South Africa. It is correct that none of the specific offences mentioned by the magistrate exist in South Africa and are statutory offences in the USA. However, the magistrate considered whether these are offences in South Africa. He stated that ‘theft by deception’ was equivalent to fraud in South Africa. [21] As regards the reference to s 4(1) it is difficult to understand why this would justify a finding that the magistrate did not apply his mind before issuing the warrant. Section 4(1) sets out that any request for the surrender of a person to a foreign state shall be made through diplomatic channels to the Minister. That it was recorded in the warrant is factually correct. [22] The argument that on the face of it the magistrate merely rubberstamped the draft warrant of arrest without paying any attention to the contents thereof, and thus in effect merely rubberstamping what was placed before him, is not borne out by the evidence. This submission must fail. Retrospectivity [23] What has to be considered by this Court is whether the Smit order of invalidity made by the Constitutional Court on 18 December 2020 applies to the arrest of Ms Britton although her arrest was three years prior to that date. The supremacy clause in the Constitution automatically renders any unconstitutional law a nullity ab initio. A court order declaring a law to be unconstitutional does not invalidate the law but merely 12 declares it to be invalid.12 Thus, the default position in all declarations of constitutional invalidity is retrospectivity. Section 98(6) of the 1993 Interim Constitution specifically provided that orders of invalidity would not invalidate any act permitted before the coming into effect of the declaration of invalidity.13 Now s 172(1)(b)(i) permits a court in the interests of justice and equity to limit the retrospective effects of an order of invalidity. This is done by balancing the disruptive effects of the retrospectivity against the need to grant effective relief to an applicant and others in a similar situation. [24] The argument on behalf of Ms Britton is that until 18 December 2020, s 5(1)(a) provided a lawful basis for her arrest but thereafter the legal justification ceased. Because arrest is ‘continuing’ in that her deprivation of liberty is ongoing, on the Constitutional Court’s declaration of invalidity, the underlying justification for Ms Britton’s arrest no longer exists and she is being deprived of her liberty arbitrarily and without just cause. There must be a constant justification for a person’s arrest and a continuing lawful reason for the entire period of arrest, so it is contended. On this basis it was submitted that even though the Smit order does not apply to finalised cases of extradition, it applies retrospectively to ongoing arrests under s 5(1)(a). It therefore applies retrospectively to extradition proceedings which have not been finalised. In addition, so it was argued, a declaration of retrospective invalidity would not leave the state without remedies. As counsel for Ms Britton pointed out on more than one occasion, a declaration of invalidity on the basis of Smit, would entitle the state to issue a new warrant of arrest in terms of s 5(1)(b) the following day. [25] It has been acknowledged that retrospective invalidation of actions taken in good faith could have disruptive effects. For example, in National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others,14 the Constitutional Court ordered prospectivity to avoid ‘potential disruption’ of marriages 12 Ferreira v Levin NO and Others; Vryenhoek and Others v Powell NO and Others [1995] ZACC 13; 1996 (1) SA 984 (CC); 1996 (1) BCLR 1 para 27. 13 Section 98(6) of the Interim Constitution provides that: ‘Unless the Constitutional Court in the interests of justice and good government orders otherwise, and save to the extent that it so orders, the declaration of invalidity of a law or a provision thereof- (a) existing at the commencement of this Constitution, shall not invalidate anything done or permitted in terms thereof before the coming into effect of such declaration of invalidity; or (b) passed after such commencement, shall invalidate everything done or permitted in terms thereof.’ 14 National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others [1999] ZACC 17; 2000 (2) SA 1; 2000 (1) BCLR 39 para 89. 13 that had already been solemnised under the challenged statute. The court emphasised that, while the Act in question was unconstitutional, its retroactive invalidation would have a destabilising effect on those who relied on its provisions. In ordering a period of suspension of invalidity the Constitutional Court has acknowledged the destabilising effect of immediate declarations of invalidity. [26] Ms Britton placed strong reliance on S v Ntesle,15 and S v Bhulwana; S v Gwadiso,16 to argue for limited retrospectivity. Both these matters were heard when the interim Constitution was in force. In both, the Constitutional Court cited with approval Harlan J in Mackey v US,17 where he said: ‘No one, not criminal defendants, not the judicial system, not society as a whole, is benefited by a judgment providing a man shall tentatively go to jail today, but tomorrow and every day thereafter his continued incarceration shall be subject to fresh litigation on issues already resolved.’ As a general principle, therefore, an order of invalidity will have no effect on cases which have been finalised prior to the date of the order of invalidity.18 The considerations before making an order of retrospectivity were outlined in these two matters. One was the likely impact on the administration of justice if the provision were to be struck down with immediate effect.19 It is only when the interests of good government outweigh the interests of individual litigants that the court will not grant relief to successful litigants, and, in principle those which are in a similar situation.20 [27] However, what is significant is that the court in both those matters fashioned the relief in such a manner so as to specifically exclude an appeal or review which was pending or where the time for noting an appeal had not yet expired, in its order of prospectivity. Similarly, in Geldenhuys v National Director of Public Prosecutions and Others,21 the court found that there may be outstanding cases relating to the offence 15 S v Ntsele [1997] ZACC 14; 1997 (11) BCLR 1543 (Ntsele). 16 S v Bhulwana, S v Gwadiso [1995] ZACC 11; 1996 (1) SA 388; 1995 (12) BCLR 1579 (Bhulwana). 17 Mackey v United States [1971] USSC 61; 401 US 667 at 691. 18 Ntsele fn 15 para 14. See also Bhulwana fn 16 para 32. 19 Ntsele fn 15 above para 13. 20 Bhulwana fn 16 case at para 32. 21 Geldenhuys v National Director of Public Prosecutions and Others [2008] ZACC 21; 2009 (2) SA 310 (CC); 2009 (1) SACR 231 (CC); 2009 (5) BCLR 435 (CC) para 39. 14 and to strike down the legislation would create a lacuna.22 It therefore made specific provision for pending appeals. No such order was made in Smit. Had the majority wanted to exclude pending matters from its order of prospectivity, it would have done so in explicit terms, with reasons for its decision. The failure to do so can only mean that the Constitutional Court, being aware of the possibility of making a limited declaration of retrospectivity, elected not to do so. [28] As was explained by the minority in Smit, in dealing with the constitutional invalidity of s 63 of the Drugs Act 140 of 1992,23 any retrospective invalidation would be inimical to the public interest and the administration of justice in respect of concluded prosecutions. ‘It will also result in a disruption in the prosecution of suspected offenders.’24 Because it dismissed the application to declare s 5(1)(a) inconsistent with the Constitution, it was not necessary for the minority to deal with the prospectivity of s 5(1)(a). Surprisingly, neither did Mdlanga J in the majority judgment deal with why he had ordered that the constitutional invalidity apply prospectively. [29] While there are sound reasons of policy not to make an order of invalidity applicable to cases that have been determined under an invalid law, the same is not ordinarily so in respect of pending cases. There does not seem to be a reason to resolve these cases on the basis of a law that has finally been declared to be invalid. That is usually what the interests of justice require, and it is what the Constitutional Court has ordered in a number of its decisions, referred to above. It did not do so in Smit. While it provided no reasons for its order of prospectivity, the order it gave is explicit. It is not open to this Court to speculate as to some implicit reservation of retrospectivity that the Constitutional Court in Smit left unexpressed. The appellant may well be deserving of the benefit of the declaration of invalidity given by the Constitutional Court, but since that court has rendered such invalidity prospective, the warrant of arrest that was issued in terms of s 5(1)(a) in respect of Ms Britton, is to be treated as valid. Any different order is beyond the remit of revision by this Court. 22 The offence in question was the age of consent for ‘immoral and indecent acts’ among same sex people as opposed to the same acts between heterosexual people. 23 Smit fn 1 para 93. 24 Ibid para 93. 15 [30] In the result the following order is made: The appeal is dismissed with costs including the costs of two counsel, where so employed. C E HEATON NICHOLLS JUDGE OF APPEAL 16 Appearances For the appellant: A Katz SC (with M Adhikari) Instructed by: Walkers Incorporated, Cape Town Claude Reid Attorneys, Bloemfontein For the first respondent: A G Christians Instructed by: State Attorney, Cape Town State Attorney, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 31 October 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 Joyce Seaberry Britton v Minister of Justice and Correctional Services & Others (548/2023) [2024] ZASCA 148 (31 October 2024) Today, the Supreme Court of Appeal (SCA) dismissed an appeal from the Western Cape Division of the High Court (high court). It ordered that the appeal be dismissed with costs including the costs of two counsel, where so employed. The charges against Ms Britton date from the period 1999-2002. Ms Britton was employed by the Department of Children and Family Services to provide legal services to the State of Illinois for which she received approximately $4,1 million, which was based on fraudulent billing. She was disbarred by the Supreme Court of Illinois and charged with various counts of theft and tax evasion. Thereafter she fled to South Africa. Ms Britton first learnt in 2007 that the authorities in the United States of America (USA) were intent on seeking her extradition. On 4 February 2009 she appeared in the Cape Town Magistrates Court for the purposes of holding an inquiry in terms of the Extradition Act 67 OF 1962 (the Act). She successfully challenged the lawfulness of those extradition proceedings in the high court. Unknown to Ms Britton, the USA government also sent through another request for her extradition in 2011. Approximately eight years later, in October 2017 she was advised by a member of the South African Police Services that, another request had been received for her extradition. It is these extradition proceedings that are the subject of this appeal. The current extradition process commenced on 27 February 2017 and on 20 June 2017. The Minister of Justice and Correctional Services (the Minister) issued a notice for her extradition in terms of s 5(1) of the Act. On 18 July 2017 the magistrate issued a warrant for her arrest in terms of the s 5(1)(a) of the Act. She was subsequently arrested on 12 October 2017 and immediately released on bail. In 2018 Ms Britton launched proceedings in the high court claiming that the notification received to surrender her to the US and her arrest be declared inconsistent with the Constitution and invalid. By this time, the primary issue for determination was whether Ms Britton was entitled to relief consequent upon Smit v Minister of Justice and Correctional Services (Smit) which had been delivered on 18 December 2020. In Smit the majority held that s 5(1)(a) of the Act was unconstitutional as it did not afford the magistrate any discretion to act as an independent arbiter. Instead, the magistrate was obliged to issue a warrant once notification was recieved from the Minister, a member of the executive. The Constitutional Court declared that the order of invalidity would be applicable from the date of the judgment. The high court rejected the argument that despite its prospectivity, the order was applicable to Ms Britton and dismissed her application. It granted leave to appeal to this Court. The SCA noted that, Ms Britton’s challenge to the notice of extradition and warrant of arrest crystallised into two points, namely the retrospectivity of Smit and what was described by Ms Britton’s counsel as the ‘rubberstamping’ argument. Counsel for Ms Britton argued that the magistrate failed to apply his mind to the draft order and merely signed it. The basis of this was that the warrant of arrest contained 2 several errors. The SCA however failed to find any evidence in support of this argument and dismissed it. With regards to the second point, namely the retrospectivity, the SCA had to determine whether the Smit order of invalidity applied to the arrest of Ms Britton, although her arrest was prior to that date. The SCA held that, the supremacy clause in the Constitution automatically renders any unconstitutional law invalid ab initio. While there are sound reasons of policy not to make an order of invalidity applicable to cases that have been determined under an invalid law, the same is not ordinarily true in respect of pending cases. The SCA held that there is little reason to resolve pending cases on the basis of a law that has finally been declared to be invalid. That is usually what the interests of justice require, and it is what the Constitutional Court has ordered in a number of its decisions. However, it did not do so in Smit. While Ms Britton might be deserving of the benefit of the declaration of invalidity given by the Constitutional Court, since the Constitutional Court rendered such invalidity prospective, the warrant of arrest that was issued in respect of Ms Britton in terms of s 5(1)(a) should be treated as valid. Any different order is beyond the remit of revision of this Court. As a result, the SCA dismissed the appeal. It ordered that the appeal be dismissed with costs including the costs of two counsel, where so employed. ~~~~ends~~~~

4306

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 991/2019 In the matter between: LINDOKUHLE PERCY SHONGWE APPELLANT and THE STATE RESPONDENT Neutral citation: Shongwe v The State (Case no 991/2019) [2024] ZASCA 127 (26 September 2024) Coram: MABINDLA-BOQWANA and KGOELE JJA and MANTAME AJA Heard: 19 August 2024 Delivered: 26 September 2024 Summary: Murder – robbery with aggravating circumstances – whether murder premeditated – whether appellant wrongly convicted of robbery with aggravating circumstances instead of theft – whether the intention to steal occurred after the killing – convictions confirmed. 2 ____________________________________________________________ ORDER ____________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Makhoba AJ, sitting as court of first instance): The appeal is dismissed. JUDGMENT Kgoele JA (Mabindla-Boqwana JA and Mantame AJA concurring) [1] The appellant, Mr Shongwe, was convicted of murder, robbery with aggravating circumstances, and theft in the Gauteng Division of the High Court, Johannesburg (the high court). He was sentenced to life imprisonment in respect of murder, 15 years’ imprisonment for robbery with aggravating circumstances, and two years’ imprisonment for theft. The high court granted the appellant leave to appeal to this Court in respect of the murder conviction only. The appellant successfully petitioned this Court for leave to appeal the robbery with aggravating circumstances conviction. The appeal is therefore limited to the murder and the robbery with aggravating circumstances convictions only. [2] The facts which are common cause are that Mr Solomon Sinkenyani Ngodi (the deceased), stayed alone. He regularly kept in touch with his family members telephonically. His relatives became worried when they could not get hold of him on his phone for a week, with him not visiting them for several days or attending a funeral one Saturday morning. Upon enquiring from one another about his 3 whereabouts, they eventually discovered his body on 10 December 2017 inside his bedroom, dead. The deceased’s home was locked when he was found and there were no traces of any forced entry. Several neckties were found tied around his neck, hands, and legs. His mouth was stuffed with a cloth or neckties, and another necktie was tied around his mouth while it was so stuffed. The cause of death was described by the doctor who conducted the postmortem as ‘asphyxia due to ligature strangulation’. [3] Further investigations by the police revealed that the bank card of the deceased was used at an ATM in a garage at KwaZulu-Natal (KZN). The video footage of this garage showed the appellant drawing the money at that ATM. The tracker, which was fitted onto the vehicle of the deceased, led the police to where he was found in possession of the deceased vehicle together with the deceased belongings amongst others, his house key and a wristwatch. [4] There is no direct evidence linking the appellant to the offence. In addition to being found in possession of the deceased belongings, the State led the evidence of his fingerprints which were uplifted at the deceased’s home, the video footage that depicted him drawing money from the ATM, including the statement made by him to Lieutenant Colonel Calvin Makamu (Mr Makamu) wherein he made several admissions. [5] The appellant raised an alibi defence denying ever being at the deceased’s premises. He also denied making any statement to Mr Makamu. His explanation for being found in possession of the deceased’s vehicle and his belongings was that he was given a lift by a certain Bheki and Senzo, who surreptitiously left him with the vehicle that had the deceased’s banking cards and other belongings that were recovered. 4 [6] The high court rejected the alibi defence tendered by the appellant and convicted him of murder, robbery with aggravating circumstances, and theft. The high court found the murder to have been premeditated. As indicated above, he was sentenced to life imprisonment in respect of murder, 15 years’ imprisonment for robbery with aggravating circumstances, and two years’ imprisonment for theft. All the sentences were ordered to run concurrently. [7] The appeal is based on two grounds. First, that the evidence did not establish beyond a reasonable doubt that the murder was premeditated. Second, that it could be gathered from the statement that was made to Mr Makamu, that the appellant formed the intention to take the deceased’s belongings after the assault. As a result, he should have been convicted of theft and not robbery with aggravating circumstances. [8] It is worth mentioning that counsel representing the appellant indicated in his submissions that the findings of the high court in relation to evidence of the State-witnesses and its rejection of the appellant’s version was not being challenged on appeal. The only issues were the premeditation question as well as the incorrect conviction on the robbery with aggravating circumstances. To decipher the proper context of the genesis of the submissions made by the appellant’s counsel, it is an opportune time to quote the contents of the statement made to Mr Makamu, as the appeal is centered around it. It reads: ‘On Monday 2017/12/04 I was at Diepkloof Zone 4 with my partner Mr Solly with whom we started dating each other back in 2013. We have been drinking intoxicating alcoholic beverages together for the whole day as I have visited him since Friday 1 December 2017. At about 19:00 I received a call from the mother of my daughter Owethu who resides in Richards Bay, KZN where I am originally from. Solly became aggressive as a result of this call. At the time we were sitting 5 in the dining room. Solly ended up hitting me with a clinched fist and I also did the same to him where we ended up fighting until at the bedroom. Solly then held me aside and I pushed him where he hit the wall with his head and fell down. I opened the drawer, took three ties, tide(sic) his hands, legs and neck. As I wanted to pull him with the tie, I noticed that he was no more breathing. I then took his TV set, car keys and drove home at Braamfischerville, Dobsonville. I tried to contact him but only to find his cellphone was ringing inside the M/vehicle which I took at his place and was a Silver Toyota Corolla. On Saturday 9 December 2017, I drove to Richards Bay where I was arrested the same day.’ [9] It is trite law that the question of whether the crime was premeditated or not depends on the circumstances of each case.1 This Court considered a similar question in numerous decisions already.2 The import of these decisions is that apart from pre-planning, premeditation can be inferred from the proven facts of the matter. In paragraph 13 of Kekana v the State (Kekana 2014), this Court said: ‘…[i]t is not necessary that the appellant should have thought or planned his action a long period of time in advance before carrying out his plan. Time is not the only consideration because even a few minutes are enough to carry out a premeditated action.’ [10] Counsel for the appellant submitted that there was no evidence of prior planning or premeditation on the part of the appellant. In this regard, he argued that the high court failed to take into consideration the circumstances that were set out in the statement made by the appellant to Mr Makamu. The circumstances amongst others were that the deceased was killed during a fight between two lovers; the assault and the tying up of the deceased was due to a fight between them. According to him, if one had regard to these facts, the opportunity to use force occurred suddenly and it would seem, unexpectedly so when the appellant pushed the 1 Raath v S [2008] ZAWCHC 72; 2009 (2) SACR 46 (C) para 16. 2 Kekana v The State (629/13) [2014] ZASCA 158 (1 October 2014) para 13; S v Kekana [2018] ZASCA 148; 2019 (1) SACR 1 (SCA) para 21; Benedict Moagi Peloeole v DPP Gauteng [2022] ZASCA 117; 2022 (2) SACR 349 (SCA); [2022] 4 All SA 1 (SCA) para 42. 6 deceased against the wall. I pause to mention that these submissions were startlingly made for the first time in the hearing of the appeal in this Court. The appellant attempts to seek refuge from a statement he disavowed during the hearing before the high court. [11] Be that as it may, I do not agree with the appellant’s submissions. Apart from the fact that the appellant cannot have his cake and eat it, premeditation, like in the circumstances of this matter, can be inferred from the facts found proven by the high court. In coming to its decision, the high court took into consideration all the circumstances of the murder, including the appellant’s conduct during the relevant period. Firstly, the deceased died because of ‘asphyxia due to ligature strangulation’. The conduct of the appellant at that time, ie stuffing a cloth or a necktie in the deceased’s mouth and wrapping another necktie around his mouth, on its own, signaled an intention on the part of the appellant that the deceased should suffocate and eventually die. The deceased’s body was tied and he was snuffed in the mouth to prevent him from seeking any help. It is also a signal of the intention not only to kill but of a well-orchestrated plan. [12] Considering how the deceased was tied up on the hands and feet, there was no way in which he would have had the strength to untie himself. The photographs also depict that electrical cords were plugged into the wall and connected to the heater. The probability that he had the intention to electrocute the deceased in addition to the tying cannot be excluded. In my view, this was a carefully thought-out plan to ensure that the death of the deceased materialised eventually, come what may. [13] Lastly, in addition to being incapacitated, the appellant locked the door of the deceased’s bedroom and the butler door leading to the outside. In the Kekana 2014 7 matter, the locking of the deceased in the room and further setting of the house on fire after spilling petrol in the passage, kitchen, and dining-room, were regarded as proof of premeditation. The Court concluded in that matter that the conduct indicated that the appellant was ‘carefully implementing a plan to prevent [the deceased] escape and to ensure that she died in the blaze’.3 [14] There is no doubt that on the facts of this matter, there are overwhelming proven facts whereupon the high court could infer premeditation. It is also clear that the high court did not convict the appellant on the murder charge based on the statement made to Mr Makamu only. It was but one piece of the puzzle to complete the mosaic of what happened that day. [15] The attack on the conviction of robbery with aggravating circumstances is that a possibility exists that the intention to misappropriate the deceased’s belongings was formed after the deceased was killed, or at least, after the appellant believed the deceased to be dead. The argument advanced is that, from the statement made to Mr Makamu, it is clear that the deceased’s belongings were taken after he fell. According to the appellant’s counsel, this simply means that the intention to steal was formed after the assault and not because of it, therefore, the appellant should have been convicted of theft and not robbery with aggravating circumstances. [16] The argument in relation to the conviction of robbery with aggravating circumstances is misplaced. The evidence is clear that the deceased was not only assaulted but his hands and feet were tied up. Tying is another form of overcoming resistance from a victim, and this took place in this case before the properties of the deceased were taken as indicated in the statement made to Mr Makamu. In addition, 3 Kekana v The State (629/2013) [2014] ZASCA 158 (1 October 2014) para 14. 8 the room was ransacked and left in the state depicted in the photographs. What took place clearly amounts to robbery with aggravating circumstances. [17] The appellant’s conduct even after the killing, also ineluctably impelled the finding that the murder and the robbery with aggravating circumstances had been premeditated. If there was merely a fight between two lovers that went wrong as suggested on behalf of the appellant, various questions remain unanswered. These are, why was it necessary for the appellant to take the deceased’s vehicle and also, withdraw his money from the bank? [18] Accordingly, the challenge to the convictions of premeditated murder and robbery with aggravating circumstances cannot be sustained. It follows that this Court cannot interfere with the convictions of the appellant on both counts. [19] In the results, the appeal is dismissed. ________________________ A M KGOELE JUDGE OF APPEAL 9 Appearances For appellant: M Milubi Instructed by: Legal Aid South Africa, Johannesburg Legal Aid South Africa, Bloemfontein For respondent: H H P Mkhari Instructed by: Director of Public Prosecutions, Johannesburg Director of Public Prosectutions, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 26 September 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 Shongwe v The State (2019) [2024] ZASCA 127 (26 September 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal against the decision of the Gauteng Division of the High Court, Johannesburg (the high court). The appellant was arraigned for murder, robbery with aggravating circumstances, and theft in the Gauteng Division of the High Court. Johannesburg. This was after Mr Solomon Sinkenyani Ngodi (the deceased), was found on 10 December 2017 inside his bedroom, dead. The deceased’s home was locked when he was found and there were no traces of any forced entry. Several neckties were found tied around his neck, hands, and legs. His mouth was stuffed with a cloth or neckties, and another necktie was tied around his mouth whilst it was so stuffed. The cause of death was described by the doctor who conducted the post-mortem as ‘asphyxia due to ligature strangulation’. On 11 December 2017, the appellant was arrested after the deceased’s belongings amongst others, his car, wristwatch, and bank card were found on him. In addition, the State led evidence of a video footage depicting him drawing money at an ATM, the statement made to the investigating officer, Mr Makamu, including his fingerprints which were lifted from the deceased bedroom. The high court convicted the appellant on all the counts he was charged with. He was sentenced to life imprisonment for murder, 15 years’ imprisonment for robbery with aggravating circumstances, and two years’ imprisonment for theft, with sentences ordered to run concurrently. Aggrieved by the conviction and sentence, the appellant applied for leave to appeal. The high court granted him leave with regard to the murder conviction only. The appellant further petitioned the SCA for leave to appeal the robbery with aggravating circumstances conviction, and the SCA granted same. The appellant relied on two grounds as a basis for his appeal. First, that the evidence did not establish beyond a reasonable doubt that the appellant had planned the murder. Second, that it appeared from the statement made to Mr Makamu, that the intention to take the deceased’s belongings was formed after the assault. As a result, the appellant should have been convicted of theft and not robbery with aggravating circumstances. The SCA held that there was no doubt that on the facts of this matter, premeditation could be inferred from circumstances as to how the offences were committed. The conduct of the appellant during the killing, amongst others by tying the deceased with neckties, stuffing his mouth and locking the deceased house, are sufficient facts from which premeditation can be inferred. Regarding the conviction of robbery with aggravating circumstances, the SCA held that the appellant did not only assault the deceased, he tied his hands and feet as well and this took place before the belongings of the deceased were taken. There was, therefore, no doubt that the appellants’ conduct before and after the murder demonstrated a clear intent to kill and rob the deceased of his belongings. As a result, the appeal was dismissed. 2 ~~

4228

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 700/2022 In the matter between: DEMOCRATIC ALLIANCE APPELLANT and MINISTER OF CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS FIRST RESPONDENT SPEAKER OF THE NATIONAL ASSEMBLY SECOND RESPONDENT CHAIRPERSON OF THE NATIONAL COUNCIL OF PROVINCES THIRD RESPONDENT PRESIDENT OF THE REPUBLIC OF SOUTH AFRICA FOURTH RESPONDENT Neutral citation: Democratic Alliance v Minister of Co-operative Governance and Traditional Affairs (700/2022) [2024] ZASCA 65 (30 April 2024) Coram: MOLEMELA P, PETSE DP, MAKGOKA, MBATHA AND MOLEFE JJA 2 Heard: 15 August 2023 Delivered: 30 April 2024 Summary: Constitutional law – section 27 of the Disaster Management Act 57 of 2002 – constitutional challenge – whether delegation of plenary legislative power impermissible – whether declaration of state of disaster in effect a de facto state of emergency – whether parliamentary oversight of the executive during state of disaster constitutionally compliant. 3 ______________________________________________________________________ ORDER ______________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Musi JP, Matojane and Windell JJ sitting as court of first instance): The appeal is dismissed and there is no order as to costs. ______________________________________________________________________ JUDGMENT ______________________________________________________________________ Molemela P, (Petse DP and Mbatha and Molefe JJA concurring) Introduction [1] At the core of this appeal is the constitutional validity of s 27 of the Disaster Management Act 57 of 2002 (the DMA). The constitutional challenge occurred in the context of the Coronavirus (Covid-19) outbreak, which was declared as a global pandemic by the World Health Organisation. In one of several judgments in which this Court had occasion to pronounce on the Covid-19 pandemic, it said: ‘The seriousness and the magnitude of the threat to life brought about by the pandemic cannot be exaggerated. It is not melodramatic to say that it posed, and continues to pose, the biggest threat to this country since the Spanish influenza pandemic of the immediate post-World War I years a century ago. It had the potential, and continues to have the potential, to cause devastation on a scale that, only a short while ago, people could not have begun to imagine. Drastic measures were required and an excess of caution was called for, especially given the limited knowledge about Covid-19, even among experts in the field of epidemiology.’1 1 Esau and Others v Minister of Co-Operative Governance and Traditional Affairs and Others [2021] ZASCA 9; [2021] 2 All SA 357 (SCA); 2021 (3) SA 593 (SCA) para 140 (Esau). 4 Background [2] The first outbreak of Covid-19 was identified in Wuhan, in the Hubei Province in China, during December 2019. On 30 January 2020 the World Health Organization declared the outbreak a public health emergency of international concern and, on 11 March 2020 declared it a pandemic. On 15 March 2020, the Minister of Co-Operative Governance and Traditional Affairs (the Minister) in this country issued a Notice declaring a National State of Disaster on account of the Covid-19 pandemic.2 On 18 March 2020, the Minister made regulations embodying a national public health response to the Covid-19 pandemic (the Covid-19 regulations). On 23 March 2020, the fourth respondent (the President) announced a national lockdown in South Africa, commencing on 26 March 2020. Consequently, on 25 March 2020, the Minister amended the regulations in order to bring about a nationwide lockdown.3 The country moved between five ‘alert levels’ restricting movement and economic activity, alert level five being the most restrictive of the alert levels, and level one the least restrictive.4 The lockdown regulations were extensive, and in some respects, they placed unprecedented restrictions on many constitutionally guaranteed fundamental rights and freedoms. On 29 April 2020, the Minister published the disaster management regulations. These regulations were subsequently amended in order to ease the lockdown restrictions in line with the alert levels in the risk-adjusted strategy. Thereafter, the Minister promulgated regulations as and when the need arose in accordance with the alert levels or the easing of restrictions. [3] During alert level four lockdown, the Democratic Alliance (the DA) filed an application5 seeking an order declaring s 27 of the DMA to be unconstitutional and invalid. 2 Government Notice No 313 published on 15 March 2020. 3 Disaster Management Act 57 of 2002: Amendment of Regulations issued in terms of s 27(2) in Government Notice No 398, GG 43148 published on 25 March 2020. 4 See Government Notice No 480 GG 43258. 5 The relief sought was set out as follows in the Notice of Motion: ‘1. Condonation is granted for the applicant’s non-compliance with the prescribed forms, time periods and service requirements and leave is granted for this application to be heard as one of urgency in terms of Uniform Rule 6(12). 2. Section 27 of the Disaster Management Act 57 of 2002 (‘the Act’) is declared to be unconstitutional and invalid. 5 Although the DA’s application was filed at the high court, the DA simultaneously sought direct access to the Constitutional Court, which application was subsequently dismissed by that Court on the basis that it was not in the interests of justice for that Court to deal with the matter at that stage. The application was opposed by all the cited respondents, namely the President, the Minister, the Speaker of the National Assembly and the Chairperson of the National Council of Provinces. In the high court, the DA’s application 3. In order to remedy this unconstitutionality, and with effect from the date of the order, section 27 of the Act is ordered to be read as if a new section 27(4A) has been added immediately after section 27(4), reading as follows: “(a) A copy of any declaration of a national state of disaster and any regulation or direction made or issued under section 27(2) shall be laid upon the Table in Parliament by the Minister as soon as possible after the publication thereof. (b) The National Assembly may at any time – (i) by resolution disapprove of any such declaration, regulation or direction; or (ii) by resolution make any recommendation to the Minister in connection with such declaration, regulation or direction. (c) Any such declaration, regulation or direction shall cease to be of force and effect as from the date on which the National Assembly resolves under subsection (b)(i) to disapprove of such declaration, regulation or direction, to the extent to which it is so disapproved. (d) The provisions of subsection (c) shall not derogate from the validity of anything done in terms of any such declaration, regulation or direction up to the date upon which it so ceased to be of force and effect, or from any right, privilege, obligation or liability acquired, accrued or incurred, as at the said date, under and by virtue of any such declaration, regulation or direction. (e) The provisions of subsections (a) to (d) apply equally to an extension of a national state of disaster in terms of section 27(5)(c). 4. The first respondent is directed to table before the National Assembly within three days of this order: 4.1 the declaration of the national state of disaster in GN 313 GG 43096 of 15 March 2020; 4.2 the regulations issued in terms of section 27(2) of the Act published in GNR 480 GG 43258 of 29 April 2020 (‘the COVID regulations’); and 4.3 all directions and regulations issued under the COVID regulations (including all directions and regulations that remain valid under regulation 2(3) of the COVID regulations). 5. It is declared that none of the declarations, regulations and directions made in terms of section 27 of the Act prior to the date of this order are invalidated only by virtue of the orders in paragraphs 2 to 4 (inclusive) above. 6. Paragraphs 2 to 5 of this order are referred to the Constitutional Court for confirmation. 7. Those respondents opposing any part of the relief sought are directed to pay the applicant’s costs, jointly and severally, one paying the other to be absolved, including the costs of two counsel.’ 6 came before a specially constituted court of three judges (Musi, JP, Matojane J and Windell J) (the full court) sitting as a court of first instance within the contemplation of s 14(1)(a) of the Superior Courts Act 10 of 2023. [4] The majority judgment (Musi JP and Windell J) found that the delegation of power to the Minister in terms of s 27 of the DMA falls within constitutional bounds and contains sufficient safeguards to render it constitutionally valid. It inter alia expounded as follows regarding the provisions of the DMA: ‘It is clear from the definition of disaster that it may be a sudden or progressive natural or man-made catastrophe, that causes great damage or loss of life. It may be an anticipated or uncertain calamity. It must however be of such magnitude that it is beyond the resource capabilities of those affected by it. In such circumstances uncertainties and imponderables abound when it comes to planning and implementing a prevention or mitigating strategy. The applicant correctly accepted that it was impossible for Parliament to predict in advance what the precise nature of a national disaster would be and for it to provide a clear policy framework to deal with such a disaster. A disaster can be sudden, widespread and cause immense damage if it is not arrested timeously or its potential to cause damage minimized speedily. Parliamentary law-making processes are not geared towards making laws speedily. Disasters will always affect provinces. The process for Parliament to pass an ordinary Bill affecting provinces is also a long drawn out process.6 The constitutional public access and involvement processes of Parliament may also impede an effective and rapid response to a disaster. Since it is impossible for Parliament to legislate, in advance, ways and means to deal with sudden foreseen or unforeseen calamities, it is best for it to delegate some of its functions. There is no other realistic way of ensuring effective governance during disasters. The executive would be better placed to deal rapidly, comprehensively and effectively with disasters in a way that Parliament cannot do. Parliament might conceivably not even be in session when a sudden disaster strikes.’7 6 Section 76 of the Constitution. 7 Paras 37- 40 of the judgment of the full court. 7 [5] The majority judgment concluded that the DMA contains sufficient restraints on the Minister’s powers because such powers must be exercised in pursuit of ‘certain stated positive goals’, as well as ‘negative constraints’. This conclusion was predicated on six characteristics of the DMA, which that court considered to be sufficient constraints on the Minister’s exercise of the powers conferred by s 27 of the DMA. These characteristics will be discussed later in this judgment. [6] In his dissenting judgment, Matojane J (the minority judgment) pointed out that he would have upheld the application. Relying on the maxim delegare non potent delegare (a delegate is prohibited from sub-delegating powers unless authorised to do so), he found that s 27(2) of the DMA constitutes an excessive delegation of legislative power by Parliament to the Minister. The dissenting judgment found that the scope of the discretion conferred on the Minister is broad and open-ended, with insufficient guidance provided as to how to exercise that power. It concluded that the process of executive law-making lacks transparency, public participation and debate of the parliamentary process and reduced accountability in the exercise of delegated legislative power. On those bases, the minority judgment would accordingly have held that s 27(2) is unconstitutional. Aggrieved by the majority decision, the DA applied for leave to appeal to this Court against the majority judgment. On 25 March 2022 the full court unanimously granted leave to appeal. Issues to be determined [7] The DA’s application raised the following issues for determination by the full court. First, whether s 27 of the DMA is unconstitutional because it constitutes an impermissible delegation of plenary legislative power by Parliament. Second, whether the aforesaid provision is unconstitutional because it permits the creation of a de facto state of emergency without following constitutional requirements for the declaration of a state of emergency. Third, whether the same provision is unconstitutional because it fails to require the National Assembly to exercise its oversight role required by ss 42(3) and 55(2) of the Constitution. In the event of a finding of unconstitutionality on any of the three issues 8 raised, the fourth issue arising would be the determination of a just and equitable remedy. In this Court, the DA persisted with the same issues. [8] The salient submissions of the DA Broadly stated, the DA contended that the finding of the majority judgment was erroneous in a number of respects. The DA contended that the fact that individual exercises of subordinate legislative power can be challenged under ordinary administrative-law principles cannot mean that parliament’s delegation of that power is necessarily permissible. If this were so, every delegation would be permissible, because every exercise of subordinate legislation is susceptible to legal challenge. [9] The DA contended that it is not only the responsibility of civilians to ensure that public acts are lawful – by taking the executive to court every time it acts unlawfully. Relying on Dawood v Minister of Home Affairs; Shalabi v Minister of Home Affairs; Thomas v Minister of Home Affairs,8 the DA contended that Parliament also has a responsibility to ensure that the powers it delegates are framed so as to minimise the chances of the exercise of those powers infringing constitutional rights. On this score, it contended that the powers conferred on the Minister in terms of s 27 of the DMA are untrammelled and therefore constitute a delegation of plenary legislative powers to the Minister. The DA argued that the fact that the exercise of a discretionary power may subsequently be successfully challenged on administrative grounds, does not relieve the legislature of its constitutional obligation to promote, protect and fulfil the rights entrenched in the Bill of Rights. [10] Furthermore, the DA contended that the majority judgment failed to consider that s 27 of the DMA permits the Minister to make contentious decisions without the democratic input of parliament. The DA contended that the respondents’ detailed explanation regarding how parliamentary processes worked did not demonstrate that the Minister was or is sufficiently accountable to Parliament in relation to the passing of any 8 Dawood and Another v Minister of Home Affairs and Others; Shalabi and Another v Minister of Home Affairs and Others; Thomas and Another v Minister of Home Affairs and Others 2000 (3) SA 936; 2000 8 BCLR 837 (CC) (Dawood). 9 of the Covid-19 regulations. It asserted that the respondents’ allusion to the consultations and discussions by the Executive and the relevant Cabinet member with the leaders of the opposition parties and various members of the portfolio committees in parliament could not help them resolve the fundamental problem that none of these consultations and engagements are required by the DMA. The DA further contended that given the breath of the powers conferred on the Minister, it was constitutionally required that the DMA ensure that the National Assembly has the power, by resolution, to disapprove and undo the regulations enacted by the Minister. The DA contended that without such a power, proper parliamentary oversight is not assured. [11] The DA further asserted that its case never was that, as a matter of fact, Parliament was completely supine during the pandemic. Rather its case was that s 27(2) of the DMA gives the Minister more power than the Constitution permits because it amounts to an impermissible delegation of power and in effect an abdication of Parliament’s oversight role, and because it also permitted a simulated state of emergency. The salient submissions of the respondents [12] The essence of the respondents’ submissions in respect of the contention that the state of disaster is akin to a state of emergency is set out hereunder. The respondents submitted that states of emergency and states of disaster are fundamentally different legal animals. They asserted that a state of emergency is limited to the direst of circumstances. Thus, it may only be declared when the “life of the nation” is under threat. Additionally, it must be necessary to restore “peace and order”. Unless these requirements are met, the declaration of a state of emergency would be unlawful. According to the respondents, states of disaster, on the other hand, cover a wide range of different circumstances. This, they argued, is apparent from the definition of a disaster. While a disaster may take many forms, and may threaten lives and the well-being of communities, it does not involve a threat to the life of the nation, nor does it disrupt security, peace and order. 10 [13] The respondents countered the DA's contention that s 27 of the DMA permits the creation of a de facto state of emergency without following the constitutional requirements for the declaration of a state of emergency. They contended that the very purpose of a state of emergency is to permit a suspension of the normal constitutional order, which is not the case in respect of the state of disaster. The suspension or derogation of rights does not simply mean the limitation of rights. Under a state of emergency, the Constitution actually permits all rights to be suspended, save for the few fundamental rights set out in the Table of Non-Derogable Rights, which may not be derogated. In other words, absent the safeguards in s 37, an individual could not go to court to pursue the protection of her fundamental rights. Under s 37(3), courts still retain the power to determine the validity of the declaration of the state of emergency itself, or any legislation enacted thereunder. [14] As regards parliamentary supervision, the respondents asserted that the Constitution does not require the National Assembly to include specific mechanisms into individual pieces of legislation, for example a parliamentary veto or power to overturn any decision taken by the executive in the lawful exercise of its powers. The applicable legislative framework [15] It is settled law that Parliament has the power to delegate the power to make regulations in certain circumstances. A number of factors are taken into account when a court determines whether the legislature may validly delegate its powers to a member of the executive. These include the constitutional provision in question, the power that provision confers on the legislature, the nature and degree of the purported delegation, the subject matter to which it relates and, perhaps most importantly, the impact of the delegation on the fundamental principles on which the Constitution is based. In re: Constitutionality of the Mpumalanga Petitions Bill, 2000,9 the Constitutional Court stated as follows: 9 In re: Constitutionality of the Mpumalanga Petitions Bill, 2002 (1) SA 447 (CC); 2001 (11) BCLR 1126 (CC). 11 ‘A legislature has the power to delegate the power to make regulations to functionaries when such regulations are necessary to supplement the primary legislation. Ordinarily the functionary will be the President or the Premier or the member of the executive responsible for the implementation of the law. ... The factors relevant to a consideration of whether the delegation of a law-making power is appropriate are many. They include the nature and ambit of the delegation, the identity of the person or institution to whom the power is delegated, and the subject matter of the delegated power.’10 [16] In Affordable Medicines Trust v Minister of Health,11 the Constitutional Court held that, although Parliament was permitted to confer a discretion on those to whom it had validly delegated one of its powers, this discretion may not be so broad or vague that the executive authority was unable to determine the nature and scope of the powers conferred. In those cases in which the legislature has delegated broad discretionary powers to the executive, the courts will take into account, not only the factors set out above, but also the extent to which the legislature has provided clear criteria for the exercise of the discretionary power in question. If the legislature has provided clear criteria, the courts are more likely to find that the delegation is valid and vice versa.12 [17] In Justice Alliance v President,13 the Constitutional Court acknowledged that the primary reason for delegation is to ensure that the legislature is not overwhelmed by the need to determine minor regulatory details. It reiterated the distinction made in Executive Council of the Western Cape Legislature and Others v President of the Republic of South Africa and Others,14 between delegation to make subordinate legislation within the framework of an empowering statute and assigning plenary legislative powers to another body. In the latter case, the Constitutional Court recognised that circumstances short of 10 Ibid para 19. 11 Affordable Medicines Trust and Others v Minister of Health and Another 2005 (6) BCLR 529 (CC); 2006 (3) SA 247 (CC) para 34. 12 7(2) Lawsa 3 ed para 26. 13 Justice Alliance of South Africa v President of Republic of South Africa and Others, Freedom Under Law v President of Republic of South Africa and Others, Centre for Applied Legal Studies and Another v President of Republic of South Africa and Others [2011] ZACC 23; 2011 (5) SA 388 (CC); 2011 (10) BCLR 1017 (CC) para 61. 14 Executive Council of the Western Cape Legislature and Others v President of the Republic of South Africa and Others [1995] ZACC 8; 1995 (10) BCLR 1289; 1995 (4) SA 877 (CC) (Executive Council). 12 war or states of emergency could warrant that Parliament authorise urgent action to be taken out of necessity.15 The power and duty of the executive to respond to calamitous events is therefore manifestly consistent with the principles and factors articulated by the Constitutional Court. [18] In Dawood16 the Constitutional Court held that, where the exercise of a broad discretionary power could infringe the bill of rights, it was ordinarily not sufficient for the legislature to simply state that the power must be read in a manner that was consistent with the Constitution. This was because such an approach would not promote the spirit, purport and objects of the bill of rights. Instead, the legislature had to provide clear criteria for the exercise of that discretionary power so that the bill of rights could take root in the daily practices of government. That said, the finding of the majority that Dawood is distinguishable from the facts of this case in that in Dawood, officials were given discretionary powers without any express constraints cannot be faulted. [19] In this matter, there are circumscribed circumstances under which the Minister may exercise her discretion to make regulations. In Smit v Minister of Justice and Correctional Services,17 the Constitutional Court explained the term “plenary legislative power” thus: ‘Plenary power is the authority to pass, amend or repeal an Act of Parliament. Rabie and Erasmus define plenary legislative power as follows: “Plenary means of full scope or extent; complete or absolute in force or effect. Plenary legislative power, in the full sense of the phrase would be the power enjoyed by Parliament”.’ The relevant provisions of the DMA [20] It is trite that a provision of a statute should not be interpreted in isolation but must be considered in the context of the whole Act. The long title of the DMA states that it is intended to provide for an integrated and co-ordinated disaster management policy that focuses on preventing or reducing the risk of disasters, mitigating the severity of disasters, 15 Ibid para 62. 16 Dawood fn 8 above para 54. 17 Smit v Minister of Justice and Correctional Services and Others [2020] ZACC 29; 2021 (1) SACR 482 (CC); 2021 (3) BCLR 219 (CC) para 31. 13 emergency preparedness, rapid and effective response to disasters and post-disaster recovery and rehabilitation; the establishment and functioning of national, provincial and municipal disaster management centres; disaster management volunteers; and matters incidental thereto. [21] Section 1 of the DMA defines ‘national disaster’ as a disaster classified as a national disaster in terms of section 23. In terms of s 3, the DMA is administered by a Minister designated by the President. In terms of s 4, the Minister is the chairperson of the Intergovernmental Committee. This Committee ‘must’ give effect to the principles of co-operative government as laid down in chapter 3 of the DMA. This Committee is also accountable and must report to Cabinet on the co-ordination of disaster and must advise and make recommendations to Cabinet on issues relating to disaster management. It is also tasked with establishing a national framework for disaster management aimed at ensuring an integrated and uniform approach to disaster management in the Republic by all spheres of government,18 organs of state, statutory functionaries, non-governmental institutions involved in disaster management, the private sector, communities and individuals. [22] The objective of a National Disaster Management Centre (National Centre), as set out in s 9 of the DMA, is to promote an integrated and co-ordinated system of disaster management, with special emphasis on prevention and mitigation by national, provincial and municipal organs of state, statutory functionaries, other role-players involved in disaster management and communities.19 The National Centre exercises advisory and consultative powers under ss 15 and 22 of the DMA. It can publish guidelines and recommendations in the national Government Gazette or a provincial gazette. In terms of s 15(1)(f), the National Centre must make recommendations to any relevant organ of state or statutory function on whether a national state of disaster should be declared in terms of s 27. 18 Also see s 26(3) of the DMA, which enjoins the Minister to act in close cooperation with other spheres of government. 19 Section 9 of the DMA. 14 [23] Consistent with the stated purpose of the DMA, s 23(1) vests the National Centre with the discretion to determine the magnitude and severity of the disaster and determine whether it qualifies as a local, provincial or national disaster. Further, it empowers the National Centre to reclassify a disaster at any time after consultation with the relevant disaster management centres, if the magnitude and severity or potential magnitude and severity of the disaster is greater or lesser than the initial assessment. As such, the provisions of s 15(1)(f) and s 23(1) serve as a precondition for the Minister’s declaration of national disaster that expert institutions must determine whether a disastrous event (or the threat of such event) should be regarded as a disaster under the Act.20 In this matter, too, the Minister’s declaration of a state of disaster was preceded by a government notice21 issued by the head of the National Centre in terms of s 23(1)(b) of the DMA, in terms of which he classified the Covid-19 pandemic as a national disaster. [24] Section 26 of the DMA provides as follows: ‘26. (1) The national executive is primarily responsible for the co-ordination and management of national disasters irrespective of whether a national state of disaster has been declared in terms of section 27. (2) The national executive must deal with a national disaster- (a) in terms of existing legislation and contingency arrangements. if a national state of disaster has not been declared in terms of section 27(1); or (b) in terms of existing legislation and contingency arrangements as augmented by regulations or directions made or issued in terms of section 27(2), if a national state of disaster has been declared. (3) This section does not preclude a provincial or municipal organ of state from providing assistance to the national executive to deal with a national disaster and its consequences, and the national executive, in exercising its primary responsibility, must act in close co-operation with the other spheres of government.’ 20 The Notice in the Government Gazette declaring the State of Disaster stated: ‘Considering the magnitude and severity of the Covid-19 outbreak which has been declared a global pandemic by the World Health Organisation (WHO) and classified as a national disaster by the Head of the National Disaster Management Centre, and taking into account the existing measures undertaken by organs of state to deal with the pandemic, I, the undersigned, Dr Nkosazana Dlamini Zuma, the Minister of Cooperative Governance and Traditional Affairs, as designated under Section 3 of the Disaster Management Act, 2002 (Act No 57 of 2002)…hereby declare a national state of disaster…’. 21 GN 312, GG 43096 of 15 March 2020. 15 [25] Section 27 of the DMA provides as follows: ‘27. Declaration of national state of disaster. (1) In the event of a national disaster, the Minister may, by notice in the Gazette, declare a national state of disaster if— (a) existing legislation and contingency arrangements do not adequately provide for the national executive to deal effectively with the disaster; or (b) other special circumstances warrant the declaration of a national state of disaster. (2) If a national state of disaster has been declared in terms of subsection (1), the Minister may, subject to subsection (3), and after consulting the responsible Cabinet member, make regulations or issue directions or authorise the issue of directions concerning— (a) the release of any available resources of the national government, including stores, equipment, vehicles and facilities; (b) the release of personnel of a national organ of state for the rendering of emergency services; (c) the implementation of all or any of the provisions of a national disaster management plan that are applicable in the circumstances; (d) the evacuation to temporary shelters of all or part of the population from the disaster-stricken or threatened area if such action is necessary for the preservation of life; (e) the regulation of traffic to, from or within the disaster-stricken or threatened area; (f) the regulation of the movement of persons and goods to, from or within the disaster-stricken or threatened area; (g) the control and occupancy of premises in the disaster-stricken or threatened area; (h) the provision, control or use of temporary emergency accommodation; (i) the suspension or limiting of the sale, dispensing or transportation of alcoholic beverages in the disaster-stricken or threatened area; (j) the maintenance or installation of temporary lines of communication to, from or within the disaster area; (k) the dissemination of information required for dealing with the disaster; (l) emergency procurement procedures; (m) the facilitation of response and post-disaster recovery and rehabilitation; (n) other steps that may be necessary to prevent an escalation of the disaster, or to alleviate, contain and minimise the effects of the disaster; or (o) steps to facilitate international assistance. 16 (3) The powers referred to in subsection (2) may be exercised only to the extent that this is necessary for the purpose of— (a) assisting and protecting the public; (b) providing relief to the public; (c) protecting property; (d) preventing or combating disruption; or (e) dealing with the destructive and other effects of the disaster. (4) Regulations made in terms of subsection (2) may include regulations prescribing penalties for any contravention of the regulations. (5) A national state of disaster that has been declared in terms of subsection (1)— (a) lapses three months after it has been declared; (b) may be terminated by the Minister by notice in the Gazette before it lapses in terms of paragraph (a); and (c) may be extended by the Minister by notice in the Gazette for one month at a time before it lapses in terms of paragraph (a) or the existing extension is due to expire.’ [26] Section 59 provides as follows: ‘59. (1) The Minister may make regulations not inconsistent with this Act- (a) concerning any matter that- (i) may or must be prescribed in terms of a provision of this Act; or (ii) is necessary to prescribe for the effective carrying out of the objects of this Act; and (b) providing for the payment, out of moneys appropriated by Parliament for this purpose, of compensation to any person, or the dependants of any person, whose death, bodily injury or disablement results from any event occurring in the course of the performance of any function entrusted to such person in terms of this Act. . . . (3) The Minister may, in terms of subsection (1), prescribe a penalty of imprisonment for a period not exceeding six months or a fine for any contravention of, or failure to comply with, a regulation. (4) Any regulations made by the Minister in terms of subsection (1) must be referred to the National Council of Provinces for purposes of section 146(6) of the Constitution.’ [27] It is clear that the DMA creates and empowers a range of administrative bodies and authorises a variety of actions during the currency of a state of disaster.22 The 22 Esau fn 1 above para 11. 17 Minister, in her capacity as the Chairperson of the Intergovernmental Committee, plays a key role in those administrative bodies. Notably, s 26(3) enjoins the cabinet, in the exercise of its primary responsibility, to act in close co-operation with the other spheres of government.23 It stipulates that the national executive in the national sphere of government (ie the President and his cabinet), is ‘primarily responsible for the co-ordination and management of national disasters regardless of whether a national state of disaster has been declared in terms of s 27’.24 At the risk of stating the obvious, this means that even in circumstances where a state of disaster has not been declared, cabinet still carries the primary responsibility for the co-ordination and management of the state of disaster. [28] Section 27(1) empowers the Minister to declare a national state of disaster by notice in the Gazette if existing legislation and contingency arrangements do not ‘adequately’ provide for the national executive to deal effectively with the disaster. Section 27(2) stipulates that once the state of disaster has been declared, the Minister is required to consult with the ‘responsible Cabinet member’ before making regulations that bear on that minister’s portfolio. So, for instance, before making a regulation concerning emergency procurement procedures, he or she must consult with the Minister of Finance.25 In this matter, the Minister averred that she also consulted frequently with the Minister of Health. This Court, in Esau, aptly said the following: ‘In other words, even in times of national crisis, as this undoubtedly is, the executive has no free hand to act as it pleases, and all of the measures it adopts in order to meet the exigencies that the nation faces must be rooted in law and comply with the Constitution. The rule of law, a founding value of our Constitution, applies in times of crisis as much as it does in more stable times. And the courts, in the words of Van den Heever JA in R v Pretoria Timber Co (Pty) Ltd and Another should not, even when the legislature has conferred “vast powers” to make subordinate 23 Ibid para 13. 24 Ibid para 12. 25 Ibid para 16; Minister of Cooperative Governance and Traditional Affairs and Another v British American Tobacco South Africa (Pty) Ltd and Others [2022] ZASCA 89; [2022] 3 All SA 332 (SCA) para 91 (British American Tobacco). 18 legislation on the executive, “be astute to divest themselves of their judicial powers and duties, namely to serve as buttresses between the Executive and the subjects”.’26 [29] In British American Tobacco this Court had occasion to interpret the provisions of s 27(2)(n) of the DMA. It said: ‘The jurisdictional requirements for the exercise of the power under s 27(2)(n) are these. There must be a national state of disaster. The Minister must consult the responsible Cabinet member. The steps taken to prevent an escalation of a disaster, or to alleviate, contain and minimise its effects, must be necessary. Whether these steps are necessary turns on the objectively ascertained facts, and not on the subjective beliefs of the Minister. The power in s 27(2)(n), as in the case of all the powers specified in s 27(2), must ‘be exercised only to the extent that this is necessary’ for the purposes specified in s 27(3). Moreover, the above interpretation is sensible.’27 (Own emphasis.). [30] It is clear from the passage quoted in the preceding paragraph that this Court did not consider that provision in isolation but in the context of the whole Act. The findings made by that court in its interpretive exercise in relation to that provision are therefore binding on this Court on the basis of the doctrine of stare decisis. Despite the fact that this Court emphasised that all the powers specified in s 27(2), must be exercised only to the extent that this is necessary for the stated purposes of the Act and not on the subjective beliefs of the Minister,28 the DA in this matter, without arguing that this finding should not be followed because it is clearly wrong, submitted that the impugned regulations granted ministers ‘nearly unfettered regulatory powers that the catch-all section 27(2) granted the CoGTA Minister’. That submission clearly has no merit. [31] The crisp question is whether, given the authorities cited above and the various provisions of the DMA, s 27 of the DMA amounts to plenary delegation of powers. It is to that aspect that I now turn. 26 Esau fn 1 above para 5. 27 British American Tobacco fn 25 above paras 91-92. 28 Ibid para 99. 19 [32] It is clear from the aforesaid provisions that once the state of disaster has been declared in terms of s 27(1) of the DMA, the Minister is, during the subsistence of the state of disaster, obliged to consult with members of Cabinet for the relevant portfolio prior to making regulations, issuing directions, or authorising the issuing of directions.29 [33] In Esau,30 this Court dealt with an appeal concerning the constitutional validity of certain decisions taken by members of the executive and regulations made by the Minister in order to deal with the Covid-19 pandemic. The application brought by the appellants in the lower court raised several issues, including whether the Disaster Regulations of 29 April 2020 were consistent with ss 26 and 27 of the DMA, and whether certain of the regulations that had been published by the Minister were unreasonable and unjustifiable infringements of fundamental rights and were invalid on that account. This Court then said: ‘Section 27(2)(n) is a general empowerment. It allows for regulation-making for purposes of ‘other steps that may be necessary to prevent an escalation of the disaster, or to alleviate, contain and minimise the effects of the disaster. Two further express curbs are placed on the regulation-making powers of the designated minister. First, in terms of s 27(2), he or she is required to consult with the “responsible Cabinet member” before making regulations that bear on that minister’s portfolio. So, for instance, before making a regulation concerning emergency procurement procedures, he or she must consult with the Minister of Finance. Secondly, in terms of s 27(3), his or her regulation-making power may only be exercised to the extent necessary to achieve certain stated purposes. There are five permissible purposes. They are: “(a) assisting and protecting the public; (b) providing relief to the public; (c) protecting property; (d) preventing or combating disruption; or (e) dealing with the destructive and other effects of the disaster.” ’31 [34] It is of significance that the national executive is primarily responsible for the co-ordination and management of national disasters irrespective of whether a national state of disaster has been declared in terms of s 27. The Minister is designated by the President. In terms of s 4 of the DMA, it is the President who establishes the intergovernmental committee on disaster management. In terms of s 27(2), the Minister 29 Section 27(2) of the DMA. 30 Esau fn 1 above. 31 Ibid para 15-16. 20 must consult the responsible cabinet member before making regulations or issuing directions that have an impact on that Minister’s portfolio. In Esau, this Court summarised the President’s exercise of executive authority as follows: ‘In terms of s 85(1) of the Constitution, executive authority is vested in the President. Section 85(2) determines how that authority is exercised. It provides: “The President exercises the executive authority, together with the other members of the Cabinet, by- (a) implementing national legislation except where the Constitution or an Act of Parliament provides otherwise; (b) developing and implementing national policy; (c) co-ordinating the functions of state departments and administrations; (d) preparing and initiating legislation; and (e) performing any other executive function provided for in the Constitution or in national legislation.” In terms of this section, the Constitutional Court held in President of the Republic of South Africa and Others v South African Rugby Football Union and Others, the exercise of executive authority ‘is a collaborative venture in terms of which the President acts together with the other members of the Cabinet’. The consequences of this allocation of power in s 85(2) were spelt out in Minister of Justice and Constitutional Development v Chonco and Others. Ministers act collectively with the President and they are all ‘collectively and individually accountable to Parliament under s 92(2) of the Constitution’. That means that the entire collective is responsible for every decision, whether or not particular individual members were party to a particular decision.’32 (Own emphasis.). This passage provides the broader context in which the Minister’s exercise of the powers conferred by s 27(2) must be understood. Given this context and the structure of the DMA, including its provision for the involvement of other spheres of government, it appears that the Minister’s discretion pertaining to the exercise of the powers envisaged in s 27 is not impermissibly wide, considering all the constraints bearing on the exercise of that power. [35] Significantly, in British American Tobacco, this Court held that all the powers specified in s 27(2), must be exercised only to the extent that this is necessary for the 32 Esau fn 1 above paras 54-55. 21 purposes specified in s 27(3). As to whether these steps are necessary turns on the objectively ascertained facts, and not on the subjective beliefs of the Minister.33 In the same judgment, this Court stated as follows: ‘Sections 27(2) and 27(3) do not assign to the Minister plenary legislative power: it does not grant the Minister the power to pass, amend or repeal an Act of Parliament. What is more, ss 27(2) and 27(3) provide a ‘clear and binding framework for the exercise of the powers. . . . At the outset, the approach to a justification analysis under s 36 of the Constitution in a time of national crisis such the COVID-19 pandemic, as stated in Esau, bears repetition: “[T]he executive has no free hand to act as it pleases, and all of the measures it adopts in order to meet the exigencies that the nation faces must be rooted in law and comply with the Constitution.”’34 [36] It is now convenient to explain what bearing the doctrine of stare decisis has on the analysis and conclusion of this matter. This matter happens to be one of several court challenges that were brought against some of the provisions of the DMA. It is necessary to preface this discussion with a passage from two judgments dealing with the doctrine of stare decisis, which is a doctrine that requires that courts ‘stand or abide by cases already decided’. The first one is a judgment of this Court and the second, a judgment of the Constitutional Court. This Court in Patmar Explorations (Pty) Ltd v Limpopo Development Tribunal35 stated as follows: ‘The basic principle is stare decisis, that is, the Court stands by its previous decisions, subject to an exception where the earlier decision is held to be clearly wrong. A decision will be held to have been clearly wrong where it has been arrived at on some fundamental departure from principle, or a manifest oversight or misunderstanding, that is, there has been something in the nature of a palpable mistake. This Court will only depart from its previous decision if it is clear that the earlier court erred or that the reasoning upon which the decision rested was clearly erroneous. The cases in support of these propositions are legion. . . . The doctrine of stare decisis is one that is fundamental to the rule of law. The object of the doctrine is to avoid uncertainty and confusion, to 33 British American Tobacco fn 25 above para 91. 34 Ibid paras 34 and 97. 35 Patmar Explorations (Pty) Ltd and Others v Limpopo Development Tribunal and Others [2018] ZASCA 19; 2018 (4) SA 107 (SCA). 22 protect vested rights and legitimate expectations as well as to uphold the dignity of the court. It serves to lend certainty to the law.’36 [37] In Ayres and Another v Minister of Justice and Correctional Services and Another,37 the Constitutional Court said the following: ‘As this Court noted in Camps Bay Ratepayers’ and Residents’ Association, the doctrine of precedent is “not simply a matter of respect for courts of higher authority. It is a manifestation of the rule of law itself, which in turn is a founding value of our Constitution”. Similarly, in Ruta, this Court held: “[R]espect for precedent, which requires courts to follow the decisions of coordinate and higher courts, lies at the heart of judicial practice. This is because it is intrinsically functional to the rule of law, which in turn is foundational to the Constitution. Why intrinsic? Because without precedent, certainty, predictability and coherence would dissipate. The courts would operate without map or navigation, vulnerable to whim and fancy. Law would not rule.”’38 [38] As mentioned before, an important context taken into account in both Esau and British American Tobacco respectively is that in terms of s 26 of the DMA, in instances where a state of disaster has been declared, the National Executive must deal with the disaster in terms of existing legislation and contingency arrangements as augmented by the regulations or directions made or issued in terms of s 27(2). The Minister’s regulations remain subject to judicial review by the courts.39 [39] The fact that the findings in Esau and British American Tobacco, respectively, pertaining to the general architecture of the DMA were made in the context of applying the s 36 limitation test does not render these findings less apposite in the current context. The DA made no submissions urging this Court to find any of those findings to be clearly wrong. As mentioned earlier, the full court identified certain restraints which led it to conclude that s 27 of the DMA does not delegate plenary legislative powers to the Minister because there are sufficient restraints which serve as guidance regarding how she must 36 Ibid paras 3-4. 37 Ayres and Another v Minister of Justice and Correctional Services and Another [2022] ZACC 12; 2022 (5) BCLR 523 (CC); 2022 (2) SACR 123 (CC). 38 Ibid paras 16-17. 39 Esau fn 1 above paras 7 and 88. 23 exercise her delegated authority. Esau and British American Tobacco respectively, made similar findings which are binding on this Court on the basis of stare decisis. [40] It bears reiterating that none of the parties urged us to conclude that any of the findings previously made by this Court are clearly wrong. Having analysed the reasoning of this Court in Esau and British American Tobacco respectively, nothing persuades us to conclude that any of those findings are wrong. Therefore, these decisions are binding. [41] In determining whether s 27 amounts to an impermissible delegation of powers, it will be helpful to juxtapose the various provisions of the DMA with the principles laid down in the Constitutional Court authorities which have been alluded to above. At the outset, it bears reiterating the trite principle that s 27 must not be interpreted in isolation but in the context of the whole Act having regard to its overarching purpose.40 On the basis of the 10 factors mentioned below, which include the six factors enumerated by the majority judgment, there can be no doubt that s 27 does not confer overly broad delegated powers on the Minister. [42] First, the general scheme of the DMA reveals a requirement for the Minister to constantly engage with several role-players in her decision making. Clearly, the exercise of her powers is part of a broader collaborative venture.41 This is one of the ways in which the Minister’s delegated regulation-making authority is circumscribed. That being the case, the general scheme of the DMA is such that the extent to which the Minister’s discretion in relation to the power delegated to her may be exercised in terms of s 27(1) is sufficiently guided by other provisions of the DMA itself.42 In that sense, the whole of the DMA provides a broad framework for the exercise of the Minister’s powers.43 40 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 18. 41 See ss 23(3) and 23(8) of DMA. 42 Executive Council fn 14 above para 206. 43 British American Tobacco fn 25 above para 97. 24 [43] Second, the Minister can only exercise her powers once the disaster has been classified as a national disaster by the head of the National Centre. It is evident from s 23 that this classification is required for purposes of ensuring that the primary responsibility for the coordination and management of the disaster is bestowed on the relevant sphere of government that would ultimately be responsible for the coordination and management of the disaster. [44] Third, the Minister may declare a national state of disaster by notice in the Gazette if ‘existing legislation and contingency arrangements do not adequately provide for the national executive to deal effectively with the disaster’ or if there are other special circumstances that warrant such declaration.44 The Minister is thus not given carte blanche to whimsically declare a state of disaster. Fourth, the DMA’s stated purpose is to implement urgent measures to address the disaster. The DMA therefore expressly advocates for rapid and effective interventions. Parliament’s slow procedures would clearly inhibit the achievement of this goal.45 [45] Fifth, the Minister must consult a cabinet colleague before making regulations or issuing directions that have an impact on that colleague’s portfolio.46 Sixth, the declaration of a state of disaster permissible under s 27 is for relatively short periods of time – three months.47 [46] Seventh, the extension of the declaration of disaster is for one month at a time. A sensible interpretation of s 27(5) is that any extension of the national state of disaster would be for the attainment of the same stated purposes of the DMA. Thus, the extension of the state of disaster would also have to be ‘necessary’.48 In similar vein, the necessity to extend would also have to be objectively ascertainable on facts. I therefore share the majority of the full court’s view that the power of extension of the national state of disaster 44 Section 27 (1) of the DMA; British American Tobacco fn 25 above para 96. 45 Executive Council item (e) para 206. 46 Section 27(2) of the DMA; British American Tobacco fn 25 above para 91. 47 Ibid para 206. 48 British American Tobacco fn 25 above para 103. 25 is by clear implication subject to the same requirements as the original declaration of the national state of disaster terms of section 27(1). [47] Eighth, all the powers specified in s 27(2), namely ‘(a) assisting and protecting the public; (b) providing relief to the public; (c) protecting property; (d) preventing or combating disruption; or (e) dealing with the destructive and other effects of the disaster,49 must be exercised only to the extent necessary for the stated purposes of the Act and not on the subjective beliefs of the Minister.50 Such powers must be exercised ‘for the purposes specified in s 27(3)’. Thus, s 27(3) itself provides a further limitation and layer of scrutiny and compliance to the exercise of her regulatory powers.51 [48] Ninth, s 59 of the DMA provides that the Minister may make regulations if it is necessary to prescribe for the effective carrying out of the objects of the DMA. These include the integrated and coordinated disaster management policies that are focused on reducing the risk of disasters and mitigating their severity. Notably, such regulations must not be inconsistent with the provisions of the DMA.52 In De Beer v Minister of Cooperative Governance and Traditional Affairs,53 the court acknowledged this principle by stipulating that since the lockdown regulations and directions were an exercise of public power, they could not go beyond the express provisions of the DMA. [49] Tenth, ss 27(2) and 27(3) do not assign to the Minister the power to pass, amend or repeal an Act of Parliament.54 On the basis of these factors, I conclude that s 27 does not constitute a delegation of plenary delegated powers.55 49 Esau fn 1 above paras 15 -16; British American Tobacco fn 25 above para 91. 50 Ibid. 51 Helen Suzman Foundation v Speaker of the National Assembly and Others (32858/2020) [2020] ZAGPPHC 574 (5 October 2020) paras 70-71; British American Tobacco fn 25 above para 91. 52 Section 59 of the DMA. 53 De Beer v Minister of Cooperative Governance and Traditional Affairs [2020] ZAGPPHC 184; 2020 (11) BCLR 1349 (GP) (De Beer). 54 British American Tobacco fn 25 above para 97. 55 Ibid para 97. 26 [50] It is necessary to consider next the argument that s 27 is an impermissible delegation of legislative powers of ‘the second type’, on the basis that there is no explicit power granted to the delegatee to amend or repeal an Act of Parliament where the power is broad. The DA’s complaint on this aspect is that s 27(2) confers on the Minister the power to sub-delegate the issuance of directives to unspecified persons. The maxim delegare non potent delegare, on which the DA relies for its argument, does not constitute a blanket ban on sub-delegation of powers. This is for the simple reason that not every sub-delegation is impacted by that maxim, but only such delegations that are not, either expressly or by necessary implication, authorised by the delegated powers.56 Whether or not sub-delegation is impermissible turns upon the construction of the empowering statute.57 [51] Notably, in AAA Investments (Propriety) Limited v The Micro Finance Regulatory Council and Another,58 the Constitutional Court recognised that Ministers may of necessity have to delegate their powers, which do not require the exercise of a political discretion, to officials in their respective Departments.59 Ministers may therefore delegate certain limited functions to officials in their respective Departments. The nature and ambit of the purported delegation, the subject-matter to which it relates, the degree of delegation, the control and supervision retained or exercisable by the delegator over the delegate are included among the circumstances to be taken into account when considering whether a delegation is permissible.60 The Minister’s power to sub-delegate must therefore be seen in that context. [52] Having considered all the factors stated in the afore-stated authority and the broader construct of the DMA, I am of the view that the Minister may lawfully delegate powers which do not require the exercise of a political discretion to officials. Furthermore, 56 Attorney-General, OFS v Cyril Anderson Investments (Pty) Ltd 1965 (4) SA 628 (A) at 639C-D (Attorney-General, OFS). See also, for example, Government of the Province of the Eastern Cape v Frontier Safaris (Pty) Ltd [1997] 4 All SA 500 (A); 1998 (2) SA 19 (SCA) at 28B-D (Frontier Safaris). 57 Attorney-General, OFS above at 639C-D. See also, for example, Frontier Safaris above at 31B-I. 58 AAA Investments (Propriety) Limited v The Micro Finance Regulatory Council and Another [2006] ZACC 9; 2006 (11) BCLR 1255 (CC); 2007 (1) SA 343 (CC). 59 Ibid para 89. 60 Ibid para 136. 27 the majority judgment's conclusion that the construct of the DMA permits a sub-delegation to Ministers who have knowledge about their respective portfolios and are therefore best suited to formulate policies and strategies for their respective Departments in order to mitigate the risk and effects of a disaster’, cannot be faulted. This is because the national executive remains primarily responsible for the co-ordination and management of national disasters even during a national state of disaster.61 [53] Moreover, the view that s 27 does not constitute a delegation of plenary powers is fortified by the findings of the majority judgment of the Constitutional Court in Nu Africa Duty Free Shops (Pty) Ltd v Minister of Finance and Others; Commissioner for the South African Revenue Service v Ambassador Duty Free (Pty) Ltd and Others; Minister of Finance v Ambassador Duty Free (Pty) Ltd and Others.62 This matter concerned amendments effected by the Minister of Finance to Schedules 4 and 6 of the Customs Act and to Schedule 1 of the VAT Act. The amendments introduced a quota system to operate on a six-monthly cycle which sought to address the unauthorized resale of duty-free alcohol and tobacco products by diplomats and imposed VAT liability on importers, including duty-free retailers, in certain situations. The Minister published these amendments to Schedules 4 and 6 of the Customs Act and to Schedule 1 of the VAT Act relying on the powers conferred on him in terms of ss 75(15)(a)(i)(bb) of the Customs Act and 74(3)(a) of the VAT Act ( the impugned amendments). These amendments were set to take effect on August 1, 2021. [54] In terms of s 120, the Commissioner of the South African Revenue Service (SARS) was authorized to make rules regarding the payment of duties and other charges. To provide guidance, SARS had published rules promulgated in terms of section 120 of the Customs Act. Aggrieved by the impugned amendments to the Schedules as well as the rules, the retailers approached the high court seeking to review and set aside the impugned amendments. Nu Africa then filed an application to intervene, contending that 61 Section 26(1) of the DMA. 62 Nu Africa Duty Free Shops (Pty) Ltd v Minister of Finance and Others; Commissioner for the South African Revenue Service v Ambassador Duty Free (Pty) Ltd and Others; Minister of Finance v Ambassador Duty Free (Pty) Ltd and Others [2023] ZACC 31; 2023 (12) BCLR 1419 (CC); 2024 (1) SA 567 (CC) (Nu Africa). 28 certain provisions in the Customs Act and the VAT Act were constitutionally invalid to the extent that they conferred on the Minister plenary legislative powers. A further complaint was that the delegation by the Minister to the Department of International Relations and Cooperation (DIRCO) authorising the amendment of the quotas was an unlawful delegation of authority because the delegation was to an unspecified functionary at DIRCO. The high court held that the Act did not empower the Minister to create the Schedules. Consequently, it declared certain sections of the Customs Act and VAT Act unconstitutional and invalid. [55] The Commissioner of SARS countered Nu Africa's contentions, emphasizing the substance of delegated powers rather than their formal structure. The Nu Africa judgment, being the most recent Constitutional Court judgment on the issue of delegation of legislative powers, puts to bed any doubts that may have been harboured in relation to the scope of the delegation of the powers conferred by s 27 to the Minister. In endorsing parliament’s delegation of powers to the Minister of Finance, the majority judgment of the Constitutional Court held that when determining whether a delegation constitutes an affront to the Constitution, ‘the enquiry should be context-specific, and consideration should be given to the scope of the delegation, the subject matter to which it relates, the degree of delegation and the sufficiency of the constraints on the exercise of the discretionary powers conferred by the section’.63 It distinguished Executive Council, pointing out that in that matter, it was the plenary nature of the delegated power that pointed to unconstitutionality. It held that the answer turned on what the relevant factors yielded based on the circumstances of each delegation. Furthermore, the majority found the Minister’s delegation of the authority, to increase or decrease the quota of alcohol, to the Department of International Relations and Cooperation to be justifiable. [56] Nu Africa’s injunctions about the consideration of the context, the nature and scope of the delegation, the subject matter to which it relates and the sufficiency of the constraints are aspects that were traversed and determined in favour of the Minister by this Court in Esau and British American Tobacco, respectively, which have already been 63 Ibid para 95. 29 discussed earlier in this judgment. As was the case in British American Tobacco. In Nu Africa too, the court took into account that the Minister did not have carte blanche to amend the legislation.64 [57] It has already been found that the general architecture of the DMA encourages co-operative governance in that s 26(3) of the DMA enjoins the Minister to act in collaboration with other spheres of government in devising and implementing a rapid and effective response to disasters. Moreover, in British American Tobacco, this Court found that ss 27(2) and 27(3) provide a ‘clear and binding framework for the exercise of the Minister’s powers’.65 In Nu Africa, the majority not only found the promotion of co-operative governance to be a relevant factor, but also found that such delegation ‘actually enhances efficient governance, both of which are constitutional imperatives’.66 Furthermore, it observed as follows: ‘The Executive is in a much better position than Parliament to appreciate the day- to-day needs and demands of administering the matters contained within the Schedules to the Customs and the VAT Act. Parliament’s delegation promotes co- operative governance and actually enhances efficient governance, both of which are constitutional imperatives. Parliament made the conscious choice that the prevailing circumstances dictated that the law-making work in the form of amending the Schedules be best left to the expertise and proximity of the Executive. In the circumstances, I see nothing constitutionally impermissible with that. This is especially so since Parliament retains sufficient oversight.’67 [58] For all the reasons set out above, the DA’s contention that s 27 amounts to an impermissible delegation of plenary powers falls to be rejected. Once the findings of this Court in Esau and in British American Tobacco as discussed above, are accepted to be correct, as they must, it becomes incongruous to simultaneously hold that s 27 is akin to a state of emergency, an aspect to be considered next. 64 British American Tobacco fn 25 above para 97; Nu Africa fn 62 above para 23. 65 British American Tobacco fn 25 above para 97. 66 Ibid para 100. 67 Ibid para 100. 30 Does s 27 of the DMA bring about a de facto state of emergency? [59] It is imperative to understand the distinction between a state of disaster and a state of emergency. The DA asserted that the DMA permits the creation of a situation akin to a state of emergency insofar as it fails to provide for the parliamentary oversight role that s 37 of the Constitution has ordained for Parliament in an actual state of emergency. The DA emphasised that its complaint is not that a national state of disaster is the same concept in law as a state of emergency under the Constitution; it acknowledged that the two have different threshold requirements. It however contended that s 27 of the DMA permits a similar outcome to a state of emergency without the constitutional safeguards attendant on a state of emergency. [60] The DA further asserted that s 27 of the DMA circumvents the strictures of s 37 of the Constitution because it permits the Minister to place the country under a state of emergency without being subjected to procedures and safeguards embodied in s 37. It is apposite to deal first with a misconception: the DA’s contention that s 27 of the DMA permits a de facto state of emergency because that provision was used by the National Executive to ‘suspend the South African constitutional order’ is plainly misconceived. This is because the state of emergency itself does not permit a blanket suspension of the constitutional order. On the contrary, s 37(3) of the Constitution empowers the court to decide on the validity of any legislation enacted or action taken in consequence of a state of emergency. [61] Moreover, it is clear from the provisions of ss 37(4)68 and 37(5)69 that only a limited derogation from the fundamental rights guaranteed by the Constitution is permissible, 68 Section 37(4) that: ‘Any legislation enacted in consequence of a declaration of a state of emergency may derogate from the Bill of Rights only to the extent that- (u) the derogation is strictly required by the emergency; and (6) the legislation- (i) is consistent with the Republic’s obligations under international law applicable to states of emergency; (ii) conforms to subsection (5); and (iii) is published in the national Government Gazette as soon as reasonably possible after being enacted.’ 69 Section 37(5) provides that: ‘No Act of Parliament that authorises a declaration of a stale of emergency, and no legislation enacted or other action taken in consequence of a declaration, may permit or authorise- (a) indemnifying the state, or any person, in respect of any unlawful act; (b) any derogation from this section; or (e) any derogation from 31 non-derogable rights mentioned in that provision remain protected. Once this fundamental distinction between a state of emergency and a state of disaster is understood, the complaint that the state of disaster is akin to a state of emergency but without the constitutional safeguards of s 37 loses its force.70 Nothing in the DMA suggests that it permits a deviation from the normal constitutional order. The safeguards enunciated in s 37 therefore had to be seen against the backdrop of an appreciation that the provision in question legitimises a drastic reduction in constitutional protections in the first place.71 The same simply cannot be said for states of disaster as regulated under the DMA. [62] It was held in Esau that the DMA applies when a disaster is not serious enough to justify the declaration of a state of emergency, but serious enough that the ordinary law cannot deal with it.72 Sight must not be lost of the fact that a limitation of rights is permitted in the ordinary course, even in the absence of a declaration of a state of disaster, provided the limitation complies with s 36 of the Constitution. Therefore, the limitation of certain fundamental rights during a state of disaster cannot, without more, be equated with the creation of a state of emergency. In the ordinary course, (ie where neither the state of emergency nor the state of disaster has been declared), any and all limitations on fundamental rights are capable of constitutional challenge. During a state of disaster, that competence of the courts to rule on the validity of regulations remains intact. Any limitation of fundamental rights arising from the regulations that have been passed may be challenged in court (and in some cases were so challenged).73 In other words, the state of disaster does not upset the status quo insofar as the normal constitutional order is concerned. Where no such deviation is permitted, it is not necessary for the DMA to include a specific provision preserving the competence of courts to rule on the validity of regulations.74 a section mentioned in column 1 of the Table of Non-Derogable Rights, to the extent indicated opposite that section in column 3 of the Table. 70 Freedom Front Plus v President of the Republic of South Africa and Others [2020] ZAGPPHC 266; [2020] 3 All SA 762 (GP) para 68 (Freedom Front Plus). 71 Ibid para 65. 72 Esau fn 1 above para 10. 73 Compare: British American Tobacco fn 25 above; Freedom Front Plus fn 70 above; De Beer fn 53 above. 74 Freedom Front Plus fn 70 above para 68. 32 [63] However, the Constitution permits all rights under a state of emergency, to be suspended, save for the prescripts in the Table of Non-Derogable Rights. In other words, absent the safeguards in s 37(3), during a state of emergency an individual would not be entitled to approach the court for purposes of testing whether the limitation of their rights is justifiable in terms of s 36 of the Constitution. [64] The high-water mark of the DA’s contention on this aspect is that the safeguard of extending the state of emergency only with the approval of Parliament, as set out in s 37(2) of the Constitution is absent in the DMA. Section 27(5)(c) of the DMA deals with extensions of a state of disaster. It provides that a national disaster may be extended by the Minister for one month at a time before it lapses or before the existing extension expires. A proper interpretive exercise demands that this provision be interpreted within the broader context of the DMA. That being the case, a sensible interpretation of s 27(5)(c) is that any extension of the national state of disaster must be for the attainment of the same stated purposes of the DMA. In Esau,75 this Court concluded that the Minister may declare a state of disaster under s 27(1) ‘only if’ one of two preconditions is present, namely if ‘existing legislation and contingency arrangements do not adequately provide for the national executive to deal effectively with the disaster’; or if ‘other special circumstances warrant the declaration of a national state of disaster’. [65] In British American Tobacco, this Court stated that s 27(2)(n) of the DMA specifically authorises the Minister to make regulations or issue directions concerning ‘other steps that may be necessary to prevent an escalation of the disaster, or to alleviate, contain and minimise the effects of the disaster’.76 [66] This Court went on to conclude that the power in s 27(2)(n), as in the case of all the powers specified in s 27(2), must ‘be exercised only to the extent that this is necessary’ for the purposes specified in s 27(3). Thus, it follows logically that the 75 Esau fn 1 above para 14. 76 British American Tobacco fn 25 above para 88. 33 extension of the state of national disaster must also be subjected to the same rigours, ie the extension must be ‘necessary’.77 In similar vein, the necessity to extend would also have to be objectively ascertainable on facts.78 It therefore goes without saying that the majority judgment’s view that the power of extension of the national state of disaster is by clear implication subject to the same requirements as the original declaration of the national state of disaster terms of s 27(1). Consequently, the fact that the DMA does not have a provision matching s 37(3) of the Constitution, which expressly preserves the competence of the courts to decide on the validity of a declaration of a state of emergency or its extension, does not render it unconstitutional. For all the reasons mentioned above, the full court in Freedom Front Plus79 correctly rejected the argument that s 27 of the DMA is unconstitutional to the extent that it permits the imposition of a state of disaster without the safeguards imposed for a declaration of a state of emergency. Does s 27 of the DMA permit the executive branch of the state to exercise powers without parliamentary oversight? [67] It is apposite to commence a discussion of this leg of the DA’s argument by quoting a passage from a decision of the Constitutional Court as to how it perceived the constitutional imperative of parliamentary supervision. In United Democratic Movement v Speaker of the National Assembly and Others,80 the Constitutional Court stated as follows: ‘Members of Parliament have to ensure that the will or interests of the people find expression through what the State and its organs do. This is so because Parliament “is elected to represent the people and to ensure government by the people under the Constitution”. This it seeks to achieve by, among other things, passing legislation to facilitate quality service delivery to the people, appropriating budgets for discharging constitutional obligations and holding the Executive and organs of State accountable for the execution of their constitutional responsibilities.’81 77 Ibid para 91. 78 Ibid para 91. 79 Freedom Front Plus fn 70 above para 65. 80 United Democratic Movement v Speaker of the National Assembly and Others [2017] ZACC 21; 2017 (8) BCLR 1061 (CC); 2017 (5) SA 300 (CC) (UDM). 81 Ibid para 38. 34 [68] The DA contends that the DMA does not make provision for effective oversight thereby violating the doctrine of the separation of powers. The DA asserted that the DMA fails to require the National Assembly to exercise the oversight role required by s 42(3) and 55(2) of the Constitution. It argued that holding the Executive accountable should not be at the benevolence of a particular parliament. Rather that parliament, as an institution, must be legislatively enjoined to do so by the DMA. First of all, it must be borne in mind that there is nothing in the DMA precluding parliament from executing its oversight function. As will be demonstrated, the DA’s contentions pay little or no regard to the role played by parliamentary committees in which the DA is represented. [69] In countering the DA’s contentions, Parliament averred that it had, during the Covid-19 pandemic, exercised parliamentary oversight through the National Assembly’s various Committees, as well as various select Committees of the National Council of Provinces. Part 10 of Chapter 12 of the National Assembly Rules deals with Portfolio Committees. These may be established by the Speaker of Parliament acting with the concurrence of the Rules Committee. Each Portfolio Committee consists of a prescribed number of members of Parliament and performs several functions. Parliament also asserted that it adopted specific rules to facilitate virtual sittings of the National Assembly as well as the National Council of Provinces. It set out in detail how members of the National Executive were called to account to parliament. The National Executive asserted that the Constitution, parliament’s Oversight and Accountability Model and the rules of parliament enabled parliament to exercise its constitutional mandate to the full extent required by the Constitution. That evidence was not controverted. It is clear that all the different mechanisms of parliamentary oversight were not employed out of benevolence but out of compliance with parliament’s own rules and Oversight and Accountability Model. [70] During the exchange with the bench counsel for the DA was asked whether the role played by the Portfolio Committee during the state of disaster, alluded to in the respondents’ papers, did not suffice as scrutiny of executive action. Counsel, correctly, in my view, submitted that this case is not about what the executive authority did or did not 35 do during the state of disaster pertaining to Covid-19 pandemic. It is rather about what the DMA obliges Parliament to hold the National Executive regarding the proclamation of a state of disaster, and stipulating how it is to be managed, once proclaimed. This, the DA submitted, is where the DMA falls short because it does not oblige Parliament to put adequate measures in place for its supervision of the National Executive. In the context of the facts of this case, this proposition is plainly unsustainable. [71] The mere fact that the DMA does not, unlike the State of Emergency Act 64 of 1997 (SOEA), expressly provide for parliamentary supervision, does not mean that Parliament’s supervision is ousted. This is because parliamentary oversight is constitutionally ordained in ss 42(3) and 55(2)(b) of the Constitution, both of which expressly provide for Parliament’s supervisory role. Section 42(3) provides: ‘The National Assembly is elected to represent the people and to ensure government by the people under the Constitution. It does this by choosing the President, by providing a national forum for public consideration of issues, by passing legislation and by scrutinizing and overseeing executive action.’ [72] The requirement for the National Assembly to scrutinise and oversee executive action is self-evident. Section 55(2)(b) provides: ‘The National Assembly must provide for mechanisms – (a) to ensure that all executive organs of state in the national sphere of government are accountable to it; and (b) to maintain oversight of – (i) the exercise of national executive authority, including the implementation of legislation; ...’ The question is whether these mechanisms exist. More about this later. [73] In addition to the above, there are several provisions of the Constitution which serve to ensure that the executive is held accountable. Section 56 provides: ‘The National Assembly or any of its Committees may – (a) summon any person to appear before it to give evidence on oath or affirmation, or to produce documents; (b) require any person or institution to report to it; 36 (c) compel, in terms of national legislation or the rules and orders, any person or institution to comply with a summons or requirement in terms of paragraph (a) or (b); and (d) receive petitions, representations or submissions from any interested persons or institutions.’ [74] In terms of s 57(1) of the Constitution, the National Assembly may – ‘(a) determine and control its internal arrangements, proceedings and procedures; and (b) make rules and orders concerning its business, with due regard to representative and participatory democracy, accountability, transparency and public involvement.’ [75] In Economic Freedom Fighters v Speaker of the National Assembly,82 the Constitutional Court observed that ‘both sections 42(3) and 55(2)(b) of the Constitution do not define the strictures within which the National Assembly is to operate in its endeavour to fulfil its obligations’. The court held that the National Assembly had the latitude to determine how best it should carry out its constitutional mandate. It said: ‘It falls outside the parameters of judicial authority to prescribe to the National Assembly how to scrutinise executive action, what mechanisms to establish and which mandate to give them, for the purpose of holding the Executive accountable and fulfilling its oversight role of the Executive or organs of State in general. The mechanics of how to go about fulfilling these constitutional obligations is a discretionary matter best left to the National Assembly. Ours is a much broader and less intrusive role. And that is to determine whether what the National Assembly did does in substance and in reality amount to fulfilment of its constitutional obligations. That is the sum-total of the constitutionally permissible judicial enquiry to be embarked upon. . . . It is therefore not for this Court to prescribe to Parliament what structures or measures to establish or employ respectively in order to fulfil responsibilities primarily entrusted to it.’83 The clear provisions of s 42(3) and 55(2)(b) and the dictum in the preceding paragraph put it beyond question that the National Assembly indeed has the latitude to determine how it will exercise its oversight of the executive. 82 Economic Freedom Fighters v Speaker of the National Assembly and Others; Democratic Alliance v Speaker of the National Assembly and Others [2016] ZACC 11; 2016 (5) BCLR 618 (CC); 2016 (3) SA 580 (CC) para 87. 83 Ibid para 93. 37 [76] The DA baldly alleged, but did not put forth evidence to support its case, that the mechanics adopted by Parliament during the state of disaster to hold the Executive accountable, were inadequate. It failed to pay due regard to the provisions of Parliament’s Oversight and Accountability Model, which documents parliament’s own view of how the obligation of oversight ought to be executed.84 In UDM, the Constitutional Court remarked that Parliament’s scrutiny and oversight role blends well with the obligations imposed on the Executive by section 92 of the Constitution.85 Section 92 of the Constitution renders the national executive accountable, collectively and individually, and stipulates that members of cabinet are accountable collectively and individually to Parliament for the exercise of their powers and the performance of their functions, and that they must provide Parliament with full and regular reports concerning matters under their control. [77] In clause 3.1.2 under the heading ‘plenary processes for effecting oversight and accountability, the Oversight and Accountability’ provides as follows: ‘The procedure of putting questions to the Executive is one of the ways in which Parliament holds the Executive to account. Questions can be put for oral or written reply to the President, Deputy President and the Cabinet Ministers on matters for which they are responsible. Question time affords members of Parliament the opportunity to question members of the Executive on service delivery, policy and other executive action on behalf of both their political parties and the electorate.’ [78] It is necessary to discuss the measures that are in place to hold Parliament accountable. In UDM, the Constitutional Court explained the constitutional imperative of accountability as follows: ‘The National Assembly indeed has the obligation to hold Members of the Executive accountable, put effective mechanisms in place to achieve that objective and maintain oversight of their exercise of executive authority. There are parliamentary oversight and accountability mechanisms that are sufficiently notorious to be taken judicial notice of. Some of them are calling on Ministers to: regularly account to Portfolio Committees and ad hoc Committees; and avail themselves to respond to parliamentary questions as well as other question and answer sessions during a 84 The contents of this document were alluded to in and annexed to the first respondent’s answering affidavit. 85 UDM fn 80 above para 39. 38 National Assembly sitting. It is also through the State of the Nation Address, Budget Speeches and question and answer sessions that the President and the rest of the Executive are held to account. These accountability and oversight mechanisms, are the regular or normal ones. There may come a time when these measures are not or appear not to be effective. That would be when the President and his or her team have, in the eyes of the elected representatives of the people to whom they are constitutionally obliged to account, disturbingly failed to fulfil their obligations. In other words, that stage would be reached where their apparent under-performance or disregard for their constitutional obligations is viewed, by elected public representatives, as so concerning that serious or terminal consequences are thought to be most appropriate. And that takes the form of removal from office.’86 [79] The above dictum not only spells out how the executive is held accountable in the normal course but also canvass how that accountability could pan out in the event of its under-performance. The UDM judgment therefore makes it plain that in a constitutional democracy such as ours the responsibility to protect constitutional rights in practice is imposed both on the legislature and on the executive and its officials. [80] As stated in UDM, Parliament has to ensure that the will or interests of the people are considered, and this it does by, among others, holding the executive accountable for the execution of their constitutional responsibilities. Parliament’s Oversight and Accountability Model, a document that came about following the recommendations of parliament’s task team comprising members of both Houses of Parliament, was attached to the second respondent’s answering affidavit as proof of how Parliament executed its oversight role. The authenticity of that document was not placed in dispute. Nor did the DA identify any shortcomings that could be said to have hampered parliament’s oversight role in relation to the DMA. [81] It must be borne in mind that none of the provisions of the DMA purport to bar parliamentary supervision. As such, the powers exercised by the Minister under the DMA remain subject to all the provisions of the Constitution and existing law. That being the 86 Ibid paras 40-41. 39 case, the ordinary parliamentary oversight mechanisms remain intact and the exercises of powers by the Executive in terms of the DMA remain subject to this. An important consideration is that s 26(1) categorically states that the primary responsibility for the co-ordination and management of the state of disaster resides with the national executive regardless of whether a state of national disaster has been declared or not. The manner in which the National Assembly is enjoined to execute its functions is expressly provided for in the Constitution.87 [82] The Executive is accountable to Parliament under the normal constitutional order. Thus, because s 27 of the DMA relates to a national state of disaster and not a state of emergency, Parliament continues to exercise its oversight role over the Executive during the state of disaster. It is a right that is enshrined in the Constitution and is thus available to be invoked by any member of Parliament. It is the purview of Parliament to determine what oversight mechanisms to employ in fulfilling its oversight role. The DA alleged that meetings and questions were not the same as ‘genuine oversight’ because some of the questions were simply not answered by members of the executive. Parliament’s Oversight and Accountability Model sets out an array of remedies designed to ensure full accountability, including summoning of members before the portfolio committees and disciplinary steps that may be taken against errant members. It is also open to aggrieved parties to review the conduct of those who fail to adhere to their constitutional obligations.88 Aggrieved parties who choose not to invoke the available remedies cannot blame the DMA for their failure to do so. [83] The Oversight and Accountability Model inter alia emphasises the value of public participation and alludes to available interventions at the instance of the members of the public. It states inter alia as follows: ‘The motivation for political delegations to undertake the management of the legislative and oversight programme of Parliament demands capacity, competence and collective action. . . . Against this backdrop, and in the context of sections 42(3) and 55(2)(b) of the Constitution, as 87 See ss 42(3) and 55(2)(b) of the Constitution. 88 Freedom Front Plus fn 70 above para 69. 40 well as various provisions which imply oversight functions of the National Council of Provinces, Parliament through the Joint Rules Committee established a Task Team on Oversight and Accountability comprising members of both Houses of Parliament, which studied the mandates relating to oversight emanating from the Constitution. … The conventional Westminster view on oversight, as inherited by many former British colonies, is often rather adversarial and in some instances oversight is professed to be the purview opposition politicians and not the legislature as an institution. … “In the South African context, oversight is a constitutionally mandated function of legislative organs of state to scrutinize and oversee executive action and any organ of state.” It follows that oversight entails the informal and formal watchful, strategic and structured scrutiny exercised by legislatures. … In addition, and most importantly, it entails overseeing the effective management of government departments by individual members of Cabinet in pursuit of improved service delivery for the achievement of a better quality of life for all citizens. In terms of the provisions of the Constitution and the Joint Rules, Parliament has power to conduct oversight of all organs of state. The appropriate mechanism for Parliament to conduct oversight of these organs of state would be through parliamentary committees. In conducting oversight, the committee would either request a briefing from the organ of state or visit the organ of state for fact-finding, depending on the purpose of the oversight. The committees would have to consider the appropriate means for conducting oversight to cover all organs of state. Parliamentary committees are established as instruments of the Houses [of Parliament] in terms of the Constitution, legislation, the Joint Rules, Rules of the NCOP, Rules of the NA, and resolutions of the Houses to facilitate oversight and the monitoring of the Executive, and for this purpose they are provided with procedural, administrative and logistical support- they are regarded as the engine rooms of Parliament. …When a committee reports its recommendations to the House for formal consideration and the House adopts the Committee report, it gives the recommendations the force of a formal House resolution pursuant to its constitutional function of conducting oversight.’ (Own emphasis.). [84] It is evident from the above that parliamentary committees are designed for effective parliamentary, hence the Speaker of the National Assembly echoed the Oversight and Accountability’s description of parliamentary committees as parliament’s 41 ‘engine rooms’. Pierre de Vos et al in their work, South African Constitutional Law in Context 89 also consider the parliamentary committees to be engine rooms. They posit as follows: ‘The various committees of parliament - especially the various portfolio committees that focus on the work associated with a specific government department – are seen as the engine room of parliament. Although members of the NA and the NCOP can ask questions of members of the executive and have a right to have their questions answered, either orally in each of the houses or in written form, portfolio committees can call members of the executive and departmental officials to testify before them to oversee the work of the individual departments and to hold the members of the executive accountable.’90 It cannot be gainsaid that these views are consonant with the provisions of the Oversight and Accountability Model. [85] The evidence of the second and fourth respondents regarding the breadth of the Oversight and Accountability Model and various committees and their roles, and joint rules and orders and committees created within the contemplation of ss 45 and 57 of the Constitution, has not been gainsaid. All that the DA stated in response was that such evidence is irrelevant. That evidence and the self-explanatory contents of the Oversight and Accountability Model disproves the DA’s bald assertion that the fact that the Executive engaged with Parliament does not mean that Parliament has in place effective mechanisms to maintain oversight and accountability. The DA seeks to evade any engagement with these mechanisms by asserting that ‘the constitutional validity of s 27(2) is an objective question’. This line of argument simply fails to take into account that context is an important part of the unitary interpretive exercise. The role of the Oversight and Accountability Model as well the powers wielded by various portfolio are valid considerations in assessing the extent of parliamentary supervision created because of constitutional imperatives cannot be wished away. [86] In my opinion, the Minister’s exercise of her regulation-making powers envisaged in the DMA in no way violates or erodes the constitutional imperatives of supervision and 89 P de Vos et al South African Constitutional Law in Context 2 ed (2021). 90 Op cit at 180. 42 accountability prescribed in s 42(3) and 55(2)(b)(i) of the Constitution, as the executive remains accountable to parliament even during a state of disaster; the Oversight and Accountability Model does not state otherwise. [87] It follows that the respondents’ assertion that parliamentary oversight through the activities of the Portfolio Committee, parliamentary committees and the rules of parliament all enable parliament to fulfill its constitutional mandate during a state of disaster, is unassailable. Against the background of the authorities discussed in the foregoing paragraphs, the DA’s contention that s 27 of the DMA enables a situation in which ‘government can grant itself dictatorial powers’ lacks merit and, as a result, falls to be rejected. [88] It bears mentioning that some of the DA’s contentions were contradictory. By way of an example, the DA prefaced its arguments by emphasising that it ‘does not seek to undo or imperil the Executive’s ability to respond quickly and creatively to disasters’. It pointed out that it ‘seeks to preserve that ability – but simultaneously ensure that Parliament be given the ability to readily influence and, if necessary, invalidate this response after the fact’. It then asserted that ‘often, public participation did not occur at all’. However, the uncontroverted evidence of the first respondent completely blunts the sting of this contention. As stated before, the DA did not in any way discredit the evidence pertaining to the steps taken by the parliamentary committees and the assertions regarding how the participation of members of the public was facilitated.91 Against that background, and the express provisions of the DMA considered as a whole, the assertion that the DMA fails to facilitate public involvement is devoid of merit. [89] There remains the DA’s contention that parliamentary committees ‘have no teeth’. Without any elaboration, the DA argues that ‘even if an entire parliamentary committee were to disagree with the steps the Minister had taken, this would have no legal effect unless the minister of his or her own accord decided to change tack’. The DA does not 91 Compare Esau fn 1 above paras 94-95. 43 engage with various provisions of the Constitution which are designed to ensure the accountability of the members of Parliament. Instead, the DA merely asserts on insubstantial grounds that ‘the constitutional difficulty is that the DMA does not require such engagements or put in place mandatory mechanisms for them to occur’. [90] The DA further contended that when the next state of national disaster is declared, the question of what engagements will occur will depend on the enthusiasm (or lack thereof) of the relevant Parliament and COGTA Minister’. This contention, as already indicated, fails to take into account various provisions of the Constitution that serve to ensure that parliament’s oversight role is maintained. It must also be borne in mind that in terms of s 56 of the Constitution, any interested persons or institutions may submit petitions and make representations or submissions to Parliament or its committees. In terms of s 59(1) of the Constitution the National Assembly must facilitate public involvement. In terms of s 59(2), the National Assembly may not exclude the public, including the media, from a sitting of a committee unless it is reasonable and justifiable to do so. Public participation is therefore a constitutional imperative. [91] Against the backdrop of all the oversight mechanisms alluded to under the heading of parliamentary supervision, as well as the safeguards that are built-in as constitutional imperatives, where the public is granted the space to engage with parliament, as well as the safeguards that are built in as constitutional imperatives, to insist that the same mechanisms will only be effective if they are expressly included in the DMA seems to be a classic example of putting substance over form. [92] Moreover, as observed in One Movement South Africa NPC v President of the Republic of South Africa and Others,92 when any member of Parliament allows himself or herself to be party to a decision that they consider not to be in the interests of the people of South Africa, they betray the people of South Africa. In the same vein, however, that court, citing UDM with approval, acknowledged that s 102 of the Constitution makes 92 One Movement South Africa NPC v President of the Republic of South Africa and Others [2023] ZACC 42; 2024 (3) BCLR 364 (CC); 2024 (2) SA 148 (CC) para 37. 44 provision for members of parliament to address the executive members’ remissness in their execution of their constitutional mandate. The following observation in UDM answers the DA’s concerns regarding the alleged inadequacy of parliamentary oversight that is effected via parliamentary committees: ‘The National Assembly indeed has the obligation to hold Members of the Executive accountable, put effective mechanisms in place to achieve that objective and maintain oversight of their exercise of executive authority. There are parliamentary oversight and accountability mechanisms that are sufficiently notorious to be taken judicial notice of. Some of them are calling on Ministers to regularly account to Portfolio Committees and ad hoc Committees; and avail themselves to respond to parliamentary questions as well as other question and answer sessions during a National Assembly sitting. . . . These accountability and oversight mechanisms are the regular or normal ones. There may come a time when these measures are not or appear not to be effective. That would be when the President and his or her team have, in the eyes of the elected representatives of the people to whom they are constitutionally obliged to account, disturbingly failed to fulfil their obligations. In other words, that stage would be reached where their apparent under-performance or disregard for their constitutional obligations is viewed, by elected public representatives, as so concerning that serious or terminal consequences are thought to be most appropriate. And that takes the form of removal from office. The Constitution provides for two processes in terms of which the President may be removed from office. First, impeachment, which applies where there is a serious violation of the Constitution or the law, serious misconduct or an inability to perform the functions of the office. Another related terminal consequence or supreme accountability tool, in-between general elections, is a motion of no confidence,’ which is envisaged in s 102 of the Constitution.’93 [93] For all the reasons set out above, s 27 of the DMA passes constitutional muster. It follows that the appeal has to fail. Under such circumstances, there is no need to address the issue of an appropriate remedy. All the parties are agreed that the Biowatch 93 Section 102 of the Constitution provides: ‘(1) If the National Assembly, by a vote supported by a majority of its members, passes a motion of no confidence in the Cabinet excluding the President, the President must reconstitute the Cabinet. (2) If the National Assembly, by a vote supported by a majority of its members, passes a motion of no confidence in the President, the President and the other members of the Cabinet and any Deputy Ministers must resign.’ 45 principle is applicable on account of the issues raised in this matter. Accordingly, there is no reason to deviate from that principle and no order as to costs will be made. [94] In the result, the following order is made: The appeal is dismissed and there is no order as to costs. ________________________ M B Molemela President Supreme Court of Appeal Makgoka JA: [95] I have had the benefit of reading the first judgment. I agree with its conclusion that s 27 of the DMA does not impermissibly delegate plenary powers to the Executive. [96] There is a preliminary point to be disposed of before this aspect is considered. The Executive (the President and the Minister) objected to this ground of attack by the DA. It contended that the latter had accepted in its founding affidavit that the wide scope of the regulation-making powers conferred on the Minister by s 27 was justified. According to the Executive, the DA did not contend that the scope of delegation to the Minister, was in itself, unconstitutional. It contended merely that, given the wide scope of the delegation to the Minister, the section did not render the Minister’s exercise of her powers subject to parliamentary supervision and control. [97] The Executive asserted that the debate before the court below focused on the adequacy of parliamentary supervision of, and control over, the Minister’s exercise of her regulation-making powers. By seeking to argue the delegation of power issue, the DA 46 was ‘shifting ground’, which according to the National Executive, was impermissible and unfair because the Executive were not called upon to justify the scope of the delegation. [98] Three points need to be made in this regard. The first is that the DA pleaded the issue of impermissible delegation of power. It could well be that the debate before the court below focused on the adequacy of parliamentary supervision of and control over the Minister’s exercise of her regulation-making powers. But the fact remains that the DA never formally abandoned the issue. In any event, where a point of law is apparent on the papers, a court is in entitled to mero motu raise it and require the parties to deal with it.94 Secondly, both the majority and minority judgments in the court below dealt with the issue. Lastly, despite its protestations, the Executive’s heads of argument in this Court addressed the issue. [99] In matters such as this, the overriding consideration is always that of prejudice. The Executive does not assert any prejudice, and I am unable to discern any. On these bases, the issue is squarely before this Court and we are therefore entitled to consider it. [100] Subject to the remarks, I agree with the conclusion in the first judgment that s 27 of the DMA does not impermissibly delegate plenary powers to the Executive. However, I do part ways with the first judgment in its conclusion that s 27 passes constitutional muster even though there is no express provision in it for Parliament’s role in s 27 when a state of disaster is declared or extended. [101] I make two observations in this regard. First, the finding that s 27 does not impermissibly delegate plenary powers to the Executive, has no bearing on whether the absence of an express parliamentary role in the DMA renders the provision unconstitutional or not. This is a discrete constitutional challenge. 94 CUSA v Tao Ying Metal Industries and Others [2008] ZACC 15; 2009 (2) SA 204 (CC); [2008] 1 BLLR 1 (CC); (2008) 29 ILJ 2461 (CC). 47 [102] Secondly, the first judgment concludes that the findings of this Court in Esau and in British American Tobacco render it ‘incongruous to simultaneously hold that s 27 is akin to a state of emergency’. I disagree. An attack on the constitutional validity of s 27 of the DMA on the basis that it creates a situation akin to a state of emergency, was never before this Court in either of those cases. Similarly, the constitutional challenge to the section based on lack of parliamentary supervision was not before this Court in any of the cases. [103] In each of them, this Court considered challenges to specific regulations promulgated in terms of s 27 of the DMA in response to the Covid-19 pandemic. No argument was advanced in any of them that the state of disaster is akin to a state of emergency, nor did this Court pronounce on that question. [104] Esau concerned, among other things, an attack on regulations which limited among others, freedom of movement, freedom of trade, occupation and profession. It was argued that these were not reasonable and justifiable limitations for purposes of s 36 of the Constitution. This Court took into account the nature of the pandemic and the reasons proffered by the Executive for those regulations. It found that, although the impugned regulations limited fundamental rights when considered against the proportionality test in terms of s 36, they were justifiable limitations. [105] A contrary finding was reached in British American Tobacco. There, a challenge was made to a regulation which prohibited the sale of tobacco products. This Court concluded that the regulation infringed on rights to dignity, bodily and psychological integrity, freedom of trade and deprivation of property, and was not justified in terms of s 36 of the Constitution. This Court also held that the regulation was not strictly necessary or essential to protect the public or to deal with the destructive and other effects of the disaster, as contemplated in s 27(3) of the DMA. Consequently, it dismissed the appeal by the Minister. 48 [106] It is therefore clear that both cases were decided in the specific context of the Covid-19 pandemic. In contrast, in this matter, the constitutional attack mounted by the DA is on s 27 of the DMA itself. It is contended that the absence of parliamentary control is unconstitutional as it, among other outcomes, brings about the same result as that of a state of emergency. Without a doubt, this is entirely different to the challenges in both Esau and British Tobacco Association. Although the Covid-19 pandemic was the catalyst to the application in the court below, a constitutional challenge to s 27 must be considered objectively, irrespective of how the Executive exercised its power in response to the pandemic. [107] With these observations out of the way, I turn to the substantive issues. I understand the DA’s contention to be this: s 27 of the DMA is unconstitutional because it does not make express provision for Parliament’s role in the declaration or extension of a state of disaster. One of the consequences of such a lack of parliamentary control is that the section permits the creation of a de facto state of emergency without following the Constitution’s requirements for the declaration of an actual state of emergency. In other words, a situation akin to a state of emergency is a result of a lack of parliamentary control in the DMA when a state of disaster is declared. Lack of parliamentary control is the cause, and a simulated state of emergency is the cause. Thus, the two are inextricably linked. Viewed in this light, I will not consider the two as separate and distinct grounds of attack, but in unison. [108] Parliament’s supervisory and oversight role over the Executive is provided for in ss 42(3) and 55(2) of the Constitution. The former enjoins the National Assembly to scrutinise and oversee Executive action. The latter provides: ‘The National Assembly must provide for mechanisms – (a) to ensure that all executive organs of state in the national sphere of government are accountable to it; and (b) to maintain oversight of – (i) the exercise of national executive authority, including the implementation of legislation; and 49 (ii) any organ of state.’ [109] In the context of the issues in this case, Parliament’s supervisory role over the Executive must be considered against the powers given to the Minister in the DMA to declare a state of disaster. Section 1 of the DMA defines a ‘disaster’ as: ‘a progressive or sudden, widespread or localised, natural or human-caused occurrence which— (a) causes or threatens to cause— (i) death, injury or disease; (ii) damage to property, infrastructure or the environment; or (iii) significant disruption of the life of a community; and (b) is of a magnitude that exceeds the ability of those affected by the disaster to cope with its effects using only their own resources.’ [110] Section 27(1) empowers the Minister to decide that any of the things mentioned above, are present. In other words, she decides what constitutes a state of disaster. In terms of s 27(1)(a) and (b), she decides that: (a) a national disaster has occurred; and (b) existing legislation and contingency arrangements do not adequately provide for the effective response to such a national disaster, and that ‘other special circumstances warrant the declaration of a national disaster’. The phrase ‘special circumstances’ is not defined in the DMA. [111] Once she decides on all the above, the Minister may declare a state of disaster. In terms of s 27(5), she is empowered to extend the state of disaster for a month at a time. There is no limit to the times she can extend the state of disaster. Of course, the Minister’s exercise of her power in s 27(2), and conceivably in terms of s 27(5), is subject to s 27(3), which requires her to do so only to the extent that is necessary for the factors mentioned in the latter subsection, namely: (a) assisting and protecting the public; (b) providing relief to the public; (c) protecting property; (d) preventing or combating disruption; or (e) dealing with the destructive and other effects of the disaster. But in truth, as to whether those factors in s 27(3)(a) to (e) are present, is entirely up to the Minister. These are undoubtedly wide and extra-ordinary powers, which give the Minister the latitude to make far-reaching decisions. 50 [112] However, the DMA does not require the Minister to obtain Parliament’s approval. She is not required to obtain such approval when she decides to either: (a) declare a state of disaster; (b) enact state of disaster regulations; or (c) extend the state of disaster. She is not obliged to inform Parliament about any of these, until after a year, as provided in s 24(2). This section obliges her to, once a year, submit a report to Parliament on the activities of the National Disaster Management Centre (NDMC). This is merely a reporting exercise, since there is no provision for Parliament to either ratify or reject any of the activities undertaken by the Management Committee. It is simply for Parliament to note the Minister’s report. Given the breadth of the powers endowed to the Minister by s 27, this is not sufficient. [113] This is where the DA’s contention about a simulated state of emergency needs to be considered. I do this by contrasting the powers conferred on the Minister, and their effect, against those in respect of a state of emergency. This brings me to the constitutional and legislative framework relevant to a state of emergency, namely, s 37 of the Constitution and the SOEA (the State of Emergency Act). [114] Section 37(1) of the Constitution sets out the jurisdictional factors to be met for the declaration of a state of emergency. It empowers the President to, in terms of a statute, declare a state of emergency only if: (a) the life of the nation is threatened by war, invasion, general insurrection, disorder, natural disaster, or other public emergency, and (b) if such declaration is necessary to restore peace and order. [115] Section 37(2) provides for the effective date, duration and extension of a state of emergency. It provides that a declaration of a state of emergency, and any legislation enacted or other action taken in consequence of that declaration, may be effective only: (a) prospectively; and (b) for no more than 21 days from the date of the declaration, unless the National Assembly resolves to extend the declaration. The Assembly may extend a declaration of a state of emergency for no more than three months at a time. The first extension of the state of emergency must be by a resolution adopted with a supporting vote of a majority of the members of the Assembly. 51 [116] Any subsequent extension must be by a resolution adopted with a supporting vote of at least 60 per cent of the members of the Assembly. Such a resolution may be adopted only following a public debate in the Assembly. [117] Section 37(3) provides for the justiciability of the State’s powers in a state of emergency. In terms thereof, any competent court may decide on the validity of: (a) the declaration of a state of emergency; (b) any extension of a declaration of a state of emergency; or (c) any legislation enacted, or other action taken, in consequence of a declaration of a state of emergency. [118] The most far-reaching provisions are those contained in s 37(4), which authorises derogation from the Bill of Rights. It reads: ‘Any legislation enacted in consequence of a declaration of a state of emergency may derogate from the Bill of Rights only to the extent that— (a) the derogation is strictly required by the emergency; and (b) the legislation— (i) is consistent with the Republic’s obligations under international law applicable to states of emergency; (ii) conforms to subsection (5); and (iii) is published in the national Government Gazette as soon as reasonably possible after being enacted.’ [119] Lastly, section 37(5) tempers the State’s power during a state of emergency. It provides that no Act of Parliament that authorises a declaration of a state of emergency, and no legislation enacted or other action taken in consequence of a declaration, may permit or authorise: (a) indemnifying the state, or any person, in respect of any unlawful act; (b) any derogation from this section; or (c) any derogation from a section mentioned in column 1 of the Table of Non-Derogable-Rights, to the extent indicated opposite that section in column 3 of the Table. That Table identifies only the right to human dignity, and the right to life as being non-derogable in their entirety. 52 [120] The State of Emergency Act constitutes legislation envisaged in s 37(1) of the Constitution. In terms of s 1(1) thereof, the President may by proclamation in the Gazette declare a state of emergency in the Republic or in any area within the Republic of South Africa. In terms of s 1(2), the President is enjoined to state briefly, the reasons for the declaration of the state of emergency. Section 1(3) provides that the President may at any time withdraw the proclamation by like proclamation in the Gazette. [121] Section 2(1)(a) of the SOEA empowers the President to make emergency regulations in respect of the Republic or of any area in which the state of emergency has been declared, for as long as the proclamation declaring the state of emergency remains in force. Such regulations must be necessary or expedient to: restore peace and order; make adequate provision for terminating the state of emergency; or deal with any circumstances which have arisen or are likely to arise as a result of the state of emergency. In terms of s 2(1)(b) the President is required to, in addition to the publication of the regulations in the Gazette, ‘cause the contents of the regulations to be made known to the public by appropriate means’. [122] Section 2(2)(a) provides for the matters in respect of which the emergency regulations may be made by the President. They include the power to delegate ‘persons or bodies . . . to make orders, rules and bylaws for any of the purposes for which the President is authorised by [the] section to make regulations, and to prescribe penalties for any contravention of or failure to comply with the provisions of such orders, rules or bylaws’. [123] Section 2(3) circumscribes the State’s exercise of power in a state of emergency and tempers the emergency regulations in certain instances. It provides that: ‘No provision of this section shall— (a) authorise the making of any regulations which are inconsistent with this Act or section 37 of the Constitution; or (b) authorise the making of any regulations whereby— (i) provision is made for the imposition of imprisonment for a period 5 exceeding three years; 53 (ii) any duty to render military service other than that provided for in the Defence Act, 1957 (Act No. 44 of 1957), is imposed; or (iii) any law relating to the qualifications, nomination, election or tenure of office of members of Parliament or a provincial legislature, the sittings of Parliament or a provincial legislature or the powers, privileges or immunities of Parliament or a provincial legislature or of the members or committees thereof, is amended or suspended.’ [124] Section 3 provides for parliamentary supervision over the proclamation of a state of emergency. This is central to the DA’s contention. I will revert fully to it. [125] The lapsing of emergency regulations is regulated in s 4(1), which provides that any regulation, order, rule or bylaw made in pursuance of the declaration of a particular state of emergency, or any provision thereof, shall cease to be of force and effect: ‘(a) as from the date on which the proclamation declaring that state of emergency is withdrawn by the President under section 1(3); (b) as from the date on which the National Assembly – (i) resolves not to extend the declaration of that state of emergency; or (ii) resolves under section 3(2)(a) to disapprove of any such regulation, order, rule, bylaw or provision, to the extent to which it is so disapproved; or (c) as from the date on which the declaration of that state of emergency lapses as contemplated in the said s 37(2)(b), whichever is the earlier date.’ [126] Section 4(2) provides that the provisions of subsection (1) shall not derogate from the validity of anything done in terms of any such regulation, order, rule, bylaw or provision up to the date upon which it so ceased to be of force and effect, or from any right, privilege, obligation or liability acquired, accrued or incurred, as at the said date, under and by virtue of any such regulation, order, rule, bylaw or provision. [127] From the above exposition of s 37 of the Constitution and State of Emergency Act, on the one hand, and of the DMA, on the other, the most conspicuous difference is that the declaration of a state of emergency is, in terms of s 3 of the State of Emergency Act, 54 subject to parliamentary supervision, whereas there is no such supervision when a state of disaster is declared. But there are other differences, which are set out below. [128] First, a state of emergency is provided for in the Constitution, whereas a state of disaster derives from an Act of Parliament – the DMA. Second, the declaration of a state of emergency is made by the President, whereas a state of disaster is declared by the Minister. [129] Second, the purpose of a state of emergency is to restore peace and order when the life of the nation is threatened by war, invasion, general insurrection, disorder, natural disaster, or other public emergency. For a state of disaster, it must be that existing legislation and contingency arrangements do not adequately provide for the Executive to deal effectively with a disaster, or that other special circumstances warrant the declaration of a national state of disaster. [130] Third, in a state of emergency, the powers to make emergency regulations reside with the President, whereas in a state of disaster, the power to make regulations lies with the Minister. Fourth, the duration of a state of emergency is 21 days, unless Parliament resolves to extend its declaration. A state of disaster endures for three months and may be extended by the Minister. [131] Fifth, the extension of a state of emergency may only be effected after debate in the National Assembly, whereas under the DMA, the Minister is empowered to extend a state of national disaster without reference to the National Assembly. Sixth, courts are expressly empowered to pronounce on the validity of the declaration of a state of emergency, incidental regulations and action. There is no such provision in the DMA for a state of disaster. [132] Seventh, in a state of emergency derogation from the Bill of Rights is expressly permitted in certain circumstances. The derogation from the Bill of Rights is not expressly permitted in a state of disaster. Eighth, the State’s powers are circumscribed during a 55 state of emergency in that the State is not indemnified for unlawful acts, and that the derogation from the Bill of Rights is circumscribed. There is no similar provision in respect of a state of emergency. [133] I revert to s 3 of the SOEA. It sets out Parliament’s role in the declaration of a state of emergency. It provides as follows: ‘Parliamentary supervision (1) A copy of any proclamation declaring a state of emergency and of any regulation, order, rule or bylaw made in pursuance of any such declaration shall be laid upon the Table in Parliament by the President as soon as possible after the publication thereof. (2) In addition to the powers conferred upon the National Assembly by section 37(2)(b) of the Constitution . . . the National Assembly may – (a) disapprove of any such regulation, order, rule or bylaw or of any provision thereof; or (b) make any recommendation to the President in connection with any such proclamation, regulation, order, rule, bylaw or provision.’ [134] Because there is no similar provision for Parliament’s role in the DMA when a state of disaster is declared, or extended, the DA had initially contended in its founding affidavit that this breaches the doctrine of separation of powers, and is therefore, invalid and unconstitutional. Subsequent to the launch of the application, Freedom Front Plus95 was handed down, in which similar arguments were rejected. This had the effect that the court below was bound by Freedom Front Plus unless it found it to be clearly wrong. As a result, the DA did not pursue the de facto state of emergency and lack of parliamentary supervision issues in the court below. But it reserved its right to raise them in this Court, which it did. [135] As mentioned, the DA’s overarching complaint was that the absence in the DMA of express safeguards similar to those found in s 37 of the Constitution, rendered the DMA unconstitutional. It said that those safeguards are necessary for the exercise of Executive power because of the severe restriction on fundamental rights inherent in a 95 Freedom Front Plus fn 70 above. 56 state of emergency. The DMA, with its capacity to similarly restrict fundamental rights, and achieve a similar outcome as in a state of emergency, does not have such safeguards. The DA asserted that the absence of these safeguards in the DMA has the effect that the DMA does not withstand constitutional scrutiny. [136] In this Court, the National Executive contended that Freedom Front Plus was dispositive of the DA’s assertions. For its part, the DA asserted that the case was wrongly decided, and urged us to overturn it. It is to that judgment I now turn. The applicant in that matter was Freedom Front Plus, a registered political party with seats in the National and Provincial Legislatures. In its judgment, the court identified as a weakness, the assumption by the applicant, that the same derogation of rights may occur under a state of disaster as under a state of emergency because the DMA does not have the same safeguards as s 37 provides for in the case of states of emergency. [137] The court below juxtaposed a state of emergency with a state of disaster as follows: ‘That states of emergency and states of disaster are fundamentally different legal animals is patently clear. The jurisdictional requirements of states of emergency spell this out. A state of emergency is limited to the direst of circumstances. It may only be declared when the “life of the nation” is under threat. Additionally, it must be necessary to restore “peace and order”. Unless these requirements are met, the declaration of a state of emergency would be unlawful. States of disaster, on the other hand, cover a wide range of different circumstances. This is apparent from the definition of a disaster. While a disaster may take many forms, and may threaten lives and the well-being of communities, it does not involve a threat to the life of the nation, nor does it disrupt peace and order.’96 [138] The court went on to explain the rationale for the derogation from fundamental rights during states of emergency, as being the protection of the constitutional order itself, and ultimately, restoring the constitutional state. This, it said, explained ‘why the jurisdictional requirements under s 37(1) are so strict’, and the safeguards in s 37 are built in. 96 Freedom Front Plus fn 70 above paras 59-60. 57 [139] Turning to the DMA, the court reasoned that it ‘does not permit a deviation from the normal constitutional order’, but merely permits the executive to enact regulations or issue directions, which ‘may well limit fundamental rights’. But, said the court, ‘the fundamental rights remain intact in the sense that any limitation is still subject to being judicially tested against s 36 of the Constitution’. The court stated that this was the reason why the DMA did not need to contain the safeguards found in s 37 of the Constitution because the court’s power to rule on the validity of regulations was ‘never removed or suspended to begin with’. [140] The court further explained that this judicial power holds for the safeguard provided in s 37(5) of the Constitution, which prohibits the state from granting indemnities in respect of unlawful acts. Lastly, the court summarily dismissed the complaint about the lack of Parliament’s role where a state of disaster is declared in terms of the DMA, as follows: ‘Once the fundamental distinction between a state of emergency and a state of disaster is understood, this complaint loses its force. It is because of the constitutional deviations that are permitted under a state of emergency that parliamentary oversight is expressly included in s 37. Where no such deviation is permitted, it is not necessary to make special provision for parliamentary oversight. That oversight is a normal component of our constitutional framework . . .’97 [141] Concerning the last point, the court pointed out that the DMA did not render inoperable, Parliament’s role to scrutinise and oversee executive action as set out in ss 42(3), 55(2)(b)(i) and 92(2) of the Constitution. Accordingly, the court dismissed the attack on the constitutionality of the DMA. [142] The court in Freedom Front Plus predicated its conclusion on two grounds. First, that a state of emergency and a state of disaster are conceptually different. Secondly, that a state of disaster did not render ss 42(3), 55(2)(b)(i), and 92(2) of the Constitution inoperable, and therefore Parliament can still hold the Executive accountable, even in the absence of an express provision for that role 97 Ibid para 68. 58 [143] In my view, with respect to the first ground, the court mischaracterized the core of Freedom Front Plus’ argument, which is also the DA’s argument in the present case. The contention was not that a national state of disaster is conceptually the same as a state of disaster. It was about the fact that through a state of disaster, the Minister is empowered to issue regulations so broad and intrusive, as would be found in a state of emergency. The only difference is that the Minister achieves the same outcome but without having to comply with the onerous injunctions of s 37, especially those relating to parliamentary control. [144] It is that mischaracterization of the argument that led the court in Freedom Front Plus to hold, wrongly in my view, that because the two are conceptually different, the DMA is constitutionally valid. This is at the heart of the court’s judgment, which had a direct influence on the outcome and the order. [145] As regards the second ground, the court reasoned that because the courts’ power to pronounce on the validity of the state of disaster, and Parliament’s power to hold the executive accountable, are extant, s 27 of the DMA is constitutionally compliant. I disagree with this reasoning. Whether a statute is constitutionally compliant, does not depend on whether is justiciable or not. Nor does it depend on whether Parliament can hold the Executive accountable. [146] It is correct that a state of disaster does not render ss 42(3), 55(2)(b)(i), and 92(2) of the Constitution inoperable, and therefore Parliament can still hold the Executive accountable. In our constitutional scheme, no legislation can permissibly render these provisions inoperable. Ordinarily, Parliament’s supervisory role over legislation is inherent in these provisions, and therefore, does not have to be expressly spelt out. But s 27 of the DMA is no ordinary legislation. Like the State of Emergency Act, it gives the Executive extra-ordinary powers to severely limit fundamental rights. That explains why, for a state of emergency, the framers of our Constitution saw it necessary to make an express provision in s 3 of the State of Emergency Act, for Parliament’s role when a state of emergency is declared. Absent this provision, the State of Emergency Act would most 59 certainly be unconstitutional, despite the presence of ss 42(3), 55(2)(b)(i), and 92(2) of the Constitution. [147] Similarly, the fact that these provisions remain extant in a state of disaster, is no answer to the constitutional challenge to s 27 of the DMA based on the lack of an express role for Parliament when a state of disaster is declared under it. The powers conferred on the Executive by s 27 of the DMA and their far-reaching effect, remove the provision from the category of ordinary legislation and place it squarely in the category of extra-ordinary legislation, much the same as the State of Emergency Act. Because of this, Parliament’s role, in addition to the role envisaged by ss 42(3), 55(2)(b)(i), and 92(2) of the Constitution must be provided for, and spelt out, as it is in s 3 of the State of Emergency Act. [148] Having regard to all of the above, I conclude that Freedom Front Plus was wrongly decided, and this Court should overturn it. [149] As a nation, we are fortunate that currently, we have a vibrant and robust Parliament. That may not always be the case. In the absence of an express provision for Parliament’s role in the DMA, an Executive-friendly Parliament could decide to remain supine and do nothing to hold the Executive accountable in any form. This would allow the Minister, for example, to extend a state of disaster contrary to the provisions of s 27(3)(a)-(e). Under those circumstances, the promises of ss 42(3), 55(2)(b)(i), and 92(2) of the Constitution will ring hollow. The country would be in an unlawful and prolonged state of disaster until the decision is set aside by a competent court. By the time this is achieved, much damage might have been caused to the fabric of our constitutional democracy. [150] The Executive’s powers in the DMA severely limit fundamental rights as much as they do in a state of emergency. It is for this reason that Parliament’s role should be clearly and expressly circumscribed in the legislation itself. In other words, when Parliament confers extraordinary powers on the Executive as s 27 does, it is required to put in place mechanisms to scrutinise and oversee the Executive action taken in terms of 60 the provision. This must include, at least: (a) a duty by the Executive to report to Parliament on what action has been taken pursuant to the provision; (b) Parliament’s power to disapprove of the Executive’s decisions. These are necessary to give effect to the injunction of s 42(3) of the Constitution. [151] As mentioned, in respect of a state of emergency, the Constitution requires Parliament to exercise strict control over its declaration, and any extension thereof. I have already set out in detail those safeguards. One of the main reasons for this is that a state of emergency results in derogation of rights. Currie and De Waal point out that the hallmark of a state of emergency is the suspension of a normal legal order, including the widespread limitation of various human rights, to address the emergency.98 [152] On a proper analysis of the regulations that may be enacted in terms of s 27(2), it is clear that save for the power of detention without trial permitted in s 37(4) of the Constitution, almost every restriction of rights available to the President in a state of emergency, is also available to the Minister in a state of disaster. The only power the Minister lacks is that of detention without trial, as allowed in s 37(4) of the Constitution. Thus, a de facto state of emergency can result following a declaration of a state of disaster, but without any parliamentary role and the safeguards of s 37 of the Constitution. [153] The simple question is this: does s 27 of the DMA empower the Minister, through a state of disaster, to achieve a substantially similar result to a state of emergency? Although this requires an objective analysis of the provision, how the Executive responded to the Covid-19 pandemic gave a glimpse of what life would be like in a state of emergency, especially during the so-called hard lockdown period. A curfew was imposed; citizens were confined to their homes; businesses were precluded from operating; some citizens were arrested, and some killed, for violating the state of disaster regulations. 98 I Currie and J de Waal The Bill of Rights Handbook 6 ed (2013) chapter 33. 61 [154] This, in effect, amounted to the suspension of the normal legal order – emblematic of a state of emergency. This was achieved through the permissive s 27 of the DMA, instead of the elaborate and circumscribed provisions of s 37 of the Constitution, read together with the relevant provisions of the State of Emergency Act. Viewed in this light, s 27 of the DMA permits an unlawful suspension of the normal legal order – precisely the purpose of s 37 of the Constitution. [155] South Africa is a signatory to various international instruments on human rights, which it is obliged to comply with. Some of the relevant instruments include the International Covenant on Civil and Political Rights (ICCPR),99 which allows signatories in ‘time of public emergency’ to derogate from the Covenant, including limitations on human rights, ‘to the extent strictly required by the exigencies of the situation.’ South Africa is also a signatory to the African Charter on Human and Peoples’ Rights, which, significantly, does not provide for states of emergency, nor the possibility of derogations being made, even in the event of a civil war. [156] In its analysis of how countries responded to the Covid-19 pandemic, the United Nations identified South Africa among the 15 countries where troubling allegations of police abuse were identified.100 South Africa was described as having a toxic lockdown culture and police and other security forces are said to have used excessive and sometimes deadly force to enforce lockdowns and curfew measures. [157] The author of a research paper makes the following observations about South Africa’s response to the Covid-19 pandemic: ‘The various reports of the excessive use of power by law enforcement and arguably unnecessary restrictions on the movement of goods and people, call into question whether South Africa is honouring its obligations as set out in international and regional instruments (ICPPR and African 99 South Africa ratified the International Covenant on Civil and Political Rights on 10 December 1998, with entry into force in March 1999. 100 https://www.reuters.com/article/us-health-coronavirus-un-rights-idUSKCN2291X9. The other countries include Nigeria, Kenya, the Philippines, Sri Lanka, El Salvador, Dominican Republic, Peru, Honduras, Jordan, Morocco, Cambodia, Uzbekistan, Iran and Hungary. 62 Charter on Human and Peoples’ Rights). The human rights abuses that have been recorded to date, stand in stark contrast to the African Charter that holds that no derogation on human rights can be made. This begs the question whether the country is in a state of disaster or a state of emergency.’101 (Emphasis added.) [158] I make these points not to suggest that the Executive’s response to the Covid-19 pandemic, and the regulations made under s 27(2) were unreasonable or disproportionate. What I endeavour to demonstrate is that a state of disaster brings about a situation akin to a state of emergency in which human rights can be derogated as would be the case in a state of emergency. All this happens without the people, through their democratically elected representatives in Parliament, having any say about it, either at the declaration of the state of disaster, or when it is extended. [159] The point is that the extent to which s 27 permits the denudation of human rights is so intrusive that it ought to occur only with Parliament’s approval, control and supervision. The fact that there is no role for Parliament under these circumstances, to my mind, offends the very essence of a constitutional democracy such as ours. [160] I appreciate that a disaster is, by its very nature, unpredictable. It demands of the Executive to respond speedily and adequately to it. Time is of the essence. I accept that the Executive should have the necessary flexibility to meet the challenges of a disaster. I also accept that in suitable circumstances, the Executive should have the power to take urgent action inconsistent with existing laws, as the Constitutional Court pointed out in Executive Council.102 But it is because of the very drastic nature of such powers, and their impact on fundamental rights, that there should be legislated control and supervision of the Executive by Parliament. 101 Disaster Management Act Research Paper May 2020. 102 Executive Council fn 14 above para 62. 63 [161] Section 27 of the DMA makes no provision for Parliament’s role in all circumstances, irrespective of the nature of the disaster. As pointed out in Esau, disasters, and their effect, differ. This Court explained: ‘[I]n some cases, such as a flood or an earth quake, for instance, extremely urgent action may be required to manage the disaster, while in other cases, a long drought, for instance, more time for reflection, planning and consultation may be available to decision-makers. The definition of a disaster recognizes a sliding scale in the nature of disasters, ranging from the sudden to the progressive. . .’103 [162] In my view, the normative position should be that the declaration of a state of disaster and the extension thereof, must have the imprimatur of Parliament. Where the nature of the disaster is such that this is not feasible, the Executive may well proceed to declare it without reference to Parliament. That should be the exception, rather than the norm. Where this is the case, Parliament should be consulted as soon as circumstances permit, for it to: (a) ratify the declaration of a state of disaster, and (b) approve any extension thereof. [163] In the present case, Parliament sought to demonstrate that it indeed hold the Executive accountable during the Covid-19 pandemic. It pointed to what it considered extensive Parliamentary oversight exercised through the various portfolio committees of the National Assembly, as well as through the various select committees of the National Council of Provinces. It detailed engagements between these legislative bodies and members of the Executive. [164] That may be so, and it is commendable. But it is not an answer to the question of whether s 27 is constitutionally valid. As mentioned, the constitutional validity of section 27(2) is an objective enquiry. It is not dependent on whether the engagements held in respect of a particular disaster were adequate or not. The fact is that those engagements are neither required by the DMA nor are there mandatory legislative mechanisms in place for them to occur. They occurred out of the goodwill of Parliament and its sense of duty. 103 Esau fn 1 above para 97. 64 Formalizing the role of Parliament in the DMA would ensure that for future states of disaster, reliance is not placed on the goodwill and ardour of the relevant Parliament to hold the Executive accountable. If anything, the evidence by Parliament to demonstrate that during the state of disaster, it exercised its supervisory role, fortifies the view why that role needs to be expressly provided for in s 27 of the DMA. [165] I conclude that the DMA permits the Minister, by fiat of s 27(2)(a)-(o), to achieve an outcome similar to a state of emergency without the constitutional safeguards attendant in a state of emergency. The absence of an express provision for parliament’s role in all circumstances in a state of disaster offends the very essence of a democratic state such as ours based on the principles of transparency, accountability, and responsiveness, among others. It is, to my mind, unconstitutional. [166] Had I commanded the majority, I would have upheld the Democratic Alliance’s appeal with costs and declared s 27(2) unconstitutional and invalid based on lack of parliamentary supervision in a state of disaster. To remedy the defect, the Democratic Alliance proposed that there should be a read-in of s 24(4A) to provide for parliamentary control, in a similar manner that s 37(3) does, together with the power of Parliament to disapprove any declaration, regulation or direction. I would grant that order subject to a rider that where the nature of the disaster is such that obtaining prior parliamentary approval is not feasible, Parliament should be consulted as soon as circumstances permit for its ratification. ________________________ TM MAKGOKA JUDGE OF APPEAL 65 APPEARANCES: For appellant: G Marcus SC (with him P Olivier) Instructed by: Minde Shapiro Inc., Cape Town Symington De Kok Inc., Bloemfontein For first and fourth respondents: W Trengove SC (with him A Hassim and T Moshodi) Instructed by: State Attorney, Cape Town State Attorney, Bloemfontein For second and third respondents: H N Maenetje SC (with him A Nase) Instructed by: State Attorney, Cape Town 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: 30 April 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 Democratic Alliance v Minister of Co-operative Governance and Traditional Affairs (700/2022) [2024] ZASCA 65 (30 April 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal against the decision of the Gauteng Division of the High Court, Pretoria (the high court). On 15 March 2020, the Minister of Co-Operative Governance and Traditional Affairs (the Minister) issued a Notice declaring a National State of Disaster on account of the Covid-19 pandemic. On 18 March 2020, the Minister made regulations embodying a national public health response to the Covid-19 pandemic (the Covid-19 regulations). On 23 March 2020, the fourth respondent (the President) announced a national lockdown in South Africa, commencing on 26 March 2020. Consequently, on 25 March 2020, the Minister amended the regulations in order to bring about a nationwide lockdown. The country moved between five ‘alert levels’ restricting movement and economic activity, alert level five being the most restrictive of the alert levels, and level 1 the least restrictive. The lockdown regulations were extensive, and in some respects, they placed unprecedented restrictions on many constitutionally guaranteed fundamental rights and freedoms. On 29 April 2020, the Minister published the disaster management regulations. These regulations were subsequently amended in order to ease the lockdown restrictions in line with the alert levels in the risk-adjusted strategy. Thereafter, the Minister promulgated regulations as and when the need arose in accordance with the alert levels or the easing of restrictions. During alert level 4 lockdown, the Democratic Alliance (the DA) filed an application seeking an order declaring s 27 of the DMA to be unconstitutional and invalid. In the high court, the DA’s application came before a specially constituted court of three judges (Musi, JP, Matojane J and Windell J) (the full court) sitting as a court of first instance within the contemplation of s 14(1)(a) of the Superior Courts Act 10 of 2023. The majority judgment (Musi JP and Windell J) found that the delegation of power to the Minister in terms of s 27 of the DMA fell within constitutional bounds and contained sufficient safeguards to render it constitutionally valid. In his dissenting judgment, Matojane J (the minority judgment) pointed out that he would have upheld the application. Relying on the maxim delegare non potent delegare (a delegate was prohibited from sub-delegating powers unless authorised to do so), he found that s 27(2) of the DMA constituted an excessive delegation of legislative power by Parliament to the Minister. On those bases, the minority judgment would accordingly have held that s 27(2) was unconstitutional. Aggrieved by the majority decision, the DA applied for leave to appeal to this Court against the majority judgment. On 25 March 2022 the full court unanimously granted leave to appeal. On appeal, they brought the following issues for determination by this Court. First, whether s 27 of the DMA was unconstitutional because it constituted an impermissible delegation of plenary legislative power by Parliament. Second, whether the aforesaid provision was unconstitutional because it permitted the creation of a de facto state of emergency without following constitutional requirements for the declaration of a state of emergency. Third, whether the same provision was unconstitutional because it failed to require the National Assembly to exercise its oversight role required by ss 42(3) and 55(2) of 2 the Constitution. In the event of a finding of unconstitutionality on any of the three issues raised, the fourth issue arising would be the determination of a just and equitable remedy. On the first issue the first judgment of the SCA held that s 27 did not confer overly broad delegated powers on the Minister and based it on the following findings: First, the general scheme of the DMA revealed a requirement for the Minister to constantly engage with several role-players in her decision making. Clearly, the exercise of her powers was part of a broader collaborative venture. This was one of the ways in which the Minister’s delegated regulation-making authority was circumscribed. Second, the Minister could only have exercised her powers once the disaster had been classified as a national disaster by the head of the National Centre for Disaster Management (National Centre). Third, the Minister could only declare a national state of disaster by notice in the Gazette if existing legislation and contingency arrangements did not adequately provide for the national executive to deal effectively with the disaster or if there were other special circumstances that warranted such declaration. The Minister was thus not given carte blanche to whimsically declare a state of disaster. Fourth, the DMA’s stated purpose was to implement urgent measures to address the disaster. The DMA therefore expressly advocated for rapid and effective interventions. Parliament’s slow procedures would have clearly inhibited the achievement of that goal. Coming to the second issue on appeal, the first judgment held that, in order for it to answer this issue it was imperative to understand that there was a distinction between a state of disaster and a state of emergency. Once that fundamental distinction between a state of emergency and a state of disaster was understood, the complaint that the state of disaster was akin to a state of emergency but without the constitutional safeguards of s 37 lost its force. Nothing in the DMA suggested that it permitted a deviation from the normal constitutional order. The safeguards enunciated in s 37 therefore had to be seen against the backdrop of an appreciation that the provision in question legitimised a drastic reduction in constitutional protections in the first place. The same, according to the first judgment, simply could not be said for states of disaster as regulated under the DMA. Regarding the third issue, the first judgment held as follows: the mere fact that the DMA did not, unlike the State of Emergency Act 108 of 1996 (SOEA), expressly provide for parliamentary supervision, did not mean that Parliament’s supervision was ousted. This was because parliamentary oversight was constitutionally ordained in ss 42(3) and 55(2)(b) of the Constitution, both of which expressly provided for Parliament’s supervisory role. The Minister’s exercise of her regulation-making powers envisaged in the DMA in no way violated or eroded the constitutional imperatives of supervision and accountability prescribed in s 42(3) and 55(2)(b)(i) of the Constitution, as the executive remained accountable to parliament even during a state of disaster; the Oversight and Accountability Model did not state otherwise. Against that background, the first judgment held that, the DA’s contention that s 27 of the DMA enabled a situation in which ‘government could grant itself dictatorial powers’ lacked merit and, as a result, fell to be rejected. As it related to the fourth and last issue, the first judgment held that, under such circumstances, there was no need to address the issue of an appropriate remedy. Accordingly, there was no reason to deviate from that principle and no order as to costs would be made. In conclusion, the first judgment held that s 27 of the DMA passed constitutional muster and as a result, the appeal had to fail. The second judgment agreed with the conclusion of the first judgment that s 27 of the DMA does not impermissibly delegate plenary powers to the Executive. It however, disagreed with the first judgment in its conclusion that s 27 passed constitutional muster even though there was no express provision in it for Parliament’s role in s 27 when a state of disaster was declared or extended. It further held that a state of disaster brought about a situation akin to a state of emergency in which human rights could be derogated as would be the case in a state of emergency; all this happened without the people, through their democratically elected representatives in Parliament, having any say about it, either at the declaration of the state of disaster, or when it was extended. The second judgment emphasised that the extent to which s 27 permitted the denudation of human rights was so intrusive that it ought to occur only with Parliament’s approval, control and supervision. The fact that there was no role for Parliament under these circumstances, offended the very essence of a constitutional democracy such as ours. The second judgment further held that, the normative position should be that the declaration of a state of disaster and the extension thereof, must have the imprimatur of Parliament. Where the nature of the disaster was such that that was not feasible, the Executive could then have proceeded to declare it without reference to Parliament. That should, however, be the exception rather than the norm. Where that was the case, Parliament should then be consulted as soon as circumstances permit, for it to: (a) ratify the declaration of a state of disaster, and (b) approve any extension thereof. In all the circumstances, the second judgement concluded that the DMA permitted the Minister, by fiat of s 27(2)(a)-(o), to achieve an outcome similar to a state of emergency without the constitutional safeguards attendant in state of emergency. The absence of any express parliamentary role in all circumstances in 3 a state of disaster offended the very essence of a democratic state such as ours based on the principles of transparency, accountability, and responsiveness, among others. According to the second judgement, it would have upheld the Democratic Alliance’s appeal with costs and declared s 27(2) unconstitutional and invalid based on lack of parliamentary supervision in a state of disaster. To remedy the defect, it would have applied the Democratic Alliance’s proposal that there should be a read-in of s 24(4A) to provide for Parliamentary control, in a similar way that s 37(3) did, together with the power of Parliament to disapprove any declaration, regulation or direction. The second judgement would also have granted that order, subject to a rider that where the nature of the disaster was such that obtaining prior Parliamentary approval was not feasible, Parliament should be consulted as soon as circumstances permit for its ratification. ~~~~ends~~~~

4207

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1263/2022 In the matter between: 68 WOLMARANS STREET JOHANNESBURG (PTY) LTD FIRST APPLICANT 10 FIFE AVENUE BEREA (PTY) LTD SECOND APPLICANT MARK MORRIS FARBER THIRD APPLICANT and TUFH LIMITED RESPONDENT In re: TUFH LIMITED APPLICANT and 68 WOLMARANS STREET JOHANNESBURG (PTY) LTD FIRST RESPONDENT 10 FIFE AVENUE BEREA (PTY) LTD SECOND RESPONDENT MARK MORRIS FARBER THIRD RESPONDENT 2 Neutral citation: 68 Wolmarans Street Johannesburg (Pty) Ltd and Others v Tufh Limited (1263/2022) [2024] ZASCA 48 (15 April 2024) Coram: GORVEN, WEINER and KGOELE JJA and BAARTMAN and SEEGOBIN AJJA Heard: 12 March 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 15 April 2024. Summary: Special leave to appeal – law of contract – enforcement of provision in loan agreement – failure to pay all rates, taxes, water and electricity charges (municipal charges) in respect of the immovable property constituting an event of default – whether the enforcement of provision in loan agreement between first applicant and respondent to accelerate payment and to execute against first applicant’s immovable property based upon its failure to pay municipal charges would be unconscionable and contrary to public policy. 3 ORDER On appeal from: Gauteng Division High Court, Johannesburg (Matojane J Molahlehi J and Strydom J sitting as a full court): The application for special leave is dismissed with costs on an attorney and client scale, such costs to include the costs of two counsel. JUDGMENT Seegobin AJA (Gorven, Weiner and Kgoele JJA and Baartman AJA concurring): Introduction [1] On 5 March 2020 the respondent, Tufh Limited (Tufh), brought an application against the applicants in the Gauteng Division of the High Court, Johannesburg, in which it sought, as its primary relief, payment of the sum of R4 897 004.22 together with interest and costs as well as the foreclosure of a mortgage bond executed by the first applicant, 68 Wolmarans Street Johannesburg (Pty) Ltd (Wolmarans), in favour of Tufh. [2] The application served before Senyatsi J (the court of first instance) who dismissed the application with costs on 17 September 2021. Tufh applied for and was granted leave to appeal the judgment of the court of first instance to the full court of the Gauteng Division of the High Court, Johannesburg. The full court (Matojane, Molahlehi and Strydom JJ) upheld the appeal, set aside the judgment and 4 order of the court of first instance and essentially substituted it with an order sought by Tufh. [3] On 5 December 2022, the applicants applied for special leave to this Court in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 (the Superior Courts Act) to appeal the judgment and order of the full court. On 5 April 2023, this Court referred the application for special leave for oral argument in terms of s 17(2)(d) of the Superior Courts Act. The parties were further advised that they should be prepared to argue the merits of the appeal should they be called upon to do so. Relevant background [4] Tufh is a public company with limited liability. It is engaged in the business of providing its clients with, amongst other things, single loan facilities that would afford them access to finance which in turn would allow them to purchase and subsequently convert or refurbish buildings in the inner cities of South Africa to affordable residential units that would be available for rental. [5] Wolmarans is the registered owner of an immovable property situated at 68 Wolmarans Street, Hillbrow, Johannesburg (the property), which consists of a large apartment building known as Wolbane Mansions. Wolbane Mansions comprises over 51 residential units which are occupied by about 200 tenants. The second applicant is 10 Fife Avenue Berea (Pty) Ltd (Fife) whilst the third applicant is Mr Mark Morris Farber (Mr Farber). Mr Farber is the sole director and shareholder of Wolmarans and Fife. [6] Sometime in 2013 Mr Farber approached Tufh for a loan facility to be granted in favour of Wolmarans in order to assist it with the purchase and refurbishment of 5 Wolbane Mansions. A written loan agreement was concluded in the period 8 August 2013 to 23 August 2013 between Tufh and Wolmarans. [7] In terms of the loan agreement it was agreed, inter alia, that Tufh would advance to Wolmarans a facility amount in the sum of R5 771 166.00 (the facility amount) for drawdown by Wolmarans. [8] At the heart of the dispute between the parties lie clauses 17 and 18 of the loan agreement. Clause 17 specifically records the following: ‘17 RATES AND TAXES AND MUNICIPAL SERVICE CHARGES The Borrower shall – 17.1 pay promptly on due date for payment, all rates, taxes, water and electricity charges (whether levied as basic charges or in respect of actual consumption), sanitation charges (in respect of refuse removal and sewerage) and other like imposts that may be payable in respect of the Property to any governmental, provisional, divisional council, municipal or other like authority; 17.2 provide proof of the aforesaid payments to the Lender whenever requested to do so, and the Lender have the right, but not the obligation, to make all such payments on behalf of the Borrower and any moneys so disbursed shall be immediately refundable by the Borrower to the Lender; and 17.3 provide the Lender on a monthly basis certified copies of all statements for the amounts payable in terms of 17.1.’ [9] Clause 18 specifies a number of ‘events of default’ which, when triggered, would entitle Tufh to accelerate and declare the entire principal amount outstanding, immediately due and payable. Given the nature of the dispute between the parties it is necessary to set out only those aspects of the clause that are relevant. They are the following: ‘18 EVENTS OF DEFAULT 18.1 Each of the following events shall constitute an Event of Default under the Loan Facility 6 18.1.1 the Borrower fails to pay any amount(s) due by it in terms of this Agreement on the due date for payment thereof or breaches any other provision of this Agreement and fails to remedy any such breach within any applicable cure period; . . . 18.1.20 the Borrower fails to comply with all and any municipal by-laws; . . . 18.2 Forthwith upon the occurrence of an Event of Default and at any time thereafter, if such event continues, the Lender shall in his sole and absolute discretion be entitled (but not obliged), without prejudice to any other rights which the Lender may have, by notice issued by the Lender to the Borrower to – . . . 18.2.3 accelerate and declare all amounts owing in terms of this Agreement immediately due and payable, notwithstanding that such amounts may not otherwise have been due and payable, whereupon the same shall become immediately due and payable, including any fees, penalties, costs and charges . . . .’ [10] On 8 August 2013 and as security for the facility amount, Fife and Mr Farber concluded written unlimited suretyship agreements in favour of Tufh. As backing security for the facility amount, Wolmarans registered a mortgage bond over the property for an amount of R8 656 749.00 together with an additional 30% provision for contingent costs. [11] Clause 3 of the mortgage bond deals with rates and taxes and provides as follows: ‘3 RATES AND TAXES The Mortgagor shall – 3.1 pay promptly on due date for payment all rates, taxes and other like imposts that may be payable in respect of the property to any Governmental, Provisional, Divisional Council, Municipal or other like authority; and 7 3.2 exhibit proof of such payments to the Mortgagee or its assigns whenever requested to do so, and the Mortgagee may in its own discretion make all such payments on behalf of the Mortgagor and recover the relative amounts from the Mortgagor.’ [12] In terms of clause 4 of the mortgage bond, and as further collateral security in the event of a default, Wolmarans ceded its rights to rental income and Tufh was entitled to recover and receive all rent, income and fruits from the immovable property. [13] Pursuant to the granting of the facility amount in March 2014, Wolmarans drew down on the amount for payment of the purchase price and for refurbishment. As the landlord of Wolbane Mansions, Wolmarans and its agent duly collected all rental from its tenants on the property. [14] Whilst Wolmarans paid its monthly instalments towards the facility amount in terms of the loan agreement, it breached the specific terms of the loan agreement and the mortgage bond referred to above by failing to: (a) pay the City of Johannesburg (CoJ) promptly, or at all, its account in respect of municipal service charges (rates, water, sanitation, refuse and electricity) provided to the property;1 (b) provide Tufh with proof of such payments following Tufh’s demand for same;2 and (c) provide Tufh with certified copies of the municipal statements.3 [15] The last payment to the CoJ for municipal services consumed at the property by Wolmarans’ tenants was the amount of R25 000. This payment was made on 30 October 2015. No further payments were made. Four years later and as at 12 1 This failure was in breach of clause 17.1. 2 This failure was in breach of clause 17.2. 3 This failure was in breach of clause 17.3. 8 November 2019 Wolmarans’ municipal account in respect of rates, water, electricity, sanitation and refuse stood at R3 288 156.08. [16] On 20 December 2019 Tufh’s attorneys sent a letter of demand to the applicants placing them on terms to comply with their obligations in terms of the loan agreement and mortgage bond. The letter of demand, inter alia, informed the applicants that should they fail to remedy their breaches immediately, Tufh would institute legal proceedings to enforce its rights. [17] The applicants’ attorneys responded on 13 January 2020. They recorded that there was an ongoing dispute between Wolmarans and the CoJ with regard to the manner in which the CoJ was billing Wolmarans for the municipal services rendered. They indicated that the accounts received from the CoJ contained patent errors which despite demand and continuing negotiations, were not rectified. [18] The essence of Wolmarans’ complaint was that the CoJ had incorrectly debited its account utilising incorrect readings from a different electricity meter which was not on the property. The CoJ resorted to disconnecting the electricity supply to the property in about April 2016. This resulted in Wolmarans obtaining an order from the Johannesburg High Court on 5 May 2016 (the 2016 court order) interdicting the disconnection of electricity to the property and compelling the CoJ to provide it with a proper statement of account and for a debatement thereof. The CoJ was further ordered to credit Wolmarans’ account with charges that had been incorrectly levied. [19] In responding to the above letter on 17 January 2020, Tufh’s attorneys pointed out that it was evident from the court order of 5 May 2016 that the dispute between 9 Wolmarans and the CoJ had to do with a billing query relating to water and electricity supplied to the property. There appeared to be no dispute about the rates, refuse, sanitation and other charges being levied by the CoJ to the property. Tufh’s attorneys emphasized that notwithstanding Wolmarans’ billing query, it was obliged to pay on the due date all other current charges levied subsequent to the 2016 court order. Wolmarans was informed that it remained in breach of the loan agreement and that as at 13 January 2020 the municipal account in respect of rates, water, electricity, sanitation and refuse was in arrears in the sum of R3 462 722.01. [20] On 14 February 2020, a letter was received from Wolmarans’ attorneys informing Tufh that the relevant CoJ account was being investigated by Mr Hugo Venter of Municipal Account Rectifiers (MAR) and that Mr Venter had advised Wolmarans not to make any payments to the CoJ whilst the dispute continued. [21] On 24 February 2020, Tufh’s attorneys sent a response which recorded, inter alia, that no explanation was provided as to why, for almost 5 years since the 2016 court order, Wolmarans had simply failed to pay any amount whatsoever for services provided to the property. They further recorded that MAR’s advice that no payments be made whilst the dispute existed was clearly in conflict with the express terms of the loan agreement and in contravention of the CoJ’s by-laws, which in itself amounted to a breach of the loan agreement. Wolmarans was informed that its conduct was placing Tufh’s security in and to the property at risk and it was for this reason that Tufh was entitled in terms of the loan agreement, to accelerate and declare all amounts due owing and payable. The total debt outstanding as at 21 February 2020 stood at R4 897 004.22. 10 Proceedings in the courts below The court of first instance [22] Tufh’s founding affidavit drew attention to the fact that a vital component of its business model was its right to protect the immovable property for which it had provided a loan facility and to ensure that the value of the property does not deteriorate. Tufh pointed to typical examples of events that could have a material impact on the value of the immovable property. One such event was the failure on the part of the borrower to pay the municipal accounts rendered in respect of the property and these could and did run into millions of rands. [23] In opposing the application Wolmarans persisted with its denial that it was in breach of the loan agreement. It denied that there were any municipal charges due and payable to the CoJ at the time that Tufh had placed it on terms to remedy any breaches. It blamed the CoJ for its failure to render proper statements of account. It averred that the CoJ was experiencing a billing crisis. It further averred that there was an ongoing dispute between it and the CoJ regarding its accounts. It maintained, however, that there was no obligation on it to make payment to the CoJ of undisputed amounts, even under protest, given the billing dispute as the CoJ itself had not called upon it to pay. [24] The court of first instance found that since there was a historical dispute between Wolmarans and the CoJ which resulted in the 2016 court order for a statement and debatement, and since the CoJ had itself not asserted any rights to payment since then, it would be unconscionable for Tufh to claim that Wolmarans was in breach of the loan agreement and to foreclose on the mortgage bond. [25] In dismissing the application the court of first instance ultimately found that: 11 ‘. . . In my respectful view, allowing the applicant to rely on non-payment of such services, electricity, rates and taxes as a ground to allege a breach of the loan agreement entitling it to the cancellation, accelerated payment, and cession of rental revenue generated by the first respondent would be prejudicial to the first respondent. Allowing the applicant to take such draconian steps when the first respondent is in fact up to date with its loan repayments will be an injustice of great proportion.’ The full court [26] The central issue identified by the full court for determination was whether, despite Wolmarans keeping up with its monthly instalment in terms of the loan agreement, Tufh was entitled to accelerate payment and claim the full amount outstanding in circumstances where Wolmarans had failed to pay the CoJ for municipal services rendered. [27] The full court considered that Wolmarans had admitted that since 6 March 2014 it was charged for water and electricity and that such services continued to be supplied to the property. It also admitted that it had been levied for property rates and taxes and that save for the sum of R25 000 which it paid in respect of water and electricity on 30 October 2015, no other payments were made. The full court considered that Wolmarans had fallen into significant arrears as evidenced by the amounts referred to above. [28] Placing reliance on the principle of pacta sunt servanda, the full court found that ‘generally, contracting parties have considerable freedom in choosing how they structure their agreements, and it is not the function of the court to protect consenting adults from bad bargains. Legal certainty and the notion of pacta sunt servanda are 12 central values of the law of contract, which must be honoured and enforced by the courts’. [29] It found that Wolmarans had failed to explain why it failed to pay its undisputed indebtedness to the CoJ on the due date. In line with the legal principles set out by the Constitutional Court in Beadica 231 CC and Others v Trustees for the time being of the Oregon Trust and Others,4 the full court reasoned that the harsh consequences of Wolmarans’ failure to comply with the terms of the loan agreement could not by itself constitute a sufficient basis for the conclusion that enforcement of the strict terms of the contract would be unconscionable. [30] In upholding the appeal, the full court held that: ‘The failure by the first respondent to perform its contractual obligations has destroyed the commercial purpose of the contract as the significant municipal arrears impair the appellant’s security it required in order to advance the loan facility as a charge in favour of the municipality imposed by s 118(3) of the Systems Act enjoys preference over any mortgage bond registered against the applicable immovable property.’ Application for special leave [31] For the applicants to succeed in their application for special leave to appeal the judgment of the full court, they are required to show something more than the existence of reasonable prospects of success on appeal.5 In Cook v Morrison and Another6 this Court held: ‘The existence of reasonable prospects of success is a necessary but insufficient precondition for the granting of special leave. Something more, by way of special circumstances, is needed. These 4 Beadica 231 CC and Others v Trustees for the time being of the Oregon Trust and Others [2020] ZACC 13; 2020 (5) SA 247 (CC); 2020 (9) BCLR 1098 (CC) para 14. 5 P A F v S C F [2022] ZASCA 101; 2022 (6) SA 162 (SCA) para 24. 6 Cook v Morrison [2019] ZASCA 8; [2019] 3 All SA 673 (SCA); 2019 (5) SA 51 (SCA) para 8. 13 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. This is not a closed list . . . ’ [32] The test of what constitutes a reasonable prospect of success is well established. The applicants are required to demonstrate that ‘there is a sound rational basis to conclude that there is a reasonable prospect of success on appeal’.7 They are further required to show that ‘something more by way of special circumstances, is needed’.8 Grounds for special leave [33] It must be pointed out that the applicants’ application for special leave is not a model of clarity. However, in summary, the grounds advanced appear to be the following. The applicants aver that there may well be other loan agreements which contain similar clauses such as Clauses 17 and 18 as in the present case. Borrowers in such cases may face a similar situation such as Wolmarans herein where they notionally breach the loan agreement by not paying any rates, taxes and other municipal charges thus entitling the lender to declare all amounts immediately due and payable and to seek execution against the borrower’s immovable property. [34] They further aver that the judgment of the full court has far-reaching consequences ‘beyond the immediate impact on the applicants and Tufh. The judgment potentially impacts upon many other borrowers facing the same circumstances’. They contend that while this Court as well as the Constitutional Court have dealt on a number of occasions with contracts that should not be enforced 7 MEC for Health, Eastern Cape v Mkhitha and Another [2016] ZASCA 176 paras 16-17. 8 Cook v Morrison op cit, para 8. 14 on grounds of public policy, the unique circumstances faced by the applicants herein have not been dealt with by this court. They assert that not only are there reasonable prospects of success but that the appeal also raises substantial legal issues of public importance and the interests of justice warrant that leave be granted. In this Court [35] At the outset of the hearing in this Court Mr Hollander for the applicants conceded that there was a breach of the loan agreement by Wolmarans. He submitted, however, that there were reasonable prospects of success in the appeal and that leave should be granted. On the issue of ‘special circumstances’ which embodies the test for special leave as set out in para 31 above, Mr Hollander indicated that he intended addressing three aspects only which also went to the merits of the matter. The first was that Wolmarans was engaged in a bona fide dispute with the CoJ with regard to the municipal charges levied against the property. The second was that Tufh’s security was not in any way at risk as it still held suretyships by Mr Farber and Fife. The third was that any risk to Tufh’s security was caused by Tufh itself when it elected to accelerate and declare all amounts owing in terms of the loan agreement immediately due and payable. Mr Hollander’s further submission in this regard was that whilst Wolmarans was not attacking any of the relevant clauses in the loan agreement or the agreement per se as being unconscionable and contrary to public policy, the implementation thereof certainly was. Issues raised (a) Did Wolmarans have a bona fide dispute with the CoJ in respect of municipal services rendered to the property? [36] It is common cause on the papers that, although Wolmarans’ dispute with the CoJ related only to water and electricity, it failed to make any payments for other 15 municipal charges relating to property rates and taxes and wastewater services, since 30 October 2015. The dispute in question arose out of billing accounts rendered by the CoJ which, according to the applicants, contained certain patent errors.9 [37] Apart from the specific provisions of the loan agreement10 that impose an obligation on Wolmarans to pay for all municipal services rendered to the property, such obligations also flow from the provisions of the Local Government: Municipal Systems Act No 32 of 2000 (the Systems Act) and the CoJ’s Credit Control and Debt Collection By-laws published on 23 May 200511 (the Collection By-laws). [38] Whilst municipalities are obliged to provide water and electricity to the residents in their area as a matter of public duty, they are further required to ensure the provision of services to communities in a sustainable manner. [39] Section 96(a) of the Systems Act obliges municipalities like the CoJ to collect all money that is due and payable to it. In Mkontwana v Nelson Mandela Metropolitan Municipality12 the Constitutional Court recognised that ‘it was therefore important that the possibility that municipal debt remains unpaid be reduced by all legitimate means’13 and that ‘the municipality must comply with its duty and take reasonable steps to collect amounts that are due’.14 9 Clause 17 of the loan agreement. 10 Clause 17 of the loan agreement. 11 Provincial Gazette Extraordinary, 23 May 2005, Notice 1857 of 2005. 12 Mkontwana v Nelson Mandela Metropolitan Municipality [2004] ZACC 9; 2005 (1) SA 530 (CC); 2005 (2) BCLR 150 (CC). 13 Ibid para 38. 14 Ibid para 49. 16 [40] The applicants’ argument that it had a bona fide dispute with CoJ over the outstanding municipal charges is clearly not sustainable especially in light of CoJ’s Collection by-laws. In terms of s 1, ‘account’ means a notification by means of a statement of account to a person liable for payment of any amount for which he or she is liable to pay the Council in respect of the following: ‘(a) electricity consumption based on a meter reading or estimated consumption or availability fees; (b) water consumption based on a meter reading or estimated consumption or availability fees; (c) refuse removal and disposal; (d) sewerage services and sewer availability fees; (e) rates; (f) interest; and (g) miscellaneous and sundry fees and collection charges.’ [41] The following further sections of the Collection By-laws are relevant insofar as they have some bearing on Wolmarans’ conduct herein: (a) Section 5 provides that the CoJ may estimate the consumption of water and electricity for any relevant period in the absence of a meter reading; (b) In terms of section 8(2) the CoJ may in accordance with the provisions of s 102 of the Systems Act consolidate any separate accounts of a customer liable for payment, credit any payment by such customer, and implement any of the debt collection measures provided for in the Collection By-laws; (c) Section 8(3) provides that the amount due and payable by a customer constitutes a consolidated debt and any payment made by a customer less than the total amount due will be allocated in reduction of the consolidated debt in the order prescribed; and (d) Section 11(3) provides that before or after the due date for payment specified in the CoJ account, notwithstanding its dispute with the CoJ, the customer must pay 17 the full amount of any account insofar as it relates to amounts for rates, or the municipal services concerned, and which are not in dispute. [42] On a reasonable and proper interpretation of s 11(3) of the Collection By-laws, it would seem that it is aimed at stopping unscrupulous property owners from declaring a dispute with the municipality and then withholding payment for years. The purpose of the By-laws is therefore to avoid an alleged billing dispute from persisting for years on end while the property owner continues to consume services it does not pay for. [43] Section 102 of the Systems Act deals with ‘accounts’. In relevant part it provides as follows: ‘102 Accounts (1) A municipality may - (a) consolidate any separate accounts of persons liable for payments to the municipality; (b) credit a payment by such a person against any account of that person; and (c) implement any of the debt collection and credit control measures provided for in this chapter in relation to any arrears on any of the accounts of such a person. (2) Subsection (1) does not apply where there is a dispute between the municipality and a person referred to in that subsection concerning any specific amount claimed by the municipality form that person. (3) . . . .’ (Emphasis added.) [44] In Body Corporate Croftdene Mall v Ethekwini Municipality,15 this Court held that: 15 Body Corporate Croftdene Mall v Ethekwini Municipality [2011] ZASCA 188; [2012] 1 All SA 1 (SCA); 2012 (4) SA 169 (SCA) paras 22 and 23. 18 ‘It is, in my view, of importance that subsec 102(2) of the Systems Act requires that the dispute must relate to a ‘specific amount’ claimed by the municipality. Quite obviously, its objective must be to prevent a ratepayer from delaying payment of an account by raising a dispute in general terms. The ratepayer is required to furnish facts that would adequately enable the municipality to ascertain or identify the disputed item or items and the basis for the ratepayer’s objection thereto. If an item is properly identified and a dispute properly raised, debt collection and credit control measures could not be implemented in regard to that item because of the provisions of the subsection. But the measures could be implemented in regard to the balance in arrears; and they could be implemented in respect of the entire amount if an item is not properly identified and a dispute in relation thereto is not properly raised. Whether a dispute has been properly raised must be a factual enquiry requiring determination on a case-by-case basis. It is clear from clause 22.3 of the Policy referred to above that the dispute must be raised before the municipality has implemented the enforcement measures at its disposal.’ (Emphasis added.) [45] While Wolmarans admits that its dispute with the CoJ is limited to electricity and water charges it nonetheless unreasonably, unlawfully and inexplicably withholds payments for all municipal services and charges, namely, electricity, water, sanitation (sewer), property rates and taxes and refuse. This it has been ongoing since 30 October 2015. The billing crisis which plagued the CoJ at the time has clearly afforded Wolmarans with an ideal opportunity to exploit the situation by withholding all payments. In the result it cannot be found that Wolmarans’ dispute with the CoJ is bona fide. The full court correctly found that there was no merit in the submission that no amounts were due to the CoJ. (b) Was Tufh’s security in the property at risk given that it held suretyships from the second and third respondents? [46] The validity of Fife’s suretyship was challenged by it in 2020 in previous proceedings as alluded to already. Tufh’s request for other security from Fife was 19 refused. This refusal constituted a further breach of the loan agreement which prompted Tufh to institute a further application in the Johannesburg High Court. The only existing suretyship is that of Mr Farber. In the circumstances, Wolmarans’ contention that Tufh has sufficient security in the form of the two suretyships is without merit. (c) Was Tufh’s security put to any risk by its own conduct when it accelerated and declared all amounts owing in terms of the loan agreement due and payable thereby making the implementation of the loan agreement unconscionable and contrary to public policy? [47] Before addressing this issue pertinently it is necessary to set out the legal principles that are generally applied by our courts in order to determine whether a contract is inimical to a constitutional value or principle or is otherwise contrary to public policy and should be invalidated. In A B and Another v Pridwin Preparatory School and Others16 this Court set out what it viewed as the ‘most important principles’ governing the judicial control of contracts through the instrument of public policy. The following principles were outlined: ‘(i) Public policy demands that contracts freely and consciously entered into must be honoured; (ii) A court will declare invalid a contract that is prima facie inimical to a constitutional value or principle, or otherwise contrary to public policy; (iii) Where a contract is not prima facie contrary to public policy, but its enforcement in particular circumstances is, a court will not enforce it; (iv) The party who attacks the contract or its enforcement bears the onus to establish the facts; (v) A court will use the power to invalidate a contract or not to enforce it, sparingly, and only in the clearest of cases in which harm to the public is substantially incontestable and does not depend on the idiosyncratic inferences of a few judicial minds; 16 A B and Another v Pridwin Preparatory School and Others [2018] ZASCA 150; [2019] 1 All SA 1 (SCA); 2019 (1) SA 327 (SCA); 2019 (8) BCLR 1006 (SCA). 20 (vi) A court will decline to use this power where a party relies directly on abstract values of fairness and reasonableness to escape the consequences of a contract because they are not substantive rules that may be used for this purpose.’17 [48] In Barkhuizen v Napier,18 the Constitutional Court rejected notions of good faith, fairness and reasonableness as independent grounds for refusing to enforce contractual terms. It did, however, hold that public policy as informed by the Constitution imports ‘notions of fairness, justice and reasonableness’; it takes account of the need to do ‘simple justice between individuals’; and is informed by the concept of Ubuntu.19 It also recognised that public policy requires parties to honour their contractual obligations undertaken freely and voluntarily as encapsulated in the Latin maxim pactum sunt servanda, because this is a ‘profoundly moral principle, on which the coherence of any society relies’;20 and it ‘gives effect to the central constitutional values of freedom and dignity’.21 [49] In Bredenkamp and Others v Standard Bank of SA Ltd,22 this Court rejected an argument that the Constitutional Court in Barkhuizen had established fairness as a free-standing requirement for enforcement of contractual provisions. It held that it was only if a public policy consideration, either in the Constitution or elsewhere that militated against enforcement of the terms, that such enforcement would be refused. This Court went on to hold that it was only if a constitutional value was limited by 17 Ibid para 27; See also Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A) at 9A-C. 18 Barkhuizen v Napier [2007] ZACC 5; 2007 (5) SA 323 (CC); 2007 (7) BCLR 691 (CC) para 82. 19 Ibid para 51. 20 Ibid para 87. See also R H Christie and G B Bradfield Christie’s The Law of Contract in South Africa 8 ed (2022) at 25 (Christie). 21 Ibid para 57. 22 Bredenkamp and Others v Standard Bank of SA Ltd [2010] ZASCA 75; 2010 (4) SA 468 (SCA); 2010 (9) BCLR 892 (SCA); [2010] 4 All SA 113 (SCA) para 1. 21 a contractual term or its enforcement that a court would have to determine whether that limitation was fair and reasonable. [50] In Beadica 231 CC and Others v Trustees for the time being of the Oregon Trust and Others,23 the Constitutional Court reaffirmed its position that Barkhuizen remained the leading authority in our law on the role of equity in contract, as part of public policy considerations. It recognised that good faith was ‘not a self-standing rule but an underlying value that was given expression through existing rules of law’.24 [51] The court went on to say the following in para 72: ‘It is clear that public policy imports values of fairness, reasonableness and justice. Ubuntu, which encompasses these values, is now also recognised as a constitutional value, inspiring our constitutional compact, which in turn informs public policy. These values form important considerations in the balancing exercise required to determine whether a contractual term, or its enforcement, is contrary to public policy.’ [52] The court found it necessary to provide clarity with regard to two principles derived from the case law. The first was pacta sunt servanda and the second was ‘perceptive restraint’. It held that the former was not a relic of our pre-constitutional past and that in general public policy required contracting parties to honour obligations that have been freely and voluntarily undertaken. As for the second, it held that while ‘perceptive restraint’ was a sound approach, courts should not rely on it to shrink from their constitutional duty to infuse public policy with contractual values, nor may it be used to shear public policy of the complexity of the value 23 Beadica 231 CC and Others v Trustees for the time being of the Oregon Trust and Others [2020] ZACC 13; 2020 (5) SA 247 (CC); 2020 (9) BCLR 1098 (CC) para 58. 24 Ibid para 38. See also Christie 8 ed (2022) at 428. 22 system created by the Constitution. Furthermore, the notion that there must be substantial and incontestable harm to the public before a court may decline to enforce a contract on public policy grounds, was alien to our law of contract.25 [53] Applying the above principles to the facts of this case, the question is whether the applicants have discharged the onus of demonstrating that the enforcement, or implementation as Mr Hollander put it, of the loan agreement would be contrary to public policy in the particular circumstances of this case. As Barkhuizen decided, a party seeking to avoid the enforcement of a contractual term is required to demonstrate good reason for failing to comply with the term. In the present matter the applicants were unable to show how the implementation of the loan agreement would be unconscionable and contrary to public policy. After all, this was an agreement that was freely and voluntarily entered into. There was no suggestion whatsoever that clauses 17 and 18 were anything out of the ordinary or that they imposed any undue hardship on the applicants. It was correctly pointed out by Tufh’s counsel that this was not an issue that was raised properly by the applicants in their papers in the courts below. The issue was raised rather opportunistically and that too only in heads of argument leaving no option for Tufh or the court to address the issue fully. [54] Wolmarans’ contention that it is Tufh’s own conduct that has put its security at risk is fallacious. After all, Tufh was merely implementing the terms of the loan agreement so as to ensure that its security in and to the property was not jeopardised in any way. 25 Ibid paras 83-85, 87, 89 and 90. 23 [55] As the facts show, the last payment made by Wolmarans to the CoJ was on 30 October 2015. Wolmarans asserts that it was advised by its forensic investigator not to effect any further payments until its dispute with the CoJ was resolved. What this ignores is that the dispute is related only to charges for water and electricity. Municipal charges for all other services rendered remained due, owing and payable. [56] The fact that the CoJ, for whatever reason, has adopted a supine approach in the collection of all outstanding amounts from Wolmarans, is irrelevant. The CoJ is no doubt aware that it is preferentially secured for the recovery of its debt in terms of s 118(3) of the Systems Act. In BOE Bank Ltd v Tshwane Metropolitan Municipality and Others,26 this Court confirmed that a charge in favour of the municipality imposed by s 118(3) of the Systems Act enjoyed preference over any mortgage bond registered against the applicable immovable property. In the circumstances, the provisions of s 118(3) of the Systems Act jeopardises, prejudices and impairs Tufh’s mortgage bond which is the security it bargained for with Wolmarans at the outset. [57] While the applicants’ are quick to now blame the CoJ for the position in which Wolmarans finds itself, the latter’s conduct is particularly egregious and unconscionable in that it has for more than eight years enjoyed the benefit of all municipal services at Wolbane Mansions, collected all rental from its tenants and still fails to pay for such services. It cannot therefore, be said that the full court was incorrect when it found that Wolmarans failed to discharge the onus to show that the enforcement of the relevant clauses would be unconscionable and contrary to public policy. 26 BOE Bank Ltd v City of Tshwane Metropolitan Municipality [2005] ZASCA 21; 2005 (4) SA 336 (SCA) para 5. 24 [58] In the circumstances, I find that there are no reasonable prospects in any appeal challenging the findings of the full court. Still less, are there special circumstances that would justify granting special leave to appeal herein. It follows that the application for special leave must fail. [59] As to costs, there was no issue that costs should follow the result and that such costs should include the costs of two counsel. That such costs should be paid on an attorney and client scale is provided for by the loan agreement itself. Order [60] The following order is made: The application for special leave is dismissed with costs on an attorney and client scale, such costs to include the costs of two counsel. __________________________ R SEEGOBIN ACTING JUDGE OF APPEAL 25 Appearances For the applicants: L Hollander Instructed by: Swartz Weil Van Der Merwe Greenberg Inc. Attorneys, Parkview Bezuidenhout Inc., Bloemfontein For the respondent: A C Botha SC (with him E Eksteen) Instructed by: Schindlers Attorneys, 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: 15 April 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 68 Wolmarans Street Johannesburg (Pty) Ltd and Others v Tufh Limited (1263/2022) [2024] ZASCA 48 (15 April 2024) Today, the Supreme Court of Appeal (SCA), per Seegobin AJA (Gorven, Weiner and Kgoele JJA and Baartman AJA concurring) handed down a judgment dismissing an application for special leave to appeal against a judgment and order of the Gauteng Division of the High Court, Johannesburg. The matter involved a written loan agreement concluded between the first applicant and the respondent in terms of which the respondent lent and advanced to the first applicant monies for the purpose of purchasing and refurbishing a block of residential units in Hillbrow, Johannesburg. A material term of the agreement was that the first applicant, in addition to paying the monthly instalment due to the respondent in terms of the agreement, was also obliged to pay the City of Johannesburg (CoJ), its account in respect of all municipal charges relating to property taxes, water, electricity and other services rendered to the property, and to provide the respondent with proof of such payment. The first applicant breached the loan agreement by failing to pay any and all amounts due to the CoJ for a period in excess of 7 years, thus placing the respondent’s security in and to the property at risk. This entitled the respondent to accelerate and declare all amounts in terms of the loan agreement to be due, owing and payable. The first applicant’s primary contention before this Court was that the enforcement of the provision in the loan agreement to accelerate payment and execute against the first applicant’s immovable property based on its failure to pay municipal charges was unconscionable and contrary to public policy. Based on the application of the legal maxim pacta sunt servanda and other established legal principles as outlined in various authorities of the SCA and the Constitutional Court, the SCA found that the respondent’s conduct in enforcing the terms of the loan agreement as aforesaid, was neither unconscionable nor contrary to public policy. 2 In all the circumstances, the SCA found that the applicants failed to show that there would be any reasonable prospects of success in any appeal or that there were any special circumstances justifying the granting of special leave to appeal. The application was accordingly dismissed with costs. ~~~~ends~~~~

4256

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 641/2023 In the matter between: GOEDVERWACHTING FARM (PTY) LTD APPELLANT and ADRIAAN JOHANNES ROUX FIRST RESPONDENT ANY AND ALL UNLAWFUL SECOND RESPONDENT OCCUPIERS OF THE PROPERTY THE CITY OF JOHANNESBURG THIRD RESPONDENT METROPOLITAN MUNICIPALITY MINISTER OF AGRICULTURE FOURTH RESPONDENT AND LAND AFFAIRS Neutral citation: Goedverwachting Farm (Pty) Ltd v Roux and Others (641/2023) [2024] ZASCA 83 (31 May 2024) Coram: NICHOLLS, MEYER and MATOJANE JJA and COPPIN and MBHELE AJJA Heard: 06 May 2024 2 Delivered: 31 May 2024 Summary: Land tenure – Extension of Security of Tenure Act 62 of 1997 – whether the respondents were occupiers as defined – no evidence of commercial farming on the land – role of the probation report – impermissible for court to make factual findings on basis of the probation officer’s report on matters which were not raised in the pleadings. 3 ORDER On appeal from: Land Claims Court, Randburg (Flatela J, sitting as a court of first instance): 1. The appeal is upheld. 2. The order of the Land Claims Court is set aside and substituted with the following: ‘1. The first and second respondents are to be evicted from portion 17 of the farm Goedverwachting, number 442, Registration Division IR, Gauteng Province on or before 31 July 2024. 2. The Sheriff of the Court, together with the assistance of the South African Police Services, if necessary, is authorised to execute the eviction proceedings against the first and second respondents should the respondents fail to vacate the property by 1 August 2024.’ 3. There is no order as to costs. JUDGMENT Nicholls JA (Meyer and Matojane JJA and Coppin and Mbhele AJJA concurring): [1] This is an appeal against a decision of the Land Claims Court (LCC) which dismissed an application for eviction in terms of the Extension of Security of Tenure Act 62 of 1997 (ESTA). The appellant is Goedverwachting Farm (Pty) Ltd (Goedverwachting), the registered owner of portion 17 of the farm Goedverwachting, number 442, Registration Division IR, Gauteng Province (the farm). The first respondent is Adriaan Johannes Roux (Mr Roux) and the second respondent is all those persons who occupy the farm through Mr Roux. The third respondent is the City of Johannesburg Metropolitan Municipality and the fourth is the Minister of Agriculture and Land Affairs. No relief is sought against the third and fourth respondents. Mr Roux and those occupying through 4 him will be referred to as the respondents. This appeal is with the leave of the LCC. [2] The issue in this appeal is one of jurisdiction, namely whether Mr Roux falls within the definition of an ‘occupier’ in terms of ESTA. If not, the LCC does not have the necessary jurisdiction. An ‘occupier’ is defined in terms of s 1 of ESTA as follows: ‘“occupier” means a person residing on land which belongs to another person, and who on 4 February 1997 or thereafter, had consent or another right in law to do so, but excluding– (a) . . . (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) . . .’ [3] It is not disputed that the farm in question is agricultural land and that at some stage, Mr Roux had consent to occupy the farm. The narrow question for determination is whether commercial farming was conducted on the farm, and if so, whether there were persons other than Mr Roux and his family members employed on the farm. Subsection (b) of the definition thus contains an exclusion from the definition of occupier and an inclusion in prescribed circumstances. [4] The LCC, based on a probation officer’s report in terms of s 9(5) of the Act (the report), found that Mr Roux was excluded from the definition of occupier because he was conducting commercial farming on the land, as envisaged in s (1)(b) of the definition of occupier. It accordingly held that the LCC did not have the jurisdiction to determine the eviction. The court did not deal with the inclusionary aspect at all, namely whether Mr Roux worked the land himself and employed only family members. That commercial farming was taking place is denied by Goedverwachting, who argue that this was not justified on the facts before court. Moreover, this was not an issue in dispute between the parties, or pleaded by them. [5] The respondents’ occupancy is not in dispute. Mr Roux and all those occupying 5 through him have been residing on the property since 2017, initially with the consent of Barend Frederik Keet (Mr Keet), the previous owner. The applicant states that the respondents had a ‘temporally limited consent to occupy the property’ afforded to them by Mr Keet, which was properly terminated. According to Mr Keet, prior to the property being sold to Goedverwachting, he was approached by members of Deneys Swiss Dairy (Pty) Ltd (Deneys) who expressed an intention to purchase the property and run a dairy business on the land. Pursuant to the proposed purchase the respondents were afforded a conditional right of tenancy on condition that the agreed purchase price was paid on the agreed terms. Deneys, according to Mr Keet, breached the purchase agreement and any right it had to the tenancy of the property was terminated. The agreement of sale was cancelled and the property thereafter sold to Goedverwachting. [6] Correspondence between Mr Keet’s attorneys and Mr Roux bears this out. A letter dated 5 June 2017, in which reference was made to a previous letter dated 11 May 2017, was served personally on Mr Roux on 14 June 2017. It refers to the breach of the sale agreement and informs Mr Roux and Ms McGovern of the immediate cancellation of the contract and their concomitant obligation to vacate the premises. Two years later on 14 June 2019, another letter was sent to Mr Roux by Mr Keet’s attorney stating that since the cancellation of the sale agreement in 2017, the respondents had been in unlawful occupation and had paid no occupational rental. Mr Roux was invited to a roundtable conference and to settle the matter, failing which Mr Keet would institute legal proceedings for eviction. It appears that the respondents did not attend any meeting. [7] The property was then sold by Mr Keet to Goedverwachting on 9 December 2020 with transfer taking place on 24 June 2021. The Deed of Transfer registered in the Deeds Office as T41994/2021 is proof of Goedverwachting’s ownership of the farm. Still, the respondents refused to vacate the property. This resulted in a notice in terms of s 81 of 1 Section 8(1) of ESTA provides 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; 6 ESTA being dispatched to the respondents. Section 8 of ESTA provides that an occupier’s right of residence may be terminated if it is just and equitable. It then sets out factors to be taken into consideration in determining this. Despite receiving the notice, no response was forthcoming from the respondents. [8] The present eviction application was launched on 15 September 2022 in terms of s 92 of ESTA on the basis that the statutory requirements of s 8 had been complied with and that the consent to occupy had been properly terminated. It is not disputed that Mr Roux had alternative accommodation in the form of a small holding in the Free State. It was alleged that his continued occupation of the farm had resulted in the deterioration and gradual degradation of the property. Attached to the papers are various aerial photographs which depict a decrepit-looking farmhouse with animals such as donkeys, chickens and goats freely roaming on the property. These photographs had to be taken utilising a drone and a helicopter as the respondents had refused representatives of (b) the conduct of the parties giving rise to the termination; (c) the interests of the parties, including the comparative hardship to the owner or person in charge, the occupier concerned, and any other occupier if the right of residence is or is not terminated; (d) the existence of a reasonable expectation of the renewal of the agreement from which the right of residence arises, after the effluxion of its time; and (e) the fairness of the procedure followed by the owner or person in charge, including whether or not the occupier had or should have been granted an effective opportunity to make representations before the decision was made to terminate the right of residence.’ 2 Section 9 of ESTA provides as follows ‘9 Limitation on eviction (1) Notwithstanding the provisions of any other law, an occupier may be evicted only in terms of an order of the Court issued under this Act. (2) The Court may make an order for the eviction of an occupier if- (a) the occupier's right of residence has been terminated in terms of section 8; (b) the occupier has not vacated the land within the period of notice given by the owner or person in charge; (c) the conditions for an order for eviction in terms of section 10 or 11 have been complied with; and (d) the owner or person in charge has, after the termination of the right of residence, given- (i) the occupier; (ii) the municipality in whose area of jurisdiction the land in question is situated; and (iii) the head of the relevant provincial office of the Department of Rural Development and Land Reform, for information purposes, not less than two calendar months' written notice of the intention to obtain an order for eviction, which notice shall contain the prescribed particulars and set out the grounds on which the eviction is based: Provided that if a notice of application to the Court has, after the termination of the right of residence, been given to the occupier, the municipality and the head of the relevant provincial office of the Department of Rural Development and Land Reform not less than two months before the date of the commencement of the hearing of the application, this paragraph shall be deemed to have been complied with. (3) …’ 7 Goedverwachting any access to the farm. In addition, it was stated that Goedverwachting, which was to have operated a cattle farming business, was losing substantial sums of money by the continued occupation of the property by the respondents. [9] Preempting the defence of the respondents that their entitlement to the land was by virtue of their early occupation of the land as Khoi and San people, attached to the founding affidavit of the appellant is a document purporting to be an aboriginal title of the Gona-Hesse !Khwe Royal Kingdom officially endorsed by King Gqona Cornelius Botha (Mr Botha). A notice of the Kingdom declares that Mr Roux occupies the farm by virtue of his aboriginal title ‘and in conjunction with the Customary Law and Constitution of South Africa (1996)’. The deponent to the appellant’s affidavit, a director of Goedverwachting, alleges that this is a fictitiously created document and the stamp it bears of the Midvaal Municipality was fraudulently obtained. The date stamp has allegedly also been tampered with. The Midvaal Municipality has indicated that it has no knowledge of the document. Nothing was put up to refute this. [10] Two answering affidavits have been filed. The first is that of Mr Botha, apparently in the name of the Gonas Customary & Indigenous Law Agency, and in his capacity as King of the Gona-Hesse !Khwe Royal Kingdom. He states that Mr Roux and the members of Deneys are members of his kingdom and that the land was stolen from his forefathers, the Gona-Hesse !Khwe people who are the real landowners and the true indigenous aboriginal people of South Africa. As such, Goedverwachting and Mr Keet are in possession of ‘stolen goods’- the land that was stolen from their forefathers and never returned to them. Mr Botha denies staying on the farm which he describes as a false accusation by Goedverwachting. He did however assist Mr Roux and the Deneys Swiss Dairy as they are members of the Gona-Hesse !Khwe Royal Kingdom. Numerous allegations of dishonesty and fraud are made against Mr Keet. [11] Mr Roux in a similar vein relies on the ‘Gonas Customary & Indigenous Law System’ to assert ownership of the farm and states that he does not, and will not, 8 unlawfully occupy any land. In relation to the facts contained in the founding affidavit, he states that Mr Keet sold the property to Deneys and the members of Deneys gave them ‘permission to look after the farm’. Hilda McGovern, Mr Roux’s daughter, filed a confirmatory affidavit wherein she confirms that she is a member of Deneys and gave Mr Roux permission to stay on the farm after Deneys ‘paid’ Mr Keet for the farm. No evidence of any payment is attached in substantiation. [12] The only defence put up by the respondents is that the land in question belonged to them by virtue of their aboriginal title and because they had purchased the farm. No evidence was provided to support this defence. What is singularly lacking in both answering affidavits is any allegation that the land was being operated as a commercial venture at the time the eviction was sought. Nor is there any description of who worked on the farm. By relying on their indigenous rights to the land, the issue of whether the appellant is entitled to evict the respondents in terms of ESTA or whether they are occupiers in terms of ESTA is not pertinently addressed. Instead, the case made out by the respondents is that they are in legal occupation by virtue of their indigenous title to the land, alternatively that they are the owners of the land having purchased it from Mr Keet. [13] It is very difficult to ascertain the situation of Deneys on the papers before this court. However, what is evident is that the dairy business did not succeed and Deneys went into voluntary liquidation at the hands of Ms McGovern who filed a special resolution in terms of s 352(2) of the Companies Act 71 of 2008. A final liquidation order was granted on 4 November 2020. It appears that during mid 2022, members of Deneys unsuccessfully attempted to have the liquidation set aside on the basis that there was value in the equity and goodwill in the brand of Deneys Swiss Dairy. From excerpts of the affidavits in the various applications, it is evident that the business of Deneys had stopped operating and had completely closed by December 2019. Mr Roux himself stated under oath on 9 April 2021 that by 6 April 2021 ‘there was not a single item on the premises that belonged to Deneys Swiss Dairy’. 9 [14] The confusion was further compounded by the respondents’ heads of argument which were filed late and for which condonation was sought, and granted. In this Court, as in the LCC, Mr Roux refused legal representation. He insisted that lawyers were not to be trusted and that his daughter, Ms McGovern, would argue on his behalf. He explained that persons with legal knowledge had assisted him in drafting his heads of argument. Apart from asserting their original aboriginal title to the land, the main thrust of the heads of argument is that the legal representatives of Goedverwachting had fraudulently and dishonestly omitted to include portions of the record which would further Mr Roux’s case. This is an apparent reference to papers where Ms McGovern applied to be an intervening party in the present case and an application to set aside the liquidation of Deneys. It was alleged that Deneys is not in voluntary liquidation and that Ms McGovern was coerced into signing the necessary documents and resolutions. As a result, an urgent application for the rescission of the liquidation was to be brought, and a further attempt was made to justify Ms McGovern’s intervention as an interested party in these proceedings. Ms McGovern confirmed that both the application for the rescission of the liquidation of Deneys and the application for Ms McGovern to be admitted as an intervening party had been heard by the time the matter was heard in this Court. Both applications were dismissed and have not been appealed. Despite the heavy reliance on the alleged wrongdoings in respect of these applications in the heads of argument, these applications are not relevant to the issue before this Court which is whether a commercial enterprise was being conducted on the farm at the time the eviction was sought. [15] As indicated, the finding of the LCC that the respondents did not fall within the purview of ESTA, was based solely on the probation officer’s report dated 25 October 2022 provided by the Department of Agriculture, Land Reform and Rural Development. In terms of s 9(2)(c) of ESTA a court is compelled to obtain a report to ensure the ‘conditions for an order for eviction in terms of section 10 or 11 have been complied with’. Section 26(3) of the Constitution requires a court to consider all relevant circumstances before ordering an eviction. The probation officer’s report is merely a mechanism to place information before a court to enable it to comply with its 10 constitutional obligations.3 The content of the report enables the court to get an indication of what constitutional rights are implicated, including any rights to education of the children on the property; the availability of alternative accommodation to the occupier; and any other hardships that the eviction may cause the occupier. Thus the role of a probation officer’s report is to assist the court in determining whether an eviction would be just and equitable in the circumstances of a particular case. [16] The purpose for which such reports are made is clearly set out in s 9(3) of the Act which provides as follows: ‘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 116 of 1991), or an 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.’ [17] The sole statement in the report upon which the LCC relied to find that a commercial enterprise was being conducted on the farm was the following: ‘During the 7 years residing on the farm [Mr Roux] has also indicated that he has been farming with livestock which consist of 200 pigs and 18 cattle.’ The version apparently given to the probation officer by Mr Roux was that Deneys had entered into an agreement with Mr Keet to acquire the farm for R5 million. This was to be paid in cash of R900 000; cows to the value of R2 million and livestock feed to the value of R1,2 million. A total of R4,1 million had already been paid. [18] Relying on the above, the LCC made the following finding: ‘[36] Section 1 excludes from the definition of an occupier a person using or intending to use the 3 Valley Packers Co-operative Limited v Dietloff and Another [2000] ZALCC 47; [2001] 2 All SA 30 (LCC) para 7; Nederburg Wines (Pty) Ltd v Nero and Others [2018] ZASCA 119 paras 7-9. 11 land in question mainly for industrial, mining, commercial, or commercial farming purposes. On the facts of this case, the respondents have been occupying the premises since 2017 through Deneys Dairy which had an intention to purchase the farm for commercial purposes. The respondents were granted consent to occupy the farm pending payment of the purchase price. Clearly this was a commercial enterprise, and that it failed, and with the respondents continuing to occupy the property despite not having fulfilled the suspensive condition does not find for their consent in occupation of the property nor bring them in the ambit of occupiers in terms of ESTA. [37] The Probation report notes that the first respondent operates a farming business which consists of 200 pigs and 18 cattle, a commercial business. The respondents are simply excluded by section 1 by reason of the commercial enterprise. That their agreed facts stated to the contrary, they are wrong in law.’ [19] The first point is that the probation officer’s report cannot usurp the court’s discretion as to whether an eviction should be granted. Secondly, the report is not made under oath. It is, therefore, not evidence before the Court. Thirdly, even on Mr Roux’s own version, it contained factual inaccuracies. These included the duration of his tenancy on the farm; the identity of the other occupants and his dependency on a state pension, an anomalous situation if the farm were a functioning commercial enterprise. That he received a social grant was vehemently denied by Mr Roux. [20] The reference to livestock numbers is not sufficient to establish the scale and nature of any commercial enterprise. The report itself does not suggest that a commercial venture was being conducted and no mention is made of a functioning dairy. There is no evidence of any commercial activity at the time the eviction application was launched. The aerial photographs taken in 2022 do not reflect this. If indeed a business enterprise were operating on the farm, one would have expected some financial information to be provided. But more importantly, this was not the version put up by the respondents. [21] This Court has repeatedly emphasised that the function of judicial officers is to determine the issues before them and to confine themselves to such issues. It is for the parties to set out and define the nature of their dispute in the pleadings and the court to 12 then adjudicate on the issues so defined.4 It is not for the judicial officer to create new factual issues particularly where the parties were not asked for their submissions whether this was an appropriate approach to the matter, or even whether the issue was in dispute. [22] The probation officer’s report cannot be used as a substitute for evidence. It was incumbent upon the respondents to raise the issue that they did not fall within the definition of an occupier in terms of ESTA and to set out the reasons therefor. The LCC impermissibly took it upon itself to make a finding on an issue that was not in dispute between the parties without hearing either party on the issue. In doing so, the LCC erred in finding that the respondents were excluded from the definition of ‘occupier’ under s 1 of ESTA and dismissing the application for eviction on this basis. Taking into consideration that the requirements of s 115 of ESTA have been complied with, it is just and equitable to grant an order for eviction against Mr Roux and all those occupying through him. [23] As regards costs, Goedverwachting acknowledged because land claims invariably deal with vulnerable persons, costs are only awarded in exceptional circumstances. However, it was contended that a costs order was warranted against the respondents as they had been in unlawful occupation since 2017 without paying any rental. This had resulted in ongoing financial losses. Goedverwachting only took transfer of the property in June 2021 so any financial losses can only have taken place thereafter. In any event I am not persuaded that that this is an exceptional circumstance which would justify a costs order against the respondents. 4 National Director of Public Prosecutions v Zuma [2009] ZASCA 1; 2009 (2) SA 277 (SCA); [2009] 2 All SA 243 paras 15-16; Advertising Regulatory Board NPC and Others v Bliss Brands (Pty) Ltd [2022] ZASCA 51; [2022] All SA 607 (SCA); 2022 (4) SA 57 (SCA) para 9; Fischer and Another v Ramahlele and Others [2014] ZASCA 88; 2014 (4) SA 614 (SCA); [2014] 3 All SA 395 (SCA) para 15; Road Accident Fund v MKM obo KM and Another; Road Accident Fund v NM obo CM and Another [2023] ZASCA 50; [2023] 2 All SA 613 (SCA); 2023 (4) SA 516 (SCA) para 66. 5 Section 11(2) provides that a Court may grant an eviction order in respect of any person who became an occupier after 4 February 1997 if it is just and equitable to do so while section 11(3) sets what factors the court should have regard to. These include the length of occupation of the land, the reason for the eviction, whether there is suitable alternative accommodation and the balance of interests between the owner and the occupiers. 13 [24] Although Goedverwachting seeks the immediate eviction of the respondents, it was conceded that this would be unduly harsh. In view of the fact that the respondents have been residing on the farm for a number of years, it is just and equitable that they be given a couple of months within which to vacate the property. [25] In the result the following order is made: 1. The appeal is upheld. 2. The order of the Land Claims Court is set aside and substituted with the following: ‘1. The first and second respondents are to be evicted from portion 17 of the farm Goedverwachting, number 442, Registration Division IR, Gauteng Province on or before 31 July 2024. 2. The Sheriff of the Court, together with the assistance of the South African Police Services, if necessary, is authorised to execute the eviction proceedings against the first and second respondents should the respondents fail to vacate the property by 1 August 2024.’ 3. There is no order as to costs. _____________________ C E HEATON NICHOLLS JUDGE OF APPEAL 14 Appearances For the Appellant: L van Gass Instructed by: Van Greunen & Associates Inc, Pretoria Symington De Kok Attorneys, Bloemfontein For the Respondent: A.J Roux (in person) H McGovern (in person)

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 31 May 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 Goedverwachting Farm (Pty) Ltd v Adriaan Johannes Roux and Others (641/2023) [2024] ZASCA 83 (31 May 2024) Today, the Supreme Court of Appeal (SCA) upheld an appeal from the Land Claims Court, Randburg (LCC). The order of the LCC was set aside and substituted with an order that: ‘the first and second respondents are to be evicted from portion 17 of the farm Goedverwachting, number 442, Registration Division IR, Gauteng Province on or before 31 July 2024; the sheriff of the Court, together with the assistance of the South African Police Services, if necessary, is authorised to execute the eviction proceedings against the first and second respondents should the respondents fail to vacate the property by 1 August 2024; there is no order as to costs.’ Johannes Roux and those occupying the property through him (the respondents) together with members of Deneys Swiss Dairy (Pty) Ltd (Deneys), had approached the previous owner of the farm, Mr Keet, to purchase the property and operate a dairy business on the land. They were afforded temporary consent to occupy the property subject to the agreed purchase price being paid. However, according to Mr Keet the purchase agreement was breached and any right to occupy the property was subsequently terminated. The respondents however, failed to vacate the property. The sale agreement was cancelled and the property was thereafter sold to Goedverwachting Farm (Pty) Ltd, the appellant. By that stage Deneys had gone into liquidation and the dairy business was no longer operating. The respondents refused to vacate the property even after the sale and the appellant dispatched a notice in terms of section 8 of the Extension of Security of Tenure Act (ESTA) to the respondents. The respondents however, failed to provide a response. The present eviction application was launched in terms of section 9 of ESTA on the basis that the statutory requirements in terms of section 8 of ESTA were complied with. The appellant argued that it intended to operate a cattle farming business and was losing substantial amounts of money due the continued occupation of the respondents. Mr Roux however, maintained that the respondents were in legal occupation of the land by virtue of their indigenous title to the land based on the ‘Gonas Customary & Indigenous Law System’ and that the members of Deneys gave them ‘permission to look after the farm’ and ‘paid’ for the farm. The LCC held that the respondents did not fall within the purview of ESTA because it was not an occupier as defined. This was on the basis it was conducting commercial farming on the land. The LCC’s decision was based solely on the statement in the probation officer’s report which held that, ‘during the 7 years residing on the farm [Mr Roux] has also indicated that he has been farming with livestock which consist of 200 pigs and 18 cattle’. The LCC, therefore, found that a commercial enterprise was being conducted and that the respondents were therefore excluded from the definition of occupier in terms of ESTA. 2 The SCA held that the probation officer’s report cannot override the court’s discretion as to whether an eviction should be granted and it does not amount to evidence. The role of a probation officer’s report is to assist a court in determining whether an eviction is just and equitable. In any event the probation officer’s report contained several inconsistencies and inaccuracies which did not support the LCC’s finding that a commercial enterprise was being conducted thus excluding the respondents from the definition of occupier in terms of ESTA. The only defence put up by the respondents was that, they occupied the property by virtue of their indigenous right to the land and because they had purchased the land. However, no evidence was submitted in support of these defences. The Court emphasised that the function of judicial officers is to determine the issues before them and to confine themselves to such issues. The LCC impermissibly made a finding on an issue that was not in dispute between the parties and without hearing either party on the issue. In doing so, the LCC erred in its finding that the respondents were excluded from the definition of occupier. As a result, the SCA upheld the appeal. ~~~~ends~~~~

4199

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 773/2022 In the matter between: SAVANNAH COUNTRY ESTATE HOMEOWNERS ASSOCIATION APPLICANT and ZERO PLUS TRADING 194 (PTY) LTD FIRST RESPONDENT MARIO BROWN PRETORIUS SECOND RESPONDENT UNIVERSITY OF PRETORIA THIRD RESPONDENT Neutral citation: Savannah Country Estate Homeowners Association v Zero Plus Trading 194 (Pty) Ltd and Others (773/2022) [2024] ZASCA 40 (4 April 2024) Coram: PONNAN, MABINDLA-BOQWANA and GOOSEN JJA, and TOLMAY and BLOEM AJJA Heard: 6 March 2024 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 4 April 2024. Summary: Procedure – application for special leave to appeal in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 – difference between ‘special leave’ to appeal and ‘leave’ to appeal – applicant seeking special leave to appeal against any decision of a high court in terms 2 of s 16(1)(b) to satisfy the Supreme Court of Appeal not only that there are reasonable prospects of success, but some additional factor or criterion – applicant failed to demonstrate such additional factor or criterion – matter struck from the roll. 3 ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Janse van Nieuwenhuizen, Basson and Molefe JJ, sitting as court of appeal): The matter is struck from the roll with costs. JUDGMENT Bloem AJA (Ponnan, Mabindla-Boqwana and Goosen JJA, and Tolmay AJA concurring) [1] This is an application for special leave to appeal and, if granted, the determination of the appeal itself. On 23 March 2023, the two judges who considered the application referred it for oral argument in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013 (the Superior Courts Act). [2] In 2013, the applicant, as plaintiff, instituted action in the Gauteng Division of the High Court, Pretoria (the high court) against fourteen defendants. Only the applicant and three respondents, who were cited as the first, second and third defendants, participate in this application. Accordingly, no reference is made in this judgment to the remaining respondents against whom no relief is sought. [3] The applicant is Savannah Country Estate Homeowners Association (Savannah), a non-profit company. The first respondent is Zero Plus Trading 194 (Pty) Ltd (Zero Plus); the second respondent is Mario Brown Pretorius, a businessperson and Zero Plus’ chief executive officer (Mr Pretorius); and the third respondent is the University of Pretoria (the University). 4 [4] In its particulars of claim, Savannah alleged that during 2005 or 2006, Zero Plus caused a secure estate, the Savannah Country Estate, to be established. In 2007, Zero Plus caused the property known as Erf 445 Savannah Country Estate Extension 5 Township (Erf 445) to be transferred to Savannah. On 24 April 2007 Savannah, unlawfully represented by Mr Pretorius, sold Erf 445 to Zero Plus. [5] Savannah alleged that the sale of Erf 445 to Zero Plus was unlawful and in conflict with the provisions of s 228 of the Companies Act 61 of 1973,1 in that, at the time of the sale, Savannah had 280 members, but none of them received notification of when the decision was taken to sell Erf 445 to Zero Plus. Savannah claimed the following relief: ‘1. Declaring the sale agreement dated 27 April 2007 between [Savannah] and [Zero Plus] unlawful, null and void ab initio. 2. Setting aside the registration of the Erf 445 Savannah Country Estate Extension 5 township. 3. Ordering [Zero Plus] to sign all documents necessary to set in motion the process of transfer of Erf 445 Savannah Country Estate Extension 5 to [Savannah]. 4. Further and/or alternative relief, 5. Costs of suit.’ [6] Zero Plus and Mr Pretorius delivered special pleas and a plea over. They pleaded that Erf 445 was transferred to Zero Plus on 9 July 2007, whereafter it was improved with 106 sectional title units. Only their third special plea is presently relevant. It provides: ‘1. Erf 445 is zoned for and has been developed with 100 sectional title units, most of which have been sold by [Zero Plus]. 2. The common property forming part of the sectional title development on Erf 445 has 1 Section 228 of the Companies Act 61 of 1973 was repealed by the Companies Act 71 of 2008 with effect from 1 May 2011. The section was in operation when Erf 445 was sold by Savannah to Zero Plus on 24 April 2007. Section 228(1)(b) provided that directors of a company did not have the power, save by special resolution of its members, to dispose of the whole or the greater part of the assets of the company. 5 been transferred to the body corporate of the sectional title development. 3. [Zero Plus] is no longer the owner of any of the common property or of most of the sectional title units which form part of Erf 445 and accordingly it is an impossibility for [Zero Plus] to comply with the relief sought in the particulars of claim.’ [7] The University pleaded that during November 2007, it purchased 32 sectional title units from Zero Plus for a purchase price of R24 053 200. Accordingly, the University pleaded that: ‘it is … impossible for the First Defendant to restore the 32 sectional title units … to the Plaintiff, as the Third Defendant is the registered owner of the said units.’ [8] In its replication, Savannah alleged that the defence of impossibility of performance cannot succeed because Mr Pretorius, when he concluded the sale agreement with Zero Plus, unlawfully represented Savannah, thereby rendering the sale agreement between Savannah and Zero Plus unlawful and invalid. It alleged that the subsequent purchasers cannot benefit from an unlawful sale agreement. [9] The parties held a pretrial conference on 8 April 2019. The relevant paragraphs of the pretrial minute read as follows: ‘6.1 The Parties agree to separate the first and second defendants’ special plea as contained in paragraphs 3.1 to 3.3 of the first and second defendants’ plea, as read with paragraph 6.3 of the third defendant’s plea, from the remainder of the issues in dispute. In addition, the Parties agree that the separated issue and the remainder of the special pleas raised by the defendants be dealt with on the first day of the trial. 6.2 The Plaintiff reserves its rights to lead oral evidence in respect of the separated issue and the remainder of the special pleas. 6.3 The Plaintiff proposes that, should the separated issue and the remainder of the special pleas not be determined so as to dispose of the matter, the remainder of the matter (the main merits) proceed to trial.’ 6 Before the high court [10] Aside from the pleadings, the high court also had regard to the various title deeds of the property in question, a conveyancer’s certificate and the sectional title register on Erf 445, which was opened on 15 May 2009, as being part of the facts which were common between the parties. It upheld the special plea and the defence of impossibility of performance and found that, in terms of s 13 of the Sectional Titles Act 95 of 1986 (the Sectional Titles Act), the legal effect of the registration of the sectional plan was that Erf 445 and the buildings thereon were deemed to be divided into sections and common property in accordance with the sectional plan, resulting in the land being moved out of the township register and into a sectional title register. [11] The high court dismissed the action on the basis that it was unable to find that the sale of Erf 445 to Zero Plus was unlawful and therefore null and void. The following order was issued: ’17.1 The first and second defendants’ third special plea is upheld with costs, including the costs consequent upon the employment of senior counsel. 17.2 The third defendant’s plea as per paragraph 6.3 is upheld with cost, including the costs consequent upon the employment of senior counsel. 17.3 The plaintiff’s claim is dismissed with costs, including the costs consequent upon the employment of senior counsel.’ [12] The high court dismissed Savannah’s application for leave to appeal. This Court granted it leave to appeal to the full court of the North Gauteng Division of the High Court, Pretoria (the full court). Before the full court [13] The full court considered the pleadings and the information contained in the conveyancer’s certificate and annexures thereto. The latter documents reveal that on 15 April 2003, Zero Plus became the owner of portion 23 of the farm 7 Zwartkoppies 364 (portion 23). On 10 March 2004, the local authority approved the development of the Savannah Country Estate. In accordance with the approval, portion 23 was developed in five phases. The property forming the subject matter of this appeal was developed as part of the fifth phase. [14] Erf 445 was re-zoned from ‘special’ to ‘residential’. Zero Plus accordingly made an application on 22 June 2006, in terms of s 100 of the Town-planning and Townships Ordinance 15 of 1986, to amend the zoning in accordance with its decision. Erf 445 should have been excluded from the category of common property. Due to an error, such exclusion was at no stage prepared or lodged with the local authority. The local authority approved the application for zoning on 30 March 2007. The above error was discovered after the approval of the zoning application. Savannah’s only two directors at the time, Mr Pretorius being one, decided to rectify the error by transferring the property back to Zero Plus. The transfer took place on 9 July 2007. The sectional title units were then developed whereafter Zero Plus sold some of them to third parties. Zero Plus sold 32 of those units to the University. [15] The full court found that, upon the establishment of the township on which the sectional title scheme was developed, the property was removed from the farm register in the deeds office and entered into the township register, resulting in the farm ceasing to exist. It found that, since Zero Plus is no longer the owner of the property, it was impossible for Zero Plus to comply with the relief sought by Savannah. The full court found that the grounds of appeal were misguided. It found that, based on the common cause facts and the application of legal principles to those facts, the appeal had to be dismissed. Before this Court [16] It must now be determined whether Savannah has made out a case for 8 special leave to be granted to it to appeal against the order and judgment of the full court. [17] A distinction is drawn in s 16 of the Superior Courts Act between leave and special leave to appeal. Section 16(1)(b) of the Superior Courts Act2 provides that, subject to s 15(1) thereof, the Constitution and any other law, ‘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’. This means that an appeal against the decision of the full court in this matter would only be available to Savannah upon the grant of special leave by this Court. [18] Corbett JA had occasion in Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd (Westinghouse), to deal with the distinction between ‘leave’ and ‘special leave’ as it appeared in s 20(4) of the Supreme Court Act 59 of 1959, the predecessor of s 16(1) of the Superior Courts Act. The learned Judge said the following: ‘I have no doubt that the terms "special leave" and "leave" were chosen with deliberation by the lawgiver and that they were intended to denote different concepts. It may be accepted that the normal criterion of reasonable prospects of success applies to both the "special leave" of s 20 (4) (a) and the "leave" of s 20 (4) (b). . . In my view, however, the word "special" in the former subsections denotes that some additional factor or criterion was to play a part in the granting of special leave.’3 2 Section 16(1) of the Superior Courts Act reads as follows: ‘(1) Subject to s 15(1), the Constitution and any other law — (a) an appeal against any decision of a Division as a court of first instance lies, upon leave having been granted — (i) if the court consisted of a single judge, either to the Supreme Court of Appeal or to a full court of that Division, depending on the direction issued in terms of s 17(6); or (ii) if the court consisted of more than one judge, to the Supreme Court of Appeal; (b) an appeal against any decision of a Division on appeal to it, lies to the Supreme Court of Appeal upon special leave having been granted by the Supreme Court of Appeal; and (c) an appeal against any decision of a court of a status similar to the High Court, lies to the Supreme Court of Appeal upon leave having been granted by that court or the Supreme Court of Appeal, and the provisions of s 17 apply with the changes required by the context.’ 3 Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd [1986] ZASCA 10; 1986 (2) SA 555 (AD) at 561C-F. 9 [19] In National Union of Metalworkers of South Africa and Others v Fry's Metals (Pty) Ltd,4 this Court, referring to Westinghouse, held that the criterion for the granting of special leave to appeal is not merely that there is a reasonable prospect that the decision of the court a quo will be reversed – but whether the applicant has established some additional factor or criterion. Examples of the additional factors or criteria were given: ‘One is “[w]here the matter, though depending mainly on factual issues, is of very great importance to the parties or of great public importance”. No doubt every appeal is of great importance to one or both parties, but this court must be satisfied. . . that the matter is objectively of such importance to the parties or the public that special leave should be granted. We emphasise that the fact that applicants have already enjoyed a full appeal before the LAC will normally weigh heavily against the grant of leave. And the demands of expedition in the labour field will add further weight to that.’ [20] In Stu Davidson and Sons (Pty) Ltd v Eastern Cape Motors (Pty) Ltd,5 the regional court dismissed the plaintiff’s claims. It successfully appealed to the Eastern Cape Division of the High Court. The defendant, thereafter appealed to this Court against the decision of the full court, with the special leave of this Court. In the majority judgment, reference was also made to Westinghouse. It was found that what was required in an application for special leave to appeal, in addition to attempting to demonstrate that the court a quo was wrong, was some additional factor or criterion. Lewis JA, writing for the majority, stated that the fact that two judges of this Court gave special leave to appeal does not mean that the judges hearing the appeal ‘[were] not required to consider whether [they] actually should be entertaining the appeal at all’. It was found that the appeal had no merit, which meant that ‘there [were] no reasonable prospects of success, much less special circumstances’. The Court considered the following factors as 4 National Union of Metalworkers of South Africa and Others v Fry's Metals (Pty) Ltd [2005] ZASCA 39; [2005] 3 All SA 318 (SCA); 2005 (5) SA 433 (SCA); (2005) 26 ILJ 689 (SCA); 2005 (9) BCLR 879 (SCA); [2005] 5 BLLR 430 (SCA) para 43. 5 Stu Davidson and Sons (Pty) Ltd v Eastern Cape Motors (Pty) Ltd [2018] ZASCA 26 paras 2 and 3. 10 to why special leave to appeal should perhaps not have been granted:6 ‘[T]he amount in issue is minimal. There is no legal question to be determined. There is no factual dispute that requires reconsideration. There is no reason why an appellate court should determine any matter arising from the first appeal further. Again, it is trite that where there has been no manifest denial of justice, no important issue of law to be determined, and the matter is not of special significance to the parties, and certainly not of any importance to the public generally, special leave should not be granted.’ [21] In the light of the above authorities, I now deal with Savannah’s application for special leave to appeal. In the notice of motion,7 Savannah described the application as one for leave to appeal (as opposed to special leave to appeal) against the order and judgment of the full court. [22] The founding affidavit in support of the application stated that it was ‘an application for special leave to appeal in terms of the provisions of Section 16(b) … ’. The correct reference ought to have been s 16(1)(b). The deponent then dealt with the background of the litigation and the factual matrix, the alleged flaws in the judgment and the grounds of appeal. Six paragraphs were devoted to the prospects of success on appeal. It was submitted that Savannah had ‘at least a reasonable prospects of showing that the special plea of impossibility was not competent and ought to have been dismissed by the Court a quo’. It was also submitted that ‘the interests of justice support the grant of leave to appeal’. There was no reference to special leave to appeal under either the heading of prospect of success or interests of justice. Savannah has thus failed, in its founding affidavit, to show any additional factor or criterion in support of an application for special leave to appeal. 6 Ibid para 19; See also Integrity Forensic Solutions CC v Amajuba District Municipality [2023] ZASCA 124 para 9. 7 The notice of motion contained not only the relief sought by Savannah, but also the factual basis, consisting of 25 paragraphs, upon which that relief is sought. 11 [23] Savannah’s counsel conceded this. When faced with these difficulties, counsel suggested that it may be prudent for Savannah to apply for the hearing to be postponed with the necessary tender of costs. The purpose of the postponement, so we were informed, would be to enable Savannah to amend its notice of motion and deliver supplementary affidavits to seek special leave to appeal. [24] In that regard, it would be for Savannah to demonstrate, among other things, that the requirements for special leave could be satisfied. It would serve no purpose to postpone the application if the envisaged appeal lacked merit. [25] The substantive relief sought against the respondents is set out in prayers 1, 2 and 3, which are quoted in paragraph 5 above. On the pleadings, Savannah has not made out any case against the University for the relief sought in those prayers. But, even if the relief sought in those prayers was granted, it would not affect the University since no relief is specifically sought against it in those prayers. It accordingly has no prospects of success on appeal against the University, let alone showing any special circumstances required for it to succeed. This was conceded on behalf of Savannah at the hearing before us. [26] After the sectional title register had been opened in 2007, Zero Plus sold and transferred some of the units in the development scheme to the purchasers thereof, 32 units having been sold and transferred to the University. In terms of s 36(1) of the Sectional Titles Act,8 a body corporate for that scheme was deemed to have been established with effect from the date on which the first person became the owner of a unit in the scheme. The first purchaser and the developer 8 Section 36(1) of the Act was amended with effect from 7 October 2016. As at 2007 it read as follows: ‘With effect from the date on which any person other than the developer becomes an owner of a unit in a scheme, there shall be deemed to be established for that scheme a body corporate of which the developer and such person are members, and every person who thereafter becomes an owner of a unit shall be a member of that body corporate.’ 12 then became members of that body corporate. Every person who thereafter became an owner of a unit also became a member of that body corporate. The body corporate thereafter became solely responsible for the control, management, administration, use and enjoyment of the sections9 and of the common property in the scheme.10 [27] Since the sale of Erf 445 from Savannah to Zero Plus, the registrar of deeds has registered the sectional plan and has opened a sectional title register in respect of Erf 445, which entitled Zero Plus to sell units. Thus far, Savannah has not sought to assail any of those approvals. It follows that as things presently stand, Savannah can hardly obtain the relief it seeks. This must mean that Savannah is not out of the starting blocks. It has shown no prospects of success on appeal. [28] Savannah has inexplicably not sought to amend its particulars of claim when it had sufficient opportunity to do so. In one of their special pleas, Zero Plus and Mr Pretorius pointed out that Savannah had failed to join the body corporate of the development scheme, all the owners of the sectional title units and the mortgage bondholders. On delivery of that plea, during September 2013, Savannah should have investigated whether it was necessary to amend its particulars of claim in the light of the registration of the sectional plans and the opening of the sectional title register. The same opportunity presented itself after the University had delivered its plea during February 2014, wherein it pleaded that Zero Plus sold 32 sectional title units to it. [29] In its heads of argument, the University indicated that Savannah had intimated on at least two occasions during pretrial conferences, which were held on 4 September 2015 and 17 May 2016, that it was considering amending its 9 In s 1 of the Act, ‘section’ means a section shown as such on a sectional plan. 10 Eden Village (Meadowbrook) (Pty) Ltd and Another v Edwards and Another 1995 (4) SA 31 (AD) at 40H-I. 13 particulars of claim. However, no amendment of the particulars of claim was ever sought. It is furthermore pointed out that at a pretrial conference, which was held on 8 April 2019, Savannah proposed that, should the special plea of impossibility of performance ‘not be determined so as to dispose of the matter, the remainder of the matter (the main merits) proceed to trial’. Savannah was accordingly prepared to commence with the trial on the merits on the pleadings in their current form. On those pleadings, Savannah would have been unable to secure any relief against any of the respondents. [30] In all the circumstances, given that there is no merit at all in the appeal, there are no reasonable prospects of success, much less special circumstances. A postponement of the application will serve no purpose. The application for special leave to appeal must accordingly fail and Savannah should be ordered to pay the respondents’ costs. [31] In the result, the matter is struck from the roll with costs. _________________________ G H BLOEM ACTING JUDGE OF APPEAL 14 Appearances For the appellant: H H Cowley with him J Mnisi Instructed by: Matojane Malungana Inc, Randburg SMO Seobe Attorneys Inc, Bloemfontein For the first and second respondents: L Putter SC Instructed by: Jacobs Roos Fouche Inc, Pretoria Bezuidenhouts Inc, Bloemfontein For the third respondent: J P Vorster SC Instructed by: Tim Du Toit & Co Inc, Pretoria Rossouws 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: 04 April 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 Savannah Country Estate Homeowners Association v Zero Plus Trading 194 (Pty) Ltd and Others (773/2022) [2024] ZASCA 40 (04 April 2024) Today the Supreme Court of Appeal (SCA) struck a matter from the roll with costs. In 2013, the applicant, Savannah Country Estate Homeowners Association (Savannah), as plaintiff, instituted action in the Gauteng Division of the High Court, Pretoria (the high court) against 14 defendants. Only Savannah and three respondents, cited as the first, second and third defendants in the high court, participated in the special application for leave to appeal. The first respondent is Zero Plus Trading 194 (Pty) Ltd (Zero Plus); the second respondent is Mario Brown Pretorius, a businessperson and Zero Plus’ chief executive officer (Mr Pretorius); and the third respondent is the University of Pretoria (the University). In its particulars of claim, Savannah alleged that during 2005 or 2006, Zero Plus caused a secure estate, the Savannah Country Estate, to be established. In 2007, Zero Plus caused the property known as Erf 445 Savannah Country Estate Extension 5 Township (Erf 445) to be transferred to Savannah. On 24 April 2007 Savannah, unlawfully represented by Mr Pretorius, sold Erf 445 to Zero Plus. Savannah alleged that the sale of Erf 445 to Zero Plus was unlawful and in conflict with the provisions of s 228 of the Companies Act 61 of 1973, in that, at the time of the sale, Savannah had 280 members, but none of them received notification when the decision was taken to sell Erf 445 to Zero Plus. Zero Plus and the Mr Pretorius delivered special pleas and a plea over. They pleaded that Erf 445 was transferred to Zero Plus on 9 July 2007, whereafter it was improved by the development of 106 sectional title units. Their third special plea, which is relevant in these proceedings, provided that Zero Plus was no longer the owner of any of the common property or of most of the sectional title units which formed part of Erf 445 and accordingly, it was an impossibility for Zero Plus to comply with the relief sought in the particulars of claim. The University pleaded that during November 2007 it had purchased 32 sectional title units from Zero Plus and accordingly, it was impossible for Zero Plus to restore the 32 sectional units. In its replication Savannah alleged that the defence of impossibility of performance cannot succeed because Mr Pretorius, when he concluded the sale agreement with Zero Plus, unlawfully represented Savannah, thereby rendering the sale agreement between Savannah and Zero Plus unlawful and invalid. 2 The high court upheld the special plea and the defence of impossibility of performance and found that, in terms of s 13 of the Sectional Titles Act 95 of 1986, the legal effect of the registration of the sectional plan was that Erf 445 and the buildings thereon were deemed to be divided into sections and common property in accordance with the sectional plan, resulting in the land being moved out of the township register and into a sectional title register. The high court dismissed the action on the basis that it was unable to find that the sale of Erf 445 to Zero Plus was unlawful and therefore null and void. On appeal to the full court of the Gauteng Division of the High Court, Pretoria (the full court), it found that, upon the establishment of the township on which the sectional title scheme was developed, the property was removed from the farm register in the deeds office and entered into the township register, resulting in the farm ceasing to exist. It found that, since Zero Plus was no longer the owner of the property, it was impossible for Zero Plus to comply with the relief sought by Savannah. The full court further found that the grounds of the appeal were misguided and that, based on the common cause facts and the application of legal principles to those facts, the appeal had to be dismissed. The crisp issue before the SCA was whether Savannah had made out a case for special leave to be granted to it, in order to appeal against the order and judgment of the full court. The SCA, in coming to a conclusion, pointed out that, in its notice of motion, Savannah described the application before the SCA as one for leave to appeal (as opposed to special leave to appeal) against the order and judgment of the full court, further stating that there was no reference to ‘special leave’ to appeal under either the heading of ‘prospect of success’ or ‘interests of justice’ in Savannah’s founding affidavit. In this regard, the SCA held that Savannah had thus failed, in its founding affidavit, to show any additional factor or criterion, relevant for the consideration of the application for special leave to appeal. Considering the concession by Savannah’s counsel regarding the founding affidavit not demonstrating the considerations sought for special leave to appeal, Savannah indicated that it would have to apply, before the SCA, for the postponement of the application for special leave to appeal and to appeal to remedy its notice of motion and supplement its affidavit to seek special leave to appeal. The SCA, in coming to a conclusion regarding the intended application for postponement, held that on the pleadings, Savannah had not made out any case against the University for the relief sought in the prayers in the particulars of claim and even if the relief sought in those prayers were granted, it would not affect the University since no relief was sought against it in those prayers. Savannah accordingly had no prospects of success on appeal against the University, let alone showing any special circumstances required for it to succeed. The SCA further held that, since the sale of Erf 445 from Savannah to Zero Plus, the registrar of deeds had registered the sectional plan and had opened a sectional title register in respect of Erf 445, which entitled Zero Plus to sell units. Currently, Savannah had not sought to assail any of those approvals, therefore, as things stood on the pleadings, Savannah could hardly obtain the relief that it sought. In the result, the SCA held that, on the current pleadings, it was evident that Savannah had no prospects of success on appeal and since there were no prospects of success on appeal, a postponement of the application for leave to appeal (to convert it into an application for special leave to appeal) would serve no purpose. The matter was accordingly struck from the roll with costs. --------oOo--------

4267

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 358/2023 In the matter between: ELMARIE VAN JAARSVELD APPELLANT and WYNAND JACOBUS VAN JAARSVELD FIRST RESPONDENT CAPITEC BANK HOLDINGS LTD SECOND RESPONDENT Neutral citation: Van Jaarsveld v Van Jaarsveld and Another (258/2023) [2024] ZASCA 92 (11 June 2024) Coram: MOCUMIE, MOKGOHLOA, WEINER and KGOELE JJA, and TOLMAY AJA Heard: 6 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives via e-mail, publication on the Supreme Court of Appeal 2 website and released to SAFLII. The date and time for delivery are deemed to be at 11h00 on 11 June 2024. Summary: Divorce – arbitration agreement in the Deed of Settlement made an order of court – interpretation of s 2(a) of the Arbitration Act 42 of 1965 – whether arrear maintenance is arbitrable – s 2(a) wide enough to preclude such a matter. 3 ORDER On appeal from: Free State Division of the High Court, Bloemfontein (Mpama AJ, Loubser J sitting as a court of appeal): 1 The appeal is upheld with costs, including costs of two counsel where so employed. 2 The order of the high court is set aside and replaced with the following order: ‘The appeal is dismissed with costs’ JUDGMENT Kgoele JA (Mocumie, Mokgohloa and Weiner JJA and Tolmay AJA concurring) [1] The appeal concerns the interpretation of s 2(a) of the Arbitration Act 42 of 1965 (the Arbitration Act). Central to the appeal is a dispute as to whether arrear maintenance falls within the purview of s 2(a). The magistrate court for the district of the Free State held at Bloemfontein (the maintenance court), ruled that the issue falls within the purview of s 2(a). This ruling was set aside on appeal to the Free State Division of the High Court, Bloemfontein (the high court). It held that the maintenance court had no jurisdiction to decide the issue, only an arbitrator could 4 do so. This appeal is against the decision of the high court with special leave of this Court. [2] The dispute arose in the following circumstances. The appellant, Mrs Elmarie Van Jaarsveld and the first respondent, Mr Wynand Jacobus Van Jaarsveld, were married. Their marriage was dissolved on 4 June 2015. The decree of divorce granted incorporated a deed of settlement concluded by the parties. Two clauses thereof are relevant for the purposes of this appeal. The first one is clause 3.1 which provides the appellant with the entitlement to the payment of spousal maintenance. In terms of this clause, the spousal maintenance would cease if she remarries, cohabits with another man, or upon her death (the dum casta clause). The second is clause 11 which provides that any dispute between the parties regarding their rights, duties, or liabilities arising from the deed of settlement, was to be submitted to arbitration (the arbitration clause). [3] Around 2018, several disputes arose between the parties arising from the deed of settlement. An arbitrator was eventually appointed to resolve those disputes. Meetings between the parties culminated in an arbitration agreement concluded in August 2020. At all times the parties were assisted by their respective legal representatives. Clause 3 of the arbitration agreement accorded the arbitrator the power to determine his or her own jurisdiction. [4] The appellant, however, never filed a statement of claim in respect of those disputes as agreed in the arbitration agreement. Instead, on 20 August 2020, the appellant’s attorney wrote a letter to the respondent’s attorney, raising concerns about the costs of arbitration. He also urged the respondent’s attorney that they, together with the parties, should try and resolve the disputes outlined in the letter 5 that was previously sent to them dated 9 September 2019. As a result, the arbitration proceedings did not materialise. I pause here to indicate that, the appellant’s counsel submitted before this Court that at that stage, arrear maintenance was not included in these disputes. I will return to this contention later in the judgment. [5] On 1 March 2021, the appellant approached the maintenance court with an application to enforce the maintenance order and to recover the arrear maintenance in terms of s 26 of the Maintenance Act, 99 of 1998 (the Maintenance Act). The maintenance court granted the requested order on an ex-parte basis. In addition, the maintenance court interdicted Capitec Bank Holdings Ltd, the second respondent, from effecting payment of any monies from the account of the first respondent. [6] Aggrieved by this, the first respondent anticipated the return date. In his opposition, the first respondent also objected to the jurisdiction of the maintenance court. He contended that the parties contractually excluded its jurisdiction from hearing the maintenance dispute in terms of the arbitration clause. [7] The maintenance court dismissed the objection. It ordered the maintenance enquiry to continue in that court. The respondent appealed the maintenance court’s order, and as alluded to already, the high court upheld his appeal. The high court concluded that the question of whether the arrear maintenance is a matter falling within the purview of s 2 of the Arbitration Act or not cannot be decided by the maintenance court, but by the arbitrator, since the parties had agreed to refer their dispute to arbitration. The high court also concluded that the arbitrator must decide his own jurisdiction. 6 [8] The central question in this appeal is whether a dispute regarding arrear maintenance is arbitrable. Key to this dispute is s 2(a) of the Arbitration Act which prohibits the submission to arbitration of certain matters or subjects. It provides: ‘A reference to arbitration shall not be permissible in respect of – (a) any matrimonial cause or any matter incidental to any such cause. (b) . . .’ [9] It is trite that an agreement to have a dispute resolved by way of arbitration is not in itself inherently contra bonos mores.1 In Telecordia Technologies Inc v Telkom SA Ltd2 this Court stressed the need, when courts have to consider the confirmation or setting aside of arbitral awards, for the adherence to the principle of party autonomy, which requires a high degree of deference to arbitral decision and minimises the scope of intervention by the courts. [10] In the same breath, it is well established that arbitration does not oust the jurisdiction of courts.3 Section 3 of the Maintenance Act also stipulates that each magistrates’ court functions as a maintenance court at the district level, possessing jurisdiction over all matters arising from the Maintenance Act. A maintenance order is defined in the Maintenance Act as ‘any order for the payment, including the periodical payment, of sums of money . . . issued by any court in the Republic. . .’ A ‘court’ in the Republic includes a high court. [11] The appellant’s main submission is that the impugned arbitration clause is in conflict with s 2(a) of the Arbitration Act because the arrear maintenance dispute 1 Lufuno Mphaphili and Associates (Pty) Ltd v Andrews and Another 2009 (4) SA 529 (CC) para 219-223. 2 Telcordia Technologies Inc v Telkom SA Ltd [2006] ZASCA 112; 2007 (3) SA 266 (SCA); (2007 (5) BCLR 503; [2007] 2 All SA 243 para 48. 3 Crompton Street Motors CC t/a Wallers Garage Service Station v Bright Ideas Projects 66 (Pty) Ltd t/a All Fuels [2021] ZACC 24; 2021 (11) BCLR 1203 (CC); 2022 (1) SA 317 (CC) para 26. 7 constitutes a matrimonial cause, or a matter incidental thereto. The appellant therefore supports the order of the maintenance court that the dispute was not capable of being adjudicated upon by way of arbitration. [12] Relying on Eke v Parsons (Eke),4 and Brookstein v Brookstein (Brookstein), 5 the first respondent supports the order of the appeal court. He contends that the deed of settlement disposed of all the disputes between the parties; the lis between the parties became res judicata; the matrimonial cause between the parties ceased to exist when a decree of divorce was granted; nothing remained that was incidental to such cause. As far as the characterisation of the dispute between the parties is concerned, the first respondent submitted that the appellant’s cause of action is based on the dum casta clause; and the parties expressly agreed that all issues arising from the settlement agreement were to be dealt with by way of arbitration; their arbitration agreement should be respected by the court. [13] As a basis for the argument that the dispute does not fall within the purview of s 2(a) of the Arbitration Act, the first respondent relied on Brookstein wherein this Court dealt with the question of whether a delictual claim based on negligent misrepresentation of the appellant’s accrual was a cause that formed part of the matrimonial cause and thereby not susceptible to arbitration in terms of the Arbitration Act. In this regard, the Court held as follows: ‘After the order was granted, there was no longer any matrimonial cause to speak of. Neither was there anything incidental to such cause, as all of the matrimonial issues were disposed of when the court granted the order incorporating the settlement agreement. Consequently, there cannot be any issue still outstanding relating to the marriage. The inevitable result is that the marriage and all its 4 Eke v Parsons [2015] ZACC 30; 2015 (11) BCLR 1319 (CC); 2016 (3) SA 37 (CC). 5 Brookstein v Brookstein [2016] ZASCA 40; 2016 (5) SA 210 (SCA). 8 natural consequences came to an end, and anything relating thereto, such as proprietary consequences, became res judicata.’6 [14] In characterising the dispute between the parties, the first respondent argued that the dispute between the parties concerns in particular, a factual determination of whether the dum casta clause was triggered or not. If the answer is yes, the first respondent submitted, a question of whether the appellant is entitled to the payment of maintenance in terms of the deed of settlement arises. As such, s 2(a) of the Arbitration Act is not applicable and the dispute between the parties is arbitrable. To amplify this submission, the first respondent contends that the dispute dates back to 2018. It relates to the fact that the appellant was living with another man as husband and wife and therefore his obligation to pay maintenance was extinguished. According to the first respondent, the dispute was properly formulated and the appellant elected not to place any evidence of exceptional circumstances before the maintenance court that would entitle it to exercise its discretion not to stay the proceedings and refer the dispute to arbitration. [15] As far as the arbitration clause is concerned, the first respondent argued that the facts of this case are telling in that the appellant is the one who requested that an arbitrator be appointed; an arbitration agreement was concluded between the parties; the appellant is the one who reneged from this agreement by failing to file a statement of claim in circumstances where the parties had agreed that the arbitrator should decide upon his own jurisdiction. The first respondent contends that the order of the high court cannot be faulted. 6 Ibid fn 5 above para 12. 9 [16] The characterisation of the principal issue before this Court is a fundamental point of departure of the dispute between the parties. This is evident because whilst the appellant refers to it as arrear maintenance, the first respondent, on the other hand, relates the dispute to the dum casta clause, a duty to maintain. According to him, this would include a question of whether the maintenance order has lapsed or been extinguished. [17] The characterisation proffered by the first respondent is ill-conceived for two reasons. First, the maintenance dispute stems from a maintenance order that was made by the high court when the marriage between the parties was dissolved. It relates to enforcing an order of the court and not the underlying settlement agreement. The appellant sought an order for the attachment of a debt. The majority of the claims consist of the short payments that were made by the first respondent. For example, in July 2017, it reflected a short payment of R1 627.50. This is so because an amount of R32 550 instead of R34 177.50 was paid. The list goes on up until the year 2020. Some short payment relates to relatively small amounts of ± R400. Only three of the 42 months’ transactions relied on by the appellants relate to a total non-payment. [18] The upshot of all of the above is that the first respondent did comply with the maintenance court order but not in full. The statement proffered by the first respondent that he denies that he is obliged to pay any maintenance to the applicant, cannot be true as well. He did make payments but not in accordance with the amount the maintenance order stipulated. [19] Second, even though the first respondent’s contention that the maintenance dispute dates back to 2018 may be correct, however, it is clear that it did not form 10 part of the disputes for which an arbitrator was sought and appointed. The letter requesting an appointment of an arbitrator dated 9 September 2019 which was attached to the papers that served before the maintenance court, enumerated the disputes between the parties. And maintenance was not among them. Therefore, the arbitration agreement the first respondent bemoans does not include arrear maintenance. The arbitration agreement is therefore irrelevant for the purposes of the issue before this Court. The submission that the appellant reneged from the arbitration agreement cannot be correct. [20] It appears that the high court was not spared by how the first respondent misconstrued and conflated the issue that was before the maintenance court, hence its finding that the arbitrator must decide his jurisdictional issues. For that reason, the high court misdirected itself in this regard. This brings me to the main issue before this Court, whether arrear maintenance is a matrimonial cause or an incidental cause thereto. [21] The high court did not make a finding that arrear maintenance is a matter falling within the purview of s 2(a) or not. It deferred the decision to the arbitrator. Whether it did so because of the arbitration clause or because parties signed an arbitration agreement does not come out clearly from the judgment. Either way, the decision of the high court cannot be supported. [22] A proper analysis of the arbitration clause itself reveals that it was couched in a general manner. It did not specify the enforcement of maintenance as a dispute that should be referred to arbitration. What compounds the issue further is that nowhere in the arbitration clause or the deed of settlement did the parties refer to the fact that ‘the arbitrator should decide its own issues of jurisdiction’. As indicated above, this 11 phrase is only found in the arbitration agreement. I have already pronounced that the arbitration agreement is irrelevant to the issue in this appeal. It is therefore apparent that this phrase cannot be imported to assist in the interpretation of the arbitration clause. In my view, it cannot be said that the arbitration clause gave express intention of the parties that enforceability of the maintenance order or arrear maintenance should be submitted to arbitration. Under the circumstances, and as already indicated above, the interpretation of s 2(a) of the Arbitration Act becomes necessary. [23] Recently the Constitutional Court in Amabhungane Centre for Investigative Journalism NPC v President of the Republic of South Africa7 restated the trite approach to the interpretation of statutory provisions and held: ‘. . .one must start with the word, affording them their ordinary meaning, bearing in mind that statutory provisions should always be interpreted purposively, be properly contextualised and must be construed consistently with the Constitution. This is a unitary exercise. The context maybe determined by considering other subsections, sections or the chapter in which the keyword, provision or expression to be interpreted is located. Context may also be determined from the statutory instrument as a whole. A sensible interpretation should be preferred to one that is absurd or leads to an unbusinesslike outcome.’ [24] Following the above unitary approach, the point of departure is the language used in the section, in ‘light of the ordinary rules of grammar and syntax.’8 To this end, the phrase ‘incidental to’ in its ordinary grammatical meaning, and when used as an adjective, denotes ‘something happening in connection with or as a natural result of something else.’9 7 AmaBhungane Centre for Investigative Journalism NPC v President of the Republic of South Africa [2022] ZACC 31; 2023 (2) SA 1 (CC); 2023 (5) BCLR 499 (CC) para 36. 8 Natal Joint Municipality Pension Fund v Endumeni Municipality [2012] 2 All SA 262, 2012 (4) SA 593 (SCA) and Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk [2014] 1 All SA 517, 2014 (2) SA 494 [2013 ZASCA 176. 9 Oxford Advanced Learner’s Dictionary(7th Edition) Oxford University Press, 2005 12 [25] The language of s 3 of the Maintenance Act is also important as it gives the magistrates’ court jurisdiction over all matters arising from the Maintenance Act. The purpose of the Maintenance Act should also be taken into consideration. Amongst others, its purpose is to provide for the easy, cost-effective, and speedy resolution of maintenance complaints including recovery of arrear maintenance, or enforcement of its orders. In addition, the Maintenance Act criminalises failure to pay any particular amount of maintenance in accordance with a maintenance order in terms of s 31(1). The Maintenance Act therefore, jealousy created specialised courts, to wit maintenance courts, to deal with complaints where any person legally liable to maintain any other fails to do so, and the enforcement of the said orders. This Court cannot therefore interpret s 2(a) of the Arbitration Act in a manner that will be at odds with the purpose of the Maintenance Act. [26] In terms of s 8(1) of the Divorce Act 70 of 1979 (the Divorce Act), it is possible for a maintenance order to be varied, rescinded, or suspended. This section is equivalent to s 19 of the Maintenance Act. The arbitrator cannot be clothed with these powers imposed by the two Acts. The powers are bestowed upon the courts only. Assuming for a moment that the first respondent’s contention to the effect that he was not obliged to pay maintenance as ordered by the high court is correct, it means, procedurally, he should have approached the maintenance court for an application to discharge, vary, or suspend it. The arbitrator could not discharge or vary such order. [27] It is significant to mention that s 8(1) of the Divorce Act specifically provides for the maintenance order or an order regarding custody, access, or guardianship of a child as orders that can be varied, rescinded, or discharged. The section did not 13 include the proprietary order granted by the courts. Apart from the fact that the Brookstein matter heavily relied upon by the first respondent dealt with a delictual claim, this exception created by s 8(1) of the Divorce Act serves as the main reason why reliance on this authority cannot advance his case. Maintenance, like issues relating to custody, access including guardianship of children, is and remains a live issue or dispute depending on the differing circumstances of the parties. That is why access to the maintenance court is made available pre and post-divorce. As already indicated above and with the risk of repetition, this is so because any party can approach the court anytime after such an order has been made to request the discharge, variation or setting aside of the maintenance court order. The argument regarding res judicata is therefore misplaced. [28] A case that is close to the facts in this appeal is Ressell v Ressell. 10 In this matter, the court refused to enforce a settlement agreement that was made an order of court. The settlement agreement also stipulated that any disputes (post-divorce) between the parties had to be referred to arbitration. A dispute existed concerning access to a child after the divorce. The court held that the provision in s 2(a) of the Arbitration Act excluding ‘any matter incidental to such matrimonial cause’ is adequately wide enough to keep such matters out of the field of arbitration. The court further explained that this applies whether the dispute arose before or after the divorce. [29] From the above analysis, it cannot be contended that the ensuing arrear maintenance including the enforcement of the order are not connected with the matrimonial cause or are matters incidental thereto. Section 2(a) of the Arbitration 10 Ressell v Ressell 1976 (1) SA 289 (W) at 291. 14 Act is wide enough to keep such matters out of the field of arbitration. The appeal court misdirected itself by deferring the issue to be dealt with by the arbitrator. The issue that was before the maintenance court was not a dispute on the underlying settlement agreement, but an enforcement of one of the provisions of the order of the court. [30] Lastly, the common law prohibits the ousting of the jurisdiction of or access to, the courts.11 The appellant, therefore, in the worst-case scenario, could not have been deprived of the choice of forums in which to pursue civil enforcement of the maintenance order and cannot lawfully have waived her right to approach the maintenance court in terms of the Maintenance Act. The legislation applies ex-lege and obtains force by reason of the will and decision of the Legislature, not because individuals elect to be subject thereto.12 Consequently, the arbitration agreement cannot in the circumstances of this matter supersede the jurisdiction of the maintenance court. [31] It would be remiss to conclude without dealing with the submission made by the first respondent that the issue of the appellant not being able to afford arbitration was not properly brought before the maintenance court and the maintenance court erred by taking it into account. The converse is true. A letter dated 20 August 2020 was annexed to the papers that were submitted by the first respondent to the maintenance court. The date of this letter predates the date when the appellant approached the maintenance court by a period of about six months. This letter shows that at the time when the parties were engaged in the aborted arbitration, a concern 11 Schierhout v Minister of Justice 1925 AD 417 at 424 (and applied more recently by this Court in Bafana Finance Mabopane v Makwakwa and Another 2006 (4) SA 581 (SCA) para 21. 12 RMB Private Bank (A Division of Firstrand Bank Ltd) v Kaydeez Therapies CC (in liquidation) 2013 (6) SA 308 (GSJ) at 311G. 15 had already been raised by the appellant regarding the costs of arbitration. The maintenance court was within its powers to have regard thereto, as by its nature, the procedure takes the form of an inquiry. [32] In the result,the following order is granted 1 The appeal is upheld with costs, including costs of two counsel where so employed. 2 The order of the high court is set aside and replaced with the following order: ‘The appeal is dismissed with costs’ ________________________ A M KGOELE JUDGE OF APPEAL 16 Appearances For the appellant: N Snellenburg SC with H J Van der Merwe Instructed by: Symington De Kok Attorneys, Bloemfontein. For the respondent: S Grobler SC with R Van der Merwe Instructed by: Hendre Conradie Inc Rossouws Attorneys Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 11 June 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 Van Jaarsveld v Van Jaarsveld and Another (258/2023) [2024] ZASCA 92 (11 June 2024) Today the Supreme Court of Appeal (SCA) handed down a judgment wherein it upheld an appeal with costs, including costs of two counsel where so employed, against the decision of the Free State Division of the High Court, Bloemfontein (the high court), sitting as a court of appeal. The case involves a divorce order stemming from the marriage between the appellant and the first respondent which was dissolved by the court in 2015. The decree of divorce granted by the court incorporated a deed of settlement which the parties concluded. The deed of settlement provided, inter alia, an entitlement to the payment of spousal maintenance and an arbitration clause, which provided for the resolution of disputes between the parties. In 2018, a dispute arose when the appellant sought to enforce a maintenance order and recover arrear maintenance from the first respondent. It was sparked by the application which was made ex parte by the appellant in terms of s 26 of the Maintenance Act 99 of 1998 (the Maintenance Act). On 1 March 2021, the maintenance court granted the requested order. In addition, the maintenance court interdicted Capitec Bank, the second respondent, from effecting payment of any monies from the account of the first respondent. Aggrieved by this order, the first respondent anticipated the order and objected to the jurisdiction of the maintenance court. He contended that the parties contractually excluded its jurisdiction from hearing the maintenance dispute in terms of the arbitration clause. The maintenance court dismissed the objection. The first respondent appealed the decision to the high court. The high court set aside the decision of the maintenance court. It held that the dispute should be decided by the arbitrator. The appellant successfully obtained special leave from this Court. The issue before the SCA concerned the interpretation of s 2(a) of the Arbitration Act 42 of 1965 (the Arbitration Act). The SCA was called upon to decide whether arrear maintenance is arbitrable. The appellant argued that a maintenance dispute is not arbitrable because it is related to a matrimonial cause or a matter incidental to such a cause, as prohibited by s 2(a) of the Arbitration Act. The first respondent on the other hand maintained that the maintenance court had no jurisdiction to decide the matter, and the order of the high court should be upheld. The SCA held that s 2(a) of the Arbitration Act is wide enough to keep arrear maintenance out of arbitration. In coming to this conclusion, the SCA considered the grammatical meaning of the word ‘incidental’; the purpose of the maintenance Act including s 8(1) of the Divorce Act which provides for the variation of maintenance orders. It concluded that the issue of res judicata raised by the first respondent does not feature in the circumstances of this matter because of the provisions of s 8(1) of the Divorce Act. Lastly, that the maintenance court had jurisdiction to decide the matter. As a result, the SCA upheld the appeal. The order of the high court was set aside and substituted with an order that: ‘the appeal is dismissed with costs.’ 2 ~~~~ends~~~~

4219

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 248/2022 In the matter between: DIRECTOR OF PUBLIC PROSECUTIONS EASTERN CAPE, MAKHANDA APPELLANT and LOYISO COKO RESPONDENT and WOMEN'S LEGAL CENTRE TRUST FIRST AMICUS CURIAE INITIATIVE FOR STRATEGIC LITIGATION IN AFRICA SECOND AMICUS CURIAE COMMISSION FOR GENDER EQUALITY THIRD AMICUS CURIAE Neutral citation: Director of Public Prosecutions, Eastern Cape, Makhanda v Coko (Women's Legal Centre Trust, Initiative for Strategic Litigation in Africa and Commission for Gender Equality 2 intervening as Amici Curiae) (case no 248/2022) [2024] ZASCA 59 (24 April 2024) Coram: PETSE DP and ZONDI, MOCUMIE, MBATHA and MABINDLA-BOQWANA JJA Heard: 14 November 2023 Delivered: 24 April 2024 Summary: Criminal law and procedure – rape – consent to an act of sexual penetration – nature of consent – appeal by Director of Public Prosecutions against decision of high court upholding appeal against conviction for rape – whether invocation of s 311 of the Criminal Procedure Act 51 of 1977 by the State is, on the facts, competent – whether State had proved its case against respondent beyond reasonable doubt that complainant had not consented to act of sexual penetration – whether high court's interference with factual findings of regional court warranted. 3 ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Eastern Cape Division of the High Court, Makhanda (Ngcukaitobi AJ, Gqamana J concurring, sitting as court of appeal): 1 The appeal by the State against the acquittal of the respondent is upheld. 2 The acquittal of the respondent by the high court is set aside. 3 The conviction of the respondent by the regional court is reinstated. 4 The order of the high court is set aside and in its place the following order is made: 'The appeal against conviction is dismissed.' 5 The question of sentence is remitted to the high court for it to determine whether the sentence imposed by the regional court was appropriate. 6 The Director of Public Prosecutions, Eastern Cape, Makhanda is requested to prioritise the placement of the appeal against sentence on the roll as soon as all relevant regulatory requirements have been met. 7 Should the respondent fail to prosecute the appeal against sentence within 20 days of the date of this order he shall forthwith report to the Makhanda Correctional Centre, Makhanda in order to serve his sentence. JUDGMENT Petse DP and Mabindla-Boqwana JA (Zondi, Mocumie and Mbatha JJA concurring): Introduction [1] This case adds to the distressing long list of innumerable cases of rape with which our courts have been inundated for a couple of decades now. 4 [2] Rape is an utterly despicable, selfish and horrendous crime. It gains nothing for the perpetrator, save for fleeting gratification, and yet inflicts lasting emotional trauma and, often, physical scars on the victim. More than two decades ago, Mohamed CJ, writing for a unanimous court, aptly remarked that: 'Rape is a very serious offence, constituting as it does a humiliating, degrading and brutal invasion of the privacy, the dignity and the person of the victim. The rights to dignity, to privacy, and the integrity of every person are basic to the ethos of the Constitution and to any defensible civilization. Women in this country are entitled to the protection of these rights. They have a legitimate claim to walk peacefully on the streets, to enjoy their shopping and their entertainment, to go and come from work, and to enjoy the peace and tranquility of their homes without the fear, the apprehension and the insecurity which constantly diminishes the quality and enjoyment of their lives. '1 [3] In similar vein Nugent JA, writing for a unanimous court, in equal measure described rape in these terms: 'Rape is a repulsive crime, it was rightly described by counsel in this case as an invasion of the most private and intimate zone of a woman and strikes at the core of her personhood and dignity. '2 [4] In Director of Public Prosecutions, North Gauteng v Thabethe 3 this Court rightly noted that 'rape has become a scourge or cancer that threatens to destroy both the moral and social fabric of our society. '4 [5] In Tshabalala v S (Commissioner for Gender Equality and Centre for Applied Legal Studies as Amici Curiae); Ntuli v S 5 the Constitutional Court once again underscored the gravity of the crime of rape and its attendant repulsive 1 S v Chapman [1997] ZASCA 45; 1997 (3) SA 341 (SCA) (Chapman) paras 3-4. 2 S v Vilakazi [2008] ZASCA 87; 2009 (1) SACR 552 (SCA) para 1. 3 Director of Public Prosecutions, North Gauteng v Thabethe 2011 (2) SACR 567 (SCA). 4 Ibid para 16. 5 Tshabalala v S (Commissioner for Gender Equality and Centre for Applied Legal Studies as Amici Curiae); Ntuli v S [2019] ZACC 48; 2020 (2) SACR 38 (CC). 5 consequences. In the same case, Khampepe J, writing separately, said that 'rape is not rare, unusual and deviant. It is structural and systemic. '6 [6] In Masiya v Director of Public Prosecutions Pretoria and Another (Centre for Applied Legal Studies and another as Amici Curiae)7 the Constitutional Court said the following of rape: 'Today rape is recognised as being less about sex and more about the expression of power through degradation and concurrent violation of the victim's dignity, bodily integrity and privacy. '8 Regrettably, 26 years since the decision of this Court in Chapman, the scourge of rape has shown no signs of abating. On the contrary, rape is not only rife but has also reached pandemic proportions. And, sadly, it is women and children, being the most vulnerable in society, who bear the brunt of this scourge. In this regard, the learned author Professor C R Snyman rightly opines in his book that non-consensual penile penetration of a woman's vagina violates the most personal of all the parts of a woman's body. And that it 'infringes' her whole being and identity as a woman.9 It is therefore little wonder that incidents of rape always evoke outrage and revulsion from the citizenry. [7] For most women and children, in particular, the rights guaranteed everyone in the Bill of Rights, such as the right to be free from all forms of violence from either public or private sources; bodily and psychological integrity, including the right to make decisions concerning reproduction and security in and control of their bodies,10 ring hollow. Thus, it brooks no argument to the contrary that rape gratuitously violates the fundamental value of human dignity and related rights. 6 Ibid para 76. 7 Masiya v Director of Public Prosecution Pretoria and Another (Centre for Applied Legal Studies and another as Amici Curiae) [2007] ZACC 9; 2007 (5) SA 30 (CC); 2007 (8) BCLR 827 (CC); 2007 (2) SACR 435 (CC) (Masiya). 8 Ibid para 51. 9 C R Snyman Criminal Law 5ed at 357. 10 See s 12 of the Constitution of the Republic of South Africa, 1996. 6 [8] Against the foregoing backdrop, it is hardly surprising therefore that having rightly noted the prevalence of sexual offences engulfing the country, the legislature saw it fit to take decisive action and introduced legislation such as s 3 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act11 (the Sexual Offences Act) to curb the scourge of rape. The Sexual Offences Act abolished the common law offence of rape and instead opted for an expansive definition of the statutory crime of rape going far beyond what had hitherto constituted the common law offence of rape.12 [9] This matter comes before us on appeal against a decision of the Eastern Cape Division of the High Court, Makhanda (the high court) in terms of which the appeal by the respondent, Mr Loyiso Coko, against his conviction for contravening s 3 of the Sexual Offences Act read with s 51(2)(b), (3) and (6) of the Criminal Law Amendment Act,13 (the 1997 Act) read further with Part III of Schedule 2 thereto and the resultant sentence of seven years imprisonment, was upheld. At the time material to the charge, s 51(3)(a) of the 1997 Act prescribed that in the absence of 'substantial and compelling circumstances' justifying a lesser sentence than that ordained in Part III of Schedule 2, a first offender convicted of such offence is liable to imprisonment for a minimum period of 10 years' imprisonment. [10] In S v Malgas14 this Court rightly noted that the provision of s 51(1) of the 1997 Act read with Part I of Schedule 2 thereto and, by parity of reasoning, s 51(2) read with Part II and Part III of Schedule 2 'must be read in light of the 11 Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007. 12 In his book South African Criminal Law and Procedure, Volume II (Common Law Crimes) 3ed, the learned author Professor J R L Milton defines rape thus: 'Rape consists in unlawful intentional sexual intercourse with a woman without her consent.' On the other hand in his book Criminal Law 4ed Professor C R Snyman defines the common law crime of rape as follows: 'Rape consists in the male having unlawful and intentional sexual intercourse with a female without her consent.' See also: S v Gaseb 2001 (1) SACR 438 (NmS) at 451g-h. 13 Criminal Law Amendment Act 105 of 1997. 14 S v Malgas [2001] ZASCA 30; [2001] 3 All SA 220 (A); 2001 (2) SA 1222 (A) (Malgas). 7 values enshrined in the Constitution and, unless it does not prove possible to do so, interpreted in a manner that respects those rights.' (Emphasis added.) [11] The appeal to the high court had arisen out of the incident that occurred on the night of 1 July 2018 in the respondent's room at Fingo Village, Makhanda. The charge against the respondent was that on the night in question he unlawfully and intentionally committed an act of sexual penetration on the complainant, TS, then 21 years of age, by inserting his penis into her vagina without TS's consent. The respondent pleaded not guilty to the charge. In his terse explanation in substantiation of his plea of not guilty, the respondent, who was legally represented, asserted that the sexual intercourse was consensual. [12] At the conclusion of the trial, the respondent was convicted as charged and thereafter sentenced to seven years' imprisonment. The cardinal question in this appeal is therefore whether the State succeeded in proving its case against the respondent and, in particular, whether the admitted sexual intercourse had occurred without TS's consent. We pause here to observe that this appeal raises important questions of law to which this Court must provide answers. [13] It bears mentioning that this case falls within the category of sexual violence committed in the context of an intimate relationship. Consequently, this can be particularly difficult to navigate given the intimate nature of such relationship, familiarity coupled with the fact that the parties would in most cases have previously been involved in some form of sexual contact prior to an allegation of rape by one of the parties against the other. This point was studiously emphasised by counsel for the second amicus curiae, Initiative for Strategic Litigation in Africa. However, it must be stressed that this in no way means that consent by one party to a specific form of sexual act should be taken to be a licence to every other sexual act. It is, inter alia, those types of situations that the Sexual Offences Act was designed to address. 8 Factual background [14] The events leading up to the prosecution of the respondent are largely common cause. Therefore, we shall summarise them as briefly as the exigencies of the case require. [15] The respondent and TS commenced a love relationship in mid-June 2018. At the time, the respondent was employed as a driver with Gardmed Ambulance Service. TS was still a student at a local university and in her early twenties. As it emerged from the record, the parties had on a couple of occasions engaged in discussions during which TS informed the respondent that she was a virgin. TS had, more than once, reiterated that she was not ready to engage in penetrative penile/vaginal sexual intercourse as she wished to preserve her virginity. [16] On 1 July 2018, and by sheer coincidence, their paths crossed at one of the local stores. During this brief encounter, they agreed that TS would visit the respondent at his apartment in the evening and spend the night with him. Even during this encounter, TS made plain that her acceptance of the invitation to visit the respondent at his apartment was no signification that they would engage in sexual intercourse. For his part, the respondent unequivocally assured TS that he had no qualms with her standpoint. [17] Indeed, during the early evening, TS made good on her undertaking and repaired to the respondent's apartment. Once there, the two of them sat on the respondent's bed and watched a movie on television. TS was all along wearing pyjamas, without underwear (as it was customary for her whenever she went to bed). They kissed each other for some considerable time. The respondent began to take off TS's pyjama pants. The respondent's attempt at this was thwarted by TS who, instead, closed her legs. 9 [18] In order to put her at ease, the respondent assured TS that he had no intention to have sexual intercourse with her. Having been given such assurance, TS then allowed the respondent to take off her pyjama pants. They continued kissing. The respondent then began to perform oral sex on TS. Although, TS testified that she was taken aback and felt uncomfortable when the respondent performed oral sex on her, she did not object to this. For his part, the respondent testified that whilst he was performing oral sex on TS, he also took off his pants. What happened next, according to TS' testimony, was that the respondent stopped performing oral sex and, instead, climbed on top of her as she laid on her back on the bed and started kissing her. She then dropped her guard and relaxed. The next thing, she felt a sharp pain in her vagina and realised that the respondent was penetrating her, vaginally, with his penis. [19] When the respondent inserted his penis into her vagina, TS froze and started crying. She immediately attempted to push him off her whilst at the same time saying that 'he must stop', he 'was hurting [her].' It is common cause that the respondent did not heed TS' plea and groans. Rather, what he did, on his own version, was to pause momentarily, and thereafter, according to TS' testimony, he 'just carried on shoving it in and out and saying sorry in my ear.' We pause here to observe that there was common understanding amongst those involved in the trial that the phrase 'shoving it in and out' was meant to convey to the trial court that instead of stopping the sexual act, the respondent in fact continued to thrust his penis in and out of TS' vagina. [20] As already indicated, the respondent also testified at the trial. With respect to the crucial aspects of TS' evidence, he testified that when he penetrated TS, the latter 'did not say anything at the time.' It is fair to infer that in saying this, the respondent presumably sought to convey to the trial court that TS did not verbalise her objection to his penetrative penile act. This is in fact apparent from what the respondent himself later confirmed when he testified that 'all she said 10 was that it was hurting.' Indeed, this is borne out and made clear by what the respondent later stated that TS did not resist or try to push him off her after he had mounted her following oral sex with her. [21] The respondent sought to reinforce this notion when he testified to the effect that TS was relaxed after the oral sex and that this was the stage at which he took off his pants and mounted on top of her. Further, the respondent suggested that he understood the prolonged oral sex in which they had engaged as some form of foreplay to the penetrative sexual intercourse. Most tellingly, the respondent nevertheless accepted that penetrative sexual intercourse was not in their plans on TS' visit on the fateful night. But he went on to state that penetrative sexual intercourse flowed from the 'foreplay' in the form of oral sex that they had engaged in preceding the penetrative sexual intercourse, including TS' body language. The cumulative effect of these factors, so the respondent asserted, formed the basis for his assumption that TS was a willing participant even to penetrative sexual intercourse, engendered by the latter's failure to object when he climbed on top of her. [22] After the respondent had finished having sexual intercourse, TS became emotionally withdrawn and from then on there was no meaningful communication between them, let alone an affectionate one, as would have been expected. But what emerges from the record and strikes one is that TS immediately expressed her disdain at what the respondent did to her. TS felt betrayed by the respondent who had, before he took off TS' pyjama pants, reassured her that her wish that she was not ready to engage in penile vaginal penetrative sexual intercourse would be respected. [23] The next morning TS, whose disgust at what had befallen her was palpable throughout the previous night, left and returned to her University residence. What followed next was a series of WhatsApp text messages exchanged between them 11 that spanned a period of over 48 days. We interpose here to emphasise that all of them, without exception, were about nothing else other than what befell TS on the fateful night. We refer to these messages later in this judgment, albeit briefly. The sum total of the messages exchanged reveal that TS' sudden change in her mood and disposition towards the respondent could not have been feigned. Trial court [24] At the end of the presentation of the evidence, the regional magistrate was satisfied that the State had proved the respondent's guilt beyond a reasonable doubt. More particularly, the regional magistrate held that it had been established that the respondent unlawfully and intentionally sexually penetrated TS without the latter's consent. He was not impressed by the respondent as a witness and, as a result, rejected his evidence as false beyond a reasonable doubt. [25] In reaching this conclusion, the regional magistrate, inter alia, found that the respondent's assertion that TS had, during the kissing and oral sex, given him mixed signals leading him to believe that she was consenting to penetrative penile/vaginal sex was a vain attempt aimed at tailoring his evidence to fit his version which could not reasonably possibly be true. And that having regard to the fact that TS had more than once made it abundantly clear to the respondent that she was still a virgin and wished to preserve her virginity, these considerations detracted from the truthfulness of his version. Therefore, concluded the regional magistrate, it was proven beyond reasonable doubt that the respondent in truth failed to restrain himself during the so-called heat of his passion and penetrated TS well aware that she had not consented to his penetrative sexual act. We interpose here to mention that at the trial it was common cause, in addition to her undisputed steadfast stance that she wished to preserve her virginity coupled with the respondent's assurances to her that penetrative sexual intercourse would not take place, that at no stage had TS explicitly consented to penile/vaginal penetrative sex. In the circumstances, the 12 regional magistrate convicted the respondent of rape in contravention of s 3 of the Sexual Offences Act as charged. [26] The trial court's underlying reasoning lay emphasis on the existence of the prior agreement between the respondent and TS before the night of the incident, that they would not have sex. The agreement arose from the fact that the complainant was a virgin and was not ready to engage in penetrative sex. She had made it clear that the position had not changed when she initially resisted the respondent’s attempts to remove her pyjama pants. The respondent reassured her that no sex would take place. As a result, TS allowed the respondent to take off her pyjama pants. Thus, having regard to the express agreement and a seriously held desire and value she held dearly, to remain a virgin, the trial court reasoned that something more than body language was required to communicate that TS had actually changed her mind. [27] We pause here to observe that significantly, the respondent agreed with the prosecutor that 'something more' was required to establish consent. This is borne out by what emerged during his cross-examination by the prosecutor that went as follows: 'PROSECUTOR: But you would agree with me that if she was not a virgin then it is understandable, meaning the fact that she is no longer a virgin would mean that she is sexually active and you would not need an expressive answer from her, but this girl is a virgin. Do you not think that you needed something more from her? ACCUSED: Yes, I think I needed more from her. COURT: Especially also in view of your earlier discussions surrounding her virginity. ACCUSED: that is correct your Worship.' High Court [28] Dissatisfied with his conviction and resultant sentence, the respondent unsuccessfully applied, to the regional court, for leave to appeal his conviction and sentence. In the view of the regional magistrate, the envisaged appeal had no 13 reasonable prospects of success, hence its refusal. Undaunted by this setback, the respondent turned to the high court. The high court took a different view of the matter to that of the regional magistrate and granted leave. [29] In due course, the appeal was heard by Gqamana J sitting together with Ngcukaitobi AJ. In a judgment penned by Ngcukaitobi AJ, in which Gqamana J concurred, the high court came to the conclusion that on the evidence, the respondent's conviction was unsustainable. It went on to find that the regional court had fundamentally misdirected itself in several material respects. In particular, the high court held that the regional court failed to take cognisance of the fact that consent to an act of sexual penetration can be granted either by explicitly communicating the consent to the other person or tacitly by conduct. [30] In this regard the high court, inter alia, reasoned as follows: 'It was the evidence of the Appellant that throughout the encounter, the Complainant was an equally active participant, she was not merely passive – she kissed the Appellant back, she held him, she had no problem with the removal of her clothes, she watched him take off his clothes without raising an objection, she knew he was erect, she did not object to the oral sex. The only area where there was a dispute was after the penetration. It is in this area where the Complainant says she objected and said the penetration was hurting. The Appellant’s evidence was that when the Complainant said the penetration was hurting, he “would stop and then continue”. This aspect was not taken up in cross examination, nor was it weighed in the assessment of the probabilities by the Magistrate. It was not the evidence that the Appellant simply continued with the intercourse in disregard of the wishes of the Complainant, as held by the Magistrate. In these circumstances, I cannot uphold the findings of fact of the Magistrate which are unjustified when one has regard to the record. I cannot hold that the state proved that the version of the Appellant that he genuinely believed there was at least tacit consent was false beyond reasonable doubt.' [31] It further found that TS did not object to any of the respondent's actions after taking off her pyjama pants. On this score the high court said: 14 'After she was being undressed, they continued kissing. Then the Appellant took off his clothes. No force or threats were used to coerce the Complainant (who is the same age as the Appellant). After he had taken his clothes off, he returned to place his head in between her thighs, again with no force. He then performed oral sex on her, which she testified she had no objection. On the complainant’s version, there was no manifestation of any refusal of consent between the kissing, oral sex and penetration. The evidence was that it was only after the penetration that the Complainant experienced pain and told the Appellant to stop as he was hurting her. The Appellant accepted this but said he would stop and then continue.' (Emphasis added.) [32] The high court nevertheless recognised that absence of resistance does not necessarily constitute consent to a sexual act. However, it went on to find that TS was an active participant because she did not object to a number of activities performed by the respondent before he penetrated her. It further found that neither force nor coercion was used. Discussion [33] Before delving into what is at the core of this appeal, it might be helpful to make certain observations in regard to two issues. The first relates to the proper test to be applied to the evaluation of evidence adduced in a criminal trial. The second has more to do with the enduring principles that constrain the powers of an appellate court when it comes to factual findings of the trial court and, in particular, circumscribe the circumstances in which interference with such factual findings may be justified. We proceed to deal with these issues in turn. [34] Insofar as the proper approach to evaluation of evidence in a criminal matter is concerned, bearing in mind that the onus is on the prosecution to prove its case against the accused beyond reasonable doubt, the current state of the law 15 is settled. What Nugent J said in S v Van der Meyden15 on this score is instructive. The learned Judge said: 'The onus of proof in a criminal case is discharged by the State if the evidence establishes the guilt of the accused beyond reasonable doubt. The corollary is that he is entitled to be acquitted if it is reasonably possible that he might be innocent (see, for example, R v Difford 1937 AD 370 especially at 373, 383). These are not separate and independent tests, but the expression of the same test when viewed from opposite perspectives. In order to convict, the evidence must establish the guilt of the accused beyond reasonable doubt, which will be so only if there is at the same time no reasonable possibility that an innocent explanation which has been put forward might be true. The two are inseparable, each being the logical corollary of the other. In whichever form the test is expressed, it must be satisfied upon a consideration of all the evidence. A court does not look at the evidence implicating the accused in isolation in order to determine whether there is proof beyond reasonable doubt, and so too does it not look at the exculpatory evidence in isolation in order to determine whether it is reasonably possible that it might be true. '16 [35] Van der Meyden was cited with approval in S v Chabalala17 in which Heher JA said: 'The correct approach is to weigh up all the elements which point towards the guilt of the accused against all those which are indicative of his innocence, taking proper account of inherent strengths and weaknesses, probabilities and improbabilities on both sides and, having done so, to decide whether the balance weighs so heavily in favour of the State as to exclude any reasonable doubt about the accused's guilt. '18 [36] Whilst it is permissible for a trial court to have regard to the inherent probabilities in the accused's version, such version 'can only be rejected on the basis of inherent improbabilities if it can be said to be so improbable that it cannot be reasonably true. '19 15 S v Van der Meyden 1997 (2) SA 79 (WLD); 2001 (2) SACR 97 (Van der Meyden). 16 Ibid at 80H-81B. 17 S v Chabalala 2003 (1) SACR 134 (SCA). 18 Ibid para 15. 19 See S v Shackell 2001 (2) SACR 185 (SCA) para 30. 16 [37] The concept of 'proof beyond reasonable doubt' has been a subject of judicial discussion in countless decisions of our courts. Therefore, it is not necessary to rehash the principles appertaining thereto in this judgment. It suffices to reiterate that proof beyond reasonable doubt does not equate to proof 'beyond all shadow of doubt' or 'absolute certainty' as to the guilt of the accused.20 [38] As to the second issue, it is now trite, as has repeatedly been emphasised in innumerable decisions of our courts, that in every appeal against conviction where the factual findings of the trial court are impugned, an appellate court should be guided by the well-settled principle that its powers to interfere with such findings are circumscribed. Thus, it is not at large to interfere unless it is satisfied that the trial court committed material misdirections or a demonstrable blunder in evaluating the evidence. Almost eight decades ago in Rex v Dhlumayo and Another,21 this Court quoted a passage from one of its previous judgments delivered on 28 March 1948 in Rex v Apter and Apter in which the following was stated: 'Where the judicial officer in the trial court has taken every point into consideration and has not misdirected himself or been guilty of any error of law, an appeal court, in a case in which the ground of appeal is that the trial court ought to have had a doubt, will not be entitled to interfere with the verdict unless it is satisfied that the trial court ought to have had a doubt; but I am prepared to assume that in this appeal, because of the criticism to which I have referred, we should re-try the case in the sense of inquiring whether on the record of the evidence, taken in conjunction with the impression made on the trial court by the witnesses, we ourselves are satisfied beyond reasonable doubt of the guilt of the appellants. '22 20 See, in this regard, S v Ntsele 1998 (2) SACR 178 (SCA); S v Mashiane en Andere 1998 (2) SACR 664 (NC) and the cases therein cited. 21 Rex v Dhlumayo and Another 1948 (2) SA 677 (A) (Dhlumayo). 22 Ibid at 687. Dhlumayo has been consistently followed ever since. See, for example S v Cornick and Another [2007] ZASCA 14; [2007] 2 All SA 447 (SCA); 2007 (2) SACR 115 (SCA); S v Egglestone [2008] ZASCA 77; [2008] 4 All SA 207 (SCA); 2009 (1) SACR 244 (SCA); S v Monyane and Others [2006] ZASCA 113; [2006] SCA 141 (RSA); 2008 (1) SACR 543 (SCA); S v Mnisi [2009] ZASCA 17; 2009 (2) SACR 227 (SCA); [2009] 3 All SA 159; Mazibuko and Another v National Director Of Public Prosecutions 2009 (2) SACR 368 (SCA); S v Abader 2008 (1) SACR 347 (W); S v Naicker 2008 (2) SACR 54 (N); Lotter v S [2007] ZAWCHC 70; 2008 (2) SACR 595 (C); S v Robiyana and Others [2008] ZAECHC 107; 2009 (1) SACR 104 (Ck); Bakos v S [2009] ZAGPJHC 69; 2010 (1) SACR 523 (GSJ). 17 [39] Therefore, in the ordinary course, an appellate court should proceed on the basis that the factual findings of the trial court are correct. This entails that the appellate court must defer to the trial court as the latter court was steeped in the atmosphere of the trial and had the opportunity of observing the witnesses testify, and drawing inferences from their demeanour. In Powel and Wife v Streatham Nursing Home23 Lord Wright was forthright when he put it thus: 'Not to have seen the witnesses puts appellate judges in a permanent position of disadvantage as against the trial judges, and, unless it can be shown that he has failed to use or has palpably misused his advantage, the higher court ought not to take the responsibility of reversing conclusions so arrived at, merely on the result of their own comparisons and criticisms of the witnesses and of their own view of the probabilities of the case. '24 [40] However, care should be taken not to overstate the indubitable duty of an appellate court to show deference to the factual findings of the trial court and, as a result, render the rights of appellants on appeal illusory. In this regard, the remarks of the Constitutional Court in Bernert v Absa Bank Ltd25 are instructive. The Court said the following: 'What must be stressed here, is the point that has been repeatedly made. The principle that an appellate court will not ordinarily interfere with a factual finding by a trial court is not an inflexible rule. It is recognition of the advantages that the trial court enjoys which the appellate court does not. These advantages flow from observing and hearing witnesses as opposed to reading "the cold printed word". The main advantage being the opportunity to observe the demeanour of the witnesses. But this rule of practice should not be used to "tie the hands of the appellate courts". It should be used to assist, and not to hamper, an appellate court to do justice to the case before it. Thus, where there is a misdirection on the facts by the trial court, the appellate court is entitled to disregard the findings on facts and come to its own conclusion on the facts as they appear on the record. Similarly, where the appellate court is convinced that the conclusion reached by the trial court is clearly wrong, it will reverse it. '26 23 Powel and Wife v Streatham Nursing Home 1935 AC 243. 24 Ibid at 265. 25 Bernert v Absa Bank Ltd [2010] ZACC 28; 2011 (3) SA 92 (CC); 2011 (4) BCLR 329 (CC). 26 Ibid para 106. 18 This Court [41] At the outset it soon became clear during the hearing that this case primarily concerns the interpretation and approach adopted by the high court to two crucial elements of the statutory crime of rape, namely the nature of consent to a sexual penetrative act and the form of intention required for conviction. [42] As previously indicated, the common law crime of rape was abolished by the Sexual Offences Act that took effect on 16 December 2007. And, in its wisdom, the legislature settled for an extensive definition of rape. It will be helpful at this juncture to quote s 3 of the Sexual Offences Act. It provides: 'Any person ("A") who unlawfully and intentionally commits an act of sexual penetration with a complainant ("B"), without the consent of B, is guilty of the offence of rape.' (Emphasis added.) [43] It bears mentioning that for purposes of s 3, 'consent' is defined in s 1(2) of the Sexual Offences Act as 'voluntary or uncoerced agreement'. Section 1(3), in turn, lists instances where a complainant would be taken not to have voluntarily or without coercion agreed to an act of sexual penetration.27 27 See s 1(3) which reads: '(3) Circumstances in subsection (2) in respect of which a person ('B') (the complainant) does not voluntarily or without coercion agree to an act of sexual penetration, as contemplated in sections 3 and 4, or an act of sexual violation as contemplated in sections 5 (1), 6 and 7 or any other act as contemplated in sections 8 (1), 8 (2), 8 (3), 9, 10, 12, 17 (1), 17 (2), 17 (3) (a), 19, 20 (1), 21 (1), 21 (2), 21 (3) and 22 include, but are not limited to, the following: (a) Where B (the complainant) submits or is subjected to such a sexual act as a result of- (i) the use of force or intimidation by A (the accused person) against B, C (a third person) or D (another person) or against the property of B, C or D; or (ii) a threat of harm by A against B, C or D or against the property of B, C or D; (b) where there is an abuse of power or authority by A to the extent that B is inhibited from indicating his or her unwillingness or resistance to the sexual act, or unwillingness to participate in such a sexual act; (c) where the sexual act is committed under false pretences or by fraudulent means, including where B is led to believe by A that- (i) B is committing such a sexual act with a particular person who is in fact a different person; or (ii) such a sexual act is something other than that act; or (d) where B is incapable in law of appreciating the nature of the sexual act, including where B is, at the time of the commission of such sexual act- (i) asleep; (ii) unconscious; (iii) in an altered state of consciousness, including under the influence of any medicine, drug, alcohol or other substance, to the extent that B's consciousness or judgement is adversely affected; (iv) a child below the age of 12 years; or (v) a person who is mentally disabled.' 19 [44] The expression 'sexual penetration' is defined in s 1(1) of the Sexual Offences Act as follows: '"sexual penetration" includes any act which causes penetration to any extent whatsoever by- (a) the genital organs of one person into or beyond the genital organs, anus, or mouth of another person; (b) any other part of the body of one person or, any object, including any part of the body of an animal, into or beyond the genital organs or anus of another person; or (c) the genital organs of an animal, into or beyond the mouth of another person, and "sexually penetrates" has a corresponding meaning.' The Sexual Offences Act also defines 'genital organs' as including 'the whole or part of the male and female genital organs, and further includes surgically constructed or reconstructed genital organs.' [45] In essence, s 3 of the Sexual Offences Act, as foreshadowed in its Preamble, seeks to 'deal adequately, effectively and in a non-discriminatory manner with many aspects relating to . . . the commission of sexual offences.' Further, it seeks to accord proper recognition to the right to equality enshrined in the Bill of Rights.28 The concepts of 'sexual penetration' and 'consent' are likewise now extensively statutorily defined. Self-evidently, this was the legislature's response to the criticism expressed by the Constitutional Court in Masiya that the common law crime of rape was 'archaic, illogical, discriminatory, irrational, unjust and thus unconstitutional. '29 [46] We pause here to observe – borrowing from the eloquence of Marais JA – that in the light of the most extensive definitions of the expression 'act of sexual penetration' and the concept of 'consent' employed in the Sexual Offences Act and 'an alarming burgeoning' of rape incidents, the legislature was not 'content with' the pervasive prevalence of rape and the fact that this scourge diminished the quality of life of women and children in particular, that it would remain 28 See in this regard the 4th and 6th object under 'whereas' in the Preamble to the Sexual Offences Act. 29 See Masiya fn 7 above paras 10 and 70. 20 'business as usual'30, that had hitherto allowed perpetrators avenues of escape for the consequences of their heinous deeds. The legislature therefore considered the enactment of the Sexual Offences Act as an appropriate response to the scourge of sexual violence cases. [47] From what is set out in paras 42 to 45 above, there are therefore two crucial elements of the statutory crime of rape that the State must establish to secure a conviction on a rape charge, namely (a) an act of sexual penetration without consent, in the sense defined in the Sexual Offences Act; and (b) intent, historically known as mens rea. Statutory interpretation [48] As previously indicated, the respondent was charged with a contravention of s 3 of the Sexual Offences Act. Thus, we are in this appeal enjoined to keep uppermost in our minds the abiding principles of statutory interpretation. In this regard, the logical and helpful point of departure is the decision of this Court in Natal Joint Municipal Pension Fund v Endumeni Municipality.31 [49] Endumeni tells us that the prevailing state of the law on the subject is as follows: 'Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective not subjective. A sensible meaning is to be preferred to one that leads 30 S v Malgas [2001] ZASCA 30; [2001] 3 All SA 220 (A) para 7. 31 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) (Endumeni). 21 to insensible or unbusinesslike results or undermines the apparent purpose of the document. Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used. To do so in regard to a statute or statutory instrument is to cross the divide between interpretation and legislation. In a contractual context it is to make a contract for the parties other than the one they in fact made. The ‘inevitable point of departure is the language of the provision itself’, read in context and having regard to the purpose of the provision and the background to the preparation and production of the document. '32 [50] Accordingly, the inevitable point of departure is the language used in the provision under consideration in the light of the overarching scheme of the legislation and, in particular, the context.33 Endumeni has been consistently followed in this Court34 and subsequently referred to with approval in several judgments of the Constitutional Court.35 [51] In Chisuse and Others v Director-General, Department of Home Affairs and Another36 the Constitutional Court reiterated that the process of interpretation is a unitary exercise, not a mechanical consideration of the text, context and purpose of the instrument under consideration. Most recently, the essence of what the interpretative exercise entails was neatly captured by Unterhalter AJA in 32 Endumeni para 18. 33 See, in this regard, the separate concurring judgment of Schreiner JA in Jaga v Dönges NO and Another; Bhana v Dönges NO and Another 1950 (4) SA 653 (A) at 662G-663A whose approach was endorsed by the Constitutional Court in Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism and Others [2004] ZACC 15; 2004 (4) SA 490 (CC); 2004 (7) BCLR 687 (CC) paras 77 and 89-91. 34 See, for example, Shoprite Checkers (Pty) Ltd v Mafate [2023] ZASCA 14; [2023] 2 All SA 332 (SCA) para 18; Transnet National Ports Authority v Reit Investments (Pty) Ltd and Another [2020] ZASCA 129 para 56. 35 See, for example, Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869 (CC); Airports Company South Africa v Big Five Duty Free (Pty) Limited and Others [2018] ZACC 33; 2019 (5) SA 1 (CC) para 29; Road Traffic Management Corporation v Waymark Infotech (Pty) Limited [2019] ZACC 12; 2019 (5) SA 29 (CC) paras 29-30 (Road Traffic Management). 36 Chisuse and Others v Director-General, Department of Home Affairs and Another [2020] ZACC 20; 2020 (10) BCLR 1173 (CC); 2020 (6) SA 14 (CC) para 52. See also, University of Johannesburg v Auckland Park Theological Seminary and Another [2021] ZACC 13; 2021 (8) BCLR 807 (CC); 2021 (6) SA 1 (CC) para 65; Department of Land Affairs and Others v Goedgelegen Tropical Fruits (Pty) Ltd [2007] ZACC 12; 2007 (10) BCLR 1027 (CC); 2007 (6) SA 199 (CC) in which the Constitutional Court stressed that statutory provisions must always be interpreted purposively. 22 Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others37 thus: 'It is the language used, understood in the context in which it is used, and having regard to the purpose of the provision that constitutes the unitary exercise of interpretation. I would only add that the triad of text, context and purpose should not be used in a mechanical fashion. It is the relationship between the words used, the concepts expressed by those words and the place of the contested provision within the scheme of the agreement (or instrument) as a whole that constitutes the enterprise by recourse to which a coherent and salient interpretation is determined. '38 [52] To conclude on this topic, it is necessary to emphasise that since the coming into effect of the Constitution on 4 February 1997, the courts of the land are now enjoined to interpret legislation through the prism of the Constitution. This constitutional injunction was explained by the Constitutional Court, with reference to its previous decision,39 thus: 'When interpreting legislation, a court must promote the spirit, purport and objects of the Bill of Rights in terms of section 39(2) of the Constitution. This Court has made clear that section 39(2) fashions a mandatory constitutional canon of statutory interpretation. '40 [53] In Makate v Vodacom (Pty) Ltd41 the Constitutional Court reiterated that s 39(2) 'introduced...a new rule in terms of which statutes must be construed' stating that 'this new aid of interpretation is mandatory'. It explained: '[T]his means that courts must at all times bear in mind the provisions of section 39(2) when interpreting legislation. If the provision under construction implicates or affects rights in the Bill of Rights, then the obligation in section 39(2) is activated. The court is duty-bound to promote the purport, spirit and objects of the Bill of Rights in the process of interpreting the provision in question. '42 37 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). 38 Ibid para 25. 39 Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd and Others In re: Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others [2000] ZACC 12; 2000 (10) BCLR 1079; 2001 (1) SA 545 (CC) para 21. 40 Fraser v Absa Bank Limited [2006] ZACC 24; 2007 (3) SA 484 (CC); 2007 (3) BCLR 219 (CC) para 43. 41 Makate v Vodacom (Pty) Ltd [2016] ZACC 13; 2016 (6) BCLR 709 (CC); 2016 (4) SA 121 (CC). 42 Ibid para 88. 23 [54] The Court continued: '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. '43 Analysis [55] Bearing the basic principles of statutory interpretation discussed above in mind, we now proceed to a consideration of what is at the heart of this appeal. Turning to s 3 of the Sexual Offences Act, we first deal with the concept of 'consent' as defined in s 1(2) with special reference to the word 'agreement'. To our mind, such a word entails the meeting of the minds of the willing participants to engage in penetrative sexual intercourse. The Sexual Offences Act explicitly requires that consent must be 'given consciously and voluntarily, either expressly or tacitly by persons who have the mental capacity to appreciate the nature of the act consented to. Moreover, for the consent to avail a person who commits a penetrative sexual act, such consent must be based on true knowledge of the material facts relating to the act in question. '44 [56] As this Court made plain in Mugridge v S,45 mere submission, or acquiescence, or lack of resistance does not convey a willingness to engage in a penetrative sexual act. Thus, none of these would constitute consent. The court had this to say: 'The law requires further that consent be active, and therefore mere submission is not sufficient. In Rex v Swiggelaar, Murray AJA commented as follows: "The authorities are clear upon the point that though the consent of a woman may be gathered from her conduct, apart from her words, it is fallacious to take the absence of resistance as per se proof of consent. Submission by itself is no grant of consent, and if a man so intimidates a 43 Ibid para 89. See also in this regard: Road Traffic Management fn 35 above paras 29-30. 44 See in this regard, Snyman op cit at 364. See also: S v Nitito [2011] ZASCA 198 para 8. 45 Mugridge v S [2013] ZASCA 43; 2013 (2) SACR 111 (SCA) (Mugridge). 24 woman as to induce her to abandon resistance and submit to intercourse to which she is unwilling, he commits the crime of rape. All the circumstances must be taken into account to determine whether passivity is proof of implied consent or whether it is merely the abandonment of outward resistance which the woman, while persisting in her objection to intercourse, is afraid to display or realises is useless."' (Emphasis added. )46 [57] Turning to the expression 'act of sexual penetration', what immediately strikes one is that such an expression tellingly signifies that the one party must agree to engage in a particular act of sexual penetration with another. The self-evident implication of this is that B (as illustrated in the definition) must therefore consent to the specific act of penetrative act about to take place, for 'consent' as contemplated in s 3, to avail A. Thus, for example, consent to foreplay or oral sex will not suffice for purposes of a vaginal penetrative sexual act because foreplay and oral sex do not constitute an ‘act of penetration’ as defined in the Sexual Offences Act. [58] In addition, the reference to 'an act' equally assumes great significance. In our view, it axiomatically signifies a specific act to which B consents. In this regard, counsel for the third amicus, the Commission for Gender Equality, invited us to have regard to foreign judicial precedent which dealt with a comparable situation presently confronting us in this case. Before we consider these foreign cases to which we have been referred by counsel, it is necessary to sound a word of caution as doctrines and the contextual settings between jurisdictions may well differ. [59] That resort to foreign jurisdictions for guidance is permissible and has received endorsement from the Constitutional Court is beyond question. In H v Fetal Assessment Centre47 the Court set out the circumstances in which foreign 46 Ibid para 40. 47 H v Fetal Assessment Centre [2014] ZACC 34; 2015 (2) BCLR 127 (CC); 2015 (2) SA 193 (CC) paras 31-32. See also, Nelson Mandela Foundation Trust and Another v Afriforum NPC and Others [2019] ZAEQC 2; [2019] 4 All SA 237 (EqC); 2019 (6) SA 327 (GJ) at 115-117. 25 law may be invoked as a useful aid in interpreting legislation and developing common law. The Court there said the following: 'Foreign law has been used by this Court both in the interpretation of legislation and in the development of the common law. Without attempting to be comprehensive, its use may be summarised thus: (a) Foreign law is a useful aid in approaching constitutional problems in South African jurisprudence. South African courts may, but are under no obligation to, have regard to it. (b) In having regard to foreign law, courts must be cognisant both of the historical context out of which our Constitution was born and our present social, political and economic context. (c) The similarities and differences between the constitutional dispensation in other jurisdictions and our Constitution must be evaluated. Jurisprudence from countries not under a system of constitutional supremacy and jurisdictions with very different constitutions will not be as valuable as the jurisprudence of countries founded on a system of constitutional supremacy and with a constitution similar to ours. (d) Any doctrines, precedents and arguments in the foreign jurisprudence must be viewed through the prism of the Bill of Rights and our constitutional values. The relevant question then is what role foreign law can fulfil in considering this case. Where a case potentially has both moral and legal implications in line with the importance and nature of those in this case, it would be prudent to determine whether similar legal questions have arisen in other jurisdictions. In making this determination, it is necessary for this Court to consider the context in which these problems have arisen and their similarities and differences to the South African context. Of importance is the reasoning used to justify the conclusion reached in each of the foreign jurisdictions considered, and whether such reasoning is possible in light of the Constitution’s normative framework and our social context. '48 [60] Almost a decade ago, in R v Hutchinson49 the Canadian Court was called upon to interpret s 273.1 of the Canadian Criminal Code which defined 'consent' in the context of sexual assault as 'the voluntary agreement of the complainant to engage in the sexual activity in question.' The Court there said: 48 Ibid paras 21-32. 49 R v Hutchinson 2014 SCC 19 (Hutchinson). 26 'We conclude that Farrar J.A. was correct to interpret the “sexual activity in question” in s. 273.1(1) to refer simply to the physical sex act itself (for example, kissing, petting, oral sex, intercourse, or the use of sex toys). The complainant must agree to the specific physical sex act. For example, as our colleagues correctly note, agreement to one form of penetration is not agreement to any or all forms of penetration and agreement to sexual touching on one part of the body is not agreement to all sexual touching. '50 (Emphasis added.) [61] Our comments pertaining to the passage from Hutchinson quoted in the preceding paragraph in the context of the Sexual Offences Act are these. True, the words employed in the statutory provision considered in Hutchinson are materially different to our own legislation. Nevertheless, Hutchinson provides useful insights into what the words 'an act' referred to in our own legislation should be understood to mean. In our judgement, reference to 'an act' found in s 3 can, on a rational basis, only be interpreted to mean and be understood as a reference to 'a specific physical act.' The section does not refer to 'acts' that B may consent to. Rather, it seems to be inherent in the very choice made by the legislature in using a singular, ie 'an act' that B may consent only to a specific act of sexual activity. And it seems plausible and clear enough that it would be a far cry to contend that whilst the legislation speaks of 'an act' that should be understood to be a reference to more than one act. Such an interpretation would lead 'to insensible or unbusinesslike results' or fundamentally 'undermines the apparent purpose' of the legislation. Accordingly, in our view, it would be incongruent with the Sexual Offences Act to construe the agreement to one form of sexual act to encompass all kinds of sexual acts. Therefore, this means B's willingness to engage in other acts should clearly be communicated to A, either explicitly or tacitly. Mens rea 50 Ibid para 54. 27 [62] As to the element of mens rea, it is beyond question that intention is a prerequisite for a conviction as it is an integral part of the definition of the statutory crime of rape. A must know that B had not consented to a penetrative sexual act.51 Therefore, the accused may 'escape [criminal] liability on the ground of absence of knowledge of unlawfulness of his conduct if he [or she] believed the complainant . . . was infact consenting. '52 Even dolus eventualis suffices, which means that it is sufficient to prove that A foresaw the possibility that B's free and conscious consent might be lacking, 'but nevertheless continues to act [recklessly] appreciating that [he/she may be acting without her/his consent], therefore "gambling" as it were [with the security, bodily integrity and dignity] of the person against whom the act is directed. '53 [63] Counsel for the State and the first amicus curiae, Women's Legal Centre Trust (WLCT), submitted that in this case there were, at the very least, unquestionable factors that were indicative of the presence of intent in the form of dolus eventualis. For her part, counsel for WLCT enumerated the following: (a) the respondent knew that TS was a virgin and while this is not in itself a factor that raises the bar as to the test of consent, it is relevant when considering whether the respondent was alive to the possibility that TS did not consent to sexual intercourse in the form of penile-vaginal penetration; (b) the respondent conceded that sexual intercourse in the form of penile-vaginal penetration was not part of the plan for that evening; (c) when the respondent tried to remove TS's pants, she physically resisted and expressly indicated that she did not want to have sex with him. The respondent in turn assured her that he was not trying to have sex with her; (d) following this reassurance, TS allowed the respondent to remove her pants and perform oral sex on her; and (e) when asked by the prosecutor 'what made you think at that moment that she would allow you to take her virginity? ', 51 See, in this regard: R v K 1958 (3) SA 420 (A) at 421; R v Z 1960 (1) SA 739 (A) at 743A-745D. 52 Burchell Principles of Law 5ed at 414 paras 235-236. 53 Director of Public Prosecutions, Gauteng v Pistorius [2015] ZASCA 204; [2016] 1 All SA 346 (SCA); 2016 (2) SA 317 (SCA); 2016 (1) SACR 431 (SCA) para 26. See also, S v Humphreys 2015 (1) SA 491 (SCA) para 15. 28 the respondent answered 'since there was no resistance from when I was doing oral sex, I went with the motion'; (f) that TS put a high premium of her virginity to the knowledge of the respondent and that she wished to preserve until, as she put it, 'she was ready to engage in penetrative sex'; and (g) the fact that when he testified, the respondent could only provide an incoherent and nebulous explanation as to how it came about that he ended up sexually penetrating TS vaginally, being content to suggest that he was overcome with the passion of the moment. [64] These factors, considered cumulatively, impel the conclusion that the respondent, in breach of his assurances to TS, intentionally had penetrative sexual intercourse with her, well knowing that she had not consented thereto. Counsel further argued that there could hardly be a clearer example of 'proceeded recklessly' than this. The high court's acceptance of this evidence, so it was argued, clearly played into the myth that a man can take consent to one sexual act as an invitation to perform all other sexual acts; and that 'going with the moment' is an acceptable defence – which it is not. It was further submitted that '[t]he fact that the complainant gives no outward indication that she is consenting would be strong evidence that the accused[’s] belief is not honestly entertained. '54 [65] It will be recalled that TS testified that she was uncomfortable with oral sex and that she only relaxed after the respondent went up and started kissing her again. Immediately thereafter, the next thing she felt was a sharp pain in her vagina, when the respondent penetrated her vagina without her consent. She asked him to stop, pushing him away and telling him that he was hurting her. The respondent denied that she asked him to stop and pushed him but conceded that she did say he was hurting her. But whenever TS told the respondent that the 54 Burchell fn 45 above at 415. 29 penetration was hurting her, the respondent would momentarily stop and then continue. [66] However, in the face of all this, the high court found, on insubstantial grounds, that TS was an active participant. As earlier indicated, it stated: 'It was the evidence of the Appellant that throughout the encounter, the Complainant was an equally active participant, she was not merely passive – she kissed the Appellant back, she held him, she had no problem with the removal of her clothes, she watched him take off his clothes without raising an objection, she knew he was erect, she did not object to the oral sex. The only area where there was a dispute was after the penetration. It is in this area where the Complainant says she objected and said the penetration was hurting. The Appellant’s evidence was that when the Complainant said the penetration was hurting, he “would stop and then continue”. This aspect was not taken up in cross examination, nor was it weighed in the assessment of the probabilities by the Magistrate. It was not the evidence that the Appellant simply continued with the intercourse in disregard of the wishes of the Complainant, as held by the Magistrate. In these circumstances, I cannot uphold the findings of the fact of the Magistrate which are unjustified when one has regard to the record. I cannot hold that the state proved that the version of the Appellant that he genuinely believed there was at least tacit consent was false beyond reasonable doubt.' [67] It further found that TS did not object to any of the actions by the respondent after he took off her pyjama pants. It then said: 'After she was being undressed, they continued kissing. Then the Appellant took off his clothes. No force or threats were used to coerce the Complainant (who is the same age as the Appellant). After he had taken his clothes off, he returned to place his head in between her thighs, again with no force. He then performed oral sex on her, which she testified she had no objection. On the complainant’s version, there was no manifestation of any refusal of consent between the kissing, oral sex and penetration. The evidence was that it was only after the penetration that the Complainant experienced pain and told the Appellant to stop as he was hurting her. The Appellant accepted this but said he would stop and then continue.' (Emphasis added.) 30 [68] In our view, the high court erred in making these findings. The respondent testified that he could tell from her body language that TS was ready to be penetrated. And he further stated that as he took off his pants, TS calmly lay on the bed, doing nothing. He was not sure whether she saw that he had an erection but she could have felt it. Then the following exchange ensued between the prosecutor and the respondent: ‘PROSECUTOR: You never asked her for permission to penetrate her? ACCUSED: Not with words, no. PROSECUTOR: What made you think at that moment she would allow you to take her virginity? ACCUSED: Since there was no resistance from when I was doing the oral sex, I went with the motion.’ (Emphasis added.) [69] But the high court recognised that lack of resistance does not constitute consent to sexual act. This notwithstanding, it went on to find that TS was an active participant because she did not object to a number of activities performed by the respondent before he penetrated her. It further found that no force was used nor was she coerced although the evidence supports TS’s version that she was just lying there in shock of what was happening. [70] As already mentioned, consent to penetrative sex must be communicated by the complainant to the accused. Consent to 'foreplay' does not constitute consent to 'an act of penetration'. The respondent squarely relied on and equated the complainant's consent to 'foreplay' and oral sex as constituting consent to sexual penetration. This, notwithstanding his firm assurance that no penetrative sex would take place when TS visited him at his apartment. [71] The high court further found that the trial court had applied a stringent standard for consent on the basis that TS was a virgin. In this regard, it held that the trial court had required express consent even though on the facts tacit consent was established. We disagree with these findings. The trial court did not lay down 31 a general rule that when a complainant is a virgin, a higher standard of consent is required. Rather, it found that in the peculiar circumstances of this case, there was no basis for the respondent's assertion that TS had, through her body language, tacitly consented to penetrative sex. [72] True, the trial court’s underlying reasoning lay emphasis on the existence of the agreement between the respondent and TS before the night of the incident, that they would not engage in sexual intercourse. As already mentioned, the agreement arose from the fact that TS was a virgin and had unequivocally indicated that she was not ready to engage in penetrative sex. She subsequently made it clear on the night of the incident that the position had not changed by, inter alia, initially resisting the respondent’s attempts to remove her pyjama pants. The respondent reassured her that no sexual intercourse would take place. Thus, having regard to the express agreement and uncompromising desire and value she held dearly, namely to preserve her virginity, the trial court reasoned that something more than body language was required to communicate that the complainant had changed her mind. Whilst this could have been expressed better, we are nevertheless unable to find fault with the essence of what the trial court said. [73] Significantly, the respondent also agreed with the prosecutor that 'something more' was required to establish consent. This is borne out by what emerged during the cross-examination of the respondent by the prosecutor, as earlier indicated, thus: 'PROSECUTOR: But you would agree with me that if she was not a virgin then it is understandable, meaning the fact that she is no longer a virgin would mean that she is sexually active and you would not need an expressive answer from her, but this girl is a virgin. Do you not think that you needed something more from her?55 55 The choice of words by the prosecutor is regrettable as the implication is that for someone who is sexually active express consent is not required, which is not the case. 32 ACCUSED: Yes, I think I needed more from her. COURT: Especially also in view of your earlier discussions surrounding her virginity. ACCUSED: That is correct Your Worship.' [74] That TS had the inalienable right to choose whether or not to participate in penetrative sex goes without saying. This goes to the heart of her constitutional right to dignity, bodily integrity and security of person. [75] It is noteworthy that after the penetration for the first time, and whilst the respondent was still on top of her, TS persistently demonstrated her unmistaken objection to continued penetrative sex by pushing the respondent away, telling him to stop and saying he was hurting her. Even on his own version the respondent accepted that TS told him that it was painful. Instead, the respondent would as he testified, however, merely pause and then continue. There is no evidence that he first established from TS whether he could continue, or that she communicated her consent to him to continue, even by her conduct, despite her unequivocal indication that it was painful. [76] At this juncture a pertinent observation of considerable weight may be mentioned. Logic dictates that even in circumstances where consent has been given to a specific sexual act, it may also be withdrawn during the sexual act to which the consent relates. This then means that if B changes her mind and withdraws her consent and communicates her change of mind to A, there would be no consent to speak of beyond the withdrawal of the consent previously granted. [77] Thus, subsequent to the withdrawal of consent previously granted, any continued engagement in an act of penetrative sexual act in relation to which consent has subsequently been withdrawn would constitute a contravention of 33 s 3. In this regard, a reference to the Canadian Supreme Court case of R v Ewanchunk, is merited. The court said: 'Common sense should dictate that, once the complainant has expressed her unwillingness to engage in sexual contact, the accused should make certain that she has fully changed her mind before proceeding with further intimacies. The accused cannot rely on the mere lapse of time or the complainant's silence or equivocal conduct to indicate that there has been a change of heart and that consent now exists, nor can he engage in further sexual touching to "test the waters". Continuing sexual contact after someone has said "No" is, at minimum, reckless conduct, which is not excusable.' (Emphasis added. )56 [78] Even on this basis, we conclude that the crime of rape was established. In other words, even if TS had initially consented to an act of sexual penetration – which was not the case here – her cries and groans, indicated above, served as an unequivocal indication that she disapproved of the respondent's conduct. Despite this, the respondent was unfazed and continued penetrating her. Consequently, the high court erred in disregarding this crucial aspect of the trial court's judgment. [79] We accept that the trial court went overboard in some of its findings. One example is when it found that the respondent had lured TS to his apartment with the intention of having sex with her, in the belief that he could get away with it. This is a misdirection because such a finding is not borne out by the evidence. However, this does not detract from the weight of the evidence as the facts demonstrate beyond reasonable doubt that the respondent sexually penetrated TS without her consent. Accordingly, having regard to the totality of the evidence, his defence of tacit consent was correctly rejected by the trial court as not reasonably possibly true. 56 R v Ewanchunk 1999 SCC 711 para 52. 34 [80] Considered in that context, the version of the respondent, in our view, casts a shadow of unreality over the thrust of this evidence. Such version amounts to no more than a pregnable veil of incongruity when the contrasting versions are analysed in the context of each other. And, seen in this light, there can be no cogent reason to call into question the trial court's adverse credibility findings against the respondent. We say this because of the crucial factors already mentioned in para 63 above. [81] At this juncture we revert to the WhatsApp messages to which we alluded in paragraph 23 above. Whilst the text messages exchanged between the respondent and TS in the aftermath of the incident could not in themselves be relied upon as evidence establishing the crime of rape, they are nevertheless consistent with the substance of the evidence and, in some way, reinforce the State's case. To illustrate the point, the following excerpt from the record will suffice. '[TS]: So, you don't think anything wrong happened on Sunday other than the fact that there was no condom. [Respondent]: Alot was wrong, I thought you wanted it to happen so technically consent did pop. Could infected you by not using protection. You could be pregnant right now. [TS]: For the record, I didn't want to. I wasn't ready nor prepared to have sex that night. And I thought we were on the same page about that because you assured me we weren't having sex before you took of my pyjamas. But you said one thing and did the opposite. And I’ve been going insane ever since. [Respondent]: As worthless as my apology is I'll still apologize. I am really sorry. . . . [TS]: Why are you apologising to me Loyiso? Do you get what you apologising for? What exactly is it you want me to forgive? [Respondent]: Going back on my word. And having unprotected sex with you? [TS]: Going back on your word. That's what you call inserting your penis in my [vagina] without my permission. And continuing even when I told you you hurting me. [Respondent]: Then maybe I don’t deserve your forgiveness.' 35 [82] TS testified that following the rape, she could not believe what had just happened to her. For his part, the respondent accepted that TS was visibly 'shocked, more than angry, very distant and quiet', after the sexual act. He further confirmed that she had also said that she could 'not believe what just happened, happened.' [83] TS’s distant behaviour was clearly not just due to loss of her virginity. Whilst that was in the reckoning, the issue for her was more about the manner in which she lost it. She was surreptitiously robbed of her right to choose when and with whom and how she would lose her virginity. Instead, she found herself to have lost something she valued through being sexually violated by her boyfriend. She felt betrayed that the respondent's assurances turned out to have been a ruse to violate her. The effect on her of such traumatising encounter was corroborated by Ms Yendall, a counselling psychologist, who testified that, among other things, TS struggled with anxiety and panic attacks. According to her, TS also presented depressive symptomology which included a struggle to sleep at night. The aftermath of the ordeal also had an adverse impact on her academic, social and emotional well-being. [84] Taking into account the conspectus of the evidence, there can be no doubt that rape was proved beyond a reasonable doubt in this case. Therefore, the high court’s interference with the findings of the trial court was not warranted. The inevitable consequence of our conclusion is that the respondent's conviction by the trial court falls to be reinstated. Insofar as the sentence imposed by the trial court is concerned, different considerations apply. This is because the high court, having overturned the respondent's conviction, rightly considered that such outcome rendered it unnecessary for it to deal with the appeal against the sentence which automatically fell away. We return to the consequences of this later. Court's jurisdiction 36 [85] It is apposite at this stage to refer to s 311 of the Criminal Procedure Act (the CPA).57 This provision reads: '(1) Where the provincial or local division on appeal, whether brought by the attorney-general or other prosecutor or the person convicted, gives a decision in favour of the person convicted on a question of law, the attorney-general or other prosecutor against whom the decision is given may appeal to the Appellate Division of the Supreme Court, which shall, if it decides the matter in issue in favour of the appellant, set aside or vary the decision appealed from and, if the matter was brought before the provincial or local division in terms of– (a) section 309 (1), re-instate the conviction, sentence or order of the lower court appealed from, either in its original form or in such a modified form as the said [Supreme Court of Appeal] may consider desirable.' [86] It is trite that the State does not have a right to appeal on questions of fact such as where a court has erred in evaluating the evidence or drawing inferences, even if such an error is grave. This was reiterated by this Court in Director of Public Prosecutions, Transvaal v Mtshweni58 relying on Magmoed v Janse van Rensburg.59 In Magmoed Corbett CJ made plain, with reference to previous decisions60 of this Court, that s 319 there under consideration did 'not permit of the reservation of a question which in reality is a question of fact'.61 By parity of reasoning it goes without saying that s 311 of the CPA too does not accord the State a right of appeal in relation to a question of fact even if dressed up as a question of law, like for example, whether a reasonable court would have acquitted the accused. [87] It is evident in this case that the high court committed an error of law in its approach to what was central in the matter before it. In terms of s 311(1)(a) of the CPA, this Court may 're-instate the conviction, sentence, or order of the lower 57 The Criminal Procedure Act 51 of 1977. 58 Director of Public Prosecutions, Transvaal v Mtshweni [2006] ZASCA 165; [2007] 1 All SA 531 (SCA); 2007 (2) SACR 217 (SCA) para 19. 59 Magmoed v Janse van Rensburg [1992] ZASCA 208; 1993 (1) SA 777 (A) (Magmoed). 60 See S v Khoza en Andere 1991 (1) SA 793 (A) at 797B; cf Attorney-General, Transvaal v Kader 1991 (4) 727 (A) at 739D-740J. 61 Magmoed fn 54 above at 806H-I. 37 court appealed from either in its original form or in such a modified form' as this Court may consider desirable. [88] Understandably, in this case the high court did not enter into the merits of the appeal in relation to the sentence. And, this being a case that emanated from the magistrates' court, this Court is by law precluded from entertaining the appeal against sentence in circumstances where the high court did not adjudicate the appeal once the conviction was overturned. As this Court held in S v N 62 more than three decades ago, this is because its power to hear criminal appeals derives from statute and not from its inherent jurisdiction.63 Hence, in S v Khoasasa 64 this Court reiterated that in circumstances where an appeal from a lower court has not been heard and determined first by the high court, it had no jurisdiction itself to hear such an appeal directly from the lower court. Khoasasa has been consistently followed ever since.65 [89] In these circumstances, we consider that the interests of justice dictate that the respondent ought to be afforded an opportunity to pursue his appeal against sentence in the high court, if so advised. Therefore, whatever order we make in this appeal should conduce to a speedy hearing of such appeal to prevent any potential prejudice that the respondent may suffer if the appeal against sentence is not dealt with expeditiously. Our order should, in these circumstances, incorporate a paragraph requesting the Director of Public Prosecutions, Makhanda to place the matter on the roll as soon as possible, once all the relevant regulatory requirements have been satisfied. 62 S v N 1991 (2) SACR 10(A). 63 See s 309(1) of the Criminal Procedure Act 51 of 1977 that provides that appeals from lower courts (including regional courts) lie to the High Court; Abraham de Sousa v S [2011] ZASCA 215 para 5. 64 S v Khoasasa 2003 (11) SACR 123 (SCA) (Khoasasa). 65 See, for example: S v Smith 2012 (1) SACR 567 (SCA) paras 2-3; S v Matshona 2013 (2) SACR 126 (SCA) para 5; S v Kriel 2014 (1) SACR 586 (SCA) paras 11-12. 38 [90] However, lest the respondent elects not to pursue his appeal against the sentence imposed by the regional court – thereby accepting his fate – the order of the high court setting aside the sentence will, in line with the conclusion reached in this judgment, be set aside. And the sentence imposed by the regional court will therefore be reinstated in order to cater for such eventuality. Condonation [91] There is also an application for condonation of the late filing by the State of its notice of appeal to address. Although this application was initially opposed by the respondent, the opposition was withdrawn at the hearing. The principles in regard to applications for condonation are now well settled. A court considering an application for condonation is required to have regard, inter alia, to: (a) the degree of non-compliance; (b) the explanation therefor; (c) the importance of the case; (d) the respondent's interest in the finality of the decision appealed against; and (e) the avoidance of unnecessary delay in the administration of justice. [92] In the context of the facts of this case and the fact that the matter raises an arguable point of law of general public importance, we are satisfied, having regard to the degree of non-compliance, the explanation proffered for the delay and the prospects of success, that condonation should be granted. [93] To recapitulate, in relation to the conviction, it is our considered view that upon a realistic appraisal of the evidence holistically, the State had, as correctly found by the regional magistrate, proved its case against the respondent beyond reasonable doubt. Accordingly, for all the foregoing reasons and in particular, the cumulative effect of the weighty factors mentioned in para 63 above, the foundation for the conclusion of the high court that TS had tacitly consented to the penetrative sexual act, is negated. It is therefore, with respect, a matter for adverse comment that the high court, ironically, misdirected itself in holding that 39 the regional magistrate had committed material misdirections in reaching his conclusion to convict the respondent of rape. [94] A postscript will be the appropriate point to end this judgment. It is this: were the conclusion reached by the high court to prevail, leading to the dismissal of this appeal, this would not only be a perverse incentive to unscrupulous persons taking advantage of their victims, but also have the effect of frustrating the speedy realisation of the constitutional objective of gender equality which is one of the foundational values of our constitutional order. In addition, this would also entrench patriarchal attitudes, stereotypes and mindsets that the rights of women and children, in particular, to their dignity and physical integrity count for little and can therefore be gratuitously violated with impunity. [95] On this score the remarks of Langa CJ in Masiya66 are particularly apposite and warrant repetition. The learned Chief Justice said: 'As expressed in the judgment of Nkabinde J, the historical reason why rape was criminalised was to protect the proprietary rights of men in women. However, over the years the courts have gradually focused less on the proprietary interests and more on the sexual nature of the crime. Today rape is recognised as being less about sex and more about the expression of power through degradation and the concurrent violation of the victim’s dignity, bodily integrity and privacy. In the words of the International Criminal Tribunal for Rwanda the "essence of rape is not the particular details of the body parts and objects involved, but rather the aggression that is expressed in a sexual manner under conditions of coercion. "'67 [96] Further, in his insightful article, Hall pertinently remarks that rape is: 'an act of violence and oppression against women. It is a sexual attack which expresses male dominance and contempt for women . . . The origins of rape are anchored in the structured imbalance of power between men and women as social groups, that is, in their political relationship. '68 66 Masiya fn 7 above. 67 Ibid para 78. 68 Hall Rape: The Politics of Definition (1988) 1-5 SALJ 76 at 73. 40 State of appeal record [97] Before making the order, it is regrettably necessary to comment adversely on the state of the record. It comprises three volumes running into 398 pages. Incorporated into the record are also irrelevant documents that have no bearing on what is at stake in this appeal. For example, the following documents were included: (i) transcript of the address of the legal representatives during the application for leave to appeal; and (ii) the transcript of the argument when the appeal was heard in the high court. Altogether, this irrelevant material accounts for 105 pages of the record. This is a flagrant disregard of what rule 8(6)(j)(i) of this Court requires relative to preparation of appeal records. [98] This Court has, in a number of cases, bemoaned the fact that despite many admonitions practitioners continue to pay scant regard to its rules that are designed to promote efficiency in the disposition of the court's business. One of the objectives of the rule in question is to assist Judges of this Court in preparing for the appeal so that they can focus only on relevant matter without wasting their valuable time and energy trawling through irrelevant material. Practitioners should henceforth take this as a warning that should this sort of wanton disregard for its rules persist, this Court might well seriously consider sanctioning those responsible for such transgressions as a mark of its displeasure.69 Order [99] In the result, the following order is made: 1 The appeal by the State against the acquittal of the respondent is upheld. 2 The acquittal of the respondent by the high court is set aside. 3 The conviction of the respondent by the regional court is reinstated. 4 The order of the high court is set aside and in its place the following order is made: 69 See rule 11A of the Supreme Court of Appeal Rules. 41 'The appeal against conviction is dismissed.' 5 The question of sentence is remitted to the high court for it to determine whether the sentence imposed by the regional court was appropriate. 6 The Director of Public Prosecutions, Eastern Cape, Makhanda is requested to prioritise the placement of the appeal against sentence on the roll as soon as all relevant regulatory requirements have been met. 7 Should the respondent fail to prosecute the appeal against sentence within 20 days of the date of this order he shall forthwith report to the Makhanda Correctional Centre, Makhanda in order to serve his sentence. X M PETSE DEPUTY PRESIDENT SUPREME COURT OF APPEAL N P MABINDLA-BOQWANA JUDGE OF APPEAL 42 Appearances: For the appellant: J Mnisi (with P Pillay) Instructed by: The State Attorney, Port Elizabeth The State Attorney, Bloemfontein For the respondent: KF Pieterse Instructed by: EDJ Attorneys, Bloemfontein For the first amicus curiae: B Pithey Instructed by: The Women’s Legal Centre, Cape Town Maduba Attorneys, Bloemfontein For the second amicus curiae: L Makapela Instructed by: Centre for Applied Legal Studies, Johannesburg McIntyre Van der Post Attorneys, Bloemfontein For the third amicus curiae: G Marcus SC (with E Webber) Instructed by: Norton Rose Fulbright South Africa Inc, Cape Town Lovius Block Inc., Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 24 April 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 Director of Public Prosecutions, Eastern Cape, Makhanda v Coko (Women's Legal Centre Trust, Initiative for Strategic Litigation in Africa and Commission for Gender Equality intervening as Amici Curiae) (case no 248/2022) [2024] ZASCA 59 (24 April 2024) Today, the Supreme Court of Appeal upheld an appeal by the State against the acquittal of the respondent, Mr Coko. It set aside his acquittal by the Eastern Cape Division of the High Court, Makhanda (the high court), and reinstated his conviction by the regional court. The respondent was charged with the rape of the complainant, TS who was then 21 years of age. He pleaded not guilty to the charge, asserting that the sexual intercourse was consensual. At the conclusion of the trial, the respondent was convicted as charged and thereafter sentenced to seven years’ imprisonment. The events leading to the prosecution of the respondent were largely common cause. The respondent and TS commenced a love relationship in mid-June 2018. At the time, the respondent was employed as a driver with Gardmed Ambulance Service. TS was still a student at a local university and in her early twenties. As it emerged from the record, the parties had on a couple of occasions engaged in discussions during which TS informed the respondent that she was a virgin. TS had, more than once, reiterated that she was not ready to engage in penetrative penile/vaginal sexual intercourse as she wished to preserve her virginity. On 1 July 2018, and by sheer coincidence, their paths crossed at one of the local stores. During this brief encounter, they agreed that TS would visit the respondent at his apartment in the evening and spend the night with him. Even during this encounter, TS made plain that her acceptance of the invitation to visit the respondent at his apartment was no signification that they would engage in sexual intercourse. For his part, the respondent unequivocally assured TS that he had no qualms with her standpoint. Indeed, during the early evening, TS made good on her undertaking and repaired to the respondent's apartment. Once there, the two of them sat on the respondent's bed and watched a movie on television. TS was all along wearing pyjamas, without underwear (as it was customary for her whenever she went to bed). They kissed each other for some considerable time. The respondent began to take off TS's pyjama pants. The respondent's attempt at this was thwarted by TS who, instead, closed her legs. In order to put her at ease, the respondent assured TS that he had no intention to have sexual intercourse with her. Having been given such assurance, TS then allowed the respondent to take off her pyjama pants. They continued kissing. The respondent then began to perform oral sex on TS. Although, TS 2 testified that she was taken aback and felt uncomfortable when the respondent performed oral sex on her, she did not object to this. For his part, the respondent testified that whilst he was performing oral sex on TS, he also took off his pants. What happened next, according to TS' testimony, was that the respondent stopped performing oral sex and, instead, climbed on top of her as she laid on her back on the bed and started kissing her. She then dropped her guard and relaxed. The next thing, she felt a sharp pain in her vagina and realised that the respondent was penetrating her, vaginally, with his penis. When the respondent inserted his penis into her vagina, TS froze and started crying. She immediately attempted to push him off her whilst at the same time saying that 'he must stop', he 'was hurting [her].' It is common cause that the respondent did not heed TS' plea and groans. Rather, what he did, on his own version, was to pause momentarily, and thereafter, carry on thrusting his penis in and out of her vagina. At the end of the presentation of the evidence in the trial court, the regional magistrate was satisfied that the State had proved the respondent’s guilt beyond a reasonable doubt. More particularly, it had been established that the respondent unlawfully and intentionally sexually penetrated TS without the latter’s consent. The regional magistrate was not impressed by the respondent as a witness and, as a result, rejected his evidence as false beyond a reasonable doubt. Dissatisfied with his conviction and resultant sentence, the respondent unsuccessfully applied, to the regional court, for leave to appeal his conviction and sentence. Undaunted by this setback, the respondent turned to the high court. The high court took a different view of the matter to that of the magistrate and granted leave. The judges seized with the matter in the high court came to the conclusion that on the evidence, the respondent’s conviction was unsustainable. They found that the regional court had fundamentally misdirected itself in several material respects. In particular, the high court held that the regional court failed to take cognisance of the fact that consent to an act of sexual penetration can be granted either by explicitly communicating the consent to the other person or tacitly by conduct. The high court nevertheless recognised that absence of resistance does not necessarily constitute consent to a sexual act. However, it went on to find that TS was an active participant because she did not object to a number of activities performed by the respondent before he penetrated her, including the kissing, removal of her clothes and oral sex. It further found that neither force nor coercion was used. The appeal concerned the interpretation and approach adopted by the high court to two crucial elements of the statutory crime of rape, namely the nature of consent to a sexual penetrative act and the form of intention required for conviction. The SCA, firstly, reiterated principles applicable in evaluating evidence and circumstances upon which an appellate court may interfere with the factual findings of the trial court. It then embarked on an interpretation of s 3 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act (Sexual Offences Act), which provides that 'Any person ("A") who unlawfully and intentionally commits an act of sexual penetration with a complainant ("B"), without the consent of B, is guilty of the offence of rape.' The SCA held that the Sexual Offences Act explicitly requires that consent must be 'given consciously and voluntarily, either expressly or tacitly by persons who have the mental capacity to appreciate the nature of the act consented to. 3 Turning to the expression 'act of sexual penetration', the SCA held that the expression tellingly signifies that the one party must agree to engage in a particular act of sexual penetration with another. The self-evident implication of this is that B (as illustrated in the definition) must therefore consent to the specific act of penetrative act about to take place, for 'consent' as contemplated in s 3, to avail A. Thus, for example, consent to foreplay or oral sex will not suffice for purposes of a vaginal penetrative sexual act because foreplay and oral sex do not constitute an ‘act of penetration’ as defined in the Sexual Offences Act. In addition, the SCA held that the reference to 'an act' equally assumes great significance. It axiomatically signifies a specific act to which B consents. Reference to 'an act' found in s 3 can, on a rational basis, only be interpreted to mean and be understood as a reference to 'a specific physical act.' The section does not refer to 'acts' that B may consent to. The SCA found that logic also dictated that even in circumstances where consent had been given to a specific sexual act, it may also be withdrawn during the sexual act to which the consent related. Thus, subsequent to the withdrawal of consent previously granted, any continued engagement in an act of penetrative sexual act in relation to which consent has subsequently been withdrawn would constitute a contravention of s 3 of the Sexual Offences Act. Even if TS had initially consented to an act of sexual penetration – which was not the case here – her cries and groans served as an unequivocal indication that she disapproved of the respondent’s conduct. Despite this, the respondent was unfazed and continued penetrating her. As to mens rea, the SCA found that factors, considered cumulatively, impelled the conclusion that the respondent, in breach of his assurances to TS, intentionally had penetrative sexual intercourse with her, well knowing that she had not consented thereto: (a) the respondent knew that TS was a virgin and while this is not in itself a factor that raises the bar as to the test of consent, it is relevant when considering whether the respondent was alive to the possibility that TS did not consent to sexual intercourse in the form of penile-vaginal penetration; (b) the respondent conceded that sexual intercourse in the form of penile-vaginal penetration was not part of the plan for that evening; (c) when the respondent tried to remove TS's pants, she physically resisted and expressly indicated that she did not want to have sex with him. The respondent in turn assured her that he was not trying to have sex with her; (d) following this reassurance, TS allowed the respondent to remove her pants and perform oral sex on her; and (e) when asked by the prosecutor 'what made you think at that moment that she would allow you to take her virginity? ', the respondent answered 'since there was no resistance from when I was doing oral sex, I went with the motion'; (f) that TS put a high premium of her virginity to the knowledge of the respondent and that she wished to preserve until, as she put it, 'she was ready to engage in penetrative sex'; and (g) the fact that when he testified, the respondent could only provide an incoherent and nebulous explanation as to how it came about that he ended up sexually penetrating TS vaginally, being content to suggest that he was overcome with the passion of the moment. The SCA held that considering the conspectus of the evidence, there could be no doubt that rape was proved beyond a reasonable doubt in this case. The SCA also held that the high court’s interference with the findings of the trial court was not warranted. The inevitable consequence of the conclusion of the SCA was that the respondent’s conviction by the trial court fell to be reinstated. As to jurisdiction the SCA found that the high court committed an error of law, which permitted the State to appeal in terms of s 311 of the Criminal Procedure Act 51 of 1977. Insofar as the sentence imposed by the trial court was concerned, different considerations applied. This is because the high court, having overturned the respondent’s conviction, that outcome rendered it unnecessary for it to deal with the appeal against the sentence which automatically fell away. The matter was remitted to the high court to determine the appeal on sentence. ~~~~ends~~~~

4324

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 934/2023 In the matter between: AFRICAN CENTRE FOR BIODIVERSITY NPC APPELLANT and MINISTER OF AGRICULTURE, FORESTRY AND FISHERIES FIRST RESPONDENT DIRECTOR-GENERAL: DEPARTMENT OF AGRICULTURE, FORESTRY AND FISHERIES SECOND RESPONDENT EXECUTIVE COUNCIL FOR GENETICALLY MODIFIED ORGANISMS THIRD RESPONDENT APPEAL BOARD, GENETICALLY MODIFIED ORGANISMS FOURTH RESPONDENT MONSANTO SOUTH AFRICA (PTY) LTD FIFTH RESPONDENT BAYER (PTY) LTD SIXTH RESPONDENT Neutral citation: African Centre for Biodiversity NPC v Minister of Agriculture, Forestry and Fisheries and Others (934/2023) [2024] ZASCA 143 (22 October 2024) Coram: MOLEMELA P and PONNAN and NICHOLLS JJA and KOEN and COPPIN AJJA Heard: 19 September 2024 2 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 22 October 2024 at 11h00. Summary: Genetically Modified Organisms Act 15 of 1997 – application for a permit to conduct activities in respect of genetically modified organisms – s 5(1)(a) – failure by decision-makers to determine whether applicant must submit an assessment in accordance with the relevant provisions of the National Environmental Management Act 107 of 1998 – approval of application set aside – application referred back to decision-makers for reconsideration. 3 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Tolmay J, sitting as court of first instance): a The appeal is upheld with costs including those of two counsel to be paid by the respondents jointly and severally, the one paying the other to be absolved. b The order of the court a quo is set aside and replaced with the following order: ‘1 The application succeeds with costs including those of two counsel to be paid by the respondents jointly and severally, the one paying the other to be absolved. 2 The following decisions are reviewed and set aside: 2.1 The fourth respondent’s approval during or about June 2015, of the fifth respondent’s application for the general release of MON87460; 2.2 The third respondent’s decision of 1 September 2016, dismissing the appeal lodged by the appellant against the fourth respondent’s approval of the fifth respondent’s application for the general release of MON87460; and 2.3 The first respondent’s decision of 2 December 2016, confirming the dismissal of the appeal lodged by the appellant against the fourth respondent’s approval of the fifth respondent’s application for the general release of MON87460. 3 The fifth respondent’s application for the approval of the general release of MON87460 is referred back to the fourth respondent for re-consideration.’ ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Ponnan JA (Molemela P and Nicholls JA and Koen and Coppin AJJA concurring): [1] The use of genetically modified organisms (GMOs) in South Africa is regulated by the Genetically Modified Organisms Act 15 of 1997 (the Act) and, the Regulations framed thereunder, the Genetically Modified Organisms Regulations (the Regulations).1 The purpose of the Act and the Regulations is, inter alia, to promote the responsible development, production, use and application of GMOs within the 1 GNR 120 of 26 February 2010. 4 framework of the Constitution and the National Environmental Management Act 107 of 1998 (NEMA). [2] The Act establishes an Executive Council for Genetically Modified Organisms (the Executive Council) (s 3), and an Advisory Committee (the Advisory Committee) (s 10). A permit is required for the release of GMOs.2 Whether or not a permit is granted falls to be determined by the Executive Council in consultation with the Advisory Committee.3 The process envisaged is a fact and science-based investigation into whether there are any risks posed by the release of a particular GMO into the environment and whether these risks can be effectively managed. To enable this, the Advisory Committee evaluates the scientific components of applications for permits and reports to the Executive Council, which ultimately decides whether to approve the application, and issue a permit. [3] An application for a permit: (a) must be advertised and any interested party may submit comments to the Executive Council in respect of the application;4 (b) must include a scientifically based risk assessment in respect of the potential adverse effects of the GMO on the environment as well as human and animal health and safety;5 and, (c) requires an assessment in terms of NEMA or any other applicable laws, if this is called for by the Executive Council,6 or if there is reason to believe that the release of the GMO would pose a threat to an indigenous species or the environment.7 In considering whether a permit should be granted, the Executive Council and Advisory Committee are required to determine whether a proposed activity poses a risk to human and animal health or the environment.8 [4] On 14 July 2014, the fifth respondent, Monsanto South Africa (Pty) Ltd (Monsanto), applied to the Executive Council for a permit for the general release of a genetically modified variety of maize, described as MON87460. MON87460, 2 Section 5 read with Regulation 2. 3 Section 5(1)(b). 4 Regulations 9(1), 9(5)(f) and 9(6). 5 Regulation 3(3)(a). 6 Regulation 3(3)(d). 7 Section 78 of the National Environmental Management: Biodiversity Act 10 of 2004. 8 Regulations 3, 4 and 7. 5 according to Monsanto, has been genetically modified to reduce yield loss in water limited conditions. Monsanto asserts that: ‘The reduced yield loss of maize containing MON 87460 is achieved by the expression of the inserted Bacillus subtilis cold shock protein B (“CSPB”). This protein has been extensively studied and is known to facilitate adaptation to environmental stress (such as water scarcity) by binding secondary RNA structures thus helping to preserve normal cellular function. Maize containing MON 87460 also expresses the neomycin phosphotransferase II (“NPTII”) protein derived from Escherichia coli. The NPTII protein in MON 87460 confers resistance to Kanamycin antibiotic. The purpose of inserting the gene encoding for the NPTII protein was so that there was an effective method for selecting cells after transformation (in other words so that there was a way of selecting plant cells which contain the CSPB gene during early product development).’ [5] Monsanto submitted both confidential and non-confidential versions of the application, which included an assessment of the risks relating to human and animal health, toxicology, allergenicity and nutrition. It was advertised in the Rapport, Business Day and Beeld newspapers during March and April 2014. Interested and affected parties were invited to comment or object. No comments or objections were received in response to the advertisements. The Advisory Committee, having considered the application, issued a recommendation on 17 December 2014 that the application be approved. On the strength of the Advisory Committee’s recommendation, the Executive Council granted a permit to Monsanto on 12 June 2015 for the general release of MON87460. [6] On 7 August 2015, the appellant, the African Centre for Biodiversity NPC (ACB), a non-governmental advocacy organisation, with a focus on biosafety and agricultural biodiversity, appealed in terms of s 19 of the Act against the approval granted by the Executive Council to Monsanto for the general release of MON87460. Monsanto submitted a response to ACB’s appeal on 13 July 2016. The Appeal Board, by a majority, dismissed the appeal on 1 September 2016, and the Minister of Agriculture, Forestry and Fisheries (the Minister) confirmed the Appeal Board’s decision on 2 December 2016. 6 [7] In April 2017, ACB applied to the Gauteng Division of the High Court, Pretoria (the high court), for the following relief: ‘1. the following decisions are reviewed and set aside: 1.1. the Fourth Respondent’s [Executive Council’s] approval during or about June 2015, for the general release of MON87460; 1.2. the Third Respondent’s [Appeal Board’s] decision of 01 September 2016, dismissing the appeal lodged by the Applicant against the Fourth Respondent’s approval for the general release of MON87460; 1.3. the First Respondent’s [Minister’s] decision of 02 December 2016, confirming the dismissal of the appeal lodged by the Applicant against the Fourth Respondent’s approval for the general release of MON87460 by the; 2. the Fifth Respondent’s [Monsanto’s] application for the approval for the general release of MON87460 is referred back to the Fourth Respondent for reconsideration with such guidelines as this Honourable Court deems fit; . . .’ [8] The Minister, the Director-General: Department of Agriculture, Forestry and Fisheries, the Appeal Board and the Executive Council (collectively referred to as the State respondents) were cited as the first to fourth respondents, respectively. Monsanto was cited as the fifth respondent in the application. After the launch of the application, Bayer (Pty) Ltd (Bayer) acquired ownership of Monsanto and, as a result of the permits and licences relevant to MON87460 having been transferred to it, Bayer came to be joined as the sixth respondent to the proceedings. [9] The high court (per Tolmay J) dismissed the application on 27 June 2023, but granted leave to ACB to appeal to this Court. [10] The thrust of the appellant’s case is that the State respondents accepted, at face value, the claims made by Monsanto and failed to independently and critically evaluate Monsanto’s application to satisfy themselves that the health and safety risks associated with the general release of MON87460 had been properly addressed. The appellant contends that the expert evidence that served before the State respondents, ought to have triggered the application of the precautionary principle enshrined in s 2 of NEMA. This, for two main reasons: first, there was a lack of scientific data from which conclusions about the safety of MON87460 could be drawn; and second, the 7 data that had been made available supported concerns about health risks arising from the use of MON87460. Accordingly, so the contention proceeds: (a) the Executive Council accepted the data submitted by Monsanto without any consideration of the veracity, accuracy and completeness thereof; (b) the Appeal Board did not engage with the grounds of appeal and the expert evidence, but simply rubber-stamped the decision made by the Executive Council; and, (c) the Minister further rubber-stamped the Appeal Board’s decision by way of a confirmation letter that furnished no reasons at all. [11] Parenthetically, it is perhaps necessary to touch (albeit briefly) on the precautionary principle, given its centrality to the debate. The precautionary principle, in essence, requires that where there exists evidence of possible environmental harm, decision-makers ought to adopt a cautious approach and are compelled to take protective and preventive measures before the anticipated harm materialises. Whilst there has been reference to the precautionary principle since at least the 1970s, it has more recently firmly taken root and has been referred to in almost every recent international environmental agreement, including the 1992 Rio Declaration on Environment and Development (informally described as the Earth Summit) (the Rio Declaration), the 1992 UN Framework Convention on Climate Change (Article 3(3)), the June 1990 London Amendments to the Montreal Protocol on Substances that Deplete the Ozone Layer (Preamble, para 6) and the 1992 Convention on Biological Diversity.9 [12] Principle 15 of the Rio Declaration provides: ‘In order to protect the environment, the precautionary approach shall be widely applied by States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.’ [13] The Cartagena Protocol on Biosafety to the Convention on Biological Diversity reaffirmed the precautionary approach contained in Principle 15 of the Rio Declaration. The objective of the Protocol is set out in Article 1 as follows: 9 Director-General National Parks & Wildlife Service v Shoalhaven City Council [1993] NSWLEC 191 (Shoalhaven) at 15-16. 8 ‘In accordance with the precautionary approach contained in Principle 15 of the Rio Declaration on Environment and Development, the objective of this Protocol is to contribute to ensuring an adequate level of protection in the field of safe transfer, handling and use of living modified organisms resulting from modern biotechnology that may have adverse effects on the conservation and sustainable use of biological diversity, taking into account risks to human health, and specifically focusing on transboundary movements.’ South Africa ratified the Cartagena Protocol in August 2003 and it is included as an Annexure to the Act for information purposes. [14] In Fuel Retailers, the Constitutional Court, in examining the duties imposed on environmental authorities (such as the State respondents in this case), emphasised that the approach adopted in our environmental legislation (a reference in that case to NEMA) is one of risk-aversion and caution, which entails ‘taking into account the limitation on present knowledge about the consequences of an environmental decision’.10 The Court held that the precautionary principle ‘is applicable where, due to unavailable scientific knowledge, there is uncertainty as to the future impact of the proposed development’.11 [15] In WWF South Africa v Minister of Agriculture, Forestry and Fisheries and Others,12 faced with a challenge to the determination of fishing quotas, the court (per Rogers J) made clear that the determination ought to have been informed by binding principles of environmental protection, conservation and sustainability, including the precautionary principle. Any decision taken therefore could only lawfully be taken with regard to all of these objectives and principles.13 Indeed, the failure by the decision-maker to apply the precautionary principle – and the fact that the decision ultimately taken was at odds with the precautionary principle – were cited as grounds upon which the determination was found to be unlawful, resulting in a declaration of invalidity.14 10 Fuel Retailers Association of Southern Africa v Director-General: Environmental Management, Department of Agriculture, Conservation and Environment, Mpumalanga Province and Others 2007 (6) SA 4 (CC) (Fuel Retailers) para 81. 11 Ibid para 98. 12 WWF South Africa v Minister of Agriculture, Forestry and Fisheries and Others [2018] ZAWCHC 127; [2018] 4 All SA 889 (WCC); 2019 (2) SA 403 (WCC) para 104. 13 Ibid para 83. 14 Ibid para 117. 9 [16] In the course of the judgment, where reference is made to several comparable international jurisdictions,15 Rogers J observed: ‘The risk-averse and precautionary approach mandated by NEMA and MLRA also has a bearing on this aspect of Ms Ndudane’s reasoning. The precautionary principle features widely in environmental legislation around the world. It entails that where there is a threat of serious or irreversible damage to a resource, the lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation (Jan Glazewski Environmental Law in South Africa 19-20; cf Space Securitisation (Pty) Ltd v Trans Caledon Tunnel Authority & others [2013] 4 All SA 624 (GSJ) paras 45-48)’.16 [17] The Constitutional Court adopted a similar approach in Fuel Retailers,17 which was concerned with the review of a decision to grant authorisation for the construction of a filing station. In outlining the duties of decision-makers in that context, the Court held: ‘Before concluding this judgment, there are two matters that should be mentioned in relation to the duty of environmental authorities which are a source of concern. The first relates to the attitude of Water Affairs and Forestry and the environmental authorities. The environmental authorities and Water Affairs and Forestry did not seem to take seriously the threat of contamination of the underground water supply. The precautionary principle requires these authorities to insist on adequate precautionary measures to safeguard against the contamination of underground water. . . In these circumstances one would have expected that the environmental authorities and Water Affairs and Forestry would conduct a thorough investigation into the possible impact of the installation of petrol tanks in the vicinity of the borehole, in particular, in light of the existence of other filling stations in the vicinity. The environmental authorities did not consider the cumulative effect of the proliferation of filling stations on the aquifer.’18 [18] The high court’s rejection of the appellant’s reliance on the precautionary principle was based on its finding that the precautionary principle does not find direct application in review proceedings. However, such an approach disregards the fundamental role that the precautionary principle plays in directing decision-makers in 15 Ibid para 101–104. See also J Glazewski and L Plit [2015] ‘Towards the Application of the Precautionary Principle in South African Law’ (2015) 26(1) Stellenbosch Law Review at 190. 16 Ibid 100. 17 Fuel Retailers fn 10 above. 18 Ibid paras 98-99. 10 the exercise of their discretion. The current state of knowledge and uncertainty, the potential for serious or irreversible harm and the adoption of a cautious approach is clearly consistent with the subject-matter, scope and purpose of the Act. In Director-General National Parks & Wildlife Service v Shoalhaven City Council, Stein J observed that: ‘In my opinion the precautionary principle is a statement of common sense and has already been applied by decision-makers in appropriate circumstances prior to the principle being spelt out. It is directed towards the prevention of serious or irreversible harm to the environment in situations of scientific uncertainty. Its premise is that where uncertainty or ignorance exists concerning the nature or scope of environmental harm (whether this follows from policies, decisions or activities), decision makers should be cautious.’19 [19] Delineating the role of the courts in circumstances such as this, the Constitutional Court stated: ‘The role of the courts is especially important in the context of the protection of the environment and giving effect to the principle of sustainable development. The importance of the protection of the environment cannot be gainsaid. Its protection is vital to the enjoyment of the other rights contained in the Bill of Rights; indeed, it is vital to life itself. It must therefore be protected for the benefit of the present and future generations. The present generation holds the earth in trust for the next generation. This trusteeship position carries with it the responsibility to look after the environment. It is the duty of the Court to ensure that this responsibility is carried out.’20 [20] The experts, who provided opinions in support of the appellant, highlighted several fundamental concerns, all of which were articulated in the appeal document that served before the Appeal Board. Those concerns include: (a) When regard is had to the Cartagena Protocol, which requires that claims of scientific certainty be substantiated with evidence to prove lack of potential for scientific hazards; Monsanto’s risk assessment was inadequate in identifying plausible hazards; (b) Monsanto’s claims of lack of allergenicity are unsubstantiated; (c) Monsanto itself identified a fragment of the protein used in MON87460 (cspB) that was resistant to pepsin digestion, meaning that it is not fully digestible by gastric juices, 19 Shoalhaven fn 9 above. 20 Fuel Retailers fn 10 above para 102. 11 further experimentation (such as serum analysis or animal testing) was thus required to assess potential allergenicity; (d) The data that Monsanto had included in its application showed high expression of cspB in pollen, but Monsanto has not conducted any studies on the potential and likelihood of allergenic responses to pollen; (e) There is no history of the safe use of MON87460 in the form in which it is expressed inasmuch as the data submitted by Monsanto in support of its safety claims were based on fermented and digested forms of the product; (f) There was no evidence in the record before the Executive Council, the Appeal Board and the Minister on the effects of food processing and the safety of human exposure via cooked MON87460 in South African diets, the only data included was summaries of the following – (i) A chicken feeding study in which raw maize was fed to chickens; (ii) An acute toxicity study on the effects on mice of a bacterially derived isolated protein, which has limited application to human exposure and is in any event not a study of all proteins associated with MON87460; (iii) A rat feeding study; (iv) A broiler chicken study, which was concerned with food quality standards and not with any adverse impacts on health; and, (v) Aggregated field trial summaries, which contain insufficient information to interpret and apply the findings to the application for approval for the general release of MON87460. [21] These are the precise circumstances, so contends the appellant, that ought to have triggered the application of the precautionary principle by the Executive Council, the Appeal Board and the Minister. Instead of adopting the prescribed cautious approach and requiring Monsanto to address the safety concerns that had been identified, each of the State respondents proceeded to accept the say-so of Monsanto without any further consideration of safety risks. The precautionary principle ought to have guided the decisions taken by the Executive Council, the Appeal Board and the Minister. To the extent that they did not have regard to the precautionary principle and took decisions that were at odds with its prescripts, so the contention proceeds, their decisions are liable to be reviewed and set aside. However, as interesting a discussion that a consideration of these issues is likely to generate in the light of the competing 12 contentions by the respondents, for the present, they need hardly detain us. This, because a further complaint by the appellant, that the State respondents had failed to comply with s 5(1)(a) of the Act, appears to have gone unanswered. [22] Section 5(1)(a) of the Act provides that the Executive Council shall: ‘[W]here an applicant applies in the prescribed manner for a permit to conduct activities in respect of genetically modified organisms determine whether that applicant must, in addition to his or her application, submit an assessment in accordance with the relevant provisions of [NEMA], of the impact on the environment and an assessment of the socio-economic considerations of such activities’. This provision, which is framed in peremptory terms, places an obligation on the Executive Council to make a determination as to whether or not an applicant must submit an assessment in accordance with NEMA. [23] The Rule 53 record contains no express evidence of any determination by the Executive Council as contemplated by s 5(1)(a). The argument advanced at the bar was that it would be safe to infer that the Executive Council had indeed determined that Monsanto did not have to submit such an assessment. However, such evidence, as there is, points in the opposite direction. The dissenting voice on the Appeal Board recorded: ‘Environmental Impact Assessment (EIA): There are no Indications/evidence/information to show that Monsanto was requested to submit an assessment of the impact on the environment and socio-economic considerations’. That recordal strongly suggests that, at the time that the Executive Council assessed the application for a permit for the general release of MON87460, it failed to consider or determine whether an environmental impact study in terms of NEMA was necessary. [24] The high court conflated the obligation arising from section 5(1)(a) of the Act with the applicability of the precautionary principle, finding that an environmental impact study would only be required in the event of the precautionary principle being triggered. First, as addressed above, the precautionary principle was triggered and ought to have been applied. Second, whether the Executive Council, as a matter of fact, complied with section 5(1)(a) by considering the necessity of an environmental 13 impact study to ascertain the impact on the environment of the proposed general release of MON87460, was a separate and distinct inquiry from whether the precautionary principle was triggered and should have been applied. It ought to have been a relatively simple and straightforward matter for the State respondents to have adduced evidence that a determination, one way or the other, had been made. They did not. The ineluctable conclusion is that the Executive Council failed to comply with a mandatory statutory prescript contained in section 5(1)(a). This means that the Executive Council’s decision cannot stand. Nor, for that matter, it must follow, can the decisions by the Appeal Board or the Minister. [25] In the result: a The appeal is upheld with costs including those of two counsel to be paid by the respondents jointly and severally, the one paying the other to be absolved. b The order of the court a quo is set aside and replaced with the following order: ‘1 The application succeeds with costs including those of two counsel to be paid by the respondents jointly and severally, the one paying the other to be absolved. 2 The following decisions are reviewed and set aside: 2.1 The fourth respondent’s approval during or about June 2015, of the fifth respondent’s application for the general release of MON87460; 2.2 The third respondent’s decision of 1 September 2016, dismissing the appeal lodged by the appellant against the fourth respondent’s approval of the fifth respondent’s application for the general release of MON87460; and 2.3 The first respondent’s decision of 2 December 2016, confirming the dismissal of the appeal lodged by the appellant against the fourth respondent’s approval of the fifth respondent’s application for the general release of MON87460. 3 The fifth respondent’s application for the approval of the general release of MON87460 is referred back to the fourth respondent for re-consideration.’ ________________ V M PONNAN JUDGE OF APPEAL 14 Appearances For the appellant: K Pillay SC with N Stein Instructed by: Legal Aid South Africa, Johannesburg Legal Aid South Africa, Bloemfontein For the first to fourth respondents: J Rust SC Instructed by: The State Attorney, Pretoria The State Attorney, Bloemfontein For the fifth and sixth respondents: P Lazarus SC with I Learmonth Instructed by: Webber Wentzel, 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: 22 October 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 African Centre for Biodiversity NPC v Minister of Agriculture, Forestry and Fisheries and Others (934/2023) [2024] ZASCA 143 (22 October 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal by the African Centre for Biodiversity NPC (ACB) with costs, including those of two counsel, to be paid by the respondents jointly and severally, the one paying the other to be absolved. The use of genetically modified organisms (GMOs) in South Africa is regulated by the Genetically Modified Organisms Act 15 of 1997 (the Act) and the Regulations framed thereunder, the Genetically Modified Organisms Regulations (the Regulations). The Act establishes an Executive Council for Genetically Modified Organisms and an Advisory Committee. A permit is required for the release of GMOs. Whether or not a permit is granted is determined by the Executive Council in consultation with the Advisory Committee. The process envisaged is a fact and science-based investigation into whether there are any risks posed by the release of a particular GMO into the environment and whether these risks can be effectively managed. The Advisory Committee evaluates the scientific components of applications for permits and reports to the Executive Council, which ultimately decides whether to approve the application, and issue a permit. On 14 July 2014, the fifth respondent, Monsanto South Africa (Pty) Ltd (Monsanto), applied to the Executive Council for a permit for the general release of a genetically modified variety of maize, described as MON87460. MON87460, according to Monsanto, has been genetically modified to reduce yield loss in water limited conditions. Monsanto submitted confidential and non-confidential versions of the application, which included an assessment of the risks relating to human and animal health, toxicology, allergenicity and nutrition. It was advertised in the Rapport, Business Day and Beeld newspapers during March and April 2014. Interested and affected parties were invited to comment or object. No comments or objections were received in response to the advertisements. The Advisory Committee, having considered the application, issued a recommendation on 17 December 2014 that the application be approved. On 12 June 2015, the Executive Council granted a permit to Monsanto for the general release of MON87460. On 7 August 2015, ACB, a non-governmental advocacy organisation with a focus on biosafety and agricultural biodiversity, appealed in terms of s 19 of the Act against the approval granted by the Executive Council to Monsanto for the general release of MON87460. Monsanto submitted a response to ACB’s 2 appeal on 13 July 2016. The Appeal Board, by a majority, dismissed the appeal on 1 September 2016, and the Minister of Agriculture, Forestry and Fisheries (the Minister) confirmed the Appeal Board’s decision on 2 December 2016. In April 2017, ACB applied to the Gauteng Division of the High Court, Pretoria (the high court), to review and set aside the following decisions: (a) the Executive’s Council’s decision to approve the general release of MON87460; (b) the Appeal Board’s decision dismissing the appeal; and (c) the Minister’s decision confirming the dismissal of the appeal. They also requested the high court to refer the application for the general release of MON87460 back to the Executive Council for reconsideration. The high court (per Tolmay J) dismissed the application on 27 June 2023, but granted leave to ACB to appeal to this Court. The thrust of ACB’s case was that the State respondents accepted, at face value, the claims made by Monsanto and failed to independently and critically evaluate Monsanto’s application to satisfy themselves that the health and safety risks associated with the general release of MON87460 had been properly addressed. ACB contended that the expert evidence that served before the State respondents, ought to have triggered the application of the precautionary principle enshrined in s 2 of the National Environmental Management Act 107 of 1998 (NEMA). This is so because: first, there was a lack of scientific data from which conclusions about the safety of MON87460 could be drawn; and second, the data that had been made available supported concerns about health risks arising from the use of MON87460. Accordingly, so the contention proceeded: (a) the Executive Council accepted the data submitted by Monsanto without any consideration of the veracity, accuracy and completeness thereof; (b) the Appeal Board did not engage with the grounds of appeal and the expert evidence, but simply rubber-stamped the decision made by the Executive Council; and, (c) the Minister further rubber-stamped the Appeal Board’s decision by way of a confirmation letter that furnished no reasons at all. According to the SCA, the high court’s rejection of the appellant’s reliance on the precautionary principle was based on its finding that the precautionary principle does not find direct application in review proceedings. However, such an approach, so reasoned the SCA, disregards the fundamental role that the precautionary principle plays in directing decision-makers in the exercise of their discretion. The current state of knowledge and uncertainty, the potential for serious or irreversible harm and the adoption of a cautious approach is clearly consistent with the subject-matter, scope and purpose of the Act. That aside, a further complaint by ACB, that the State respondents had failed to comply with s 5(1)(a) of the Act, appeared to have gone unanswered. This provision, which is framed in peremptory terms, placed an obligation on the Executive Council to make a determination as to whether or not an applicant must submit an assessment in accordance with NEMA. The record contained no express evidence of any determination by the Executive Council as contemplated by s 5(1)(a). The argument advanced before the SCA was that it would be safe to infer that the Executive Council had indeed determined that Monsanto did not have to submit such an assessment. However, such evidence, as there is, so stated the SCA, pointed in the opposite direction. That evidence strongly suggested that, at the time that the Executive Council assessed the application for a permit for the general release of MON87460, it failed to consider or determine whether an environmental impact study in terms of NEMA was necessary. The high court conflated the obligation arising from section 5(1)(a) of the Act with the applicability of the precautionary principle, finding that an environmental impact study would only be required in the event of the precautionary principle being triggered. The SCA held that first, the precautionary principle was triggered and ought to have been applied; and, second, whether the Executive Council, as a matter of fact, complied with section 5(1)(a) by considering the necessity of an environmental impact study to ascertain the impact on the environment of the proposed general release of MON87460, was a separate and distinct inquiry from whether the precautionary principle was triggered and should have been applied. The SCA took the view that it ought to have been a relatively simple and straightforward matter for the State respondents to have adduced evidence that a determination, one way or the other, had been made. 3 They did not. The ineluctable conclusion therefore was that the Executive Council failed to comply with a mandatory statutory prescript. This means that the Executive Council’s decision could not stand. Nor, for that matter, it had to follow, could the decisions by the Appeal Board or the Minister. In the result, the SCA upheld the appeal. --------oOo--------

4211

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1346/2022 In the matter between: CITY OF TSHWANE METROPOLITAN MUNICIPALITY APPELLANT and VRESTHENA (PTY) LTD FIRST RESPONDENT (Registration No 2001/05148/07) THE BODY CORPORATE OF ZAMBEZI RETAIL PARK SECOND RESPONDENT ZAMBEZI RETAIL PARK INVESTMENTS (PTY) LTD THIRD RESPONDENT THUMOS PROPERTIES (PTY) LTD FOURTH RESPONDENT ZRJ PROPERTIES (PTY) LTD FIFTH RESPONDENT In Re: VRESTHENA (PTY) LTD (Registration No 2001/05148/07) APPLICANT CITY OF TSHWANE METROPOLITAN MUNICIPALITY FIRST RESPONDENT THE BODY CORPORATE OF 2 ZAMBEZI RETAIL PARK SECOND RESPONDENT ZAMBEZI RETAIL PARK INVESTMENTS (PTY) LTD THIRD RESPONDENT THUMOS PROPERTIES (PTY) LTD FOURTH RESPONDENT ZRJ PROPERTIES (PTY) LTD FIFTH RESPONDENT Neutral citation: City of Tshwane Metropolitan Municipality v Vresthena (Pty) Ltd and Others (1346/2022) [2024] ZASCA 51 (18 April 2024) Coram: MOCUMIE, MBATHA and HUGHES JJA and KATHREE-SETILOANE and KEIGHTLEY AJJA Heard: 10 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 of the judgment is deemed to be 11h00 on 18 April 2024. Summary: Civil Practice – Appealability of interim orders - order held to be final in nature and appealable; municipal law – deliberate non-payment of services - appellant failed to establish a prima facie right to continue to receive electricity without payment. 3 ORDER On appeal from; Gauteng Division of the High Court, Pretoria (Ndlokovane AJ sitting as a court of first instance): 1 Condonation is granted and the appeal is reinstated. 2 The appeal is upheld with costs, such costs to include the costs consequent upon the employment of two counsel where applicable. 3 The orders of the high court are set aside and replaced by the following order: ‘The application is dismissed with costs, such costs to include the costs consequent upon the employment of two counsel where applicable.’ JUDGMENT Mbatha JA (Mocumie and Hughes JJA and Kathree-Setiloane and Keightley AJJA concurring): [1] The issues before this Court are whether the order granted by the Gauteng Division of the High Court, Pretoria, per Ndlokovane AJ (the high court) is appealable and if so, whether this Court should grant condonation, reinstate the appeal and consider the merits thereof. Background [2] A brief summary of the history is required. The Zambezi Retail Park Centre (the Retail Park) is a large commercial property situated at Erf 5 Derdepoort, R573 Meloto & R513 Zambezi. The Zambezi Retail Park Sectional Title Scheme was established in 2006 comprising eight sections. On 8 July 2010 the scheme 4 was extended to include section 9. Section 1 to 4, 7 and 8 in the building are owned by the First Respondent, Vresthena (Pty) Ltd (Vresthena), which leases them to various business entities. The management of the scheme in terms of the Sectional Titles Act 95 of 1986 (the Act) vests in the Body Corporate’s trustees elected on 19 June 2018. [3] The City provides electricity to the aforementioned properties, through the Body Corporate of Zambezi Retail Park (the Body Corporate). It is common cause that historically a petrol station, situated within the scheme, has always had a separate account with the City and a separate electricity connection. Save for the petrol station, the owner of which is not a party to this appeal, the City supplies electricity through a single supply point to the different sectional title units. The Body Corporate is billed accordingly. As of January 2022, due to the continuous failure by the Body Corporate to pay for services, the City implemented credit control measures, which included the disconnection of electricity in an attempt to collect the outstanding revenue. These measures were resisted by Vresthena. Consequently, Vresthena filed an urgent application in the high court. In Part A, which dealt with urgent relief, it sought an order compelling the City to accept and reconsider its application for a separate electricity connection for its sections of the Retail Park. In addition, it sought restoration of the electricity and water supply to the Retail Park. The relief in Part B, which was not sought urgently, was conditional on the application for a separate electricity connection being rejected by the City. In that case, Vresthena recorded in Part B that it would seek an order reviewing the rejection. [4] On 20 June 2022, the high court granted the following order in respect of the urgent, Part A, relief: 5 ‘1. The matter is certified as semi-urgent and the parties may approach the opposed motion Registrar for an expedited hearing date on the opposed motion roll where the remainder of the relief, and Part B will be dealt with. 2. Pending the hearing, the first respondent is ordered to restore electricity and/or water supply to the property known as Erf 5 Derdepoort, R573 Meloto & R513 Zambezi within 14 days of this order. 3. The first respondent is ordered to provide an updated and accurate reconciliation of the second respondent’s electricity consumption account, reflecting the current and due outstanding amount, to the second respondent’s attorney of record by 24 June 2022. 4. In the event that the second respondent wishes to dispute any of the amounts reflected on the reconciliation referred to in paragraph 2 above, then and in that event: 4.1 the second respondent will declare a formal dispute in terms of the Credit Control By-laws of the first respondent within 10 days after the receipt of the reconciliation as contemplated in paragraph 2 above, which [dispute] will be served via email on the following addresses: 4.1.1 MillyC@TSHWANE.GOV.ZA 4.1.2 WardsA@TSHWANE.GOV.ZA 4.1.3 cornelo@tshwane.gov.za 4.2 The first respondent will provide the second respondent with a written response to the aforementioned dispute within 14 days after receipt of such dispute. 4.3 The necessary adjustments will be made on the account of the second respondent. 4.4 This does not affect the rights of any party to follow any process that is available to them in law. 5. The applicant is ordered to table a resolution to the second respondent and its members within 7 days of the order being granted, to the effect that: 5.1 The second respondent will monitor alternatively appoint an independent service provider to monitor, the consumption of each of the section owners. 5.2 The second respondent will account to the owners and collect payment [from each] section owner’s consumption of electricity. 5.3 The second respondent will pay over the funds so collected from members to the first respondent timeously. 5.4 Each section owner will be liable for, and will duly pay, its electricity consumption to the second respondent and should any member of the second respondent fail to do so, the second respondent be authorised to internally disconnect the electricity supply to the non-paying section. 6 6. In the event that the first respondent fails to comply with paragraph 2 of this order timeously, the applicant is authorised to instruct an electrician and/or service provider to reconnect the electricity and/or water supply in such event, the applicant reserves its right to claim such reasonable costs from the first respondent. 7. For as long as the electricity is connected to Erf 5 Derdepoort, R573 Meloto & R513 Zambezi, the applicant will make payment of its consumption to the first respondent unless the parties come to an alternative arrangement. 8. In relation to the proceedings of 16 June 2022, each party will pay their own costs. 9. Both parties are authorised to approach this Honourable Court in the future, if need be, on the same papers, duly supplemented for further relief as the case may be necessary.’ For the sake of clarity, the reference to ‘first respondent’ in the order is to the City, and the ‘second respondent’ is a reference to the Body Corporate. Dissatisfied with the outcome of the application the City sought leave to appeal. The appeal serves before us with leave of the high court.’ Appealability of the order [5] Vresthena submitted that the order was not appealable on the basis of its interim nature. In that regard, it submitted that: (a) the order caters for the interim period until the remainder of the relief in Part A and Part B have been determined on an expedited basis; (b) that in terms of paragraph 9 of the order the parties may supplement their papers and approach the court for further relief; (c) that its application for a separate supply of electricity was attached to its court application and upon the granting of the order the City would decide on the application; (d) if the application is granted, nothing will prevent the City from pursuing the Body Corporate for arrear amounts; (e) and if the application is not granted only then would the matter proceed to the balance of Part A and Part B. [6] In addition, Vresthena advanced the argument that the order is not definitive of the rights of the parties in that paragraph 1 of the order in Part A dispenses with the argument that the order dispossesses the City of a substantial portion of the relief sought. Additionally, it submitted that as the order falls 7 outside of the Zweni triad, it is not appealable on other grounds. Lastly, Vresthena contended that paragraph 1 of Part A opened the door to any of the litigants to approach the court on an expedited hearing date on the opposed motion roll where the remainder of the relief, and Part B will be dealt with. [7] To the contrary, the City contended that the order is appealable in that it is final in effect and falls within the Zweni triad.1 It submitted that the order granted by the high court is not purely interlocutory as it cannot be corrected, altered or set aside by the judge who granted it at any time before the final judgment. In addition, it argued that the order failed to take into account the constitutional obligation that rests on the City to collect outstanding revenue for the purpose of providing basic services to the residents in its area of jurisdiction, as contemplated in the Constitution of the Republic of South Africa, Act 108 of 1996 (the Constitution) and other relevant legislation. The order was granted in favour of Vresthena even though it did not meet all the requirements of an interdict, in particular the consideration of other possible remedies at the disposal of Vresthena. The legal principles regarding the appealability of court orders [8] The traditional approach to appealability of court orders is generally regarded as being that set out in Zweni. In that case it was held that for an order to be appealable, ‘the decision must be final in effect and not susceptible to alteration by the court that granted the order, it must be definitive of the rights of the parties and it must have the effect of disposing of at least a substantial portion of the relief sought in the proceedings’.2 These principles have been confirmed in various decisions as extrapolated in the judgment of this Court in FirstRand Bank 1 Zweni v Minister of Law and Order of the Republic of South Africa [1992] ZASCA 197; [1993] 1 All SA 365 (A). 2 Ibid para 12. 8 Ltd v McLachlan and Others.3 However, as noted recently by this Court, there have subsequently been significant developments in our law in this regard.4 In City of Cape Town v South African Human Rights Commission5 it was held that: ‘After confirming that the interests of justice were paramount in assessing the appealability of an interim order, the Constitutional Court in National Treasury and Others v Opposition to Urban Tolling Alliance and Others went on to set out what factors a court should consider in assessing where the interests of justice lay: “. . . To that end, [a court] must have regard to and weigh carefully all the germane circumstances. Whether an interim order has a final effect or disposes of a substantial portion of the relief sought in a pending review is a relevant and important consideration. Yet, it is not the only or always decisive consideration. It is just as important to assess whether the temporary restraining order has an immediate and substantial effect, including whether the harm that flows from it is serious, immediate, ongoing and irreparable.” The interests of justice standard will inevitably involve a consideration of any irreparable harm. To successfully appeal an interim order an applicant will have to show that it will suffer irreparable harm if the interim appeal were not granted. Even so, stated the Constitutional Court in International Trade Administration Commission v SCAW South Africa (Pty) Limited, irreparable harm although important, is not the sole consideration and the interests of justice require an evaluation of a number of factors: “. . . The test of irreparable harm must take its place alongside other important and relevant considerations that speak to what is in the interests of justice, such as the kind and importance of the constitutional issue raised; whether there are prospects of success; whether the decision, although interlocutory, has a final effect; and whether irreparable harm will result if the appeal is not granted . . .” The first enquiry is to ascertain whether the orders granted by the high court have a final effect. For this it is necessary to compare the orders granted in respect of Part A and the orders sought in Part B, to ascertain to what extent they overlap.’ 3 FirstRand Bank Ltd v McLachlan and Others [2020] ZASCA 31; 2020 (6) SA 46 (SCA) paras 21-22. 4 Cyril and Another v Commissioner for the South African Revenue Service [2024] ZASCA 32 para 7. 5 City of Cape Town v South African Human Rights Commission [2021] ZASCA 182 paras 10-12. 9 [9] In TWK Agriculture Holdings (Pty) Ltd v Hoogveld Boerderybeleggings (Pty) Ltd and others (TWK),6 this Court dealt with the issue of appealability and, in particular the role of the overarching principle of the interests of justice. It favoured the doctrine of finality as the lodestar guiding the determination of whether an order is appealable because: ‘… It allows for the orderly use of the capacity of this Court to hear appeals that warrant its attention. It prevents piecemeal appeals that are often costly and delay the resolution of matters before the high court. It reinforces the duty of the high court to bring matters to an expeditious, and final, conclusion. And it provides criteria so that litigants can determine, with tolerable certainty, whether a matter is appealable. These are the hallmarks of what the rule of law requires.’7 The sentiments expressed in TWK, regarding avoiding the piecemeal adjudication of an appeal and its consequences, were affirmed by the Constitutional Court in Cloete and Another v S; Sekgala v Nedbank Limited8 where it held that: ‘In any event, this Court has held that in considering whether to grant leave to appeal, it is necessary to consider whether “allowing the appeal would lead to piecemeal adjudication and prolong the litigation or lead to the wasteful use of judicial resources or costs”. Similarly, in TAC I, this Court stated that “it is undesirable to fragment a case by bringing appeals on individual aspects of the case prior to the proper resolution of the matter in the court of first instance”. This is one of the main reasons why interlocutory orders are generally not appealable while final orders are.’ [10] TWK did not consider the Constitutional Court’s judgment in United Democratic Movement and Another v Lebashe Investment Group (Pty) Ltd and Others,9 which affirmed the role of the interests of justice in this Court’s consideration of the question of appealability. The effect of Lebashe is that just 6 TWK Agriculture Holdings (Pty) Ltd v Hoogveld Boerderybeleggings (Pty) Ltd and Others [2023] ZASCA 63; 2023 (5) SA 163 (SCA) para 19. 7 Ibid para 21. 8 Cloete and Another v S; Sekgala v Nedbank Limited [2019] ZACC 6; 2019 (5) BCLR 544 (CC); 2019 (4) SA 268 (CC) para 57. 9 United Democratic Movement and Another v Lebashe Investment Group (Pty) Ltd and Others [2022] ZACC 34; 2023 (1) SA 353 (CC0; 2022 (12) BCLR 1521 (CC). 10 because an order is interlocutory is not decisive as to its appealability.10 This Court recently held in Nedbank Limited and Another v Survé and Others11 that ‘(i)n a matter where no case was made out for an interim interdict and the order accordingly ought never to have been granted in the first place, along with other relevant considerations, interests of justice might well render an interim interdict appealable despite the Zweni requirements not having been met’. In Lebashe, the Constitutional Court was moved to consider an interim order appealable because of the grave prejudice it caused to the constitutional protection of freedom of expression.12 In Survé this Court similarly found an interim order that was based on a prima facie finding, by the equality court, that the interdicted party had committed an act of unfair racial discrimination, to be appealable. In arriving at that decision, this Court took into account the serious reputational repercussions for the interdicted party in allowing an order to stand in circumstances where it ought never to have been made in the first place.13 [11] In sum, then, on the jurisprudence as it stands, an interim order may be appealable, taking into account a range of factors. The Zweni requirements play an important role in determining the issue of appealability in a particular case, but they are not immutable. The interests of justice continue to play a substantial role in the inquiry. What those interests are involves a finely weighed consideration of relevant factors in each case. Evaluation [12] With regard to the orders granted by the high court in Part A and Part B in this matter, one of the questions that need to be considered is whether the orders 10 Cyril para 8. 11 Nedbank Limited and Another v Survé and Others [2023] ZASCA 178; [2024] 1 All SA 615 (SCA) para 18. 12 Lebashe para 45. 13 Survé para 30. 11 are final in nature, more particularly in their effect, rather than their form.14 I agree with the City’s submissions that what needs to be considered is the consequences of the orders and the conditions brought about by what Vresthena considers to be interim orders. The effects thereof which may not be capable of being undone and a fresh order may be required to reverse the final effect thereof. [13] The orders that were granted by the high court have a number of shortcomings. First, the order does not make reference to the application for an additional electricity service connection as sought by Vresthena in paragraph 1 of Part B of the notice of motion. Second, the duration of the order is indefinite which means that it shall endure until such time that the legal process in Part B is completed. This leaves all the parties in a state of uncertainty. Third, there is no causal link between the order granted by the court in Part A and Part B of the notice of motion. Part A directs the City to continue to supply electricity and water to the entire Retail Park pending the resolution of Part B. However, Part B is directed only at a possible review of a possible decision by the City to refuse Vresthena’s application for a separate supply to the units or sections owned by it. What is more, there is no time frame laid down for the anticipated review or for Vresthena to file its application with the City for a separate electricity supply as contemplated in s 7 of its By-laws. Therefore, the court order does not set out steps to regulate Part B of the application. Fourth, the restoration of electricity without the provision for the payment of arrears creates an anomaly in that the City is forced to provide electricity to the property where payment is not being made. Lastly, the chilling effect of the order is that it compels the City to act contrary to the prevailing law and its constitutional mandate: it must continue to supply electricity to users who are in arrears and have a history of non-payment for the foreseeable future, and at the same time the City is denied the statutory 14 Lebashe para 41. 12 power to terminate services without approaching a court to obtain leave to do so. These characteristics of the order demonstrate that its effect is final in nature. At the very least, for reasons I traverse below, this is one of those cases where the relief sought ought to have never been granted, and the order is appealable on this basis too. [14] I do not agree with the argument submitted on behalf of Vresthena on a number of grounds. The doctrine of finality as envisaged in TWK cannot be blindly applied to an interim order which is final in effect and where a grave injustice would result. It was submitted on behalf of Vresthena that Part A of the order balanced the competing interest of the parties, pending the hearing of Part B, in that electricity will be provided and Vresthena will pay the City for the electricity consumed, whilst the dispute relating to the accuracy of the account can be registered and reviewed in the interim. As alluded to already, this argument is flawed as it does not address the payment of arrears. In addition, the argument is made against the backdrop that the electricity would be restored to the entire Retail Park. Disturbingly, however, the order places no direct obligation on other owners to pay for their consumption of electricity. It merely directs the applicant to place a resolution before the Body Corporate as to how payment to it, and hence to the City, should be dealt with in future. In other words, the City is obliged to reconnect services to all owners without a concomitant obligation on all of them to pay for the services they use. Lastly, there was no mention that Vresthena has made any arrangements for the payment of arrears to the City or the Body Corporate. The order simply insulates the Body Corporate and its members from payment for the consumption of electricity. This is bound to lead to irreparable harm to the City. [15] Vresthena’s argument that Part B would be determined on an expedited basis is misplaced as the order is silent on the time frames. Vresthena relies on 13 paragraph 9 of the order in Part A which states that ‘both parties are authorized to approach this honourable Court in the future, if needs be, on the same papers duly supplemented for further relief as the case may be’. The order as framed is disjunctive. As it stands, paragraph 9 refers to the variation of the orders which have no relation to each other. This would have the effect that Vresthena and the Body Corporate would enjoy carte blanche the supply of the electricity to the Retail Park without making payments to the City. I conclude by making a finding that the order is thus appealable. [16] This finding on appealability of the order has a direct link to the determination of the application for condonation for the late filling of the notice of appeal and reinstatement of the appeal by the City. Having considered the opposed application on this, I find the explanation reasonable and that there are indeed strong prospects of success on the merits. Consequently, condonation is granted and the appeal is reinstated. The merits of the application The law [17] In Vresthena’s application for an interdict, it sought an order directing the City to continue to restore and continue to supply the whole Retail Park with electricity while it applied for a separate electricity supply point. The question is whether the high court erred in finding that it had met the requirements for an interdict of this nature, particularly in light of the City’s powers and obligations in respect of the supply of electricity. [18] It is important that I should set out the relevant provisions of the law that govern the supply of electricity to the people of South Africa. The duty of the municipality to provide electricity is regulated by the Constitution, statutes and By-laws. The relevant provisions of the Constitution are as follows: 14 ‘152. Objects of local government (1) The objects of local government are— (b) To ensure the provision of services to communities in a sustainable manner;. . . (2) A municipality must strive, within its financial and administrative capacity, to achieve the objects set out in subsection (1). 153. Developmental duties of municipalities A municipality must— (a) Structure and manage its administration and budgeting and planning processes to give priority to the basic needs of the community, and to promote the social and economic development of the community; and . . . 156. Powers and functions of municipalities (1) A municipality has executive authority in respect of, and has the right to administer— (a) The local government matters listed in Part B of Schedule 4 and Part B of Schedule 5; and … (2) A municipality may make and administer By-laws for the effective administration of the matters which it has the right to administer.’ (Emphasis Added.) [19] The provision of electricity is a local government competency. Amongst the general duties of a municipality set out in s 73(1)(c) of the Local Government Municipal Systems Act 23 of 2000 (the Systems Act), is that a municipality ‘must ensure that all members of the local community have access to at least the minimum level of basic services’. Section 73(2)(c) requires a municipality to be financially sustainable. In order to realise that goal, Chapter 9 of the Systems Act regulates credit control and debt collection measures for services rendered by the municipality. Section 96 of the Systems Act15 places the debt collection responsibility on the municipality. As a result, in terms of s 98 of the Systems 15 Debt collection responsibility of municipalities. —A municipality— (a)must collect all money that is due and payable to it, subject to this Act and any other applicable legislation; and (b) for this purpose, must adopt, maintain and implement a credit control and debt collection policy which is consistent with its rates and tariff policies and complies with the provisions of this Act. 15 Act, a municipal council must adopt By-laws to give effect to its credit control and debt collection policy, its implementation and enforcement.16 [20] It is apposite that I should highlight the relevant provisions of the City of Tshwane Metropolitan Municipality Standard Electricity Supply By-laws (2013) (the By-laws): ‘1. Definitions “Consumer” means the occupier of any premises of which the Municipality has agreed to supply or is actually supplying electricity. . . 4. Supply by agreement (1) No person may use and no person is entitled to use an electricity supply (new or existing) or consume electricity from the Municipality unless or until such a person has: (a) entered into an agreement in writing with the Municipality for the supply and consumption of electricity, and the agreement, together with the provisions of these By-laws, in all respects governs the supply and consumption of electricity to and by the relevant person with whom the municipality concludes such agreement; and . . . (3) If in respect of any premises, an applicant, occupier or consumer is not the registered owner of the premises, an agreement in writing between the owner of the premises and the consumer for the rendering of a connection is required beforehand. The agreement reached binds both the consumer and the owner of the premises. . . 18. Payment of charges (1) The consumer is liable for all electricity supplied, whether metered or unmetered, to his or her premises, including electricity supplied on a prepayment basis, at the prescribed tariff, a copy of which is obtainable from the Municipality during normal office hours at the prescribed fee. (2) The Municipality must render an account to the consumer on a regular basis in respect of electricity which is metered by means of a conventional meter (excluding consumers with unmetered electricity supply in accordance with an agreement with the Municipality). The 16 By-laws to give effect to policy. — (1) A municipal council must adopt By-laws to give effect to the municipality’s credit control and debt collection policy, its implementation and enforcement. (2)By-laws in terms of subsection (1) may differentiate between different categories of ratepayers, users of services, debtors, taxes, services, service standards and other matters as long as the differentiation does not amount to unfair discrimination. 16 municipality must provide on the account all information (meter readings, dates, etc) on which the account is based. (3) All accounts envisaged in sub-section (2) are deemed payable on the due date reflected on the account and, on the consumer's failure to pay, the Municipality must notify the consumer and eventually disconnect the electricity supply to the premises of the consumer. The account as issued is considered the first notification of the amount payable. (4) As regards the accounts envisaged in sub-section 2, an error or omission on any account from the Municipality or failure by the Municipality to render an account does not relieve the consumer of the obligation to pay the amount due for electricity supplied to and consumed at the premises. The onus is on the consumer to ensure that the account rendered is in accordance with the prescribed tariff, charges and fees for and in respect of the electricity supplied to the premises. . . . 21. Right to disconnect and suspend supply and the purchase of electricity on a prepayment basis (1) The Municipality and the contractor acting on the instruction of the Municipality, shall have the right, after giving notice, to disconnect, suspend, curtail or reduce the electricity supply to any premises and/or suspend, curtail, reduce, or halt the purchase of electricity by a consumer on a prepayment basis if – (a) the consumer or another person liable for payment for the supply of electricity to the premises and/or for payment for any other municipal services in respect of the premises, fails to pay any charge due to the Municipality in respect of any electricity supplied and/or any other municipal service provided by the Municipality in respect of the premises, has failed to effect payment timeously to the Municipality.’ (Emphasis Added.) Evaluation of the merits [21] I have taken into account that Vresthena does not have a contract with the City. The contract is between the City and the Body Corporate. The Body Corporate, which Vresthena alleges to be dysfunctional did not bring the application. Although the Body Corporate was cited as the second respondent, it did not oppose the application nor did it file any supplementary affidavits in support of the application by Vresthena. 17 [22] It is common cause that there is a history of non-payment for electricity services since the time when the property was under the control of the previous owner of the relevant sections Div Prop 11 (Pty) Ltd and Div Prop 12 (Pty) Ltd (Div Prop), and thereafter their liquidators. As long ago as 11 December 2015, the City was ordered to reconnect the electricity supply to Div Prop’s sections and Div Prop was ordered to settle the amount of R2.7 million owed to the City in tranches. On 15 January 2016 Mystra (Pty) Ltd (Mystra), which owned the Super Spar and Tops, applied for a separate electricity account. The application was, however, declined by the City engineer. The reason given was that no separate connections can be given to sectional title sections, as the contract was with the Body Corporate. In terms of the court order, the liquidators had until September 2017 to settle their debt with the City, which they did. [23] On the 3 October 2017, the Body Corporate had applied for a new account with the City and entered into a new agreement for the provision of services for the Retail Park. On 14 February 2018, the City disconnected electricity due to non-payment. Mystra and Vresthena brought an urgent application to court for the reconnection of the electricity supply, and they sought a separate electricity supply. They did not cite the Body Corporate in that application. [24] The most significant development was that on 19 June 2018 a special general meeting of the Body Corporate was held, where new trustees were elected. They were given the mandate to address the electricity issue. According to Vresthena they did nothing. Vresthena alleged that on 19 February 2019 they applied for a prepaid meter, which application was declined by the City. The City always maintained a view that owners of the sections must sort out the governance with the Body Corporate that had a contract with the City. The City maintained that by January 2022 the Retail Park owed it an amount in excess of R24 million. No payment had been made since November 2017 when the Body 18 Corporate took over from the liquidators. The bulk supply system, according to the City was chosen by the Body Corporate and as a result, Vresthena could not seek to have a separate meter installed. Vresthena countered by stating that they were not liable for the entire amount to the City as part of the debt had prescribed. [25] The Constitutional Court in Mkontwana v Nelson Mandela Metropolitan Municipality17 held that electricity is a component of basic services and that municipalities are constitutionally and statutorily obliged to provide their residents with electricity. However, non-payment for such services has a negative impact on the provision of such services by the municipalities. In that regard citizens have to pay for such services. As a form of credit control, any municipality has a statutory right to terminate such services on notice. Section 102 of the Systems Act gives municipalities a discretion to implement any debt collection and credit control measures provided for in the Act. The City relies on s 21 of the Standard Electricity Supply By-law (2013) (the Electricity By-Law), which reaffirms its right to disconnect the supply of electricity. [26] Section 4(1) of the Electricity By-law provides that the provision of electricity is governed by the agreement between the City and the relevant person who has concluded the agreement with the City. Section 4(3) provides for cases where the applicant is not the registered owner of the premises. In that case, there must be an agreement in writing between the parties which binds both the consumer and the owner of the premises. Section 18 regulates the payment for all the electricity supplied, whether metered or unmetered. The City is obligated to render an account to the consumer on a regular basis. In the event that the consumer fails to pay, the City must notify the consumer and eventually disconnect the electricity supply to the premises of the consumer, which is in 17 Mkontwana v Nelson Mandela Metropolitan Municipality [2004] ZACC 9; 2005 (1) SA 530 (CC); 2005 (2) BCLR 150 (CC) paras 35 and 38. 19 terms of s 18(3). Section 18 (4) provides that ‘[a]s regards the accounts envisaged in sub-section 2, an error or omission from the Municipality or failure by the Municipality to render an account does not relieve the consumer of any obligation to pay for the amount due for electricity supplied to and consumed at the premises. The onus is on the consumer to ensure that the account rendered is in accordance with prescribed tariff, charges and fees in respect of` the electricity supplied to the premises’. [27] In Joseph and Others v City of Johannesburg and Others18 (Joseph) the Constitutional Court held that municipalities are obliged to provide electricity to residents in their area as a matter of public duty. The duty to provide electricity is set out in ss 152(1) and 153 of the Constitution read together with the duties of the municipal councils set out in ss 4(2) and s 73 of the Systems Act. This creates a reciprocal obligation. If debts are not paid to the municipality it has a constitutional duty to implement debt collection measures. The Constitutional Court in Joseph as per Yacoob J held that ‘it is important for unpaid municipal debt to be reduced by all legitimate means’.19 In a separate concurring judgment O’Regan J affirmed that ‘[t]here can be no doubt that municipalities bear an important constitutional obligation and a statutory responsibility to take appropriate steps to ensure the efficient recovery of debt’.20 [28] Vresthena submitted that since the disconnection of electricity on 13 April 2022, the Body Corporate endeavoured to negotiate the outstanding account with the City, but to no avail. It submitted that part of the debt was no longer claimable as it had prescribed. The responsibility for the payment of electricity rested squarely on the Body Corporate, that is the Body Corporate manager, the Retail 18 Joseph and Others v City of Johannesburg and Others [2009] ZACC 30; 2010 (3) BCLR 212 (CC) 2010 (4) SA 55 (CC). 19 Ibid 42. 20 Ibid 43. 20 Park and no one else, as it had entered into a contract for a bulk supply of electricity with the City as from October 2017. The owners of the various sections of the Sectional Titles Scheme are in terms of the Sectional Titles Act, obliged to pay their levies to the Body Corporate, who in turn must pay for electricity and other services. [29] Vresthena has not given any reasons why the Body Corporate has failed to make payment for the consumption of the electricity in the Retail Park. There was no averment by Vresthena that, they, as owners of various sections, have made payments to the Body Corporate, nor compelled the Body Corporate to perform its mandate. They simply allege that the Body Corporate is dysfunctional and expect the municipality to regulate the Body Corporate’s affairs. A municipality has no right to interfere in the affairs of the Sectional Titles Scheme. I find it disturbing that instead of compelling the Body Corporate, whom Vresthena cited as a second respondent, to perform its mandate, it failed to do that. Vresthena and other owners have a remedy in terms of the Sectional Titles Act, which entitles them to appoint new and effective trustees, but they have not resorted to that. [30] In its founding affidavit, Vresthena merely states that new trustees were appointed, and their mandate was to sort the electricity issue out, but nothing happened. The Retail Park is a business complex which leases premises to ‘blue chip companies’, but its Body Corporate fails to pay the necessary dues to the City. This means that the City is financing Vresthena and other sectional title owners in their business interests. [31] Electricity is a basic municipal service.21 Section 2 of the National Energy Act 34 of 2008 provides that its object amongst others, is to ensure an 21 Joseph and Others v City of Johannesburg and Others [2009] ZACC 30; 2010 (3) BCLR 212 (CC) 2010 (4) SA 55 (CC) para 34. 21 uninterrupted supply of energy to the nation and to facilitate energy access to improve the quality of life of South African people. However, the right to access electricity is not absolute. Non-payment for the provision of electricity impacts negatively on the supply thereof. Chapter 9 of the Systems Act regulates the credit control and debt collection processes of the municipality, which ensures the viability of the municipalities. [32] From this it may be concluded that Vresthena and the other owners of the sections had no right, even prima facie, to continue to receive electricity without payment for those services. The City was enjoined to implement the credit and debt collection measures against the Body Corporate and terminate the supply of electricity to the Retail Park. The order of the high court failed to take this into account. It assumed, despite the history of ongoing non-payment over many years, that Vresthena and the other owners had a right to receive electricity and ordered the restoration of its supply without imposing the reciprocal obligation on the owners for payment of the substantial arrear amount. It even sanctioned the illegal reconnection of electricity by civilians other than the City. The high court failed to consider whether Vresthena had other alternatives, when it clearly did. As already alluded to, Vresthena and the other owners have recourse against the Body Corporate. It is not enough for them to say that the Body Corporate is dysfunctional and, therefore, it cannot take steps to rectify the situation regarding payment to the City for the electricity consumed by the commercial owners of sections in the Retail Park. [33] In effect, the high court’s order impermissibly interfered with the constitutional obligation on the City to ensure the collection of revenue for the services it provides. Consequently, the high court should not have granted the order as it did not satisfy the requirements of an interdict. 22 [34] As a result, the following orders are made: 1 Condonation is granted and the appeal is reinstated. 2 The appeal is upheld with costs, such costs to include the costs consequent upon the employment of two counsel where applicable. 3 The orders of the high court are set aside and replaced by the following order: ‘The application is dismissed with costs, such costs to include the costs consequent upon the employment of two counsel where applicable.’ _____________________ Y T MBATHA JUDGE OF APPEAL 23 Appearances For the applicant: M A Dewrance SC and N Erasmus Instructed by: Diale Mogashoa Attorneys, Pretoria Honey Attorneys, Bloemfontein. For the respondent: M Louw Instructed by: Wiese and Wiese Inc, Pretoria Hendre Conradie Inc, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 18 April 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 City of Tshwane Metropolitan Municipality v Vresthena (Pty) Ltd (Registration No 2001/05148/07) and Others (1346/2022) [2024] ZASCA 51 (18 April 2024) Today the Supreme Court of Appeal (SCA) handed down judgment upholding with costs an appeal against the decision of the Gauteng Division of the High Court, Pretoria (the high court). The brief facts were as follows: The Zambezi Retail Park Centre (the Retail Centre) was a large commercial property situated at Erf 5 Derdepoort, R573 Meloto & R513 Zambezi. The Zambezi Retail Park Sectional Title Scheme was established in 2006 comprising of eight sections. On 8 July 2010 the scheme was extended to include section 9. Section 1 to 4, 7 and 8 in the building were owned by the First Respondent, Vresthena (Pty) Ltd (Vresthena), which leased the sections to various business entities. The management of the scheme in terms of the Sectional Titles Act 95 of 1986 (the Act) vested in the Body Corporate’s trustees elected on 19 June 2018. The City provided electricity to the aforementioned properties, through the Body Corporate of Zambezi Retail Park (the Body Corporate). It was common cause that historically a petrol station, situated within the scheme, had always had a separate account with the City and a separate electricity connection. Save for the petrol station, the owner of which was not a party to this appeal, the City supplies electricity through a single supply point to the different sectional title units. The Body Corporate was billed accordingly. As of January 2022 due to the continuous failure by the Body Corporate to pay for services, the City implemented credit control measures, which included the disconnection of electricity in an attempt to collect the outstanding revenue. These measures were resisted by Vresthena. Consequently, it filed an urgent application in the high court. In part A, which was directed at the urgent relief, it sought an order compelling the City to accept and reconsider its application for a separate electricity connection for its sections of the retail complex. In addition, it sought restoration of the electricity and water supply to the retail complex. The relief in part B, which was not sought urgently, was conditional on the application for a separate electricity connection being rejected by the City. In that case, Vresthena recorded in part B that it would seek an order reviewing the rejection. On 20 June 2022, the high court granted the order in favour of Vresthena. Dissatisfied with the outcome of the application the City sought leave to appeal. The appeal served before us with leave of the high court. The issues before this court were whether the order granted by the High Court Pretoria (the high court) was appealable and if so, whether this Court should have granted condonation and reinstated the appeal and considered the merits thereof. Regarding the appealability of the order, Vresthena submitted that the order was not appealable on the basis of its interim nature and fell outside the Zweni triad, whereas, the City submitted that the order was appealable in that it was final in effect and fell inside of the Zweni triad. 2 In its findings, the SCA held that, the jurisprudence as it stood, stated that an interim order may be appealable, taking into account a range of factors. The Zweni requirements played an important role in determining the issue of appealability in a particular case, but they were not immutable. The interests of justice continued to play a substantial role in the inquiry. What those interests were, involved a finely-weighed consideration the relevant factors in each case. The SCA further held that the orders that were granted by the high court have a number of short comings. First, the order did not make reference to the application for an additional electricity service connection as sought by Vresthena. Second, the duration of the order was indefinite which meant that it would endure until such time that the legal process in Part B was completed which left all the parties in a state of uncertainty. Third, there was no causal link between the order granted by the court under Part A and Part B of the notice of motion. Part A directed the City to continue to supply electricity and water to the entire Retail Park pending the resolution of Part B. However, Part B was directed only at a possible review of a possible decision by the City to refuse Vresthena’s application for a separate supply to the units or sections owned by it. What was more held the SCA, w that, there was no time frame laid down for the anticipated review or for Vresthena to file its application with the City for a separate electricity supply as contemplated in s 7 of its By-Laws. Therefore, the court order did not set out steps to regulate Part B of the application. Fourth, the restoration of electricity without the provision for the payment of arrears creates an anomaly in that the City was forced to provide electricity to the property where payment was not being made. Lastly, the chilling effect of the order was that the order compelled the City to act contrary to the prevailing law and its constitutional mandate: it must continue to supply electricity to users who were in arrears and had a history of non-payment for the foreseeable future, and they were denied their statutory power to terminate services without approaching a court to obtain leave to do so. These characteristics of the order demonstrated that its effect was final in nature. The Court, further held that Vresthena and the other owners of the sections had no right, even prima facie, to continue to receive electricity without payment for those services. On the other hand, the City was enjoined to implement the credit and debt collection measures against the Body Corporate and terminate the supply of electricity to the retail complex. The order of the court a quo failed to take this into account. It assumed that Vresthena and the other owners had a right to receive electricity and ordered the restoration of its supply without imposing the reciprocal obligation on the owners for payment of the substantial arrear amount, and despite the history of ongoing non-payment over many years. In addition, the SCA also held that the court a quo failed to consider whether Vresthena had other alternatives. Which it clearly did. The SCA found that, Vresthena and the other owners had recourse against the Body Corporate. It further held that, it was not enough for them to say that it was dysfunctional and therefore they could not take steps to rectify the situation regarding payment to the City for the electricity consumed by the commercial owners of the sections in the Retail Park. In effect held the SCA, the high court’s order impermissibly interfered with the Constitutional obligation on the City to ensure the collection of revenue for the services it provided. Consequently, the high court should not have granted the order as it did not satisfy the requirements of an interdict. As a result, the following order was made: Condonation was granted and the appeal reinstated; the appeal was upheld with costs and the high court order was set aside and replaced with the following orders: ‘The application is dismissed with costs.’ ~~~~ends~~~~

4279

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 737/2023 In the matter between C A R APPELLANT and THE CENTRAL AUTHORITY OF THE REPUBLIC OF SOUTH AFRICA FIRST RESPONDENT Y R SECOND RESPONDENT Neutral citation: C A R v The Central Authority of The Republic of South Africa and Another (737/2023) [2024] ZASCA 103 (21 June 2024) Coram: MOLEMELA P, MOCUMIE ADP, GOOSEN and MOLEFE JJA and MBHELE AJA Heard: 15 February 2024 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 21 June 2024 Summary: Hague Convention on the Civil Aspects of International Child Abduction – whether a defence to the application for the return of the child to Canada was established as envisaged in article 13(b) – abducting parent has not shown, on a balance of probabilities, that there was a grave risk that a court-ordered return of the child to Canada would expose him to psychological hardship or otherwise place him in an intolerable situation – article 13(b) defence not established – appeal upheld. 2 ____________________________________________________________________________ ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Neukircher J, sitting as a court of first instance): 1 The appeal is upheld. 2 Each party to pay its own costs. 3 The order of the high court is set aside and replaced with the following: ‘3.1 It is ordered and directed that the minor child (CJ) be returned forthwith, but subject to the terms of this order, to the jurisdiction of the Central Authority of Canada. 3.2 In the event of the respondent (the mother) giving written notification to the Central Authority of the Republic of South Africa, Pretoria (the RSA Central Authority) within five days of the date of issue of this order that she intends to accompany CJ on his return to Canada, the provisions of paragraph 3.3 shall apply. 3.3 The second applicant (the father) shall, within 20 days of the date of issue of this order, institute proceedings and pursue them with due diligence to obtain an order of the appropriate judicial authority in Canada in substantially the following terms: 3.3.1 Unless and until ordered by the appropriate court in Canada: 3.3.1.1 On date of departure of the mother and CJ from South Africa to Canada in terms of the order of the Supreme Court of Appeal of South Africa under SCA case number 737/2023, residence of CJ shall vest with the mother, subject to the reasonable rights of contact of the father. 3.3.1.2 The father is ordered to purchase and pay for economy class air tickets for the mother and CJ to travel by the most direct route from Johannesburg, South Africa, to Calgary, Alberta, Canada. 3.3.1.3 The father is ordered to make his current home, situated at 303, 380 Smith Street NW, Calgary, Alberta, T3B 6M4, (the Smith Street home), or equivalent accommodation available 3 to the mother and CJ as their residence, leaving all furniture, appliances, cutlery, crockery and linen in the home, and for such purpose shall vacate such home before date of departure of the mother and CJ from South Africa to Canada. In the event that the Smith Street home has been sold, the father shall provide CJ and the mother with equivalent accommodation. 3.3.1.4 The father is ordered to pay the following costs and expenses associated with the mother’s and CJ’s occupation of the home in para 3.3.1.3 above; rates, levies, electricity, refuse, water, heating and internet. 3.3.1.5 The father is ordered to pay the mother $1 000.00 (one thousand Canadian dollars) per month, in addition to the amount that he currently pays in the sum of $600.00 (six hundred Canadian dollars) per month (i.e. a total of $ 1 600.00 (one thousand six hundred Canadian dollars)) per month), into an account of the mother’s choosing, as cash maintenance for the mother and CJ. The first pro rata payment shall be made to the mother on the day upon which she and CJ arrive in Canada and thereafter monthly in advance on the first day of each succeeding month. 3.3.1.6 The father is ordered to pay the costs of and associated with the agreed upon crèche that CJ may attend, and for the continuation of therapy CJ is currently receiving from medical professionals. 3.3.1.7 The father is ordered to continue to pay for the medical aid on which he has registered the mother and CJ, and to cover any further reasonable and necessary medical costs not covered by the Canadian governmental medical coverage and medical aid. 3.3.1.8 The father is ordered to provide the mother with access to a roadworthy motor vehicle upon the mother’s arrival in Calgary, Alberta, Canada. 3.3.1.9 The father and the mother are ordered to cooperate fully with the RSA Central Authority, the Central Authority for 4 Canada, the relevant court or courts in Canada, and any professionals who are approved or appointed by the relevant court or courts in Canada to conduct any assessment to determine what future residence and contact arrangements will be in the best interests of CJ. 3.4 In the event of the mother giving notice to the RSA Central Authority in terms of paragraph 3.2 above, the order for the return of CJ shall be stayed until an appropriate court in Canada has made the order referred to in paragraph 3.3 above and, upon the RSA Central Authority being satisfied that such an order has been made, he shall notify the mother accordingly and ensure that the terms of paragraph 3.1 are complied with. 3.5 In the event of the mother failing to notify the RSA Central Authority in terms of paragraph 3.2 above of her willingness to accompany CJ on his return to Canada, or electing not to return to Canada with CJ, the RSA Central Authority is authorised to make such arrangements as may be necessary to ensure that CJ is safely returned to the custody of the Central Authority for Canada and to take such steps as are necessary to ensure that such arrangements are complied with, and in such event CJ is to return to Canada in the care of his father. 3.6 Pending the return of CJ to Canada as provided for in this order, the mother shall not remove CJ on a permanent basis from the province of Gauteng and, until then, she will keep the RSA Central Authority informed of her physical address and contact telephone numbers. 3.7 The RSA Central Authority is directed to seek the assistance of the Central Authority for Canada in order to ensure that the terms of this order are complied with as soon as possible. 3.8 In the event of the mother notifying the RSA Central Authority, in terms of paragraph 3.2 above, that she is willing to accompany CJ to Canada, the RSA Central Authority shall forthwith give notice thereof to the Registrar of Gauteng Division of the High Court, Pretoria, to the Central Authority for Canada, and to the father. 3.9 In the event of the appropriate court in Canada failing or refusing to 5 make the order referred to in paragraph 3.3. above, the RSA Central Authority and/or the father is given leave to approach this Court for a variation of this order. 3.10 A copy of this order shall forthwith be transmitted by the RSA Central Authority to the Central Authority for Canada. 3.11 Each party to pay its own costs.’ ____________________________________________________________________________ JUDGMENT Molemela P and Mocumie ADP (Goosen and Molefe JJA and Mbhele AJA concurring) Introduction [1] This case concerns the global phenomenon of child abduction and involves an application premised on the provisions of Hague Convention on the Civil Aspects of International Child Abduction (the Hague Convention).1 The matter brings to the fore the difficult task faced by courts whenever they are called upon to decide whether to return an abducted or retained child to his or her home country as contemplated in article 12 of the Hague Convention. As aptly observed in a number of decisions, the task of a court in deciding such a matter is rendered difficult due to the fact that article 13(b) ‘requires the court to make a decision about the interests of a particular child in a specific case in the context of, on the one hand, a factual situation that is more often than not charged with emotion and expectation, and on the other, the very limited determination of what constitutes an exception to the duty of the court to order the immediate return of the child’.2 [2] The present case comes to us as an appeal by the father of a minor child (CAR) against the judgment and order of the Gauteng Division of the High Court, Pretoria per Neukircher J (the high court), which dismissed the application for the return of the minor 1 The Convention was adopted at the 17th session of the Hague Convention on Private International Law on 24 October 1980. It entered into force between the signatories on 1 December 1983. It was drafted to ensure the prompt return of children who have been wrongfully removed from their country of habitual residence, or wrongfully retained in a country that is not their country of habitual residence. South Africa acceded to the Convention with the promulgation of the Hague Convention on the Civil Aspects of International Child Abduction Act 72 of 1996, to which South Africa became a signatory on 1 October 1997. 2 Danaipour v McLarey 286 F. 3d 1 (1st Cir. 2002) para 4. 6 child (CJ) to CAR in Canada. The application in the high court was launched by the Central Authority of the Republic of South Africa (the Central Authority) against CJ’s mother, (YR) who, it was alleged, had retained CJ in Pretoria during the family’s visit to South Africa in July 2022. Before considering the defences raised by the respondent in the high court and in this Court, we set out the factual background, which is neatly summarised in the judgment of the high court. Factual matrix [3] CAR and YR were married in 2011. At that time, they were South African citizens who lived and worked in South Africa. During 2014, they decided to relocate to Canada. YR was accepted in a Master’s degree orthodontic programme at the University of Manitoba, Winnipeg, Canada in early 2015. She was granted a temporary Canadian student visa and, CAR was granted a temporary open work visa. They arrived in Winnipeg on 11 June 2015 and stayed with friends. They subsequently applied for Manitoba’ Provincial Department Programme, which is considered a stepping stone for the application for permanent residency. They were granted permanent residency on 30 January 2017. They then applied for citizenship. In 2018, they moved to Calgary, the province of Alberta, where YR opened a dental practice. CAR and YR also purchased fixed property and took out a mortgage bond. YR was later appointed as an associate at a well-known orthodontics practice in Calgary. In 2021 she renewed that contract for another two years. [4] On 20 July 2021, the couple’s minor son, CJ, was born. The three lived together as a family in Calgary. YR subsequently suffered from postpartum depression, details whereof will be canvassed later in the judgment. On 22 December 2021, the couple was invited to take a citizenship test. In April 2022, the couple attended the Canadian Citizen Oath Ceremony and, on 27 April 2022, a certificate of Canadian citizenship was issued to the couple, thus officially making them Canadian citizens. [5] They subsequently made plans to visit their extended family in South Africa. They bought flight tickets for 9 July 2022 and the return flight was booked for 23 July 2022. However, on 8 July 2022, CAR observed that YR had packed her orthodontic equipment in her luggage, as well as the couple’s marriage certificate, among others. The family nevertheless left Canada on 9 July 2022 and travelled to South Africa. On arrival in South 7 Africa on 10 July 2022, YR informed CAR that she no longer intended to go back to Canada and that she intended to keep CJ with her in South Africa. CAR did not agree and sought legal advice. On 19 July 2022, CAR left South Africa and upon arrival in Canada, approached the Central Authority of Canada and initiated proceedings for the return of CJ in terms of the Hague Convention. It appears that the Alberta Justice and Solicitor General only sent the required request to the Central Authority of South Africa on 15 November 2022. On 20 December 2022, an application was launched in the high court by the Central Authority of the Republic of South Africa as the first applicant and CAR as the second applicant. [6] In the high court, YR raised three defences namely: (a) disputing that CJ’s habitual residence immediately before the abduction was Calgary, the Province of Alberta, Canada and contending that it was Pretoria, South Africa; (b) contending, on the basis of article 13(a) of the Hague Convention, that CAR had acquiesced to the retention of CJ in South Africa; and (c) contending, on the basis of article 13(b) of the Hague Convention, that returning CJ to Canada would expose him to grave physical or psychological harm or otherwise place him in an intolerable situation. The high court appointed a legal representative for CJ and a social worker to investigate YR’s circumstances in South Africa and Canada. YR appointed several experts: an educational psychologist, a speech therapist, an occupational therapist, a social worker in private practice and a clinical psychologist. Although the matter was initially enrolled for 24 January 2023, it had to be postponed as some of the expert reports had not yet come to hand. In its judgment, the high court remarked that ‘given that a court may sometimes require the intervention of experts to assist in making decisions, the time line of 6 weeks as set out in Article 11 [of the Hague Convention] may prove to be unrealistic’. Findings of the high court [7] Having heard the submissions by counsel for both parties and all the experts, the high court dismissed the application for the return of CJ to Canada. The high court made the following findings. Habitual residence 8 [8] The high court stated that on the basis of article 3, read with article 4 and article 12 of the Hague Convention, CAR had initiated the proceedings within weeks of CJ’s retention. It therefore found that the article 12(2) defence was not available to YR in this matter as the application was launched within a period of one year. Having considered that YR had bought a one-way ticket to Canada, worked in Canada and applied for Canadian citizenship, as well as the strong sentiments she had expressed about not returning or raising CJ in South Africa and discouraging others from residing in South Africa, the high court found that CJ’s habitual residence at the time of his retention was Canada. Acquiescence [9] Relying on Senior Family Advocate, Cape Town and Another v Houtman,3 the high court found that by returning alone to Canada on 10 July 2022, CAR could not have acquiesced to CJ’s retention in South Africa. Article 13(b)defence [10] In respect of the article 13(b) defence, the high court inter alia stated as follows: ‘[46] Much of the argument presented, more especially by YR, focused on the abusive relationship she had with [CAR] after CJ’s birth. Much of CR’s argument to refute this issue focused on YR’s emotional state and her alleged irrational behaviour. Collateral information from the friends and family was also of a nature as one would usually find in primary care and residence/contact applications under the [Children’s Act 38 of 2005]. But it is not the function of the court to determine these issues. . . . [48] The curatrix has argued that the factors set out in art 13(b) have been established in this matter and that CJ should not be returned to Canada. In doing so she has reported that YR has indicated that, were this court to order CJ’s return, she would also return to Canada. This, both she and YR argue, would give rise to intolerable circumstances because of the issues that so plagued the parties’ relationship before they arrived in the RSA, and that this was a contributing factor to YR’s emotional state which ultimately affects CJ. The other factor to be considered is that, by all accounts and according to CJ’s Canadian doctors, he was doing well and reaching all his milestones (other than latching and sleeping issues) which has been shown to be incorrect. . . . 3 Senior Family Advocate, Cape Town and Another v Houtman 2004 (6) SA 274 (C) para 17. 9 [66] There is absolutely nothing in Schutte’s report to indicate any effect that the issues raised by the curatrix will have on CJ were I to order his return save that she states, as a general observation, and according to recognised literature4, that toddlers (of 18 to 36 months) are sensitive to conflict between their caregivers and become distressed when their parents argue. However, she highlights none of the concerns mentioned by the curatrix or Jana van Jaarsveld. There is, however, as reason for this – her excuse is that the time constraints placed on her did not afford her the opportunity to conduct a proper art 13 investigation – I will deal with this aspect later. [67] As to CJ’s constitutional rights to have access to his family – there are thousands of children all over the world that are subjected every year to their parents separating and divorcing. In some instances, parents do not live in the same state or the same country. All of those children go through the emotional trauma of the nature described by the curatrix. They are sometimes separated not only from the one parent, but also from the extended family. In my view, the curatrix has taken the argument as regards intolerable circumstance too far and has brought it too close to the “best interests” principle applied in general matters falling under the Act. This is not permissible – the “best interests” principle is limited to the art 13(b) defence and that is a limited and more restricted enquiry. [68] However, that being said, I am of the view that to return CJ to Canada would expose him to an intolerable situation – I say this mainly because of his medical history.’ [11] The high court’s conclusion that CJ’s medical history would expose him to a grave risk of physical or psychological harm or intolerable situation, was predicated on the fact that the Canadian doctors had not picked up any of the developmental issues that were subsequently diagnosed by three experts in South Africa. The high court’s conclusion was based on various allegations put forward by YR. YR alleged that CJ was exposed to CAR physically, verbally and emotionally abusing YR in Canada. She further alleged that CAR abused and neglected CJ by enforcing a traumatic parenting style of not attending to CJ’s cries, which created a toxic environment and caused CJ to develop a skin irritation. CAR denied these allegations. CAR alleged that these accusations emanate from a period when YR had severe depression and had developed suicidal tendencies which posed a threat to herself and CJ. 4 AFCC (2020:17). 10 [12] YR averred that shortly after returning to South Africa, she had a consultation with Ms van Jaarsveld, an educational psychologist. According to YR, Ms van Jaarsveld had noticed that CJ was constantly banging his head and had an inability to communicate or express emotion, which had not been picked up in Canada. Furthermore, CJ had undiagnosed food allergies which were ignored by CAR and the Canadian medical professionals; these food allergies severely impacted his nurturing and development. YR further asserted that various experts in South Africa had concluded that at twelve months old, CJ was already three to four months delayed in his development. She stated that due to multifaceted interventions CJ received in South Africa, his condition had significantly improved. CAR expressed shock at the allegation that CJ had a tendency of banging his head. He pointed out that Ms van Jaarsveld saw CJ in his (CAR’s) absence and was based solely on information she had received from YR. Issue to be determined [13] Given that the high court found in CAR’s favour regarding the issue of habitual residence, and the issue of acquiescence by CAR, the central issue for determination in this appeal is whether or not the allegations made by YR established, as envisaged in article 13(b) of the Hague Convention, that there is a grave risk that CJ’s return to Canada would expose him to physical or psychological harm or otherwise place him in an intolerable situation. The law [14] According to its preamble, the Hague Convention’s objective is to protect children from the harmful effects of their wrongful removal or retention and to ensure their prompt return to the state of their habitual residence. With limited exceptions,5 the Hague Convention provides for the prompt return of an abducted child to their home country, which is considered (internationally) to be the correct forum to deal with custody and related disputes, such as the long-term best interests of the child and who of the two parents must be the primary care giver and all the auxiliary responsibilities. 5 One of those exceptions is set out in article 13(b) of the Hague Convention. It provides that the judicial or administrative authority in the state which is hearing the application for the return of the abducted child may refuse to order the child’s return if it is of the view that there is a grave risk that the child’s return would expose him or her to physical or psychological harm, or otherwise place the child in question in an intolerable situation. 11 [15] The core provision in the Hague Convention which gives effect to its stated objectives is found in Article 12(1). It reads as follows: ‘Where a child has been wrongfully removed or retained in terms of Article 3 and, at the date of the commencement of the proceedings before the judicial or administrative authority of the Contracting State where the child is, a period of less than one year has elapsed from the date of the wrongful removal or retention, the authority concerned shall order the return of the child forthwith.’ Article 13(b) of the Hague Convention sets out the defences available to the abducting parent who is opposed to the return of the child. It reads as follows: ‘Notwithstanding the provisions of the preceding Article [12], the judicial or administrative authority of the requested State is not bound to order the return of the child if the person, institution or other body which opposes its return establishes that – (a) the person, institution or other body having the care of the person of the child was not actually exercising the custody rights at the time of removal or retention, or had consented to or subsequently acquiesced in the removal or retention; or (b) there is a grave risk that his or her return would expose the child to physical or psychological harm or otherwise place the child in an intolerable situation.’ [16] It is trite that the burden of proof lies with the individual who opposes the return.6 It bears mentioning that, in terms of article 20, a court deciding an application premised on article 12 of the Hague Convention may invoke its residual discretion to refuse to grant a return order if it considers that the granting of such an order would not be appropriate, considering the fundamental principles of the requested State relating to the protection of human rights and fundamental freedoms. It is evident from the provisions of article 13 that, notwithstanding that the respondent parent establishes one of the grounds mentioned in that provision, the court retains a general discretion to order the return of the child. In Ad Hoc Central Authority for the Republic of SA and Another v Koch N.O. and Another (Koch), the minority judgment postulated that ‘[t]he existence of one of the grounds in Article 13 means only that the Court is not obliged (“bound”) to order the return of the child, but it may still do so’.7 6 P Beaumont and P McEleavy The Hague Convention on International Child Abduction (1999) at 141. 7 Ad Hoc Central Authority for the Republic of SA and Another v Koch N.O. and Another [2023] ZACC 37; 2024 (2) BCLR 147 (CC); 2024 (3) SA 249 (CC) (Koch) para 48. 12 [17] Article 13(b) has been interpreted by the Constitutional Court and this Court on several occasions. In a trilogy of cases (Sonderup v Tondelli and Another (Sonderup),8 Pennello v Pennello and Another (Pennello)9 and Koch) the Constitutional Court laid to rest any uncertainty that may have previously prevailed, but the interpretation of this section sometimes seems to elude the lower courts. More than two decades ago, the Constitutional Court, in Sonderup, explained article 13 in the following terms: ‘A matrimonial dispute almost always has an adverse effect on children of the marriage. Where a dispute includes a contest over custody, that harm is likely to be aggravated. The law seeks to provide a means of resolving such disputes through decisions premised on the best interests of the child. Parents have a responsibility to their children to allow the law to take its course and not to attempt to resolve the dispute by resorting to self-help. Any attempt to do that inevitably increases the tension between the parents and that ordinarily adds to the suffering of the children. The Convention recognises this. It proceeds on the basis that the best interests of a child who has been removed from the jurisdiction of a court in the circumstances contemplated by the Convention are ordinarily served by requiring the child to be returned to that jurisdiction so that the law can take its course. It makes provision, however, in art 13 for exceptional cases where this will not be the case. An article 13 enquiry is directed to the risk that the child may be harmed by a court ordered return. The risk must be a grave one. It must expose the child to “physical or psychological harm or otherwise place the child in an intolerable situation.” The words “otherwise place the child in an intolerable situation” indicate that the harm that is contemplated by the section is harm of a serious nature.’10 (Emphasis added.) [18] In Pennello, Van Heerden AJA explained it as follows: ‘The primary purpose of the [Hague] Convention is to secure the prompt return (usually to the country of their habitual residence) of children wrongfully removed to or retained in any Contracting State, viz to restore the status quo ante the wrongful removal or retention as expeditiously as possible so that custody and similar issues in respect of the child can be adjudicated upon by the courts of the state of the child’s habitual residence. The [Hague] Convention is predicated on the assumption that the abduction of a child will generally be prejudicial to his or her welfare and that, in the vast majority of cases, it will be in the best interests of the child to return him or her to the state of habitual residence. The underlying premise is thus that the authorities best placed to resolve the merits of a custody dispute are the courts of the 8 Sonderup v Tondelli and Another [2000] ZACC 26; 2001 (2) BCLR 152; 2001 (1) SA 1171 (Sonderup). 9 Pennello v Pennello and Another [2003] ZASCA 147; [2004] 1 All SA 32 (SCA); 2004 (3) BCLR 243 (SCA); 2004 (3) SA 117 (SCA) (Pennello). 10 Sonderup para 43-44. 13 state of the child’s habitual residence and not the courts of the state to which the child has been removed or in which the child is being retained.’11 Since the accusations and counter accusations made by CAR and YR against each other regarding alleged flaws in their respective parenting styles are aspects that are directed at the merits of a custody or primary care dispute, the authorities best placed to determine those issues are the Canadian domestic courts. Such aspects must therefore not detain this Court’s attention in this appeal. [19] Similar sentiments were recently echoed by the Constitutional Court in Koch.12 Madjiet J, writing for the majority, aptly explained the import of this article 13(b) as follows: ‘In G v D, the Court cited Re E, where the UK Supreme Court set out the principles applicable in Article 13(b) defences. These are (with my emphasis): (a) There is no need for Article 13(b) to be narrowly construed. By its very terms, its application is restricted. The words of Article 13(b) are quite plain and need no further elaboration or gloss. (b) The burden lies on the person (or institution or other body) opposing return. It is for them to produce evidence to substantiate one of the exceptions. The standard of proof is the ordinary balance of probabilities but, in evaluating the evidence, the court will be mindful of the limitations involved in the summary nature of the Convention process. (c) The risk to the child must be “grave”. It is not enough for the risk to be “real”. It must have reached such a level of seriousness that it can be characterised as “grave”. Although “grave” characterises the risk rather than the harm, there is in ordinary language a link between the two. (d) The words “physical or psychological harm” are not qualified but do gain colour from the alternative “or otherwise” placed “in an intolerable situation”. “Intolerable” is a strong word but, when applied to a child, must mean “a situation which this particular child in these particular circumstances should not be expected to tolerate”. (e) Article 13(b) looks to the future: the situation as it would be if the child were returned forthwith to his or her home country. The situation which the child will face on return depends crucially on the protective measures which can be put in place to ensure that the child will not be called upon to face an intolerable situation when he or she gets home. Where the risk is serious enough, the court will be concerned not only with the child’s immediate future because the need for protection may persist. 11 Pennello para 25. Compare to X v Latvia App no 27853/09 (European Court of Human Rights 26 November 2013) (X v Latvia) para 100-101. 12 Koch para 158. 14 (f) Where the defence under Article 13(b) is said to be based on the anxieties of a respondent mother about a return with the child, which are not based upon objective risk to her but are nevertheless of such intensity as to be likely, in the event of a return, to destabilise her parenting of the child to a point where the child’s situation would become intolerable, in principle, such anxieties can found the defence under Article 13(b).’ Analysis [20] Having set out the salient facts of this case, the parties’ submissions and the applicable legal principles, the question before us is whether, on the facts, YR succeeded in discharging the onus of showing, on a balance of probabilities, that CJ’s return to Canada would pose a grave risk of physical or psychological harm to him, or expose him to an intolerable situation as envisaged in s 13(b) of the Hague Convention. [21] As mentioned in Sonderup, an article 13 enquiry is directed to the risk that the child may be harmed by a court ordered return. The risk must be a grave one which exposes the child to physical or psychological harm or otherwise place the child in an intolerable situation.13 The words ‘otherwise place the child in an intolerable situation’ are considered to throw light, not only on the degree of the seriousness of the risk of harm, but also on the harm itself.14 Koch15 is the most recent authority of the Constitutional Court regarding the approach that courts must follow when considering applications premised on the Hague Convention. That court reiterated that: ‘. . .it is important to bear in mind that the [Hague] Convention is concerned with the return of a child to the jurisdiction of their country of habitual residence to enable the appropriate authorities and the courts of that country to decide issues relating to custody. Issues about who would be the more suitable person to be given rights of custody or access to the child are to be determined by the appropriate judicial or other authorities that will eventually be asked to determine the long-term best interests of the child. Matters such as lifestyle and parental fitness bear upon the ultimate issues to be determined in a full hearing by the appropriate forum. At the stage of Hague proceedings for the return of an abducted child, the enquiry should rather be focused on a consideration of the availability of adequate and effective measures of protection in the state of habitual residence pending the final determination of care proceedings.’ 13 Sonderup para 44. 14 Koch para 62. 15 Ibid para 88. 15 [22] It is clear that what constitutes ‘the risk of harm’ will be determined by the facts of each case ‘and the nature of the projected harm’.16 Although a child’s best interests are central to legal decisions involving children, in the context of an application for a return order premised on the Hague Convention, the Hague Convention presupposes that the child’s best interest is served by their prompt return to their country of habitual residence; as such, the concept of ‘the best interests of the child’ must be evaluated in the light of the exceptions set out in article 13(b) of the Hague Convention.17 A court that is considering an application for a child’s return premised on the Hague Convention, must, not only consider the allegations of a ‘grave risk’ for the child in the event of the granting of a return order, but must also consider any undertakings made by the applicant parent in an effort to obviate the eventuation of that harm. [23] We have carefully considered all the allegations made by YR as a basis for her contention that CJ will be harmed and placed in an intolerable situation by a court ordered return to Canada. We are, however, of the view that YR has not shown, on a balance of probabilities, that such harm will eventuate should a return order be granted. The following insightful observation made in Sonderup is apposite in determining whether there are any ameliorative measures that may mitigate the risk of grave harm: ‘. . . [T]he court ordering the return of a child under the Convention would be able to impose substantial conditions designed to mitigate the interim prejudice to such child caused by a court ordered return. The ameliorative effect of Article 13, an appropriate application of the Convention by the court, and the ability to shape a protective order, ensure a limitation that is narrowly tailored to achieve the important purposes of the Convention. It goes no further than is necessary to achieve this objective, and the means employed by the Convention are proportional to the ends it seeks to attain. . . . Pursuant to section 38, read with section 28(2), this Court is entitled to impose conditions in the best interests of [the minor child]. Such conditions should be consistent with, and not hamper, the objectives of the Convention, and in particular, should not unnecessarily delay the return of the child to the proper jurisdiction.’18 16 Ibid para 63. 17 X v Latvia para 101. 18 Sonderup para 35 and 51. 16 [24] Similar sentiments were expressed in KG v CB and Others, where this Court stated that ‘[t]he situation which the child will face on return depends crucially on the protective measures which the court can put into place to ensure that the child will not have to face a harmful situation when he or she returns to the country of habitual residence’.19 [25] The aforementioned dicta from the Constitutional Court and this Court point to the fact that, in determining whether the child in question will be placed under physical or psychological harm, or an intolerable situation, the court must consider the possibility of alleviating or extinguishing the circumstances causing the grave risk by way of imposing conditions or protective measures that will apply upon the child’s return to their rightful jurisdiction. For instance, in Sonderup, the Court made an order with a condition that the father of the minor child in that case obtain an order from the Supreme Court of British Columbia to the effect that the warrant for the arrest of the mother is withdrawn and she will not be subject to arrest by reason of her failure to return [the minor child] to British Columbia on 14 July 2000 or for any other past conduct relating to [the minor child].20 [26] In this matter, it was contended that there was a serious risk that a return order would result in YR having to make an agonising choice of being forced to leave a conducive environment to which CJ has adjusted (South Africa) for an unfamiliar environment in Canada, thereby causing YR anxiety, which would in turn expose CJ to grave harm or place him in an intolerable situation. As authority for this proposition, YR relied on the judgment of this Court in LD v Central Authority RSA and Another (LD).21 The facts of LD are briefly as follows. The minor child, E, was born on 25 August 2014. Luxembourg became the habitual residence of the mother and father, who subsequently separated. In May 2018, the mother married a South African man. She then applied in Luxembourg for leave to take E with her to South Africa since she had been offered employment there. Her application was refused, and a subsequent appeal was dismissed on 3 October 2018. On 4 October 2018, she removed E to South Africa, along with E’s half-brother, S, who was born from the mother’s previous marriage. A further appeal to the Court of Cassation in Luxembourg was dismissed on 21 November 2019. 19 KG v CB and Others [2012] ZASCA 17; 2012 (4) SA 136 (SCA); [2012] 2 All SA 366 (SCA) (KG v CB) para 51. 20 Sonderup para 56. 21 LD v Central Authority RSA and Another [2022] ZASCA 6; [2022] 1 All SA 658 (SCA); 2022 (3) SA 96 (SCA) (LD). 17 [27] Proceedings were launched in South Africa by the Central Authority at the instance of E’s father. E’s curator ad litem moved for the appointment of Ms De Vos, a psychologist, to conduct an emotional assessment of E. The latter found that E was ‘a happy young girl’ who regarded her mother, grandmother, her mother’s new husband and her half-brother, S, to be her support structure. In addition, it was stated that E felt emotionally safe and secure and that she had adapted to school and made a close friend. The psychologist concluded that if E were to be returned to Luxembourg, this ‘could potentially lead to an intolerable situation’. [28] This Court endorsed the finding of the court a quo to the effect that, if a return order was to be granted, E’s mother would face ‘an agonising choice’ of having to oversee the dismemberment of her family in that she either had to leave her husband and her son, or E. Another consideration was the close bond between E and her brother. This Court found that the impact on E, of her being returned to Luxembourg went far beyond the normal hardship and dislocation that is associated with cases of this nature. It held that the evidence showed, on a balance of probabilities, that there was a grave risk that the emotional stress under which the mother would inevitably be placed by the terms of the order of that court order would have a negative impact on E’s sense of security and well-being. As E’s mother was her primary attachment figure, this could cause psychological harm to E, as well as being a possible intolerable situation on its own. The appeal against the refusal to grant a refusal order was therefore dismissed. [29] It was contended on behalf of YR that the curatrix ad litem had correctly opined in her report that, compelling YR to return with CJ to Canada would force her to make an ‘agonising choice’ in that she would have to return to a country where she had been very unhappy; she would thus have to live with CAR in a situation where she was emotionally and physically abused and which exacerbated her emotional breakdown. We are of the view that the facts in LD are vastly different to those in this matter and that reliance on LD was therefore misplaced. [30] The Hague Conference on Private International Law (the HCCH) has developed and published a ‘Guide to Good Practice under the Convention of 25 October 1980 on the Civil Aspects of International Child Abduction’. Part VI of the said guide seeks to guide central authorities, legal practitioners, litigants and courts on the interpretation and 18 practical application of article 13(b).22 Amongst the practical measures it recommends, is the inclusion of conditions (commonly referred to as undertakings) in the return orders that courts are inclined to grant. These are protective measures aimed at ameliorating what would otherwise constitute harsh consequences of court ordered returns on the abducting parents. The ameliorative measures may include undertakings to accede to the inclusion of a non-prosecution clause so as to ameliorate the fears of the abducting parent, or the applicant parent undertaking that upon the child returning to the habitual country of residence, the abducting parent and the minor child would exclusively occupy the matrimonial home (or any other alternative accommodation that is offered) until the custody and care-related disputes are resolved in the country of habitual residence.23 [31] In this case, CAR has furnished an undertaking and YR was given an opportunity to comment on its feasibility. CAR has undertaken to provide YR with separate accommodation where she will stay with CJ. He has undertaken to pay her maintenance and provide her with all necessities during her period of unemployment. It is not difficult for this Court to take such an undertaking into consideration and include it in the order which is ultimately crafted. This is what is typically known as a ‘mirror order’ which has been fashioned since Sonderup by the Constitutional Court in South Africa. It has become a common feature in most orders compelling the return of the child. This is more so the case between member States that promote the conclusion of ‘undertakings’ as some of the measures which strengthen the practical application of the Hague Convention. Canada, as a signatory to the Hague Convention, is one of the signatories that is receptive of undertakings from other member States. In our view, the undertaking made by CAR regarding YR and CJ not sharing the same accommodation with CAR serves to assuage the feared risk of emotional and physical abuse. [32] The crisp question is whether YR’s anxieties about the return of CJ to Canada are nevertheless of such intensity as to be likely to destabilise her parenting of CJ to a point where CJ’s situation would become intolerable, thus founding a defence under article 13(b). However, what should not be taken for granted or watered down is the impact of post-partum depression on any mother. This case is a typical example. This Court pays due consideration to the common cause fact that YR suffered from post-partum 22 Published by The Hague Conference on Private International Law (HCCH) in 2020. 23 Compare Thomson v. Thomson, [1994] 3 SCR 551. Also see Z Du Toit and B Van Heerden ‘International Child Abduction in South Africa’ (2023) 12(4) Laws 1 at 11. 19 complications which left her severely depressed in a faraway country, where she could not enjoy the support of extended family. As a result, YR remained inconsolable, extremely concerned about CJ’s health and developmental milestones despite many assurances from the medical professionals in Canada, which probably exacerbated her condition. That said, the facts of the case also reveal a husband who took over the responsibilities of a mother during a very difficult period his wife went through, with both hands, to be the primary care giver. That should not be reduced to nothing now that the parties are locked in a dispute over the return of their child to Canada. [33] YR asserted that she has recovered from that condition owing to the support she received from extended family, among others. We note that YR’s clinical psychologist, Ms Karen Adams, stated in her report that, even though YR showed no current symptoms suggesting the presence of a psychiatric disorder, ‘the resurgence of the symptoms of a major depression cannot be excluded’ in the event of YR being exposed to a ‘hostile environment’. It was argued that this would have an impact on CJ, and that his exposure to his parents’ conflict would place CJ in an intolerable situation. The curatrix ad litem, inter alia, mentioned the following in her report: ‘South Africa is the habitual residence of the greater-known part of CJ’s family save for his father. CJ has become accustomed to the security and care of his greater family, he goes to school with his cousin, sees his maternal grandparents on a weekly basis and must be encouraged to see his paternal grandparents who love him dearly. Removing him from South Africa would deprive him from the company and protection of the extended family.’ [34] It bears emphasising that the importance of a child’ support structure cannot be downplayed. We are therefore mindful of the fact that the effect of a return order will somehow impact on the bond that CJ has formed with his maternal grandparents and friends, which bond has by now been cemented by the period of time he has spent in South Africa on account of the delays in the finalisation of the matter in the courts, for which none of the parties can be held responsible. The majority judgment in Koch has observed that ‘courts vigilantly ensure that the parent who has removed the child should not be able to rely on the consequences of that removal (in this case depriving CJ of his attachment to extended family) to create a risk of harm or an intolerable situation on return.24 It definitively clarified that regrettable as they may be, inordinate delays cannot 24 Koch para 164; 167-168. 20 be held against the parent applying for the child’s return, because to do so would subvert the Hague Convention’s aims.25 [35] We take note of the fact that should a return order be granted, CJ and YR will return to Canada and the living arrangements will be in accordance with the undertaking made by CAR. As correctly observed by the high court, there is no evidence to suggest how CJ was truly emotionally affected by YR’s post-partum depression; neither was there any evidence to suggest that the delay in reaching his milestones was as a result of the conflict between his parents. Furthermore, the high court correctly observed that at the time when YR was suffering from postpartum depression, CAR became very involved in CJ’s daily care and took him to his doctor’s appointments. This was confirmed by the CJ’s erstwhile caregiver, Ms Castillo-Cogasi, who stated that CJ related more with CAR than with YR during the period that she was employed by the couple. [36] The high court also accepted that everything pointed to CAR ‘being a very involved and loving parent in every sense of the word’. The same sentiments were expressed in the report of Ms Irma Schutte, the only expert who consulted with both parties. That being the case, it is not farfetched to accept that, pending the decision of the Canadian courts regarding the care and custody of CJ, he will enjoy the attention of both parents as they will be living in the same city. In this regard, due consideration must be paid to the undertaking that was made by CAR in relation to providing accommodation and maintenance to YR pending the decision of the Canadian courts regarding the custody and care of CJ. This undertaking will duly be incorporated in the return order in the hope that it will ameliorate any harsh consequences that may result from CJ’s court ordered return to Canada. [37] Considering all the circumstances of the case, it is clear that the high court erred in its approach to the application of article 13(b). The first, and more obvious, error is the manner in which it dealt with the onus which rests on YR and the evidence she led to discharge that onus. Despite its own finding that there was no evidence that tied CJ’s delayed milestones to the conflict arising from the marital problems between YR and CAR, which were obviously exacerbated by the YR’s severe depression, the high court inexplicably endorsed Ms van Jaarsveld’s opinion that ‘to put a child at risk by returning 25 Ibid para 215-216. 21 him to Canada where he will be exposed to the same circumstances which is possibly the root of his development delays will be emotionally and psychologically irresponsible’. Given that Ms van Jaarsveld’s observations were based only on her interactions with YR (her report confirms that she did not consult with CAR and expressly states that she did not seek to validate the factual accuracy of the narratives contained in the report), the high court attached too much weight to Ms van Jaarsveld’s report in relation to the conclusion that CJ would be exposed to the same circumstances which were possibly ‘the root of his development delays’. The concession made by YR’s counsel to the effect that there is no factual basis for motivating that CJ will be exposed to the same adverse circumstances if he is returned to Canada, was rightly made. [38] The high court stated that its finding that CJ’s return would expose him to an intolerable situation was ‘mainly because of his medical history’ and ‘[t]he fact that these [developmental] issues were not picked up and therefore not addressed in Canada is cause for grave concern’. On this score, the high court seems to have paid little regard to the fact that there was nothing to refute the findings of the medical experts that had examined CJ in Canada as they were done when he was six months old. His medical issues were reassessed in South Africa when he was 13 months old. Based on the caregiver and CAR’s evidence, the argument that this lapse of time could have a bearing on some of the symptoms not being picked up earlier cannot be summarily rejected as fanciful. [39] Although the high court had commended CAR for being a loving father who took CJ for medical appointments, it paid little or no regard to his averments in terms of which he pledged to take CJ for all the necessary medical tests and interventions aimed at addressing linguistic delays, once they were in Canada. It bears noting that the medical issues alluded to by the high court were based on the following opinions of experts: (a) the slight delay of 3-4 months in receptive as well as expressive language (which was later reduced to 2 months) noted by Ms Theresa Olivier, a speech therapist, regarding CJ’s language development; (b) his listening skills were ‘not on par’ (the fact that he was mostly exposed to English in Canada during his first year was said to have had an effect on his language development); 22 (c) Ms Elna Beukes, an occupational therapist, had found that CJ showed a delay in his sensory motor skills, fine motor and perceptual development, language development and his expression of independence; (d) Ms van Jaarsveld expressed concern that CJ did not closely resemble a typical boy of a similar age, took no interest in his environment, did not explore nor try to interact with her. [40] Of crucial significance is that CJ’s developmental delays have not been disputed. What remains in dispute is the cause thereof. Regardless of the cause, what is beyond question is that the developmental issues raised by the experts would expose CJ to physical or psychological harm or otherwise place him in an intolerable situation if left unattended. The question is whether the grave risk of the occurrence of harm can be effectively mitigated by taking adequate ameliorative measures in Canada in the event of a return order being granted. If such measures are available, CJ would have been sufficiently protected and would therefore ‘not in fact face a “grave risk” of serious harm as contemplated by Article 13(b).26 [41] Notably, YR placed no cogent evidence before the high court that could have established the absence of adequate or effective measures which may address the concerns raised by YR and her experts. YR therefore failed to show that there are inadequate measures in Canada to mitigate any risks of harm that may expose CJ to physical or psychological harm or to an intolerable situation if he is returned to Canada. In the absence of cogent evidence that shows that the medical interventions received by CJ in South Africa are not, or will not be available in Canada, or that his condition would not be adequately monitored in Canada, the high court’s conclusion that to return CJ to Canada would expose him to an intolerable situation on account of his medical history is not sustainable. Moreover, since YR stated that she would return to Canada if a return order were granted, the high court failed to consider that YR’s presence in Canada would ensure that CJ continues to see the relevant medical experts who will constantly monitor, review and evaluate his developmental milestones. [42] Another error relates to the high court not having conducted the two-pronged enquiry, as envisaged in article 13(b) which takes into account the interplay of the short 26 Koch para 66. 23 term and long-term best interests of children. In Sonderup, the Constitutional Court explained the approach as follows: ‘The Convention itself envisages two different processes — the evaluation of the best interests of children in determining custody matters, which primarily concerns long-term interests, and the interplay of the long-term and short-term best interests of children in jurisdictional matters. The Convention clearly recognises and safeguards the paramountcy of the best interests of children in resolving custody matters. It is so recorded in the preamble which affirms that the states parties who are signatories to it, and by implication those who subsequently ratify it, are “[f]irmly convinced that the interests of children are of paramount importance in matters relating to their custody.” As was stated by Donaldson MR in Re F: “I agree with Balcombe LJ ‘s view expressed in Giraudo v Giraudo . . . that in enacting the 1985 Act [giving effect to the Convention], Parliament was not departing from the fundamental principle that the welfare of the child is paramount. Rather it was giving effect to a belief — ‘that in normal circumstances it is in the interests of children that parents or others shall not abduct them from one jurisdiction to another, but that any decision relating to the custody of the children is best decided in the jurisdiction in which they have hitherto been habitually resident’”.27 [43] Although a reading of the judgment of the high court reveals that its basis for its refusal to grant a return order was that CJ’s medical condition posed a grave risk that precluded it from granting a return order, there is no explicit finding that CJ’s medical condition constituted an article 13(b) defence. However, we are of the view that such a finding is implicit in the reasoning of the high court and, therefore, accept the establishment of the article 13(b) defence as the basis for the relief granted by the high court. It is settled law that a court that considers an article 13(b) defence to have been established, still has to exercise a discretion whether or not to return the child to the country of habitual residence.28 In that exercise, it may, in the spirit of achieving the purpose and objects of the Hague Convention, consider making a return order on certain conditions. What is clear from the judgment is that the high court did not address itself to the option of imposing protective measures which it could possibly put into place to ensure that CJ would not have to face a harmful situation if he was returned to Canada.29 One such measure would be an order compelling the continuation of all therapies and medical examinations on CJ in Canada upon his return. All things considered, including 27 Sonderup para 28. 28 Koch para 217. 29 KG v CB para 51. 24 the protective measure mentioned above, the harm that YR has alleged does not extend beyond the harm that flows naturally from a court-ordered return.30 In our view, the high court failed to balance both the interests of the child and the general purposes of the Hague Convention, which it was obliged to do.31 [44] For all the reasons set out in the preceding paragraphs, it follows that the order of the high court falls to be set aside. It remains now to raise an aspect which is of concern to this Court, namely, the non-participation of the Central Authority in this appeal. The Central Authority is, in terms of Articles 6 and 7 of the Hague Convention, key to the initiation of the proceedings under the Hague Convention.32 It is the centre that holds these proceedings together. Without the Central Authority as a party before this Court, this Court was at a loss as to whether the Central Authority of Canada would be willing to enforce, or, at least, assist CAR to apply for a mirror order complementing the order which this Court is inclined to grant. This attests to the importance of the involvement of the Central Authority until the exhaustion of the available appeal processes. It is thus 30 Sonderup para 46. 31 Koch para 217. 32 Article 6 of the Hague Convention provides as follows: ‘A Contracting State shall designate a Central Authority to discharge the duties which are imposed by the Convention upon such authorities. Federal States, States with more than one system of law or States having autonomous territorial organisations shall be free to appoint more than one Central Authority and to specify the territorial extent of their powers. Where a State has appointed more than one Central Authority, it shall designate the Central Authority to which applications may be addressed for transmission to the appropriate Central Authority within that State.’ Article 7 provides: ‘Central Authorities shall co-operate with each other and promote co-operation amongst the competent authorities in their respective States to secure the prompt return of children and to achieve the other objects of this Convention. In particular, either directly or through any intermediary, they shall take all appropriate measures - (a) to discover the whereabouts of a child who has been wrongfully removed or retained; (b) to prevent further harm to the child or prejudice to interested parties by taking or causing to be taken provisional measures; (c) to secure the voluntary return of the child or to bring about an amicable resolution of the issues; (d) to exchange, where desirable, information relating to the social background of the child; (e) to provide information of a general character as to the law of their State in connection with the application of the Convention; (f) to initiate or facilitate the institution of judicial or administrative proceedings with a view to obtaining the return of the child and, in a proper case, to make arrangements for organising or securing the effective exercise of rights of access; (g) where the circumstances so require, to provide or facilitate the provision of legal aid and advice, including the participation of legal counsel and advisers; (h) to provide such administrative arrangements as may be necessary and appropriate to secure the safe return of the child; (i) to keep each other informed with respect to the operation of this Convention and, as far as possible, to eliminate any obstacles to its application.’ 25 important that this judgment and this Court’s misgivings about the non-participation of the Central Authority in the appeal be brought to its attention. In the event of the designated Central Authority not being able to attend court, then the Family Advocates in the various divisions of the high court or the State Attorney could step in. This will also ensure that the matters are finalised expeditiously as envisaged in article 11 of the Hague Convention. Order [45] In the result, the following order is issued: 1 The appeal is upheld. 2 Each party to pay its own costs. 3 The order of the high court is set aside and replaced with the following: ‘3.1 It is ordered and directed that the minor child (CJ) be returned forthwith, but subject to the terms of this order, to the jurisdiction of the Central Authority of Canada. 3.2 In the event of the respondent (the mother) giving written notification to the Central Authority of the Republic of South Africa, Pretoria (the RSA Central Authority) within five days of the date of issue of this order that she intends to accompany CJ on his return to Canada, the provisions of paragraph 3.3 shall apply. 3.3 The second applicant (the father) shall, within 20 days of the date of issue of this order, institute proceedings and pursue them with due diligence to obtain an order of the appropriate judicial authority in Canada in substantially the following terms: 3.3.1 Unless and until ordered by the appropriate court in Canada: 3.3.1.1 On date of departure of the mother and CJ from South Africa to Canada in terms of the order of the Supreme Court of Appeal of South Africa under SCA case number 737/2023, residence of CJ shall vest with the mother, subject to the reasonable rights of contact of the father. 3.3.1.2 The father is ordered to purchase and pay for economy class air tickets for the mother and CJ to travel by the most direct route from Johannesburg, South Africa, to Calgary, Alberta, Canada. 26 3.3.1.3 The father is ordered to make his current home, situated at 303, 380 Smith Street NW, Calgary, Alberta, T3B 6M4, (the Smith Street home), or equivalent accommodation available to the mother and CJ as their residence, leaving all furniture, appliances, cutlery, crockery and linen in the home, and for such purpose shall vacate such home before date of departure of the mother and CJ from South Africa to Canada. In the event that the Smith Street home has been sold, the father shall provide CJ and the mother with equivalent accommodation. 3.3.1.4 The father is ordered to pay the following costs and expenses associated with the mother’s and CJ’s occupation of the home in para 3.3.1.3 above; rates, levies, electricity, refuse, water, heating and internet. 3.3.1.5 The father is ordered to pay the mother $1 000.00 (one thousand Canadian dollars) per month, in addition to the amount that he currently pays in the sum of $600.00 (six hundred Canadian dollars) per month (i.e. a total of $ 1 600.00 (one thousand six hundred Canadian dollars)) per month), into an account of the mother’s choosing, as cash maintenance for the mother and CJ. The first pro rata payment shall be made to the mother on the day upon which she and CJ arrive in Canada and thereafter monthly in advance on the first day of each succeeding month. 3.3.1.6 The father is ordered to pay the costs of and associated with the agreed upon crèche that CJ may attend, and for the continuation of therapy CJ is currently receiving from medical professionals. 3.3.1.7 The father is ordered to continue to pay for the medical aid on which he has registered the mother and CJ, and to cover any further reasonable and necessary medical costs not covered by the Canadian governmental medical coverage and medical aid. 3.3.1.8 The father is ordered to provide the mother with access to a roadworthy motor vehicle upon the mother’s arrival in Calgary, Alberta, Canada. 27 3.3.1.9 The father and the mother are ordered to cooperate fully with the RSA Central Authority, the Central Authority for Canada, the relevant court or courts in Canada, and any professionals who are approved or appointed by the relevant court or courts in Canada to conduct any assessment to determine what future residence and contact arrangements will be in the best interests of CJ. 3.4 In the event of the mother giving notice to the RSA Central Authority in terms of paragraph 3.2 above, the order for the return of CJ shall be stayed until an appropriate court in Canada has made the order referred to in paragraph 3.3 above and, upon the RSA Central Authority being satisfied that such an order has been made, he shall notify the mother accordingly and ensure that the terms of paragraph 3.1 are complied with. 3.5 In the event of the mother failing to notify the RSA Central Authority in terms of paragraph 3.2 above of her willingness to accompany CJ on his return to Canada, or electing not to return to Canada with CJ, the RSA Central Authority is authorised to make such arrangements as may be necessary to ensure that CJ is safely returned to the custody of the Central Authority for Canada and to take such steps as are necessary to ensure that such arrangements are complied with, and in such event CJ is to return to Canada in the care of his father. 3.6 Pending the return of CJ to Canada as provided for in this order, the mother shall not remove CJ on a permanent basis from the province of Gauteng and, until then, she will keep the RSA Central Authority informed of her physical address and contact telephone numbers. 3.7 The RSA Central Authority is directed to seek the assistance of the Central Authority for Canada in order to ensure that the terms of this order are complied with as soon as possible. 3.8 In the event of the mother notifying the RSA Central Authority, in terms of paragraph 3.2 above, that she is willing to accompany CJ to Canada, the RSA Central Authority shall forthwith give notice thereof to the Registrar of Gauteng Division of the High Court, Pretoria, to 28 the Central Authority for Canada, and to the father. 3.9 In the event of the appropriate court in Canada failing or refusing to make the order referred to in paragraph 3.3. above, the RSA Central Authority and/or the father is given leave to approach this Court for a variation of this order. 3.10 A copy of this order shall forthwith be transmitted by the RSA Central Authority to the Central Authority for Canada. 3.11 Each party to pay its own costs.’ _________________________ M B MOLEMELA PRESIDENT SUPREME COURT OF APPEAL __________________________ B C MOCUMIE ACTING DEPUTY PRESIDENT SUPREME COURT OF APPEAL 29 Appearances For the appellant: C Woodrow SC Instructed by: Clarks Attorneys, Johannesburg Phatshoane Henney Attorneys, Bloemfontein For the second respondent: I Vermaak-Hay Instructed by: Arthur Channon Attorneys, Pretoria Huggett Retief 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: 21 June 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 C A R v The Central Authority of The Republic of South Africa and Another (737/2023) [2024] ZASCA 103 (21 June 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal, ordering each party to pay its own costs. It further set aside and replaced the order of the Gauteng Division of the High Court, Pretoria (the high court). The proceedings concerned the Hague Convention on the Civil Aspects of International Child Abduction (the Hague Convention) and the matter came to the SCA as an appeal by the father of a minor child (CAR) against the judgment and order of the high court, which dismissed the application for the return of the minor child (CJ) to CAR in Canada. The application in the high court was launched by the Central Authority of the Republic of South Africa (the Central Authority) against CJ’s mother, (YR) who, it was alleged, had retained CJ in Pretoria in July during the family’s visit to South Africa in July 2022. CAR and YR were married in 2011. At that time, they were South African citizens who lived and worked in South Africa. During 2014, they decided to relocate to Canada. YR was accepted in a Master’s degree orthodontic programme at the University of Manitoba, Winnipeg, Canada in early 2015. She was granted a temporary Canadian student visa and, CAR was granted a temporary open work visa. They arrived in Winnipeg on 11 June 2015 and stayed with friends. They subsequently applied for Manitoba’s Provincial Department Programme, which is considered a stepping stone for the application for permanent residency. They were granted permanent residency on 30 January 2017 and then applied for citizenship. In 2018, they moved to Calgary, the province of Alberta, where YR opened a dental practice. CAR and YR also purchased fixed property and took out a mortgage bond. YR was later appointed as an associate at a well-known orthodontics practice in Calgary. In 2021 she renewed that contract for another two years. On 20 July 2021, the couple’s minor son, CJ, was born. The three lived together as a family in Calgary. On 22 December 2021, the couple was invited to take a citizenship test. In April 2022, the couple attended the Canadian Citizen Oath Ceremony and, on 27 April 2022, a certificate of Canadian citizenship was issued to the couple, thus officially making them Canadian citizens. During July 2022, the family a planned family visit to South Africa. They bought flight tickets for 9 July 2022 and the return flight was booked for 23 July 2022. On arrival in South Africa on 10 July 2022, YR informed CAR that she no longer intended to go back to Canada and that she intended to keep CJ with her in South Africa. CAR did not agree and sought legal advice. On 19 July 2022, CAR left South Africa 2 and upon arrival in Canada, approached the Central Authority of Canada and initiated proceedings for the return of CJ in terms of the Hague Convention. On 20 December 2022, an application was launched in the high court by the Central Authority of the Republic of South Africa as the first applicant and CAR as the second applicant. In the high court, YR raised three defences namely: (a) she disputed that CJ’s habitual residence immediately before the abduction was Calgary in Canada and contended that it was Pretoria, South Africa; (b) she raised a defence predicated on article 13(a) of the Hague Convention, in terms of which it was alleged that CAR had acquiesced to the retention of CJ in South Africa; and (c) she raised a defence predicated on article 13(b) of the Hague Convention, in terms of which it was alleged that returning CJ to Canada would expose him to grave harm physical or psychological harm or otherwise place him in an intolerable situation. The high court stated that on the basis of article 3, read with article 4 and article 12 of the Hague Convention, CAR had initiated the proceedings within weeks of CJ’s retention. It found that the article 12(2) defence was not available to YR in this matter as the application was launched within a period of one year, finding that CJ’s habitual residence at the time of his retention was Canada. In relation to the defence of acquiescence, the high court found that by returning alone to Canada on 10 July 2022, CAR could not have acquiesced to CJ’s retention in South Africa. Lastly, in relation to the defence predicated on article 13(b) of the Hague Convention, the high court concluded that to return CJ to Canada would expose him to an intolerable situation – mainly because of his medical history, and due to the fact that some medical issues, which were picked up two months after CJ’s arrival in South Africa, were not picked up and therefore not addressed in Canada. Given the findings by the high court, the crisp issue before the SCA was whether the high court correctly found that YR had established, under article 13(b) of the Hague Convention, that there is a grave risk that CJ’s return to Canada would expose him to physical or psychological harm or otherwise place him in an intolerable situation. In arriving at its conclusion, the SCA held that, in consideration of all the circumstances of the case, it was clear that the high court erred in its approach to the application of article 13(b) because, firstly, despite its own finding that there was no evidence that tied CJ’s delayed milestones to the conflict arising from the marital problems between YR and CAR, the high court inexplicably endorsed Ms van Jaarsveld’s opinion that ‘to put a child at risk by returning him to Canada where he will be exposed to the same circumstances which is possibly the root of his development delays will be emotionally and psychologically irresponsible’. In the second instance, the SCA stated that although the high court had commended CAR for being a loving father who took CR for medical appointments, it paid little or no regard to his averments in terms of which he pledged to take CJ for all the necessary medical tests and interventions aimed at addressing linguistic delays, once they were in Canada. On this point, it held that of crucial significance was that while CJ’s developmental delays could not be disputed, there was insufficient evidence regarding the cause thereof. Lastly, the SCA held that another error related to the high court not having conducted the two-pronged enquiry, as envisaged in article 13(b) which takes into account the interplay of the short term and long term best interests of children in that did not address itself to the option of imposing protective measures which it could possibly put into place to ensure that CJ would not have to face a harmful situation if he was returned to Canada and failed to balance both the interests of the child and the general purposes of the Hague Convention, which it was obliged to do. In the result, the SCA upheld the appeal, ordering each party to pay its own costs and further set aside and replaced the order of the high court. --------oOo--------

4214

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 462/23 In the matter between: KB FIRST APPELLANT HBB SECOND APPELLANT and MINISTER OF SOCIAL DEVELOPMENT RESPONDENT Neutral citation: KB & Another v Minister of Social Development (Case no 462/23) [2024] ZASCA 54 (19 April 2024) Coram: MOKGOHLOA, MOTHLE, MABINDLA-BOQWANA and KGOELE JJA and BLOEM AJA Heard: 15 February 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by e-mail, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 11h00 on 19 April 2024. 2 Summary: Constitutional law – Children’s rights – Surrogacy – s 294 of the Children’s Act 38 of 2005 – declarator sought that the requirement of use of a gamete of at least one of the commissioning parents to the exclusion of the genetic link between siblings is inconsistent with the Constitution –– provision found to be constitutionally valid. 3 ORDER On appeal from: Mpumalanga Division of the High Court, Mbombela (Sibuyi AJ sitting as court of first instance): The appeal is dismissed with each party to pay its own costs. JUDGMENT __ ___ Mokgohloa JA (Mothle, Mabindla-Boqwana and Kgoele JJA and Bloem AJA concurring): Introduction [1] The appellants brought an application in the Mpumalanga Division of the High Court, Mbombela (the high court) seeking an order declaring s 294 of the Children’s Act (the Act)1 inconsistent with the Constitution, on the basis that, as it currently reads, it denies a child already born, the right to have a genetically linked sibling through surrogacy. The appellants suggested words to be read into the section to cure the invalidity. The high court dismissed the application and granted the appellants leave to appeal to this Court. The facts [2] The facts in this matter are common cause. The appellants KB, the wife and HBB, the husband, were married to each other in December 2011. HBB has two adult children from his previous marriage. The appellants, together, have a 1 Childrens’ Act 38 of 2005. 4 son (minor child) who was born on 21 February 2018, after a fertilised embryo, created from two gametes not genetically linked to the appellants, was transferred to KB’s uterus. [3] KB had struggled with uterine growths which made it difficult to fall pregnant naturally. She had her first myomectomy in 2009 followed by further three myomectomies. HBB on the other hand, also had a previous vasectomy which was reversed. In 2000 he was diagnosed with testicular cancer which was medically treated. [4] The appellants tried for five years to have children. They had numerous attempts through in vitro fertilisation (IVF) and intrauterine insemination (IUI) but were unable to fall pregnant. Their doctor advised them to make use of donor gametes to have children. They took the doctor’s advice and found donors that suited their requirements and had seven embryos fertilised. KB underwent her first transfer which resulted in the birth of the minor child at thirty-three weeks. This was because her uterus was ruptured during the gestation period. Once she was medically treated and cleared, KB underwent the second transfer. This resulted in a positive pregnancy. However, at six months, she had to undergo emergency surgery because her life was in danger. She lost the baby during the process and her uterus was removed to the extent that she is unable to carry any of the remaining three embryos. [5] The appellants are of the view that the only way for the embryos to be born would be by way of the surrogate motherhood process. They have found a willing surrogate who is prepared to assist them. A surrogate motherhood agreement has been drafted and awaits the granting of their application by the court, before they can sign. 5 In the high court [6] The appellants contended that the provisions of s 294 of the Act that require that there must be a genetic link between the child to be born out of surrogate motherhood agreement and the commissioning parents violate the best interests of the minor child and his rights to dignity and equality. The respondent, the Minister of Social Development (the Minister), opposed the application and raised several points in limine, some of which were dismissed by the high court. There is no cross appeal. [7] As to the merits, the Minister argued that the appellants had not made out a case for the relief sought. First, they failed to identify the minor child’s rights and to establish the violation of such rights. Second, the constitutional invalidity of s 294 has already been decided by the Constitutional Court in the matter of AB and Another v Minister of Social Development2 (AB). Third, the proposed ‘reading in’ to the provisions of s 294 violates the doctrine of separation of powers, as the provision is polycentric, and a legislative measure which must be left for the executive and the legislature to determine. [8] In dismissing the application, the high court held that the appellants failed to identify the right that is alleged to have been violated and to provide the basis for that violation. The court agreed with the Minister that the Constitutional Court had already determined the constitutional validity of s 294 in AB and found it consistent with the Constitution. Significantly, it also held that the impugned section had nothing to do with the right of the minor child to have a sibling with the same genetic link. 2 AB and Another v Minister of Social Development [2016] ZACC 43; 2017 (3) BCLR 267 (CC); 2017 (3) SA 570 (CC). 6 [9] The high court further held that the removal of the genetic link requirement from s 294 or the creation of an exception thereto, will in essence be a fundamental departure from a lawfully chosen policy position. It found that it ‘cannot interfere with the lawfully chosen measure on the ground that the Legislature should have taken other considerations into account or that it should have considered a different decision that is preferable (the right to have a genetically linked sibling).’ The high court concluded that to grant the relief sought by the appellants would violate the principle of separation of powers and interfere with the lawfully chosen measure by the legislature. In this Court [10] The appellants rely on s 28 of the Constitution dealing with Children’s rights as well as the equality provision in s 9 and the right to human dignity provided for in s 10. The rights they allege to have been violated by s 294 are those of their minor child (already born) and not those of the child to be born. They contend that the genetic link requirement between the child to be born out of a surrogate motherhood agreement and the commissioning parent/s impacts on the minor child’s asserted constitutional rights. They argue that it is in the best interest of the minor child to have a sibling who is genetically linked to him, if possible. According to them, this fits together with the right to family life found in various international human rights agreements, including Article 16 of the Universal Declaration of Human Rights. The appellants further contend that the limitation placed by s 294 is not reasonable and justifiable as it limits the minor child’s rights to dignity and equality. [11] Accepting that s 28(2) of the Constitution gives paramountcy to the best interest of the minor child in matters concerning children, the Minister submits that it is, however, not violated in this case. She further contends that s 28(2), like 7 other rights in the Bill of Rights, is subject to limitations that are reasonable and justifiable in compliance with s 36 of the Constitution. [12] Professor Donrich Thaldar was admitted as the amicus curiae in this matter. He filed submissions in support of the appellants’ application. In his submissions, he argues that the genetic link requirement in s 294 is ‘a scourge in our legal system that causes much pain and suffering for infertile persons’. He is further critical of the AB decision and contends that it was wrongly decided. He then suggests that the appropriate remedy will be to strike out the genetic link requirements with immediate effect. Is s 294 unconstitutional? [13] The key question to determine is whether there is a right to have a genetically linked sibling, the source of that right, if any, and how it relates to surrogacy as provided in chapter 19 of the Act. If there be any such right, whether to declare s 294 invalid to the extent of its inconsistency with the Constitution. This requires an understanding of what s 294 means, within the legislative scheme of the Act. [14] The principles applicable in statutory interpretation are trite. Regard must be had to the text, context and purpose of the provision. And the provision must be within the lens of the Constitution.3 Further, the historical context within which the provision was enacted may be a relevant to the process of interpretation. I find it apposite to outline the relevant sections in the Children’s Act that provide for surrogate motherhood, the background and the purpose of those sections. 3 Cool Ideas 1186 CC v Hubbard [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869 (CC). 8 [15] Surrogate motherhood in South Africa is regulated by chapter 19 of the Children’s Act. Prior to the promulgation of chapter 19, no legislation existed which expressly regulated the issue of surrogacy in South Africa. Though not regulated, the reality is infertile couples and surrogate mothers entered into altruistic and commercial surrogacy agreements on a regular basis mainly due to the advantages that surrogacy was seen to hold over the adoption procedure. The legal relationship between the parties to the surrogacy arrangement remained uncertain.4 [16] This uncertainty gave rise to an investigation by the South African Law Commission (SALC) into the surrogate motherhood. The SALC prepared a report. Parliament referred that report to the relevant ad hoc select committee for deliberations. The deliberations led to the promulgation of chapter 19 of the Act5 and s 294 was enacted and it reads thus: ‘Genetic origin of child No surrogate motherhood agreement is valid unless the conception of the child contemplated in the agreement is to be effected by the use of the gametes of both commissioning parents or, if that is not possible due to biological, medical or other valid reasons, the gametes of at least one of the commissioning parents or where the commissioning parents is a single person, the gamete of that person.’ The words that the appellants sought to be read in, at the end of the provision, after the words ‘. . . where the commissioning parent is a single person, the gamete of that person’ are ‘or where the genetic origin of the child is the same with that of any of her siblings.’ 4 AB fn 2 paras 246 and 248. 5 AB fn 2 para 248. 9 [17] It is plain from the language of the section that it seeks to create a bond between a child to be born, with at least one of the commissioning parents. This is confirmed by the heading of the section: ‘Genetic origin of the child’. The context as borne out by the Act was to assist fertile parents who could not conceive a child due to biological, medical or other reasons, to use their gametes or of one of them to conceive a child or if the commissioning parent is single, his or her gamete. This, as the legislative scheme, was confirmed by the majority in AB.6 Nkabinde J, writing for the majority observed that, the regulatory scheme must be considered with the Act as a whole. The main objective of the Act is to give effect to constitutional rights of children. ‘The legislative scheme under [chapter 19], especially the impugned provision, also protects the child by ensuring that a genetic link exists when that child is conceived.’7 [18] Counsel for the appellants argued that the real purpose of s 294 is a genetic link. The bond requirement or purpose in s 294 will be met by using the embryos, due to the genetic link the minor child and the child to be born will have. According to her, s 294 as it reads, limits the minor child’s constitutional rights by prohibiting surrogacy in spite of the fact that the embryo to be used is genetically linked to the child. She contended that there is no justification for that limitation. [19] The difficulty with this proposition is that s 294 serves a purpose of a bond between a child to be born and a parent. Therefore, what is contended for by the appellants is in conflict with the purpose of the provision. Moreover, the interests sought to be protected in that provision are of the child to be born and not the one already born as already stated. 6 AB fn 2 paras 276 – 278. 7 Ibid para 279. 10 [20] As already mentioned, the text, and context reveal the purpose. It is to protect the child to be born by creating and establishing the genetic origin of a child to at least one of the parents which is important for the self-identity of the child. The appellants’ contention that the child to be born out of surrogacy can obtain a genetic origin from its siblings is not supported by the text, context and purpose of s 294. What is evident is that it is a parent whose gamete is used, that establishes the child’s origin, in terms of that section, not the sibling’s genetic origin. The interests of the child spoken of in s 294 read in context, are not those of a child already born. [21] Furthermore, as stated by the high court, it is incumbent upon a party raising a constitutional challenge to identify the right that is alleged to be violated and the basis upon which it is contended that the right is violated. There is no right that can be constitutionally sourced for a minor child to have a sibling that is genetically related to them. The basis advanced by the appellants, for this right, is that a full biological sibling may be crucial in case of possible illness that the minor child may face later in life. He may need a potential match for a tissue or organs, for instance. While this argument may be compelling, its importance does not give rise to a constitutional right. [22] As to the assertion that the right to equality of the child has been infringed, the appellants have not established how the minor child is treated differently from other children similarly placed and hence s 9(1) of the Constitution is violated. Equally, no evidence has been placed as to how the minor child’s right to dignity has been breached. I, therefore, cannot find that the appellants succeeded in identifying the constitutional right violated and the basis for the alleged violation. The finding of the high court in this regard cannot be faulted. 11 [23] Counsel for the appellants submitted that the rationality of s 294 was not the question before us, but the issue was whether the provision is justifiable. We do not get to the limitation analysis because no violation of a right has been identified. In any event, the purpose of s 294 was clearly articulated by the Constitutional Court in AB as indicated above. [24] What the Constitutional Court stated when dealing with the rationality of s 294 is relevant to this case. The Court said, in a case where legislative measures were challenged on the basis that they were irrational, a court must ‘examine the means chosen in order to decide whether they are rationally related to the public good sought to be achieved.’8 The court went further and held that: ‘It needs to be stressed that the legislative measure chosen by the Legislature in section 294 is rationally related to the public good sought to be achieved by government. Therefore we cannot interfere with the lawfully chosen measure on the ground that the Legislature should have taken other considerations into account or that it should have considered a different decision that is preferable. [T]he 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.’9 [25] The means chosen to achieve the purpose of enacting s 294 was the legislature’s choice and courts cannot interfere with that choice on the ground that it would have considered a different purpose and means. To do this, would be for the judiciary to usurp the powers given to the other arms of the state and a violation of the doctrine of separation of powers. 8 Ibid para 285. 9 Ibid para 292. 12 [26] Most importantly, we are bound by the Constitutional Court’s interpretation of s 294, even if we held a different view. Following precedent is not simply a matter of respect for courts of higher authority, but ‘is a manifestation of the rule of law itself, which in turn is a founding value of our Constitution.’10 [27] In conclusion, the appellants are seeking an order that certain words be read into the provisions of s 294 of the Act, to make a provision that a surrogate motherhood agreement will be valid where the genetic origin of the child to be born is the same as any of her siblings. It follows that the reading in of words into the legislative provision has to be preceded by a finding of constitutional invalidity. Absent that finding, such reading in cannot be made. Costs [28] The appellants asked this Court to follow the position adopted in AB and grant them part of their costs (ie travelling expenses), in the event they were unsuccessful. They contend that they pursued this appeal not only in their own interest and that of the minor child, but also on behalf of other would-be parents and children who may find themselves in a position similar to theirs. [29] Generally costs follow the result. However, where litigants unsuccessfully raise important constitutional issues against the state, costs will not be awarded against them. The reason for this is that litigants must not be discouraged from challenging the constitutionality of laws that limit their rights for fear of being mulcted with costs. There is, however, an exception to this rule: this is when the 10 Camps Bay Ratepayers and Residents v Harrison [2010] ZACC 19; 2011 (4) SA 42 (CC); 2011 (2) BCLR 121 (CC) para 28. 13 litigation pursued by such litigant, was frivolous or vexatious or in any other way manifestly inappropriate.11 [30] It is unusual to expect the state, being the successful party, to pay the costs of the other party. If this were to be adopted as the general position, it would mean, in every case where the state opposes a constitutional matter and succeeds, it may be ordered to pay the losing party’s costs or part thereof, which may run into a considerable amount of money. This is not what Biowatch envisioned. Also, this is not precedent set by the AB judgment, properly construed. [31] Indeed, the Constitutional Court in AB awarded costs to the unsuccessful litigant. It appears, that in the high court the State had conducted its litigation in a dilatory manner. Furthermore, the issues raised by the appellants in this matter are not novel. The appellants launched their application during February 2022. This was almost six years after the judgment in AB, was delivered, which clearly found s 294 to be consistent with the Constitution. The law pertaining to the constitutionality of s 294 was clear. Regrettably, the appellants continued with their application all the way to this Court. [32] Significantly, the appellants never pleaded to have the Minister pay for costs in their papers. They did not even submit that in their heads of argument. This request was only raised in oral argument, it is not substantiated by any facts. In fact, the Minister was caught by surprise on this issue and was never given an opportunity to prepare for argument. It would not be appropriate in this case to order the Minister to pay the costs of the appellants as there are no grounds to justify such an order. In any event, costs are a matter for the Court’s discretion. 11 Biowatch Trust v Registrar Genetic Resources and Others (CCT 80/08) [2009] ZACC 14; 2009 (6) SA 232 (CC); 2009 (10) BCLR 1014 (CC). 14 [33] Nonetheless, even if I found that the appellants’ determination to seek a declaration of constitutional invalidity of the impugned section was not justified, I am mindful of the fact that the court should guard against deterring bona fide litigants from challenging the constitutionality of laws that they believe limit their rights, in fear of being mulcted with costs. The Biowatch principle will, accordingly, apply and each party shall be ordered to pay its own costs. [34] For all these reasons, the following order shall issue: The appeal is dismissed with each party to pay its own costs. ____________________ F E MOKGOHLOA JUDGE OF APPEAL 15 Appearances For the appellant: A De Vos SC and H Botma Instructed by: Adele van der Walt Inc, Pretoria Honey Attorneys, Bloemfontein For the respondent: HA Mpshe and P Loselo Instructed by: State Attorney, Mbombela 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: 19 April 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 KB & Another v Minister of Social Development (Case no 462/23) [2024] ZASCA 54 (19 April 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal against the decision of the Mpumalanga Division of the High Court, Mbombela (the high court). The facts in this matter were common cause. The appellants KB, the wife and HBB, the husband, were married to each other in December 2011. The appellants, together, have a son (minor son) who was born on 21 February 2018, after a fertilised embryo, created from two gametes not genetically linked to the appellants, was transferred to KB’s uterus. KB had struggled with uterine growths which made it difficult to fall pregnant naturally. She had her first myomectomy in 2009 followed by further three myomectomies. HBB on the other hand, also had a previous vasectomy which was reversed. In 2000 he was diagnosed with testicular cancer which was medically treated. The appellants tried for five years to have children. They had numerous attempts through in vitro fertilisation (IVF) and intrauterine insemination (IUI) but were unable to fall pregnant. Their doctor advised them to make use of donor gametes to have children. They took the doctor’s advice and found donors that suited their requirements and had seven embryos fertilised. KB underwent her first transfer which resulted in the birth of the minor child at thirty-three weeks. This was because her uterus was ruptured during the gestation period. Once she was medically treated and cleared, KB underwent the second transfer. This resulted in a positive pregnancy. However, at six months, she had to undergo emergency surgery because her life was in danger. She lost the baby during the process and her uterus was removed to the extent that she is unable to carry any of the remaining three embryos. The appellants were of the view that the only way for the embryos to be born would be by way of the surrogate motherhood process. They had found a willing surrogate who was prepared to assist them. A surrogate motherhood agreement had been drafted and awaited the granting of their application by the court, before they could sign. In the high court, the appellants brought an application to declare that the provisions of s 294 of the Children’s Act 38 of 2005 (the Act) that required that there must be a genetic link between the child to be born out of surrogate motherhood agreement and the commissioning parents violated the best interests of the minor child and his rights to dignity and equality. The respondent, the Minister of Social Development (the Minister), argued that the appellants had not made out a case for the relief sought. The high court agreed with the Minister and held that that the appellants failed to identify the right that was alleged to have been violated and to provide the basis for that violation. It as a result, dismissed the application which lead the appellants to bring the matter on appeal to this Court. The issue before this Court was whether the right to have genetically linked siblings existed, what was the source of that right, if any, and how it related to surrogacy as provided in chapter 19 of the Act. The SCA held that the limitation challenge brought by the appellants, was answered by considering what the purpose of the provision was. As already mentioned, the text, and context revealed the purpose. It was to protect the child to be born by ensuring that there existed a genetic link between the child and the parent/s when that child was conceived. It further created and established a genetic origin of a child to at least one of the parents which was important for the self-identity of the child. The 2 appellants’ contention that the child to be born out of surrogacy could have obtained a genetic origin from its siblings was not supported by the text, context and purpose of s 294. What was evident was that it was a parent whose gamete was used that established the child’s origin, in terms of that section, not the sibling’s genetic origin. It was clear that the interests of the child spoken of in s 294 read in context, were not those of a child already born. That section had nothing to do with those alleged rights. Furthermore, the SCA concurred with the high court and stated that it was incumbent upon a party raising a constitutional challenge to identify the right that was alleged to be violated and the basis upon which it was contended that the right was violated. There was no right that can be constitutionally sourced for a minor child to have a sibling that was genetically related to them. The basis advanced by the appellants, for that right, was that a full biological sibling may be crucial in case of possible illness that the minor child may face later in life. While that argument may be compelling, its importance did not create a constitutional right. Furthermore, the SCA held the means chosen to achieve the purpose of enacting s 294 was the legislature’s choice and courts could not interfere with that choice on the ground that it would have considered a different purpose and means. To do that, would be for the judiciary to usurp the powers given to the other arms of the state and a violation of the doctrine of separation of powers. In conclusion, the SCA held that the appellants were seeking an order that certain words be read into the provisions of s 294 of the Act to make provision that a surrogate motherhood agreement would be valid where the genetic origin of the child to be born was the same as any of her siblings. It followed that the reading in of words into a legislative provision had to be preceded by a finding of constitutional invalidity. Absent that finding, such reading in could not be made. As a result, the appeal was dismissed with each party to pay its own costs. ~~~~ends~~~~

4210

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 393/2021 In the matter between: CLIFFORD MATHUTHU FIRST APPELLANT MBIZO KHUMALO SECOND APPELLANT CHRISTOPHER SIBANDA THIRD APPELLANT BHEKIMPILO NDLOVU FOURTH APPELLANT and THE STATE RESPONDENT Neutral citation: Mathuthu and Others v The State (393/2021) [2024] ZASCA 50 (17 April 2024) Coram: MOKGOHLOA, NICHOLLS, MOTHLE and HUGHES JJA and BAARTMAN AJA Heard: 29 February 2024 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 17 April 2024 at 11h00. Summary: Criminal procedure – appeal against conviction and sentence – leave to appeal refused by regional magistrate – petition in terms of s 309C of the Criminal Procedure Act 51 of 1977 refused by the high court – special leave to appeal against the dismissal of the petition granted by this Court – test is whether appellants have shown reasonable prospects of success on appeal. 2 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Mokgoatlheng and Janse Van Rensburg JJ sitting as court of appeal): 1 Leave to appeal against the refusal of the petition in respect of the conviction is dismissed. 2 Leave to appeal against the refusal of the petition in respect of sentence is granted. 3 The matter is remitted to the high court in respect of sentence. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Hughes JA (Mokgohloa, Nicholls and Mothle JJA and Baartman AJA concurring): [1] This is an appeal against a refusal of a petition for leave to appeal by the Gauteng Division of the High Court, Johannesburg (the high court) (per Mokgoatlheng and Janse Van Rensburg JJ). The appellants appeared before the Newlands Regional Court, Johannesburg (the regional court) on a number of counts, to wit eleven in total. They were convicted and sentenced. I will return to the sentences imposed upon each appellant later in the judgment. [2] The appellants, aggrieved by the convictions and sentences imposed, sought leave to appeal, which the regional court refused. An application to the high court for leave to appeal by way of petition in terms of s 309C of the Criminal Procedure Act 51 of 1977 (the CPA) was refused. This Court subsequently granted special leave to appeal to this Court, the refusal of the petition seeking leave to appeal in respect of both the conviction and sentence. [3] Counsel for the appellants laboured under the impression that he was at this Court to argue the merits of the appeal against both the convictions and sentences imposed by the regional court. This Court enquired from counsel whether he 3 understood the task at hand, since it was evident from his heads of argument that he had adopted the incorrect approach. From the bar, counsel responded that he placed reliance on a decision of this Court, Van Wyk v S, Galela v S,1 where special leave to appeal had been granted in terms of s 16(1)(b) of the Superior Courts Act 10 of 2013 (the Superior Courts Act). [4] It would be well to bear in mind that the threshold in terms of s 16(1)(b) is that it permits leave to appeal being granted on the basis that ‘special circumstances’ exist to do so. This threshold is much higher than that required by the high court when it considered the petition, for there the threshold was that there were ‘reasonable prospects of the contemplated appeal succeeding’.2 [5] The confusion as to where an appeal lies from the magistrates’ court under s 309 of the CPA at this juncture is disappointing, to say the least. From as far back as S v Khoasasa;3 S v Matshona;4 Tonkin v S;5 Dipholo v S;6 Mthimkhulu v S7 to the latest De Almedia v S,8 it has been reiterated that ‘the issue to be determined is not whether the appeal against conviction and sentence should succeed but whether the high court should have granted leave, which in turn depends upon whether the appellant could be said to have reasonable prospects of success on appeal.’9 It is the decision of the high court refusing the petition, and the question whether it was correct in dismissing the petition in terms of s 309C of the CPA, that is before this Court. [6] The appellants stood trial on several charges in the regional court. The counts ranged from robbery with aggravating circumstances read with s 51(2) of the Criminal Law Amendment Act 105 of 1997 (the Act) to attempted murder, unlawful possession of unlicensed firearms in term of ss 3 and 90 of the Firearm Control Act 60 of 2000 1 Van Wyk v S, Galela v S [2014] ZASCA 152; [2014] 4 All SA 708 (SCA); 2015 (1) SACR 584 (SCA). 2 Ibid para 39. 3 S v Khoasasa [2002] ZASCA 113; 2003 (1) SACR 123 SCA; [2002] 4 All SA 635 (SCA). 4 S v Matshona [2008] ZASCA 58; [2008] 4 All SA 68 (SCA); 2013 (2) SACR 126 (SCA) (Matshona). 5 Tonkin v S [2013] ZASCA 179; 2014 (1) SACR 583 (SCA) (Tonkin). 6 Dipholo v The State [2015] ZASCA 120. 7 Mthimkhulu v S [2016] ZASCA 180. 8 De Almeida v S [2019] ZASCA 84. 9 Tonkin para 3 quoting Matshona para 4; Ntuli v The State [2018] ZASCA 164 para 4; S v Kriel [2011] ZASCA 113; 2012 (1) SACR 1 (SCA) para 11-12; S v Smith [2011] ZASCA 15; 2012 (1) SACR 567 (SCA) para 2-3. 4 and contravention of s 36 of the General Law Amendment Act 62 of 1935, being in possession of a motor vehicle which was reasonably suspected to have been stolen. They were all convicted on counts one to four and the third appellant was convicted on count five, whilst the fourth appellant was convicted on count six. The sentences were ordered to run concurrently. [7] It is not desirable to deal with the merits in detail when dealing with an application of this nature. However, it is necessary for me to set out the facts of this case in more detail. I will be referring to those parts that will assist in establishing whether there are reasonable prospects of success on appeal. In summary, the facts giving rise to the appellants’ convictions follow below. [8] On 9 February 2015, Thatoya Malimo Molefe (Mr Molefe) was on his way home to Midrand, having attended a meeting in Parkmore when he was robbed of his Toyota Camry motor vehicle at gun point by the appellants. Following upon the aforesaid incident, on 17 February 2015 at 11h25 at the Worldware shopping mall, in Fairlands, the appellants entered an MTN store and robbed the store of cellphones at gun point, to the value of R380 000 and cash in the amount of R2000. In an attempt to flee from the MTN store, the appellants fired shots at the security personnel in the shopping mall and proceeded to their getaway vehicles, being the Toyota Camry, a Volkswagen Polo and a Kia Rio RS. This is the same Toyota Camry which was taken from Mr Molefe in Parkmore. Significantly, the cellphones were recovered in the vehicles at the scene of the shopping mall. [9] A shoot out ensued between the security personnel and the appellants. In an attempt to flee the scene, one of the appellants was apprehended at the scene as he injured himself whilst trying to climb over a high wall. Another appellant fled into a nearby field, and was apprehended by the security personnel in the field after he shot at the security guard and eventually surrendered himself. [10] Police on patrol, stationed at Fairlands, were informed of a Toyota Quantum fleeing the scene. They spotted the vehicle and gave chase. As the vehicle, which was in their sight at all times, attempted to evade the police on the N1, volumes of traffic 5 hindered their progress. The driver and the passenger exited the vehicle and fired shots at the police. At some point, the driver of the vehicle got back into the vehicle and abandoned the passenger, who was eventually apprehended by the police. [11] The last appellant to be arrested was apprehended when he pretended to seek assistance from a home in the area close to the scene. A security guard on patrol noticed the altercation between this appellant and the gardener of the home. A shoot out ensued between them and the security guard sought cover outside of his vehicle. The appellant managed to drive away with the security guard’s vehicle until he came to a cul de sac and was arrested by the security guards. [12] The appellants’ counsel challenged the evidence of the eye-witnesses and the reliability of these witnesses as single witnesses. The appellants submitted that the trial court did not exercise the necessary caution required when dealing with the evidence of a single witness. [13] Regarding the convictions, the offences were committed from different moving scenes. Even so, the difficulty that the appellants have is that they were in one way or the other apprehended on the scene or in close proximity of the different scenes with the stolen cellphones from the MTN store and had firearms. In addition, they were positively identified by the witnesses as being there when the offence was committed. I have no difficulty with the manner in which the trial court applied the cautionary rule to the evidence of the single witnesses, having found the evidence to be satisfactory in all respects. [14] It is unfortunate that the magistrate profiled the appellants when he commented that ‘the fact that you have four Zimbabwe nationals, linked to the same event, they all speak the same language. It its remarkable that the police could find four individuals, on their versions so far removed from each other and yet attempt to falsely implicate them in the commission of the crime in this matter, it is highly unlikely’. Nonetheless, the hypothesis advanced by the magistrate bore credence and did not detract from the trial courts findings of fact on the evidence. It is trite that an appeal court’s interference with a trial court’s finding of facts in the absence of any misdirection by the trial court, 6 is limited. The high court’s dismissal of the petition for leave to appeal the convictions was thus correct as there was no misdirection by the trial court. [15] The Constitutional Court, in S v Bogaard,10 said the following about this Court’s power to interfere with a sentence imposed by a lower court: ‘It can only do so where there has been an irregularity that resulted 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.’ [16] The sentences imposed by the magistrate are not clearly set out and require clarification for a definitive sentence to emerge. Both counsel for the appellants and for the State conceded that there was confusion arising from the manner in which the magistrate imposed the sentences. Hence, both parties had different interpretations on what sentence had actually been imposed on the appellants. To illustrate the point made above, I set out the sentence imposed as per the record of the proceedings. [17] The sentence reads: ‘. . . . In respect of count 1 all four of you are sentenced to 15 years imprisonment in terms of section 51(2) of the Criminal Law Amendment Act. In respect of count 2 you are all four sentenced to 15 years imprisonment in terms of section 51(2) of the Criminal Law Amendment Act. In respect of count 3 you are all four sentenced to 15 years imprisonment in terms of section 51(2) of the Criminal Law Amendment Act. In respect of count 4 you are all sentenced to 5 years imprisonment in terms of section 51(2) of the Criminal Law Amendment Act. Count 5 you are all sentenced to 5 years imprisonment in terms of the minimum legislation. Accused 3 in respect of count 7 five years imprisonment, that is for the possession of the firearm, and accused 4 in respect of count 6, 5 five years imprisonment. So in short accused 1 and 2 then [indistinct] 55 years imprisonment and accused 3 and 4 60 years imprisonment each . . . . In respect of count 1 and 3 the sentences to run concurrently, 10 years of the sentence to run concurrently with the sentence in respect of count 2. Count 4 and 5 taking together for the purpose of sentence, 5 years imprisonment . . . . I think your conduct clearly demonstrate that you can never be trusted with the [indistinct] of licenced 10 S v Bogaard [2012] ZACC 23; 2012 (12) BCLR 1261 (CC); 2013 (1) SACR 1 (CC) para 41. 7 firearms and therefore you remain unfit in terms of Section 102 of the Firearm Control Act. Thank you.’ [18] From the aforesaid, it is clear that the judgment of the regional court on sentence is not particularly helpful and is incoherent. In addition, the high court did not deal with the confusion as set out in the sentences above. Regarding petitions, the high court is not obliged to gives reasons for its refusal. It is trite that in terms of s 19(d) of the Superior Courts Act, an appellate court exercising appeal jurisdiction may ‘confirm, amend or set aside the decision which is the subject of the appeal and render any decision which the circumstances may require’. [19] In my view, there was a clear misdirection by the sentencing court in imposing a sentence that is confusing, incoherent and clearly not comprehensible. The high court was obliged to deal with this confusion and failed to do so when it refused the petition. Thus, this Court is none the wiser and is constrained to remit the matter to the high court to deal with the issue of sentence. [20] Court orders must be framed in unambiguous terms, practical and enforceable. In Eke v Parsons,11 the Constitutional Court stated that there ought to be no doubt or confusion regarding what the order states. The Constitutional Court explained this as follows: ‘If an order is ambiguous, unenforceable, ineffective, inappropriate, or lacks the element of bringing finality to a matter or at least part of the case, it cannot be said that the court that granted it exercised its discretion properly. It is a fundamental principle of our law that a court order must be effective and enforceable, and it must be formulated in language that leaves no doubt as to what the order requires to be done. The order may not be framed in a manner that affords the person to whom it applies, the discretion to comply or disregard it.’12 [21] It follows that the refusal of the petition for leave to appeal against sentence must succeed. [22] In the result, I make the following order: 11 Eke v Parsons [2015] ZACC 30; 2015 (11) BCLR 1319 (CC); 2016 (3) SA 37 (CC) para 64. 12 Ibid para 74. 8 1 Leave to appeal against the refusal of the petition in respect of the conviction is dismissed. 2 Leave to appeal against the refusal of the petition in respect of sentence is granted. 3 The matter is remitted to the high court in respect of sentence. ___________________ W HUGHES JUDGE OF APPEAL 9 Appearances For the appellants: M Khonou Instructed by: Mosiapoa Attorneys, Protea Glen Reynard & Associates Inc., Bloemfontein For the respondent: J F Masina 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: 17 April 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 Mathuthu and Others v The State (393/2021) [2024] ZASCA 50 (17 April 2024) Today the Supreme Court of Appeal (SCA) made an order in which it dismissed leave to appeal the refusal of the petition in respect of the conviction and granted leave to appeal the refusal of the petition in respect of sentence. The SCA further remitted the matter back to the Gauteng Division of the High Court, Johannesburg (the high court) in respect of the sentence. The appellants appeared before the Newlands Regional Court, Johannesburg (the regional court) on a number of counts, to wit eleven in total. The counts ranged from robbery with aggravating circumstances read with s 51(2) of the Criminal Law Amendment Act 105 of 1997 to attempted murder, unlawful possession of unlicensed firearms in term of ss 3 and 90 of the Firearm Control Act 60 of 2000 and contravention of s 36 of the General Law Amendment Act 62 of 1935, being in possession of a motor vehicle which was reasonably suspected to have been stolen. They were all convicted on counts one to four and the third appellant was convicted on count five, whilst the fourth appellant was convicted on count six. The sentences were ordered to run concurrently. The appellants, aggrieved with the convictions and sentences imposed, sought leave to appeal, which the regional court refused. An application to the high court for leave to appeal by way of petition in terms of s 309C of the Criminal Procedure Act 51 of 1977 was also refused. The SCA then granted the appellants special leave to it for the refusal of the petition seeking leave to appeal in respect of both the conviction and sentence. The brief background facts were as follows. On 9 February 2015, Thatoya Malimo Molefe (Mr Molefe) was on his way home to Midrand, having attended a meeting in Parkmore when he was robbed of his Toyota Camry motor vehicle at gun point by the appellants. Following upon this incident, on 17 February 2015 at the Worldware shopping mall in Fairlands, the appellants entered an MTN store and robbed the store of cell phones at gun point, to the value of R380 000 and cash in the amount of R2000. In an attempt to flee from the MTN store, the appellants fired shots at the security personnel in the shopping mall and proceeded to their getaway vehicles, being the Toyota Camry, a Volkswagen Polo and a Kia Rio RS. This was the same Toyota Camry which was taken from Mr Molefe in Parkmore. A shoot out ensued between the security personnel and the appellants. In an attempt to flee the scene, one of the appellants was apprehended at the scene as he injured himself whilst trying to climb over a high wall. Another appellant fled into a nearby field, and was apprehended by the security personnel in the field after he shot at the security guard and eventually surrendered himself. 2 Police on patrol, stationed at Fairlands, were informed of a Toyota Quantum fleeing the scene. They spotted the vehicle and gave chase. As the vehicle, which was in their sight at all times, attempted to evade the police on the N1, volumes of traffic hindered their progress. The driver and the passenger exited the vehicle and fired shots at the police. At some point, the driver of the vehicle got back into the vehicle and abandoned the passenger, who was eventually apprehended by the police. The last appellant to be arrested was apprehended when he pretended to seek assistance from a home in the area close to the scene. A security guard on patrol noticed the altercation between this appellant and the gardener of the home. A shoot out ensued between them and the security guard sought cover outside of his vehicle. The appellant managed to drive away with the security guard’s vehicle until he came to a cul de sac and was arrested by the security guards. The issue before the SCA related to whether the high court had correctly dismissed the petitions for leave to appeal the conviction and sentence. The SCA in coming to a conclusion reasoned that, even though the appellants’ challenged the evidence of the eye-witnesses and the reliability of these witnesses as single witnesses, the regional court correctly applied the cautionary rule to the evidence of the single witness and the hypothesis advanced by the magistrate bore credence and did not detract from the trial courts findings of fact on the evidence. The SCA, on this aspect, concluded that the high court’s dismissal of the petition for leave to appeal the convictions was thus correct as there was no misdirection by the trial court. With regards to the sentencing phase, the SCA reasoned that the sentences imposed by the magistrate were not clearly set out and required clarification for a definitive sentence to emerge, holding that it was clear that the judgment of the regional court on sentence was not particularly helpful and was incoherent. The SCA further stated that the high court did not deal with the confusion as set out in the sentence, pointing out that there was a clear misdirection by the sentencing court in imposing a sentence that is confusing, incoherent and clearly not comprehensible and that the high court was obliged to deal with this confusion and failed to do so when it refused the petition. In the circumstances, the SCA held the view that it is constrained to remit the matter to the high court to deal with the issue of sentence. In the result, the SCA issued an order in which it dismissed leave to appeal the refusal of the petition in respect of the conviction and granted leave to appeal the refusal of the petition in respect of sentence with the result that the matter be remitted to the high court in respect of the sentence. --------oOo--------

4280

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 483/2023 In the matter between: EAMONN COURTNEY APPELLANT and IZAK JOHANNES BOSHOFF NO FIRST RESPONDENT WINNIE GLADNESS GUMEDE NO SECOND RESPONDENT ABSA BANK LTD THIRD RESPONDENT THE MASTER OF THE HIGH COURT, JOHANNESBURG FOURTH RESPONDENT Neutral citation: Eamonn Courtney v Izak Johannes Boshoff NO & Others (483/2023) [2024] ZASCA 104 (21 June 2024) Coram: PONNAN, MOCUMIE, NICHOLLS and MATOJANE JJA and TOLMAY AJA Heard: 21 May 2024 Delivered: 21 June 2024 Summary: Insolvency law — order of final sequestration not preceded by provisional order — order not a nullity — valid until set aside by a court of law — no proper case for rescission. 2 ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Wanless AJ, sitting as a court of first instance); 1 The appeal against paragraphs 1, 2 and 3 of the order of the high court is dismissed with costs, including the costs of two counsel. 2 Paragraphs 4 to 8 of the order of the high court are set aside. JUDGMENT Nicholls JA (Ponnan, Mocumie and Matojane JJA and Tolmay AJA concurring): [1] This appeal has its genesis in the grant of an order placing the estate of the appellant, Mr Eamonn Courtney (Mr Courtney), under final sequestration. The order was granted by Moultrie AJ, on an unopposed basis, in the Gauteng Division of the High Court, Johannesburg (the high court) on 4 May 2020, in terms of the Insolvency Act 24 of 1936 (the Act). The final order was not preceded by the grant of an order in terms of s 10 of the Act, sequestrating the estate of Mr Courtney provisionally. Nor, did the court issue a rule nisi under s 11(1) of the Act, calling upon him to appear on a day mentioned in the rule to show cause why his estate should not be finally sequestrated. Pursuant to the final order, the first and second respondents, Mr Izak Boshoff NO and Ms Winnie Gumede NO (the trustees), were appointed the Trustees of the insolvent estate of Mr Courtney by the fourth respondent, the Master of the High Court, Johannesburg (the Master), who took no part in the proceedings either in this Court or the one below. The third respondent is Absa Bank Ltd (Absa), 3 the sequestrating creditor, to whom Mr Courtney was indebted in excess of R54 million. [2] Almost 2 years later, on 29 April 2022, Mr Courtney launched an urgent application in the high court. Relief was sought in two parts. Under Part A, Mr Courtney essentially sought an order that, pending determination of Part B, the trustees be interdicted from taking any further steps in relation to the administration of his insolvent estate. Under Part B, Mr Courtney sought an order in the following terms: ‘1. An order declaring the final order of sequestration of the applicant’s estate under case number 41681/20 dated 4 May 2020 a nullity and void ab initio, alternatively setting it aside. 2. An order declaring the appointment of the first and second respondents as trustees of the applicant’s insolvent estate under Master’s reference number G506/2020 to be a nullity and void ab initio, alternatively setting it aside. 3. An order declaring all steps taken by the first and second respondents following on the final order of sequestration under case number 41681/2020 dated 4 May 2020 and the first and second respondents’ appointment under Master’s reference number G506/2020 to be of no force or effect and setting same aside. 4. An order that the first and second respondents within a period to be determined by this court render to this court a full account of their administration of the applicant’s insolvent estate under Master’s reference number G506/2020 estate inclusive [of] the realisation of assets, receipts of proceeds, the distribution of proceeds, and expenditure incurred (inclusive legal fees) and all fees levied.’ [3] The application was opposed by the trustees and Absa. In addition, on 14 May 2022, the latter gave notice of its intention to conditionally cross apply for an order in the following terms: ‘1. The order of Moultrie AJ dated 4 May 2020 is varied to read as follows: 4 1. The estate of Eamonn Courtney (“the Respondent”) is placed under provisional sequestration in the hands of the Master of the High Court. 2. The respondent and any other party who wishes to avoid such an order being made final, are called upon to advance the reasons, if any, why the court should not grant a final order of sequestration of the said estate on the . . . day of . . . at 10:00 or as soon thereafter as the matter may be heard. 3. A copy of this order must forthwith be served - 3.1 on the Respondent by way of service on his attorneys of record Gothe Attorneys Incorporated situated at 225 Muller Street, Queenswood, Pretoria; 3.2 on all the employees of the Respondent, if any; 3.3 on all trade unions of which the employees of the Respondent are members, if any; 3.4 on the Master; and 3.5 on the South African Revenue Services.’ [4] The matter was heard by Wanless AJ in the high court on 10 August 2022. On 20 December 2022, the learned acting judge delivered a written judgment, in which he issued the following order: ‘3. The application instituted by the Applicant is dismissed and the Court specifically declines to grant the relief sought by the Applicant in paragraphs 1, 3 and 4 of the Applicant’s Notice of Amendment dated the 10th of August 2022. 4. The Applicant; First Respondent; Second Respondent and Third Respondent are to pay their own costs in respect of the application referred to in paragraph 3 hereof. 5. In respect of the costs payable by the First and Second Respondents in terms of paragraph 4 hereof, these costs are to be paid by the First and Second Respondents in their personal capacities and are not to be paid from the administration of the Applicants’ insolvent estate. 6. The order of Moultrie AJ dated 4 May 2020 under case number 41681/2019 is varied to read as follows: “1. The estate of Eamonn Courtney (“the Respondent”) is placed under provisional sequestration in the hands of the Master of the High Court. 5 2. The respondent and any other party who wishes to avoid such an order being made final, are called upon to advance the reasons, if any, why the court should not grant a final order of sequestration of the said estate o[n] the 27th day of February 2023 at 10:00 or as soon thereafter as the matter may be heard. 3. A copy of this order forthwith be served- 3.1 on the Respondents by way of service on his attorneys of record Gothe Attorneys Incorporated situated at 225 Muller Street, Queenwood, and Pretoria; 3.2 on the employees of the Respondent, if any; 3.3 on all trade unions of which the employees of the Respondent are members; if any; 3.4 on the Master; 3.5 on the South African Revenue Services.” 4. The costs of this application are to be costs in the administration of the Respondent’s estate.” 7. The provisional sequestration order granted in terms of paragraph 6 hereof will be deemed effective as from 4 May 2022. 8. The Applicant is to pay the Third Respondent the costs of the Third Respondent’s conditional counter-application, such to include the costs of two (2) Counsel.’ [5] The high court granted leave to: (a) Mr Courtney to appeal in respect of the whole of its judgment and order; (b) the trustees to cross-appeal against paragraph 5 of the order that they pay the costs occasioned by the application in their personal capacities; and, (c) Absa to conditionally cross-appeal, in the event that Mr Courtney is successful in his appeal, that it be entitled to move for an order in terms of its conditional counter-application. [6] The background facts leading up to this appeal are as follows. Mr Courtney, a citizen of the United Kingdom, who was resident in South Africa at the time, set up two companies, Salt House Investments (Pty) Ltd (SHI) and Allied Mobile Communications (Pty) Ltd (AMC). He and his wife, Mrs Cole-Courtney, were the 6 sole directors of the two companies. AMC was the Courtney’s primary income-producing company and provided, inter alia, cellular devices to mobile network operators, retailers and wholesalers across Africa. It formed a network of international companies ultimately owned and controlled by the Courtneys. SHI was a property holding company which owned several luxury properties, including the home in which the Courtneys resided at 733 Nick’s Place, Eagle Canyon Golf Estate, Roodepoort. [7] On 21 November 2014, Mr Courtney irrevocably and unconditionally guaranteed payment on behalf of SHI of its liabilities to Absa, as and when they became due, limited to the amount of R27 million. On 17 May 2018, he did the same in respect of AMC - this was limited to the amount of R27,5 million. His wife concluded identical guarantees. [8] By the end of 2018, AMC was under considerable financial pressure. In May and July 2019, Vida Resources PTE Limited and Vodacom (Pty) Ltd, respectively, launched separate liquidation applications against AMC in the high court. The Government Employees Pension Fund then launched an urgent application against AMC and the international companies belonging to the Courtneys in the Gauteng Division of the High Court, Pretoria to perfect its security. This was in respect of monies loaned and advanced by them in the sum of approximately R767,5 million. The order was granted in August 2019. In November 2019, R&R Wholesales & Distributors issued a liquidation application against AMC. Pursuant to this application, AMC was placed in final winding-up on 21 May 2020. By this time, the group of companies and the Courtney’s total indebtedness to creditors was in the vicinity of R1 billion. 7 [9] Both companies defaulted on their obligations to Absa in terms of their respective overdraft facilities. Mr Courtney, in turn, failed to make payment in terms of the guarantees. Meetings were held between Absa and Ms Cole-Courtney, who also represented Mr Courtney. After several promises of payment were not met, Absa proceeded with separate applications for the sequestration of the estate of each of them on 26 November 2019. It is only the sequestration application for the sequestration of Mr Courtney’s estate that is relevant to these proceedings.1 The application was served personally on him at his place of residence at Canyon Golf Estate on 28 November 2019. Less than a week later, on 3 December 2019, Mr Courtney and his wife left South Africa and never returned to their home. There is some dispute as to whether they ‘fled’ South Africa, abandoning their companies and their creditors. As appears from Mr Courtney’s passport, he returned to South Africa on 5 February 2020 and left again on 19 March 2020. Since then, he has not returned and appears to have permanently settled in Scotland. [10] The hearing of Mr Courtney’s sequestration application was set down for 5 February 2020. On 10 December 2019, Crawford and Associates, acting on behalf of Mr Courtney, sought an indulgence until 17 January 2020 to file an answering affidavit. No answering affidavit was filed by that date, or at all, despite Mr Courtney having been placed on terms. A notice of set down for 4 May 2020 was hand delivered to Crawford and Associates on 27 February 2020. [11] Neither Mr Courtney, nor his attorneys, appeared on 4 May 2020 and the final sequestration order was granted on an unopposed basis. There is no suggestion that 1 The estate of Mrs Cole-Courtney was placed first under provisional sequestration on 13 October 2021 and then under final sequestration on 24 January 2022. 8 Absa failed to meet any of the statutory requirements for the grant of a sequestration order. [12] On 5 May 2020, the day after the final order had been granted, Crawford and Associates withdrew as Mr Courtney’s attorneys of record. The address given for Mr Courtney on the Notice of Withdrawal was 733 Nick’s Place, Eagle Canyon Gold Estate, Honeydew, the same address at which the application had been served personally on Mr Courtney. When Absa’s attorneys attempted to serve the final order of sequestration on Mr Courtney on 4 June 2020, the Sheriff found the premises locked, and the order was affixed to the door. The order was also served by email on Mr Courtney, with a delivery notification that it had been received. Mr Courtney confirmed under oath, in another application,2 that he learnt of the sequestration order on 8 July 2020 and received a copy thereof on 15 July 2020. Therefore, Mr Courtney was aware that his estate had been placed under a final order of sequestration at the latest in July 2020. [13] By that stage, Mr Courtney was represented by new attorneys, Banda and Associates, and had been consulting with them regarding contemplated litigation in respect of AMC and SHI. He was aware that the trustees were continuing with the administration of his insolvent estate and when called upon by the trustees to comply with his obligations under the Act, he failed to do so. On 15 July 2020, the trustees despatched an email to Banda and Associates requesting them to bring to Mr Courtney’s attention, an attached letter that detailed the various respects in which he was obliged to assist the trustees under the Act. This was ignored. The trustees 2 Absa launched liquidation proceedings against SHI on 27 February 2020. AMC was placed in final liquidation on 21 May 2020. Pursuant to this various urgent application were launched by the Courtneys. This was the first wherein the Courtneys sought to have access to the digital records relating to the liquidations. 9 alleged that, by leaving the country, he avoided prosecution for failing to discharge his statutory obligations, thereby contravening various provisions of the Act. He has also allegedly secreted valuable moveable assets, such as artworks and, by remaining outside the country, has shielded himself from the recovery of costs in the litigation. [14] As things then stood, Mr Courtney and his attorneys, to all intents and purposes, appeared to have accepted the outcome of the sequestration application, to which there had, in any event, been no opposition. [15] On 9 March 2022, the trustees launched an ex parte application in the Court of Sessions in Scotland with a view to obtaining an order from that court in respect of Mr Courtney’s assets that were situated in that jurisdiction. On becoming aware of this, Mr Courtney suddenly saw fit, some two years after the event, to challenge the grant of the final sequestration order. He did so on the sole basis that, not having been preceded by a provisional order, the final order of sequestration granted by Moultrie AJ on 4 May 2020 was ‘a nullity and void ab initio’. [16] Mr Courtney launched an urgent application in the high court during April 2022. The relief sought in the application underwent several amendments. Even when the matter finally came before Wanless AJ, an amendment was sought during the course of the hearing itself. This amendment replaced the notice of motion in its entirety. The relief finally sought was the following: ‘1 It is declared that the order of this court dated 4 May 2020 issued under case number 41681/2019 pursuant whereto the estate of Eamonn Courtney was finally sequestrated is a nullity and set aside. 10 2 The ex parte order of this court dated 8 September 2020 issued under case number 2020/23030 pursuant whereto the powers of the first and second respondents were extended in accordance with Section 18(3) of the Insolvency Act, 1936 is set aside. 3 That first and second respondents shall within a period determined by this court render a full accounting to this court of their administration of the applicant’s estate under Master’s reference number G506/2020. 4 Upon delivery of the accounting by the first and second respondents as ordered in paragraph 3 above, the applicant is granted leave to approach this court on supplemented papers and notice for such further relief, and to seek such directions thereafter, as may be appropriate. 5 Costs of the application are to be paid by the first to third respondents jointly and severally, the one paying the other to be absolved. 6 The third respondent’s conditional-application is dismissed with costs.’ [17] All of the points that were sought to be pursued on appeal need not detain us because the approach adopted by Wanless AJ is confusing and contradictory. The learned judge held: ‘In light of, inter alia, the considerable delay on behalf of [Mr Courtney] in seeking relief from this Court to have the order of Moultrie AJ granted on 4 May 2020 declared a nullity and set aside, this Court would have declined to have come to the assistance of [Mr Courtney] in terms of Rule 42(1), alternatively, the common law. In any event, [Mr Courtney] is not entitled to that relief in that whilst Moultrie JA did not have the authority in terms of the Act to grant a final sequestration order in respect of [Mr Courtney’s] estate, he did have the authority to grant a provisional order of sequestration. The fact that he granted a final order instead of a provisional order was a mistake. Following thereon, the order granted by Moultrie AJ was not void ab initio but remained in place until it was either set aside or varied by a subsequent order of this Court. In the premises, [Mr Courtney] is not entitled to the relief sought that the order granted by Moultrie AJ on 4 May 2020 should be declared a nullity and set aside.’ [18] That conclusion (the primary conclusion) was dispositive of the matter in its entirety. Having arrived at the conclusion that Mr Courtney was not entitled to the 11 relief that he sought, namely that the final order of sequestration granted by Moultrie AJ should be set aside, and that consequently the application instituted by him (the main application) fell to be dismissed (para 3 of the order), nothing further remained. The dismissal of Mr Courtney’s application meant that the judge did not have to enter into the counter application, which was conditional upon the main application succeeding. To the extent that the judge did so, he misconceived the true nature of the enquiry. In that regard, the costs should obviously have followed the result. There was thus no warrant for ordering the trustees to pay costs in their personal capacities. Thus, unless the primary conclusion (to which I now turn) is susceptible to being overturned on appeal, the cross appeal by Absa, as well as the trustees, need not detain us. [19] Relying on the decisions of this Court in The Master of the High Court Northen Gauteng High Court, Pretoria v Motala NO and Others (Motala),3 and in Knoop NO and Another v Gupta and Another (Knoop),4 it was argued on behalf of Mr Courtney that the grant of a final order of sequestration that was not preceded by a provisional order was not competent under the enabling legislation and therefore a nullity from inception. Being a nullity, so the argument proceeded, the order could not be revived and transformed retroactively into a competent order in terms of s 149(2) of the Act. [20] In Motala, this Court found that an order interdicting the Master of the High Court from appointing provisional judicial managers save in terms of a court order, 3 The Master of the High Court Northern Gauteng High Court, Pretoria v Motala NO and Others [2011] ZASCA 238; 2012 (3) SA 325 (SCA) (Motala). 4 Knoop NO and Another v Gupta and Another [2020] ZASCA 163; [2021] 1 All SA 726 (SCA); 2021 (3) SA 88 (SCA) para 34. 12 was not a competent order.5 In so doing, so this Court held, the high court issued an order that it was not empowered to grant in terms of the legislation. The judge therefore usurped a power that had been reserved to the Master. The relevant section of the Act,6 conferred on the Master, and only the Master the power to appoint provisional judicial managers. It was therefore impermissible for the court to arrogate to itself the power that had been reserved by the legislature for the Master. In such a situation, said this Court, the order of the court was a nullity and it was unnecessary for the order to first be set aside by a court. [21] Motala was confirmed by this Court in City Capital SA Property Holdings Limited v Chavonnes Badenhorst St Clair Cooper NO and Others,7 and Knoop and Another NNO v Gupta (Tayob Intervening).8 [22] The reliance on Motala and Knoop is misplaced. In Motala, because the court purported to exercise a power that it did not have in the face of an express statutory provision, the order was a nullity. In Knoop, an application for leave to appeal was granted simultaneously with an application for leave to execute, as well as an order that all future appeals did not suspend the operation of the order. This Court held that the order was invalid because it was issued contrary to the provisions of s 18(4) of the Superior Courts Act 10 of 2013, which expressly provides that an appeal against an execution order will be suspended pending an appeal in terms of s 18(4). As in Motala, the high court in Knoop, had made an order contrary to the express provision of a statute. Thus, like Motala, the order in Knoop was a nullity. 5 Motala para 14. 6 Section 429 of the Insolvency Act. 7 City Capital SA Property Holdings Limited v Chavonnes Badenhorst St Clair Cooper NO and Others [2017] ZASCA 177; 2018 (4) SA 71 (SCA). 8 Knoop and Another NNO v Gupta (Tayob Intervening) [2020] ZASCA 149; [2021] 1 All SA 17 (SCA); 2021 (3) SA 135 (SCA). 13 [23] Here, it is only a court that can issue a sequestration order, whether provisional or final. The complaint, in essence boils down to one of timing, namely that it was not competent for the high court to have issued a final order when it did, inasmuch as it was not preceded by a provisional order. The complaint therefore, properly understood, is that although Moultrie AJ was empowered to issue the order that he did, he did so too early. Unlike Motala and Knoop, Moultrie AJ did not appropriate to himself a power that had been expressly reserved to someone else. It is this that distinguishes this matter from those two cases. [24] Having chosen not to oppose the application for his sequestration, Mr Courtney was not free to thereafter ignore the order that issued.9 Even an incorrect judicial order exists in fact and may have legal consequences until a court sets it aside.10 Therefore, unlike Motala and Knoop, the final order of sequestration continued to operate and had force and effect. Pursuant to that order, the trustees were appointed and, thereafter, continued to discharge their function. [25] This being the case, Mr Courtney’s only option was to apply for a rescission of the order of final sequestration. A rescission may be granted in terms of rule 42(1)(a) of the Uniform Rules of Court on the basis that it was erroneously sought and erroneously granted in the absence of a party, alternatively the common law. 9 Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and Development Company Ltd & others [2013] ZASCA 5; [2013] 2 All SA 251 (SCA) para 17. 10 Department of Transport and Others v Tasima (Pty) Ltd [2016] ZACC 39; 2017 (2) SA 622 (CC); 2017 (1) BCLR 1 (CC) para 180; Municipal Manager O.R. Tambo District Municipality and Another v Ndabeni [2022] ZACC 3; [2022] 5 BLLR 393 (CC); (2022) 43 ILJ 1019 (CC); 2022 (10) BCLR 1254 (CC); 2023 (4) SA 421 (CC) paras 23-26. 14 [26] Rescission does not follow automatically upon proof of a mistake.11 A court always has a discretion whether to grant an application for rescission which must be judicially exercised.12 The Constitutional Court, in Zuma v Secretary of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector Including Organs of State and Others, held that if litigants deliberately elect not to participate in proceedings, they cannot raise their absence as a ground for rescission in terms of rule 42(1)(a).13 This Court, in Lodhi 2 Properties v Bondev Developments (Pty) Ltd (Lodhi 2 Properties),14 held that a court does not grant a default judgment on the basis that the defendant does not have a defence but on the basis that the defendant has been notified of the claim and the plaintiff is entitled to the order sought as per the rules. [27] Not only did Mr Courtney elect not to participate in the application for his final sequestration, but he also has put up no defence whatsoever. It is not disputed that he is hopelessly insolvent. As this Court pointed out in Lodhi 2 Properties, ‘a judgment granted against a party in his absence cannot be considered to have been granted erroneously because of the existence of a defence on the merits which had not been disclosed to the judge who granted the judgment’.15 Clearly Mr Courtney cannot avail himself of rule 42(1)(a), in support of which, in any event, no case was properly advanced on the papers by him. 11 Colyn v Tiger Food Industries Ltd t/a Meadow Feed Mills Cape [2003] ZASCA 36; [2003] 2 All SA 113 (SCA) (Colyn) para 5. 12 De Wet v Western Bank 1979(2) SA 1031 (A) at 1042F- 1043C; Colyn para 5. 13 Zuma v Secretary of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector Including Organs of State and Others [2021] ZACC 28; 2021 (11) BCLR 1263 (CC) para 56. 14 Lodhi 2 Properties Investments CC v Bondev Developments (Pty) Ltd [2007] ZASCA 85; [2007] SCA 85 (RSA); 2007 (6) SA 87 (SCA) para 27. 15 Ibid para 17. 15 [28] It remains to consider a rescission under the common law. To be successful, Mr Courtney has to show that he was not in wilful default and that there is good cause to grant the rescission. He is unable to show either. He has put up no defence and he consciously chose to ignore the order of final sequestration for two years. [29] The sole objective of the application seems to be to disrupt the administration of his insolvent estate. No doubt, the legal steps taken by the trustees in respect of his property in Scotland appear to have impelled him to act. At the bar, counsel conceded that in persisting with the matter, Mr Courtney hoped to force the respondents to the negotiating table. However, as the relief originally sought under Part B declaring the appointment of the trustees a nullity and seeking to set aside all the steps taken by them in the discharge of the statutory duties, is no longer persisted in, it may well be that what we have been treated to are arguments in sophistry, because it is plain that the clock cannot be turned back. [30] Accordingly, for the reasons given: (a) the appeal by Mr Courtney must fail; and, (b) paragraphs 4 to 8 of the order of the high court, which cannot stand, must be set aside. [31] In the result: 1 The appeal against paragraphs 1, 2 and 3 of the order of the high court is dismissed with costs, including the costs of two counsel. 2 Paragraphs 4 to 8 of the order of the high court are set aside. __________________________ C E HEATON NICHOLLS JUDGE OF APPEAL 16 Appearances For the appellant: J G Smit Instructed by: Gothe Attorneys Inc., Pretoria Lovius Block Inc., Bloemfontein For the first and second respondents: S Symon SC Instructed by: Cox Yeats Attorneys, Johannesburg Symington De Kok Attorneys, Bloemfontein For the third respondent: A Subel SC with A Vorster Instructed by: Cox Yeats Attorneys, Johannesburg Phatshoane Henney Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 21 June 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 Eamonn Courtney v Izak Johannes Boshoff NO & Others (483/2023) [2024] ZASCA 104 (21 June 2024) Today, the Supreme Court of Appeal (SCA) dismissed an appeal from the Gauteng Division of the High Court, Johannesburg (high court). Its order was: ‘the appeal against paragraph 1, 2 and 3 of the order of the high court is dismissed with costs, including the costs of two counsel; paragraph 4 to 8 of the order of the high court are set aside.’ Mr Courtney, a citizen of the United Kingdom, who was resident in South Africa at the time, set up two companies, Salt House Investments (SHI) and Allied Mobile Communications (Pty) Ltd (AMC). He and his wife Mrs Cole-Courtney, were the sole directors of the two companies. On 21 November 2014, Mr Courtney irrevocably and unconditionally guaranteed payment by SHI of its liabilities to Absa, limited to the amount of R27 million. On 17 May 2018, he did the same in respect of AMC, limited to the amount of R27,5 million. His wife concluded identical guarantees. By the end of 2018, AMC was under considerable financial pressure. Multiple companies had launched liquidation applications against AMC and on 21 May 2020, AMC was placed under a final liquidation order. Both SHI and AMC defaulted on their overdraft facilities to Absa. In addition, Mr Courtney failed to make payment in terms of the guarantees. As a result, Absa launched an application to place Mr Courtney’s estate under final sequestration, alternatively provisional sequestration. The application was served on him personally at his place of residence on 28 November 2019. On 3 December 2019, the Courtney’s left South Africa and appear to have permanently settled in Scotland. The hearing of the sequestration was set down for 5 February 2020. On 10 December 2019, Crawford and Associates, representing Mr Courtney sought an indulgence until 2 17 January 2020 to file an answering affidavit but failed to do so. A notice of set down for 4 May 2020 was hand delivered to Crawford and Associates. Neither Mr Courtney nor his attorneys appeared at the hearing. Consequently, a final sequestration order was granted on an unopposed basis. On 5 May 2020, Crawford and Associates withdrew as Mr Courtney’s attorneys. Thereafter Mr Courtney appointed new attorneys, Banda and Associates, in respect of contemplated litigation concerning AMC and SHI. Through his new attorneys, he was aware that the trustees were continuing with the administration of his insolvent estate and when called upon by the trustees to comply with his obligations under the Insolvency Act 24 of 1936, he failed to do so. Almost 2 years later, on 9 March 2022, the trustees launched an ex parte application in the Court of Sessions in Scotland in order to locate his assets which were situated in that jurisdiction. Only then did Mr Courtney challenge the final sequestration order on the sole basis that it was not preceded by a provisional order and was therefore null and void ab initio. Mr Courtney launched an urgent application in the high court during April 2022 in order to set aside the final sequestration order on the basis that it was a nullity. Absa launched a conditional counter application to vary the final order of sequestration to a provisional order in the event that, the court set aside the final order of sequestration. The high court dismissed Mr Courtney’s application but nevertheless varied the final order to a provisional order effective from the date of the final order. It also granted a costs order against the trustees in their personal capacities. In the SCA, the Court held that a court may issue a sequestration order, whether provisional or final. Because the high court was empowered to issue the final sequestration order, although it may have done so too early, the final order was not a nullity. That being the case, Mr Courtney’s only option was to apply for a rescission of the order under rule 42(1)(a) of the Uniform Rules of Court or under the common law. He, however, did not participate in the application for his final sequestration, failed to put any defence and chose to ignore the order of final sequestration for two years. Rescission was not available to Mr Courtney in these circumstances. As a result, the SCA dismissed the appeal. It set aside the order varying the final sequestration order to a provisional order and the personal costs order against the trustees. ~~~~ends~~~~

4234

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 1250/2022 In the matter between: MINISTER OF POLICE APPELLANT and THAMSANQA RONNY MIYA RESPONDENT Neutral citation: Minister of Police v Miya (1250/2022) [2024] ZASCA 71 (06 May 2024) Coram: MOKGOHLOA, MEYER and KGOELE JJA and BAARTMAN and BLOEM AJJA Heard: 15 March 2024 Delivered: 06 May 2024 Summary: Civil claim – interpretation of s 2(2)(a) of State Liability Act 20 of 1957 – whether failure to serve summons on the head of the department renders the summons a nullity – purpose of the Act achieved. 2 ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Mazibuko AJ sitting as court of first instance): The appeal is dismissed with costs, which costs shall include the costs consequent on the appointment of two counsel. JUDGMENT Kgoele JA (Mokgohloa and Meyer JJA, Baartman and Bloem AJJA concurring): [1] A little less than a decade ago the Constitutional Court, to underscore the approach our courts should employ in applying the laws in this country, including the interpretation of the Constitution, statutes, and contracts in matters before them remarked: ‘Our peculiarity as a nation impels us to remember always, that our Constitution and law could never have been meant to facilitate the frustration of real justice and equity through technicalities. The kind of justice that our constitutional dispensation holds out to all our people is substantive justice. This is the kind that does not ignore the overall constitutional vision, the challenges that cry out for a just and equitable solution in particular circumstances and the context within which the issues arose and are steeped. We cannot emphasise enough, that form should never be allowed to triumph over substance….’1 1 City of Tshwane Metropolitan Municipality v Afriforum and Another [2016] ZACC 19; 2016 (9) BCLR 1133 (CC); 2016 (6) SA 279 (CC) para 18. 3 [2] Central to the issues in this appeal is the question whether the non-compliance with the provisions of s 2(2)(a) of the State Liability Act 20 of 1957 (State Liability Act) renders the summons a nullity. This is a similar question already pronounced by this Court per Makgoka JA recently in Minister of Police v Molokwane (Molokwane).2 Whereas in Molokwane the non-compliance relates to the failure to serve the summons on the State Attorney in terms of s 2(2)(b) of the State Liability Act, the converse occurred in this matter. This appeal concerns the failure to serve the appellant, the Minister of Police (the Minister), in terms of s 2(2)(a), albeit that it was served on the State Attorney. The Gauteng Division of the High Court, Pretoria (the high court), dismissed the special plea the Minister raised in this regard. It concluded that the non-compliance with s 2(2)(a) did not render the summons a nullity. The appeal is with leave of the high court. [3] The appeal is opposed by the respondent, Mr Miya. In the main action, Mr Miya sued the Minister and the National Director of Public Prosecution (NDPP) for damages allegedly suffered on 19 December 2017, at Vosloorus. The allegations against them are that he was unlawfully arrested and detained for three days by members of the police acting within the course and scope of their employment with the Minister. The trial began with a determination of a special plea against the Minister only. [4] The salient factual background relevant to the adjudication of the special plea are common cause. They are that: the cause of action arose on 19 December 2017; summons was issued on 5 May 2019; the statutory notice in terms of the Institution of Legal Proceeding Against Certain Organ of the State Act 40 of 2002, as amended 2 Minister of Police v Samuel Molokwane (730/2021) [2022] ZASCA 111 (15 July 2022). 4 (the statutory notice), was served on the Minister; summons was served at the State Attorney’s office on 7 May 2019; Mr Miya never served the summons at the office of the Minister as required in terms of s 2(2)(a); on 11 July 2019 the State Attorney filed a notice of intention to defend on behalf of both the Minister and the NDPP; almost two years later the Minister filed his amended plea on 22 February 2022 wherein he introduced the special plea which is the subject of this appeal. [5] The contents of the amended plea were that: the cause of action arose on 19 December 2017; the summons was issued on 5 May 2019; the summons was served on the State Attorney on 7 May 2019 and not on the head of the Department concerned; s 2 (1) of the State Liability Act and rule 4(9) of the Uniform Rules of Court are obligatory; the service on the State Attorney alone is fatal and renders the claim prescribed irrespective of the Minister’s participation in the proceedings from its inception. [6] It is important to set out the provisions of section 2(2) of the State Liability Act in full at the outset. It provides: ‘(2) The plaintiff or applicant, as the case may be, or his or her legal representative must – (a) after any court process instituting proceedings and in which the executive authority of a department is cited as nominal defendant or respondent has been issued, serve a copy of that process on the head of the department concerned at the head office of the department; and (b) within five days after the service of the process contemplated in paragraph (a), serve a copy of that process on the office of the State Attorney operating within the area of jurisdiction of the court from which the process was issued.’ (Emphasis added.) [7] Before the high court, the Minister submitted that the provisions of s 2(2) of the State Liability Act are obligatory; failure to serve the summons on the Minister is fatal; service on the State Attorney alone renders the summons a nullity. In the alternative, the Minister submitted that the claim had prescribed due to non-service 5 on the debtor, the Minister, in terms of s 2(2)(a). Although the arguments of both parties centered around the decision in Molokwane, the Minister argued that the facts therein were distinguishable. The difference, according to him, stems from the fact that in Molokwane summons was served on the Minister who is the debtor, which is not the case in this matter. As a basis for this argument, the Minister pinned his colours of the mast on s 15(1) of the Prescription Act 68 of 1969 (the Prescription Act). This section provides that the running of prescription shall ‘be interrupted by the service on the debtor of any process . . .’. [8] In dismissing the special plea, the high court agreed with the submissions by Mr Miya to the effect that undoubtedly the Minister, who is the debtor, became aware of the summons; he responded to the summons by filing relevant court processes in his defence; and the omission to serve on him did not render the summons void as its purpose was consequently achieved. The high court did not pronounce on the issue of prescription. [9] Before us, and in a somewhat different approach from the one advanced in the high court, counsel representing the Minister attempted to persuade this Court to reconsider its findings in Molokwane. He argued that the appeal primarily rests on the issue of prescription which was not dealt with by the high court; what was said in Molokwane was obiter because in this matter the debtor was not served; even though the Minister became aware of the summons and filed all the necessary court processes, service on him or his office was still required to interrupt prescription; the failure to serve cannot be condoned as the Prescription Act is also peremptory on the issue of service on the debtor. Furthermore, counsel representing the Minister submitted that the failure to adjudicate the issue of prescription is so egregious, 6 renders the matter res judicata, and violated the Minister’s right to a fair hearing in terms of s 34 of the Constitution. [10] I start my analysis of the merits with the issue of prescription because, in my view, it ought not detain us much save to say that prescription does not arise in the context of the facts of this matter. First, the plea of prescription was pleaded in the alternative. This much is acknowledged by the Minister’s counsel in his arguments. Second, the service on the State Attorney was within the three years before prescription would begin to run. The tenor of the high court’s finding is simply that prescription had been interrupted without saying so in so many words. It is demonstrably clear that once the bridge regarding effective service was crossed, the need for the high court to have analysed the issue of prescription no longer existed. Additionally, the Minister was timeously served with the statutory notice. It is trite that it is ‘a process’ that serves to interrupt prescription.3 The defence of prescription together with the arguments related thereto were therefore ill-conceived. [11] I now turn to the main issue of whether the non-compliance with service on the Minister is fatal to the main action. To recap, the arguments supporting the reconsideration of the Molokwane judgment were couched along the following confines: the State Attorney is not a debtor as defined by the Prescription Act; it was never the intention of the Prescription Act that the mere ‘knowledge’ of the debtor regarding the institution of the proceedings should be sufficient to interrupt the running of prescription in circumstances where the summons was not served on him; and that the finding in that regard in Molokwane was obiter. 3 Molokwane fn 2 para 24. 7 [12] As already indicated above, it is common cause that the main issue in this appeal concerns the interpretation of s 2(2) of the State Liability Act. It is by now trite that when a legislative provision is to be interpreted, consideration should be given to the language used in the light of the ordinary rules of grammar and syntax; the process of interpretation is objective, not subjective; and a sensible meaning should be preferred rather than an insensible one.4 Furthermore, the Constitutional Court has made it clear that when interpreting legislation, the purpose of the impugned section must be fulfilled, and if it is fulfilled, a mechanical approach is to be deprecated.5 [13] Consistent with the above principles as propounded in various judgments, most recently, this Court rejected similar arguments raised by the Minister in Molokwane. It remarked: ‘This approach received the imprimatur of the Constitutional Court in African Christian Democratic Party v Electoral Commission and Others [2006] ZACC 1; 2006 (3) SA 305 (CC); 2006 (5) BCLR 579 (CC) para 25. There, it was held that the adoption of the purposive approach in our law has rendered obsolete all the previous attempts to determine whether a statutory provision is directory or peremptory on the basis of the wording and subject of the text of the provision. The question was thus ‘whether what the applicant did constituted compliance with the statutory provisions viewed in the light of their purpose’. A narrowly textual and legalistic approach is to be avoided.’6 [14] The court further held: ‘There is also the injunction in s 39(2) of the Constitution, which enjoins courts, when interpreting any legislation, to promote the spirit, purport and objects of the Bill of Rights. Thus, where a 4 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 18. 5 African Christian Democratic Party v Electoral Commission and Others [2006] ZACC 1; 2006 (3) SA 305 (CC); 2006 (5) BCLR 579 (CC) para 25. 6 Molokwane fn 2 para 16 8 provision is reasonably capable of two interpretations, the one that better promotes the spirit, purport and objects of the Bill of Rights should be adopted. The right implicated in this case is that of access to courts, enshrined in s 34 of the Constitution. Consistent with this injunction, the interpretation of s 2(2) of the State Liability Act must be one which promotes this right, by considering the underlying purpose of the section, rather than merely its text. This purposive approach is far more consistent with our constitutional values, than reading the section narrowly and strictly, as preferred by the appellants.’7 The observations expressed in the preceding paragraphs accord with the remarks quoted above which were made by the former Chief Justice Mogoeng in the City of Tshwane v Afriforum. [15] Molokwane is on all fours with the present appeal as it dealt with almost similar facts and exactly the same legal points raised in this matter. Looking at the facts of this appeal from all angles, there is no doubt that the principles of interpretation that were dealt with in Molokwane albeit with specific reference to s 2(2)(b) apply to the facts of this matter. In my view, the same purposive interpretative approach employed by this Court in Molokwane applies mutatis mutandi to s 2(2)(a). [16] The argument that Molokwane is obiter has no merit as well. It is clear that, in Molokwane, this Court dealt with the interpretation of s 2(2) as a whole, not disjunctively as counsel for the Minister wants to portray.8 This much is buttressed by the fact that a simple syntax reading of ss 2(2)(a) and 2(2)(b) reveals that the subsections are conjoined twins as there is a word ‘and’ between them. Paragraph 12 of Molokwane is instructive as the purpose of the whole s 2(2) was clearly spelled out therein. I agree with the remarks made therein that the question to be considered 7 Molokwane fn 2 para 17. 8 Molokwane paras 11 and 12. 9 in interpreting this section is not about how the knowledge was obtained, but whether knowledge of the action was obtained. [17] There is a further reason why the approach suggested by the counsel representing the Minister is untenable. Applying a narrow approach, as suggested by him, will in my view lead to an insensible conclusion that the State Attorney’s office acted without the instruction of the Minister when it filed the plea and subsequent amended plea on behalf of the Minister. However, the Minister’s counsel conceded from the bar that when the State Attorney’s office filed the Minister’s plea and subsequently the amended plea, it acted on the instructions of the Minister. The concession therefore throws the Minister’s approach completely out of balance. [18] Apart from the fact that there was no basis laid by the Minister to demonstrate that the principles already pronounced in Molokwane are clearly wrong, this Court is not persuaded by the submission that the mere fact that the non-service relates to the Minister changes the picture. The particular facts and circumstances of this matter are telling, including the context within which the issues arose which are: the statutory notice was served on the Minister; the Minister gave instructions to the State Attorney, an agent acting on his behalf, to defend the matter by filing a notice to defend; the Minister participated in all the stages of proceedings until at trial. All of these demonstrate that the Minister was fully aware of the proceedings against him. There was not even an iota of prejudice decried by the Minister as a result of this failure. [19] It is for these reasons that I conclude that the fact that the summons was not served within the prescripts of s 2(2) of the State Liability Act with particular reference to s 2(2)(a), is, on the facts of this case, not fatal. This much is best 10 accentuated by the following conclusion of the high court which serves as the epicenter of the interpretation it affirmed: ‘It is not my finding that the State Attorney accepted the summons on behalf of the first defendant nor that the State Attorney replaced the first defendant as a debtor. The first defendant remained a debtor who was not served with the court process but who ultimately became aware of the summons (plaintiff’s claim) as he responded to it.’ The decision of the high court to dismiss the special plea was therefore correct. The appeal must fail. [20] As far as costs are concerned, Mr Miya argued that he is entitled to costs consequent on the employment of two counsel. I am of the view that the ground that was heavily relied upon by the Minister to the effect that this Court should reconsider the decision in Molokwane, is a substantial issue. Mr Miya, as an ordinary citizen, had to defend the judgment in his favour by all the means he had. This, in my view, justified the employment of two counsel. The issue is exacerbated by the fact that the Minister came to this Court to defend the indefensible. [21] The following order is thus made: The appeal is dismissed with costs, which costs shall include the costs consequent on the appointment of two counsel. ________________________ A M KGOELE JUDGE OF APPEAL 11 Appearances For appellant: T C Kwinda Instructed by: State Attorney, Pretoria State Attorney, Bloemfontein For respondent: M R Maphutha (with A Seshoka) Instructed by: Makhafola & Verster Inc., Pretoria Makubalo 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: 06 May 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 Minister of Police v Miya (1250/2022) [2024] ZASCA 71 (06 May 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing an appeal, with costs, including that of two counsel where so employed, against the decision of the Gauteng Division of the High Court, Pretoria (the high court). Mr Miya, the respondent, sued the appellant, the Minister of Police (the Minister) and the NDPP for damages arising from an alleged unlawful arrest and detention that occurred on 19 December 2017. The trial began with a determination of a special plea which the Minister raised. The special plea related to the failure by Mr Miya to serve the summons on the office of the Minister in terms of s 2(2)(a) of the State Liability Act 20 of 1957 (State Liability Act). The summons was only served at the office of the State attorney in terms of s 2(2)(b). Despite this, the State attorney filed a notice of intention to defend on behalf of the Minister and the NDPP. Before the high court, the Minister submitted that the provisions of s 2(2) of the State Liability Act were obligatory; failure to serve the summons on the Minister was fatal and that service on the State Attorney alone rendered the summons a nullity. In the alternative, the Minister submitted that the claim had prescribed due to non-service on him (the debtor) in terms of s 2(2)(a). The high court dismissed the special plea. Relying on the decision of this Court in Molokwane, the high court held that the omission to serve on the Minister did not render the summons a nullity as the purpose of the Act was achieved. The high court did not pronounce on the issue of prescription. Aggrieved by the high court’s order, the Minister appealed to this Court. The central issue in this appeal is whether non-compliance with s 2(2)(a) of the State Liability Act rendered the summons a nullity. Before this Court, the Minister's counsel argued that even though the Minister became aware of the summons and filed all the necessary court processes, service on him or his office was still required to interrupt prescription; the failure to serve could not be condoned as the Prescription Act was also peremptory on the service of the debtor. Furthermore, the Minister's counsel contended that the failure to decide on the issue of prescription was so egregious, rendered the matter res judicata, and violated the appellant’s right to a fair hearing in terms of s 34 of the Constitution. In its findings, the SCA first dealt with the issue of prescription. It concluded that the prescription argument together with the arguments related thereto were ill-conceived because prescription did not arise in the context of the facts of this matter; the tenor of the high court’s judgment is that prescription was interrupted. As far as the main issue is concerned, the SCA, in affirming the trite principles of interpretation of statutes as espoused in Molokwane held: that there was no basis to revisit Molokwane as the Minister failed to demonstrate that the principles as pronounced in Molokwane were clearly wrong; the fact that the non-service related to the Minister which was not the case in Molokwane did not change the picture; on the particular facts of this matter, no prejudice was suffered by the Minister; it was clear that the 2 Minister (the debtor) was fully aware of the proceedings against him; the purpose of the State Liability Act was achieved. As a result, the SCA confirmed the decision of the high court and concluded that the fact that the summons were not served within the prescripts of s 2(2) of the State Liability Act with particular reference to s 2(2 )(a) in this matter, was not fatal. And thus, the appeal had to fail. ~~

4205

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 1030/2022 In the matter between: CHRISTOPHER CHARLES HUGHES APPLICANT and NICOLAS GARGASSOULAS FIRST RESPONDENT CINDY-ANN OOSTHUIZEN SECOND RESPONDENT PAM GOLDING PROPERTIES (PTY) LTD THIRD RESPONDENT Neutral Citation: Christopher Charles Hughes v Nicolas Gargassoulas and Others (1030/2022) [2024] ZASCA 46 (12 April 2024) Coram: MOTHLE AND MOLEFE JJA AND COPPIN AJA Heard: 19 February 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 12 April 2024. Summary: Civil Procedure – application for leave to appeal in terms of section 17(2)(d) of the Superior Courts Act 10 of 2013 – whether the appeal would have reasonable prospect of success – agreement of sale – whether the purchaser validly waived the benefits of the suspensive condition in the agreement of sale – 2 whether agreement lapsed due to the non-fulfilment of the suspensive condition – whether the purchaser validly ceded his right to claim the repayment of the deposit. 3 ______________________________________________________________ ORDER ______________________________________________________________ On appeal from: The Western Cape Division of the High Court, Cape Town (Dolamo J sitting as court of first instance): The application for leave to appeal is dismissed with costs. ______________________________________________________________ JUDGMENT ______________________________________________________________ Coppin AJA (Mothle and Molefe JJA concurring): [1] The applicant, Christopher Charles Hughes (Mr Hughes) seeks leave to appeal against the orders of the Western Cape Division of the High Court, Cape Town (the high court) in terms of which it: (a) declared a written agreement of sale between Mr Hughes and one Peter Henry Green (Mr Green) in respect of an immovable property situated at 9 North Oaks Estate, Houtbay (the property) to have lapsed due to the non-fulfilment of a suspensive condition; and (b) ordered the second respondent, Pam Golding Properties Pty Ltd (Pam Golding) to repay the deposit of R1 million, which Mr Green had paid in terms of the agreement, to Nicolas Gargassoulas (first respondent) and Cindy-Ann Oosthuizen (second respondent), to whom Mr Green has ceded his rights in respect of the deposit. [2] Leave to appeal having been refused by the high court, the applicant petitioned this Court for leave to appeal. It was ordered that the application be referred to this Court for consideration, as contemplated in s 17(2)(d) of the Superior Courts Act,1 and that the parties should also be prepared to address this Court on the merits. In terms of s 17(2)(e) of the Superior Courts Act, this Court may thus grant, or refuse leave to appeal, and if it grants such leave, the court will proceed to consider the merits of the appeal. 1 Superior Courts Act 10 of 2013. 4 [3] The applicable test is stated in s 17(1) of the Superior Courts Act. It is whether: (a) (i) the proposed appeal has a reasonable prospect of success, or (ii) whether there is some other compelling reason why the appeal should be heard, including whether there are conflicting judgments on the matter under consideration. Other requisites are that the decision sought to be appealed against must not fall within the ambit of s 16(2)(a); and that if 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. [4] The essence of this matter is whether there is a reasonable prospect on appeal of finding that Mr Green had waived his rights in respect of the suspensive condition and that the agreement had not lapsed due to its non-fulfilment. And following from that, whether the first and second respondents were entitled to the deposit. Common cause background facts [5] Mr Green sought to buy a residential property for his daughter, the second respondent, whose partner is the first respondent, and he had enlisted the services of an estate agent, Ms Karen Williamson (and Ms Cindy Gilio) of Signature Real Estate to assist him in that regard. Mr Hughes is a chartered accountant living in the United Kingdom. The property was being marketed by another estate agent, Ms Monique Dollenberg of Pam Golding on Mr Hughes’ behalf. [6] The agreement for the sale of the property was concluded between Mr Green and Mr Hughes on 12 February 2020. The agreed purchase price was R4 950 000. In terms of the agreement Mr Green was to pay a deposit of R1 million into the trust account of Pam Golding within seven business days after the date of signature of the agreement and pay the balance of the purchase price (ie R3 950 000) to the conveyancing attorneys appointed by the seller (Mr Hughes) against registration of transfer of the property. [7] Clause 6.1 of the agreement provided that the agreement shall be subject to the suspensive condition that the purchaser (Mr Green) obtains approval for a mortgage loan to finance the balance of the purchase price by no later than 13 5 March 2020. Of further significance, clause 6.2 provided that the suspensive condition has been inserted for the benefit of the purchaser who may waive it ‘by giving notice in writing to the seller at any time prior to the date for fulfilment or waiver’. Clause 6.5 provided that ‘[i]f the suspensive condition is not fulfilled or waived by the due date, therefore then this Agreement shall become null and void and that the Deposit and any interest accrued thereon, shall be repaid in full to the purchaser within 5 (five) business days after such date’. [8] The agreement also contained, inter alia, standard clauses to the effect that all additions and variations to the agreement had to be in writing and signed by the parties (clause 19.4). Further, that no waiver of any rights by any party arising out of or in connection with the agreement or any part thereof shall be ‘of any force or effect unless in writing and signed by the parties. (Clause 19.5). It is common cause that Mr Green duly paid the deposit as per their agreement and applied for mortgage financing in respect of the balance of the purchase price. [9] The agreement reflects that H J Joubert attorneys were the appointed conveyancers (the conveyancers). There is a dispute about whether the conveyancers were appointed at the instance of Mr Green, or Mr Hughes, but it is common cause that their mandate was to effect transfer of the ownership of the property from Mr Hughes to Mr Green. It is further common cause that the due date for the fulfilment of the suspensive condition was 2 April 2020, because if it was not fulfilled by 13 March 2020, as stipulated in clause 6.1.1.1, it was to be automatically extended for a further 14 days as contemplated in clause 6.1.4 of the agreement. The envisaged date for the transfer of the property was 30 April 2020. [10] It is common cause that Mr Green did not obtain approval for, or a mortgage loan before or by the due date. But that on 10 March 2020, Ms Tania Liebenberg, a conveyancing secretary employed by the conveyancers, sent the following email (which is at the heart of this matter) concerning the transfer of the property to the first respondent, Ms Karen Williamson and Cindy Gilio, and also copied it to Mr Green: ‘Good day We refer to the above-mentioned matter and confirm that we have spoken to the purchaser and the purchaser advised that he will make payment of the full purchase price. 6 He will be buying the property cash. We will confirm as soon as the balance of the purchase price is paid. Kind regards Tania Liebenberg…’ [11] It is further common cause that Ms Karen Williamson, subsequently forwarded this email to Ms Dollenberg of Pam Golding, who, in turn, forwarded it to Mr Hughes. There was no immediate response from any of the addressees to this email and the national Covid-19 lockdown soon came into effect. [12] A series of emails, which are referred to by the applicant, were exchanged between Mr Henning Joubert of the conveyancers and Mr Hughes regarding the progress of the transaction. On 24 April 2020 Mr Joubert wrote to Mr Hughes informing him, inter alia, as follows: ‘I trust that you are well during these difficult times while there is a lockdown worldwide. The reason for my e-mail, being that I was contacted by the buyer due to the delay in all conveyancing matters in South Africa. Due to the lockdown, the deeds office and all related services are closed, causing all property transfers to be delayed… We will do our utmost best to expedite the registration of your property as soon as all services are available again. At this stage we are only awaiting the rates clearance figures, levy figures and electrical compliance certificate. On payment of the figures and receipt of the relevant certificates we will proceed to launch in the deeds office. I trust that registration will happen during the month of June 2020.…’ [13] In an email dated 5 May 2020 Mr Hughes responded to an email of Mr Joubert dated 28 April 2020 in which Mr Joubert, inter-alia, informed him that he was not sure when the deeds office will reopen. Mr Hughes’ response stated that he understands that the number of matters needed to be addressed and states, inter-alia, that he understands ‘that the purchaser is now applying for a bond but that it was agreed that either the remainder of the purchase price would be transferred or guarantees for this would be delivered’. And enquired ‘What is the status’? 7 [14] In an email dated 14 May 2020 from Mr Joubert to Mr Hughes, he updates Mr Hughes on progress (or the status) of the transaction at that stage. Mr Joubert, inter-alia, states: ‘… The buyer wanted to buy cash for the property, but due to the lockdown his cash flow has been compromised. He paid R 2 500 000-00 deposit and already started with the process to apply for a bond. I trust that this will be finalised within the next two weeks. (I know the buyer for many years and all his properties he bought cash. This lockdown has affected everybody and he is not very happy to have debt on his name, but circumstances are dictating differently. ).’ [15] It is common cause that at that stage Mr Green’s daughter, the second respondent, was already keen on moving into the property, but was hampered, inter-alia, by the lockdown. In his aforementioned email Mr Joubert wanted to know from Mr Hughes what his attitude was to the possibility of her taking early occupation. [16] Further correspondence was exchanged between Mr Joubert and Mr Hughes regarding documentation that required signature and regarding early occupation of the property by the second respondent. In an email dated 25 May 2020 Mr Joubert informs Mr Hughes, inter-alia, as follows: ‘…we are now awaiting on your documentation, then the rates figures and the final grant from the bank whereafter we can proceed with the registration…’. [17] In another email of the same date Mr Joubert informed Mr Hughes, inter-alia, as follows: ‘… I spoke to the bond originator and he says that because the buyer is earning a good income and is a director of a big company, it does not foresee any problems. The bank just requested the 2020 financials which [he has] given to them this week. The buyer is buying the property for his daughter, Cindy and her life partner, Nic. She isn’t married to him, but they have a family together and live together. They are the ones will be staying in the house and who needs to take occupation as soon as possible. I think that is why he tried to contact you…’ 8 [18] On 2 June 2020 Mr Joubert informed Mr Hughes by email, inter-alia, as follows: ‘… Some good news. The bank granted the bond in principle this morning, but now just have to do a valuation on the property to find value. This is purely an administrative procedure as the property is definitely worth more than the 3 million rand bond’. And in the same email Mr Joubert enquired from Mr Hughes whether the buyers may take occupation once the bank gives its final approval for the mortgage bond, and he also enquired about the occupational rent payable, if at all. [19] In an email from Mr Joubert to Mr Hughes dated 5 June 2020 he informs Mr Hughes, inter-alia, that the bank’s assessor did the valuation on that day and that the registration process would likely proceed the next week. Mr Joubert also states, inter-alia, in the email: ‘At this point the deal cannot be cancelled and I trust that all will run smoothly’. He further informs Mr Hughes that the buyers wanted to get quotations for certain work to be done to the property and that they needed access for an inspector for that purpose. It seems that the agent of Pam Golding was not very cooperative towards the buyers. [20] By 10 June 2020 this access had not been obtained. In an email of that date Mr Joubert requested that Mr Hughes give access to the property and attached an email from Karen Williamson addressed to him informing him that her clients, ie the buyers, are ‘desperate to start some repair, maintenance and landscaping at their new home’. And significantly, that it was her understanding that the buyers ‘would be allowed access once the full and final bond was approved, thus making the sale non-suspensive and unconditional’. [21] The mortgage bond for the purchase of the property was finally granted to Mr Green by the bank on 10 June 2020. Mr Joubert informed Mr Hughes of the fact in an email dated 17 June 2020 and, in an email, dated 18 June 2020 Mr Joubert was still seeking permission from Mr Hughes for the buyers to obtain access to the property. On 18 June 2020, Mr Hughes allowed early occupation of the property by the first and second respondents. On 19 June Mr Joubert again, inter-alia, assures Mr Hughes that ‘at this point the transaction cannot be cancelled as all suspensive conditions have been met and we are now proceeding towards registration’. 9 [22] In response, Mr Hughes, seemed enthusiastic for the deal to be ‘wrapped up’. However, by 22 August 2020 the transfer had still not taken place. There was also an issue with the payment of occupational rental although the first and second respondents were in occupation of the property and had effected renovations to the property. And it appears that shortly thereafter the deal finally collapsed after the buyers had engaged an architect to draw up plans for their intended alterations to the property and discovered that there were no plans (approved or otherwise) for certain parts of the building on the property and that it was thus illegal. [23] By 7 September 2020 Mr Green’s daughter and her partner had vacated the property and had handed the keys to the caretaker. An attorney acting on behalf of Mr Hughes, Mr Stefan Le Roux of Glen Marais Incorporated, in a letter dated 14 September 2020 to Mr Green states, inter-alia, the following: ‘… 1. Our letter 9 September 2020 refers. 2. On 7 September 2020, the estate agent advised that the property has been vacated and the keys handed to the caretaker. This constitutes a repudiation on your part. 3. You are hereby advised that the seller accepts your repudiation, which will entitle the seller to re-market the property and claim damages in full. 4. Please take notice that the full deposit shall be retained in lieu of damages. 5. Our client’s rights are hereby expressly reserved…’ [24] The letter of 9 September 2020 referred to in the aforementioned letter was a detailed one in which the attorneys stated the following insofar as it is relevant for this matter: ‘…3. On 10 March 2020, the offices of HJ Joubert (the “conveyancers”) emailed on your instructions, the estate agents, Mr Nic Gargassoulas and copied Mr Henna Green stating that “the purchaser advised that he will make full payment of the purchase price. He will be buying the property cash. We will confirm as soon the balance of the purchase price is paid.” 4. The upshot of this email constitutes a waiver of the benefit of the suspensive condition and consequently the transaction became a cash sale. It is therefore a matter of complete indifference whether the purchaser, subsequent to this instruction, decided to proceed with the Absa bank mortgage bond or not…’ (Emphasis added.) 10 [25] It is further not disputed that subsequently Mr Hughes went on to sell the property to someone else. Mr Hughes contended he was entitled to retain the deposit of R1 million as damages for Mr Green’s repudiation of the agreement. [26] In response to Mr Hughes’ attorneys, Mr Green’s attorneys, in a letter dated 14 September 2021, contended the following concerning the claim of waiver: ‘…2. Kindly note that an email sent amending any original terms of an/the offer to purchase (OTP) in itself does not constitute a waiver unless the seller and the purchaser has entered into a separate written addendum specifically setting out the amendment and signed by both parties. 3. In the absence of such a written addendum the suspensive condition remains alive hence the transaction does not become a cash sale. 4. Clause 6.1.1.1 of the OTP contains a suspensive condition, that stipulates loan approval by no later than 13 March 2020. 5. Clause 6.1.1.4 further states… [That] the period for fulfilment of this condition shall be extended automatically for a further (14) days… 10 It is common knowledge that by 30 March 2020 there was no loan approval and neither was the loan approval by 02 April 2020… 12 Midnight of 2 April 2020 the OTP became null and void. 13 By midnight on 2 April 2020 the suspensive condition was not fulfilled and the email advising that the sale had been a cash sale, which was not placed in a written addendum, signed by both parties, which did not constitute a valid waiver effectively rendered the OTP null and void…’ [27] This culminated in the first and second respondent bringing the claim for the declarator and for the repayment of the deposit paid, which was held in trust by Pam Golding. They aver that Mr Green had ceded his rights to the deposit to them. This is confirmed in (a) a letter dated 27 November 2020 by attorneys, Lucas Dyssel Crouse Inc. to Glyn Marais attorneys, in which they inter-alia, confirm that they act on behalf of Mr Green and that Mr Green will be ceding all his rights, entitlements and obligations in respect of the agreement to the first and second respondents, and (b) a confirmatory affidavit signed by Mr Green that is attached to the replying affidavit of the second respondents in the proceedings in the high court. 11 [28] The contents of the letters of the attorneys of the parties quoted above foreshadowed the arguments that were advanced in the high court by the respective sides in their papers. The central issue in this matter was therefore, whether Mr Green had waived the suspensive condition in the agreement. [29] The high court found that Mr Green did not. It held that Mr Green’s conduct subsequent to the email had to be taken into account; that it must be proved that Mr Green knew what the rights were that he was allegedly waving; and that if it is alleged that an agent waived those rights, it must be proved that the agent knew all the relevant facts as well as the principal’s legal rights and that he intended to waive those rights and further, that the agent was authorised to waive the principal’s rights. [30] The high court came to these conclusions on the authority of what was held in Pretorius v Greyling.2 There Price J stated: ‘… It seems to me, however, that in the matter of waiver it cannot be said that the knowledge of the principal is that of the agent or that the knowledge of the agent is that of the principal, because before there is a waiver there must be an unequivocal act done with full knowledge of all the relevant facts as well as of the rights which it is argued have been waived. This knowledge, to be effective in the case of waiver, must be the knowledge of a single person, not partly of one party of another, because no intention to waive can be inferred unless the particular person himself who commits the act which is said to constitute waiver knew of the relevant facts and intended to waive the rights of which he was fully aware. If in this case it is the agent who waived the rights then it must be proved that he himself knew all the relevant facts as well as his principal’s legal rights and intended to waive those rights, and it must also be proved that he was authorised to waive his principal’s rights. Nothing of this has been proved.’ [31] That passage is quoted with approval in Christie’s The Law of Contract in South Africa,3 where the author in discussing the requirements for waiver, states correctly, the following: ‘Having gone to all the trouble to acquire contractual rights people are, in general, unlikely to give them up. There is therefore a factual presumption, even in some cases a strong 2 Pretorius v Greyling 1947 (1) SA 171 (W) at 177. 3 G B Bradfield and R H Christie The Law of Contract in South Africa 8 ed (2022) at 535. 12 one, against waiver. That means not only that the onus is on the party asserting waiver to prove it, but that although, as in all seven cases, the onus may be discharged on a balance of probability, it is not easily discharged.’4 [32] The high court held that the email of 10 March 2020 emanated from Mr Joubert’s conveyancing secretary, or from an estate agent and not from Mr Joubert, himself, who is alleged to be Mr Green’s agent. It was not clear from the email whether Mr Joubert had full knowledge of the right(s) allegedly waived by Mr Green; that there was no proof that Mr Joubert was authorised to waive Mr Green’s right to the suspensive condition and that Mr Green’s conduct and the email of 10 March 2020 does not conclusively prove an unequivocal intention on Mr Green’s part to waive his rights enshrined in clause 6.1.1. of the agreement. [33] Regarding the appellant’s contention that Mr Joubert acted as Mr Green’s agent or had ostensible authority to do so, the high court held that this could not have been in respect of the alleged waiver, because Mr Joubert’s authority was limited to the transfer of the property and there was no proof that it extended to the waiver of Mr Green’s rights. Mr Joubert required a special mandate for such waiver and it was not proved that he had such a mandate. [34] The high court held that, in any event, the letter of 8 October 2020 ‘clearly demonstrated that [Mr Joubert] had no grasp of which right was to be waived as he regarded the approval of Mr Green’s bond as a fulfilment of the suspensive condition’ and that Mr Joubert ‘did not understand what the suspensive condition entailed.’ [35] The applicant bore the onus of proving that Mr Green had waived his rights to the suspensive condition5. This entailed putting up clear proof: (a) if it is alleged that he did waive his rights, that he was aware of those rights, intended to waive them and did do so, and (b) if it is alleged that Mr Joubert did so on his behalf, that Mr Joubert was duly authorised to waive those rights, of which Mr Green was fully 4 Ibid at 533-534. 5 See Borstlap v Spangenberg en Andere 1974 (3) SA 695 (A) at 704. 13 aware, and that Mr Joubert knew all the relevant facts, was aware of those rights and intended to waive them6. That is lacking here. [36] Judged from the perspective of a reasonable person by its outward manifestations7 the appellant had not proved that Mr Green had waived reliance on the suspensive condition as contemplated in the agreement. Not only does the subsequent conduct in going ahead with the application for a mortgage bond after the email of 10 March 2020, serve to underscore that conclusion, but there was no compliance with the formalities as stipulated in clauses 6.2 and 19.5 of the agreement for such a waiver. The latter clause specifically requires that any waiver of any right arising from or in connection to the agreement be in writing and signed by the party to the agreement. [37] It is apparent from his email of 5 May 2020 to Mr Joubert that Mr Hughes did not maintain that there had been a waiver, although he was not certain of the status of the matter. In fact, Mr Hughes never questioned the fact that Mr Joubert still seemed to be under the impression that the suspensive condition was still in place and that the condition would only be fulfilled if Mr Green obtains final approval for a loan from the bank but seems to have accepted that as a fact. The issue of waiver was only raised, (for the first time) after the property had been vacated by the first and second respondents, in Mr Hughes’ attorney’s letter of 14 September 2020. [38] Mr Green’s own version was that before the due date, after he had been pressurised by the agents to expedite the application for a bond, he had a conversation with Mr Joubert about the possibility of paying the balance in cash. He had not made a firm decision in that regard, and that two days later, after his auditor had advised him against that option, he had informed Mr Joubert accordingly. His version is borne out by the fact that he never withdrew his application for a bond and persisted therewith. He never authorised Mr Joubert to waive his rights to rely on the suspensive condition, and both he and Mr Joubert seemed to proceed on the (erroneous) basis that the contract was still valid, 6 See Pretorius v Greyling at 177. 7 See Road Accident Fund v Mothupi 2000 (4) SA 38 (A) paras 16-17. 14 subject to the condition that he obtain a mortgage loan for the balance of the purchase price. [39] Since the suspensive condition had not been fulfilled by midnight on 2 April 2020, which is the extended date for fulfilment of the condition, and since there had been no valid and unequivocal waiver of the suspensive condition, the agreement lapsed and became null and void as contemplated in clause 6.5 thereof. There was no subsequent valid variation of the agreement that could validly and effectively alter that situation. In those circumstances Mr Green was entitled to the return of his deposit as contemplated in the agreement and he was also entitled to cede his rights for the repayment of his deposit to the first and second respondents. The high court found that, in those circumstances ‘the challenge to the locus standi [of the first and second respondents] ipso facto falls away.’ [40] The high court’s reasoning and conclusion cannot be faulted. An appeal has no reasonable prospect of success, and there is no other compelling reason why an appeal should be allowed. Accordingly, the application for leave to appeal cannot succeed. [41] In the result, the application for leave to appeal is dismissed with costs. COPPIN AJA ACTING JUDGE OF APPEAL APPEARANCES: For Applicant: FSG Sievers SC Instructed by: Cato Neethling Wiid Inc. Cape Town Webbers Bloemfontein For 1st and 2nd Respondents: P de b Vivier SC Instructed by: Van Wyk Van Heerden Attorneys Paarl Heyns and Partners Inc. Cape Town Honey Attorneys Bloemfontein

1 THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGEMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 12 April 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 Christopher Charles Hughes v Nicolas Gargassoulas and Others (1030/2022) [2024] ZASCA 46 (12 April 2024) _________________________________________________________________ Today, the Supreme Court of Appeal, per Coppin AJA (Mothle and Molefe JJA concurring), handed down a judgment dismissing with costs an application for leave to appeal that had been referred to it in terms of s17(2)(d) of the Superior Courts Act, 10 of 2013 on the grounds that there were no prospects of success and no other compelling reason why an appeal in the matter should be allowed. The Western Cape high court declared that an agreement in terms of which Mr Hughes, (the applicant) had sold his property in Hout Bay through the agency Pam Golding Properties (Pty) Ltd (Pam Golding to Mr Green had lapsed due to a non- fulfilment of a suspensive condition inserted for the benefit of Mr Green and in terms of which Mr Green could raise a loan with the bank in respect of the balance of the purchase price for the property within a stipulated time. The high court also ordered Pam Golding to repay the deposit (R1 Million) which Mr Green had paid to the first and second respondents to whom he had ceded his rights for such payment. Mr Hughes sought to retain the deposit as damages after Mr Green and the first and second respondents had vacated the property upon discovering that certain portions of the building on the property had no approved plans. The SCA dismissed Mr Hughes argument that the high court had erred in finding that Mr Green did not waive his reliance on the suspensive condition. It held that considering the objective facts the high court’s finding that Mr Hughes did not discharge the onus of proving that Mr Green had waived the benefit of the suspensive condition, could not be faulted. 2 The SCA also found that Mr Green, the conveyancer, and Mr Hughes seemed to be under the erroneous impression that the agreement was still valid and subject to the suspensive condition, whereas the agreement had lapsed when the condition had not been fulfilled by the due date stipulated in the agreement. The SCA held that in those circumstances as provided in the agreement Mr Green was entitled to the repayment of his deposit and that he could have ceded his rights to the deposit to the first and second respondents. And that an argument to the contrary had no reasonable prospect of succeeding. ~~~~ends~~~~

4239

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 1005/2022 In the matter between: SIMPIWE SYDWELL MOLOSI FIRST APPELLANT NTOMBENKONZO MASETI SECOND APPELLANT DOSINI ROYAL FAMILY THIRD APPELLANT and KING PHAHLO ROYAL FAMILY FIRST RESPONDENT LUZUKO MATIWANE SECOND RESPONDENT PRESIDENT OF THE REPUBLIC OF SOUTH AFRICA THIRD RESPONDENT MINISTER OF CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS FOURTH RESPONDENT PREMIER OF THE EASTERN CAPE PROVINCE FIFTH RESPONDENT Neutral citation: Molosi and Others v King Phahlo Royal Family and Others (1005/2022) [2024] ZASCA 73 (10 May 2024) Coram: ZONDI, SCHIPPERS and MOTHLE JJA and TOLMAY and KEIGHTLEY AJJA Heard: 22 February 2024 Delivered: 10 May 2024 Summary: Traditional Leadership and Governance Framework Act 41 of 2003 – section 9 – nomination of king or queen – dispute as to which is legitimate royal family – at appeal hearing transpired that President had subsequently recognised one of the parties as king under s 9 – in circumstances, appeal moot. 2 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Eastern Cape Division of the High Court, Mthatha (Makaula, Stretch and Bloem JJ sitting as full court): The appeal is dismissed. ___________________________________________________________________ JUDGMENT ___________________________________________________________________________ Keightley AJA (Zondi, Schippers and Mothle JJA and Tolmay AJA concurring): [1] The substance of this appeal concerns the kingship of AmaMpondomise and, more particularly, who has the right, as the royal family, to identify a person as king (or queen, as the case may be) under the relevant provisions of the Traditional Leadership and Governance Framework Act 41 of 2003 (the Act).1 It was this question that engaged the Eastern Cape Division of the High Court, Mthatha (the high court) as both the court of first instance (per Jolwana J) and as a full court on appeal against the order of Jolwana J (the full court). Following the full court’s dismissal of the appeal, special leave was granted to the appellants to appeal to this Court. [2] But for events that occurred at the hearing of the appeal before this Court, this judgment would have dealt with the substantive issue that had engaged the high court. However, for reasons I record shortly, it has become unnecessary to do so. Before traversing these events, I set out the relevant background to the appeal. [3] The history of AmaMpondomise goes back centuries to before the 1300s. Following events in the 1800s the then-king of AmaMpondomise, King Mhlonthlo, was stripped of his kingship by an administrative proclamation of the colonial government at the time for his alleged involvement in the murder of a colonial magistrate. King Mhlonthlo was subsequently acquitted but from 1904, when he was stripped of his kingship, he lived as a commoner until his death in 1912. 1 The Act has subsequently been repealed under Schedule 4 of the Traditional and Koi-San Leadership Act 3 of 2019. However, it is common cause that the Act remains applicable for purposes of this appeal. 3 [4] Post-1994, the Act established a Commission to consider, among other things, cases in which it was claimed that a kingship had been established in terms of customary law. The first Commission, the Nhlapho Commission, was succeeded by the Tolo Commission. They considered a claim by AmaMpondomise for recognition of their kingship. Litigation followed after the Nhlapho Commission, and subsequently also the Tolo Commission, concluded that AmaMpondomise never had a kingship. Two separate review proceedings were instituted consecutively. Both the Nhlapho Commission decision, and subsequently the Tolo Commission decision, were set aside. The latter was set aside by way of a judgment of the high court, per Brooks J2 (the Brooks judgment). Among other things, Brooks J made an order declaring that ‘AmaMpondomise did have a kingship and that such kingship is hereby reinstated.’ [5] Having succeeded in the restoration of their kingship, the next step for AmaMpondomise was to fill the vacant position of king or queen. This process is governed by s 9 of the Act. In relevant part, it provides: ‘(1) Whenever the position of a king or a queen is to be filled, the following process must be followed: (a) The royal family must, within a reasonable time after the need arises for the position of a king or a queen to be filled, and with due regard to applicable customary law- (i) identify a person who qualifies in terms of customary law to assume the position of a king or a queen as the case may be, after taking into account whether any of the grounds referred to in section 10(1)(a), (b)and (d) apply to that person; and (ii) through the relevant customary structure- (aa) inform the President, the Premier of the province concerned and the Minister, of the particulars of the person so identified to fill the position of a king or a queen; (bb) provide the President with the reasons for the identification of that person as a king or a queen; and (cc) give written confirmation to the President that the Premier of the province concerned and the Minister have been informed accordingly; and 2 Matiwane v President of the Republic of South Africa and Others [2019] 3 All SA 209 (ECM). 4 (b) the President must, subject to subsection (3), recognise a person so identified in terms of paragraph (a)(i) as a king or a queen, taking into account(i) the need to establish uniformity in the Republic in respect of the status afforded to a king or queen; (ii) whether a kingship or queenship has been recognised in terms of section 2A; and (iii) the function that will be performed by the king or queen. (2) The recognition of a person as a king or a queen in terms of subsection (1)(b) must done by way of- (a) a notice in the Gazette recognising the person identified as king or queen; and (b) the issuing of a certificate of recognition to the identified person. (3) Where there is evidence or an allegation that the identification of a person referred to in subsection (1) was not done in terms of customary law, customs or processes, the President on the recommendation of the Minister- (a) may refer the matter to the National House of Traditional Leaders for its recommendation; or (b) may refuse to issue a certificate of recognition; and (c) must refer the matter back to the royal family for reconsideration and resolution where the certificate of recognition has been refused. (4) Where the matter that has been referred back to the royal family for recognition and resolution in terms of subsection (3) has been reconsidered and resolved, the President on the recommendation of the Minister must recognise the person identified by the royal family if the President is satisfied that the reconsideration and resolution by the royal family has been done in accordance with customary law. …’ [6] A dispute arose between the parties regarding who should be recognised as king or queen. Section 9 requires the royal family to identify the person to fill that position. Two families, namely the third appellant, the Dosini Royal Family (the Dosini family) and the first respondent, the Phahlo Royal Family (the Phahlo family),both purporting to be the royal family of AmaMpondomise, wrote to the President identifying a person to fill the vacant position. The Dosini family, nominated the second appellant, Ms Ntombenkonzo Maseti as queen. The Phahlo family nominated the second respondent, Mr Luzuko Matiwane as king. [7] The claims of both families date back to a common-cause event that took place in the 1300s. The king of AmaMpondomise at that time, King Ngcwina, disinherited his son born of the Great House, Dosini. In his stead, he named a son of a support house, 5 Cira, as his heir and successor as king. The Phahlo family’s claim to being the royal family is based on the unbroken lineage of kings from King Ngcwina to King Cira and ultimately to King Mhlonthlo who, as previously noted, was divested of his kingship by colonial proclamation in 1904. According to the Phahlo family, had King Mhlonthlo still been alive, he would have resumed the kingship on its restoration. His death in 1912, and the subsequent death of his son, Mr Matiwane’s father, means that Mr Matiwane is next in line to assume the kingship now that it has been restored. It was on this basis that the Phahlo family, being the royal family linked to Kings Ngcwina, Cira and ultimately Mhlonthlo, nominated Mr Matiwane to the President in accordance with s 9(1)(a) of the Act. [8] The Dosini family’s claim on the other hand is founded directly on what occurred in the 1300s when King Ngcwina favoured Cira as his successor. The Dosini family say that they are directly linked to Dosini, the legal successor to King Ngcwina. According to them, King Ngcwina acted contrary to customary law by, as they put it, purporting to disinherit Dosini. On their version, AmaMpondonise kingship was lost in the 1300s on Dosini’s disinheritance, and it was this kingship that was restored by the Brooks judgment. On this basis, the Dosini family claim to be the true royal family and that they are entitled to nominate Ms Maseti, being a direct descendant of Dosini, as queen. [9] Faced with two nominations by two families, each asserting that they were the royal family of AmaMpondomise, the Director-General in the Presidency responded to the families in letters dated 2 August 2019. Although there were two letters, they were in identical form, save for obvious changes pertaining to the details of the addressee. For simplicity’s sake, I refer to them in the singular as the President’s letter. [10] The letter noted that the President had taken into account the Brooks judgment, which recognised the kingship of AmaMpondomise. The President’s letter went on to record receipt of the two letters from the Dosini and Phahlo families, each claiming to represent the royal family, with their respective nominations. It recorded further that the Dosini family, in its letter, ‘acknowledged that there is a dispute within AmaMpondomise Royal Family as to who is the rightful incumbent’, and that the Dosini family had requested the President to appoint a commission to conduct an 6 investigation to determine the rightful heir. The President’s letter continued that it was evident that the royal family could not reach a unanimous decision to choose a common incumbent to ascend to the throne. In view of this, the letter stated that the provisions of ss 3A and 9 of the Act were triggered. After citing the relevant provisions of these sections, the President’s letter continued: ‘12. The President has been advised by the Minister of Cooperative Governance and Traditional Affairs that Government does not have the legal authority to be involved in any of the royal family processes of nominating an heir. Only the Royal Family through the customary structure has the authority to identify a person who qualifies in terms of customary law to assume the position of a king or queen. Once the royal family has finalised its processes of choosing the rightful heir, it then notifies government to facilitate all the required administrative processes of recognising and appointing the Kingship and the King respectively. 13. The President has therefore decided to refer the matter back to the Royal Family for reconsideration and resolution. The two families are requested to resolve the matter internally and nominate one common heir for the President to recognise as the King of AmaMpondomise.’ [11] The President’s letter prompted the respondents to take legal action. On 18 September 2019 they served an application on the appellants, seeking an order (among other prayers): (a) Declaring as unlawful, and setting aside, the resolution dated 31 May 2019 issued by the Dosini family in terms of which it identified Ms Maseti as the queen of AmaMpondomise. (b) Declaring that the Dosini family is not a royal family entitled and responsible for the identification of any person and making recommendations to the President in terms of s 9 of the Act to assume kingship or queenship of AmaMpondomise which position was left vacant by King Mhlonthlo. (c) Granting a final interdict against the Dosini family from identifying a person to assume the kingship or queenship and making recommendations to the President under s 9 for the assumption of the position of kingship or queenship left vacant by King Mhlonthlo. [12] The respondents’ case was premised on their claim to being the royal family of AmaMpondomise. In brief, they averred that the kingship that was restored by the Brooks judgment is that which had been lost by King Mhlonthlo when he was 7 dispossessed of his kingship by the colonial government in 1904. The reinstatement of the kingship meant that it was reinstated to the royal family house that was ruling at the time of dispossession, namely the Phahlo family. Custom dictates that the first son of the Great House of the king, or his direct descendant must assume the position left by his father or grandfather, unless compelling reasons exist to disentitle him. The Phahlo family had unanimously identified Mr Matiwane, the grandson of King Mhlonthlo, as heir to the kingship. [13] The respondents disputed the Dosini family’s claim to being the royal family on the basis that, having been disinherited by his father King Ngcwina in the 1300s, Dosini had never assumed the kingship. His disinheritance had not been challenged over the approximately 700 years since King Ngcwina and successive kings had followed Cira in the direct line of succession until King Mhlonthlo. It was the latter’s lost kingship as a result of colonial action that had been reversed by the Brooks judgment, and not that claimed to have been lost by the Dosini family. The Phahlo family was the legitimate royal family to nominate a king or queen under the Act. The Dosini family, who did not descend from a king, were not the royal family entitled to nominate a candidate. Their ‘posturing’ as the royal family was unlawful and was harmful to AmaMpondomise nation, which was entitled to align its affairs by nominating a king to lead them in terms of the Act. [14] In their opposition, the appellants confirmed their original position. They asserted that King Ngcwina had violated AmaMpondomise customary law by disinheriting Dosini in favour of Cira. This illegal act remained illegal despite the lapse of time. Accordingly, the Dosini house had never lost its right to the kingship, and this had been restored by the Brooks judgment. The appellants categorised Mr Matiwane as being nothing more than a junior member of the greater royal family, the Great House which was the Dosini house. It was thus the Dosini family which was the royal family lawfully entitled to nominate the king or queen. [15] In addition to their defence on the merits, the appellants raised a point in limine. They averred that the high court lacked jurisdiction because the respondents had failed to exhaust the internal remedies under the Act to resolve the dispute. More 8 specifically, they referred to s 21 of the Act.3 This section deals with the process for settling ‘dispute(s) or claims(s) concerning customary law or customs aris(ing) between or within traditional communities’. It requires community members and leaders to seek to resolve the dispute internally, and in accordance with custom. If this cannot be achieved, disputes must be referred to the relevant house of traditional leaders for resolution and, if this is unsuccessful to the Premier. Finally, s 21 provides that an unresolved dispute must be referred to the Commission. It should be noted that the Commission is no longer in existence.4 Despite this, the appellants pressed their case that the respondents’ application for declaratory and interdictory relief was premature, and that the relief sought should be refused on this basis. [16] The high court, in its first judgment, dismissed the appellants’ defence on both the point in limine and the merits in a judgment of 14 January 2020. It granted the declaratory and interdictory relief outlined earlier. In addition, it directed the President and the Minister of Co-operative Governance and Traditional Affairs to comply with their obligations in s 9(1)(b) of the Act within 30 days and to consider the Phahlo family’s resolution identifying Mr Matiwane as the king of AmaMpondomise. Costs were granted against the appellants. In a subsequent judgment, dated 28 July 2020 (the second high court judgment), the high court dismissed an application for leave to 3 Section 21 reads: ‘Dispute and claim resolution (1)(a) Whenever a dispute or claim concerning customary law or customs arises between or within traditional communities or other customary institutions on a matter arising from the implementation of the Act, members of such a community and traditional leaders within the traditional community or customary institution concerned must seek to resolve the dispute or claim internally and in accordance with customs before such dispute or claim may be referred to the Commission. (b) If a dispute or claim cannot be resolved in terms of paragraph (a), subsection (2) applies. (2)(a) A dispute or claim referred to in subsection (1) that cannot be resolved as provided for in that subsection must be referred to the relevant provincial house of traditional leaders, which house must seek to resolve the dispute or claim in accordance with its internal rules and procedures. (b) If a provincial house of traditional leaders is unable to resolve a dispute or claim as provided for in paragraph (a), the dispute or claim must be referred to the Premier of the province concerned, who must resolve the dispute or claim after having consulted- (i) the parties to the dispute or claim; and (ii) the provincial house of traditional leaders concerned. (c) A dispute or claim that cannot be resolved as provided for in paragraphs (a) and (b) must be referred to the Commission. (3) Where a dispute or claim contemplated in subsection (1) has not been resolved as approved for in this section, the dispute or claim must be referred to the Commission. 4 The Commission referred to in the Act is that established under s 22. It is a matter of public record that the first such Commission was the Nhlapho Commission. It was succeeded by the Tolo Commission by virtue of s 28(11) of the Traditional Leadership and Governance Framework Amendment Act, 23 of 2009. The Tolo Commission’s term of office has also expired. 9 appeal by the appellants. At the same time, it granted the respondents relief under s18(3) of the Superior Courts Act 10 of 2013 (the SC Act) giving them leave to execute its judgment and order handed down on 14 January 2020 pending the finalisation of any further appeal processes. [17] According to the record filed before this Court, a petition was lodged by the appellants on 16 September 2020 for leave to appeal the high court’s judgment and order. On 29 December 2020, this Court granted the appellants leave to appeal the high court’s order to the full court of the Eastern Cape Division, Mthatha. The full court dismissed that appeal (the full court judgment). This Court granted the appellants special leave to appeal to it. The record reflects that a petition for special leave to appeal against the full court judgment was lodged with this Court on 13 June 2022. Special leave was granted on 9 September 2022. The appeal to this Court was enrolled for hearing on 22 February 2024. [18] As noted earlier, had it not been for revelations disclosed to this Court at the hearing of the appeal, this judgment would have dealt with the issues as they were presented before the high court, both at first instance and as a full court. However, matters took an unanticipated turn during the appeal hearing. In answering a question from the Court, counsel for the respondents disclosed that Mr Matiwane had already been appointed as king by the President, and that this had occurred shortly after the second high court judgment was handed down. This fact was not disclosed in the record. On closer questioning, it appeared that both parties were aware of this critical development, but gave no explanation for this non-disclosure. The respondents were directed to file an affidavit together with the certificate of recognition issued by the President and the proclamation of that recognition in the Government Gazette. [19] The certificate is dated 21 September 2020, and the required notice of recognition was published in the Government Gazette of 9 October 2020. This was after the second high court judgment dismissing the leave to appeal and granting s 18(3) relief to the respondents. The recognition of Mr Matiwane as king preceded the full court appeal granted by petition to this Court. There is no reference to the recognition Mr Matiwane as king in the full court judgment and the parties have not explained why the fact of the recognition was not disclosed to that court. 10 [20] The failure on the part of the legal representatives to disclose the fact that Mr Matiwane had already been recognised as king prior to the hearing in the full court, and then to proceed with an appeal before this Court, is disturbing. Worse, we were informed that the President’s recognition was subject to a review application. This fact too was not disclosed to this Court prior to the hearing of the appeal. We were informed that both parties were represented by their attorneys and senior counsel, a fact that makes the non-disclosure by the legal representatives all the more egregious. The conduct of the attorneys and counsel must be severely censured. [21] The obvious question that arises in this appeal is that if Mr Matiwane has already been recognised under the Act as the king by the President, what practical effect would there be in a further appeal against the declarator and interdict granted by the high court? Section 16(2)(a)(i) of the SC 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 this ground alone.’ [22] The rule is aimed at reducing the heavy workload of appellate courts.5 The test is whether the judgment or order will have a practical effect or result, not whether it might be of importance in a hypothetical future case, or whether the parties believe that a practical result could be achieved in other respects.6 This Court has a discretion which may be exercised where, for example, the matter raises an important question of law that arises frequently and thus pertains to a ‘live issue’ in this sense. Invariably, cases of this nature involve questions of statutory interpretation and application.7 [23] The declarator and interdict were precursors to what was envisaged would be the President’s exercise of his power in the future. The case made out by the respondents was that in light of the President’s referral back to the parties of the dispute as to which royal family may nominate a king or queen, they had no option but to seek declaratory and interdictory relief from the high court. That relief was granted, 5 Premier, Provinsie Mpumalanga en ń Ander v Groblersdalse Stadsraad 1998 (2) SA 1136 (SCA) at 1141D. 6 Absa Bank v Van Rensburg 2014 (4) SA 626 (SCA) at para 7 (Van Rensburg). 7 Van Rensburg above fn 6, at paras 8–10. 11 and the applicants were given leave to enforce it. Thereafter, the President exercised his power under s 9 and recognised Mr Matiwane as king. Once that happened, the whole point and practical need for the relief granted to the respondents fell away. The live issue between the parties, namely whether the Phahlo family required the protection provided by the interdict and declarator, was moot. It follows that it would serve no practical purpose to revisit whether the relief was correctly granted by way of a further appeal to this Court. [24] The remaining question is whether this Court should nonetheless exercise its discretion and consider the appeal. The underlying dispute between the parties is essentially one of fact, rather than law. The high court endorsed the respondents’ case that Mhlonthlo’s kingship flowed in a direct line of descent from King Ngcwina; that King Mhlonthlo was dispossessed of his kingship by the colonial government; and thus that the Phahlo family was the royal family entitled to nominate a king to fill the position left vacant by King Mhlonthlo. [25] The Dosini family relied on a different fact of dispossession in support of their claim, namely, an allegedly unlawful dispossession effected some 700 or more years ago by King Ngcwina. Given the lapse of time since the events relied upon by the Dosini family, it is not surprising that there is no ready factual evidence to hand to judge the rights or wrongs of what happened when King Ngcwina disinherited Dosini in favour of Cira. In any event, the interdict and declaratory relief sought by and granted in favour of the Phahlo family was deliberately narrowly tailored. It was specifically aimed at obtaining clarity on which asserted royal family could legitimately nominate a replacement for King Mhlonthlo. The broader question sought to be relied upon by the Dosini family, namely whether their ancestor was unlawfully disinherited 700 years did not require determination by the high court, nor by this Court on appeal, were the matter to proceed. All of these considerations point to it being inappropriate for this Court to exercise its discretion to consider the appeal. [26] Finally, the appellants submitted that as the President’s recognition of Mr Matiwane as king was subject to a review application instituted by them, we should hear the appeal, as the interdict granted by Jolwana J would otherwise remain effective and could jeopardise the appellants’ legal prospects in the future. The 12 submission is groundless. This Court has no details of the review application, or even whether it is being actively pursued. It would be an exercise of pure speculation for this Court to conclude that the review saves the matter from mootness, or that the Court should exercise its discretion and consider the appeal. In any event, unless and until the President’s decision is set aside, it remains valid and effective.8 [27] The fact of the matter is that the appeal process was overtaken by events that occurred subsequent to the first high court judgment. For whatever reason, neither party disclosed to either the full court or in the appeal record filed in this Court that the President had formally recognised Mr Matiwane as king. This was a fact crucial to the exercise by this Court of its appellate power. The failure to make this disclosure has had the direct result that valuable Court time and resources have been expended on this matter, directly undermining the very purpose of the rule against mootness. Such conduct is to be deprecated. This is an issue affecting costs. Although the respondents have succeeded in having the appeal dismissed, they should not be given the benefit of a costs order in their favour. The appropriate way to deal with costs is to make no order in that respect. [28] In the result, I make the following order: The appeal is dismissed. ________________________ R M KEIGHTLEY ACTING JUDGE OF APPEAL 8 Oudekraal Estates (Pty) Ltd v The City of Cape Town and Others [2009] ZASCA 85; 2010 (1) SA 333 (SCA) (3 September 2009). 13 Appearances For the appellants: G Shakoane SC K Lefaladi M Mathaphuna Instructed by: Mkata Attorneys, Mthatha Honey Attorneys, Bloemfontein For the first to second respondents: M Gwala SC S X Mapoma SC Instructed by: Mvuzo Notyesi Inc, Mthatha NW Phalatsi & Partners, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 10 May 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 Molosi and Others v King Phahlo Royal Family and Others (1005/2022) [2024] ZASCA 73 (10 May 2024) Today the Supreme Court of Appeal (SCA) dismissed an appeal against a judgment and order of the Eastern Cape Division of the High Court, Mthatha (the high court), declaring that the Dosini family is not a royal family entitled to recommend to the President a person to assume the kingship or queenship of AmaMpondomise.The matter arose from a dispute between two families, both claiming to be the royal family of AmaMpondomise; the Dosini family, on the one hand, and the Phahlo family on the other. The kingship of AmaMpondomise was restored after an earlier judgment of the high court had set aside a decision by the Tolo Commission to the effect that AmaMpondomise never had a kingship. The last king of AmaMpondomise was King Mhlonthlo, who had been divested of his kingship by the colonial government in 1904. With the kingship restored, the position of king, or queen, was vacant. Section 9 of the Traditional Leadership and Governance Framework Act 41 of 2003 (the Act) provides that in the case of a vacancy, the royal family must identify a person to assume the position of king or queen and inform the President of their particulars. The Dosini family identified Ms Maseti as queen, while the Phahlo family identified Mr Matiwane as king. Mr Matiwane was the grandson of King Mhlonthlo, a direct descendant of Cira. In the 1300s, the king, King Ngcwina, had named Cira as his successor to the exclusion of his natural successor, Dosini. Ms Maseti was descended from Dosini. The Dosini family claimed that Dosini had been unlawfully disinherited in the 1300s, and therefore they were the legitimate royal family to identify Ms Maseti as queen. The Phahlo family disputed the Dosini’s claim on the basis that the kingship that had been restored was that of King Mhlonthlo. Accordingly, they were the legitimate royal family. In the ordinary course, the appeal to the SCA would have been on the merits of this dispute. However, during the appeal hearing, counsel disclosed to the Court that the President had already appointed Mr Matiwane as king and had issued a certificate to this effect. The appointment was made on 21 September 2020, while the parties were still engaged in appeal litigation in the high court. The SCA found that the appointment rendered the issues raised on appeal moot, meaning that there were no longer live issues between the parties requiring a 2 decision by the Court. No practical purpose would be served by revisiting whether the high court had correctly granted relief in favour of the Phahlo family. The further disclosure that the Dosini family had instituted a review of the President’s decision did not change this state of affairs. The SCA noted that the failure by the legal representatives to disclose these critical facts in the record prior to the appeal hearing was to be deprecated. --------oOo--------

4271

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 867/2022 In the matter between: MEC FOR THE DEPARTMENT OF PUBLIC WORKS FIRST APPELANT MEC FOR THE DEPARTMENT OF HEALTH SECOND APPELLANT MEC FOR FINANCE, EASTERN CAPE THIRD APPELANT and IKAMVA ARCHITECTS CC FIRST RESPONDENT THE SHERIFF OF THE HIGH COURT KING WILLIAM’S TOWN SECOND RESPONDENT THE SHERIFF OF THE HIGH COURT DISTRICT OF ZWELITSHA, MDANTSANE AND STUTTERHEIM THIRD RESPONDENT Neutral citation: MEC for the Department of Public Works & Others v Ikamva Architects CC and Others (867/2022) [2024] ZASCA 95 (13 June 2024) Coram: DAMBUZA, MBATHA and MABINDLA-BOQWANA JJA and WINDELL and UNTERHALTER AJJA Heard: 25 August 2023 2 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 13 June 2024. Summary: Civil Procedure – on appeal, the appellants were not entitled to an order they did not seek in the court of first instance – attachment of a bank account held by an organ of State – order of this Court on appeal would be of no practical effect – issues raised were moot – costs order of the court a quo reversed on account of serious injustice suffered by the first respondent. 3 ORDER On appeal from: Eastern Cape Division of the High Court, Bhisho (Van Zyl DJP, Tokota and Govindjee JJ sitting as court of first instance): 1. The appeal is dismissed. 2. The appellants are ordered to pay the first respondent’s costs of the appeal, including the costs of two counsel, jointly and severally, the one paying the other (s) to be absolved. 3. Save to the extent set out in paragraphs 4 and 5 below the cross-appeal is dismissed. 4. Each party is ordered to pay its own costs in relation to the cross-appeal. 5. The order of the full court is amended to read as follows: ‘1. The intervening party is given leave to intervene in the matter as the third applicant. 2. The third appellant is to pay the first respondent’s costs of the application for intervention, including the costs of two counsel. 3. The further execution of the writs of attachment dated 11 March 2016, including the removal of the attached movables, is stayed pending the final determination of the application for leave to appeal the order of Bheshe J dated 16 February 2021 (case number 2610/2019), including any consequent appeals. 4. The appellants are to pay the first respondent’s costs of the application, jointly and severally, including the costs occasioned by the Rule 30 applications dated 22 June 2021 and 30 July 2021, and the reserved costs of the hearing of the application on 5 August 2021, such costs to include the costs of two counsel where so employed.’ 4 JUDGMENT Dambuza JA (Mbatha and Mabindla-Boqwana JJA and Windell and Unterhalter AJJA concurring) Introduction [1] The three appellants are Members of the Executive Council of the Eastern Cape Departments of Public Works, Health and Finance. They appeal against parts of the judgment of the Eastern Cape Division of the High Court, Bhisho (Van Zyl DJP, Tokota and Govindjee JJ, the full court). That court granted the third appellant, Member of Executive Council for the Department of Finance, Eastern Cape (MEC for Finance), leave to intervene in an application brought by the first appellant, the Member of the Executive Council for the Department of Public Works (MEC for Public Works), and the second appellant, the Member of Executive Council for the Department of Health (MEC for Health) in the Eastern Division of the High Court, Bhisho (high court). It then granted an order staying execution of two warrants of attachment that were issued at the instance of the first respondent, Ikamva Architects CC (Ikamva) against the Departments of Public Works and Health. The order staying execution of the warrants was granted provisionally, pending finalisation of an application for leave to appeal that had been brought by the two appellants against an order granted by Bheshe J of the same Division. [2] In the same order the full court granted an order of costs against Ikamva, in respect of two applications that had been brought by it against the first and second appellants (the appellants) in terms in terms of Rule 30 of the Uniform Rules of Court. It also granted a punitive costs order against Ikamva in relation 5 to a supplementary affidavit that it had filed.1 Ikamva cross-appeals against the orders granted by the full court. Leave to appeal and cross appeal was granted by the full court. The facts [3] The order of the full court was preceded by protracted litigation which was instituted by Ikamva against the appellants. The background is the following. During 2003 the Department of Public Works offered to appoint Ikamva as ‘Consulting Architects/Principal Agents’ for a construction project described as ‘Frere Hospital (East London): Maintenance (Various): Masterplan, Upgrade’. A written agreement was concluded on 15 September 2003. During March 2007, the Department of Public Works appointed Coega Development Corporation (Coega) as the implementing agent for the same project. Coega appointed a different firm of architects to do the work that Ikamva had been contracted to do. On 9 July 2007 the Department of Public Works wrote to Ikamva advising that it would not be honouring its obligations under the contract. Ikamva accepted the repudiation of the contract and instituted an action against the two appellants, claiming an amount of R41 031 279.48 as damages for breach of contract. [4] In the action for damages, the Departments pleaded that the consultancy contract, in terms of which Ikamva was appointed, was invalid because it was concluded contrary to the provisions of the Constitution, the Preferential 1 The order of the full court reads thus: ‘1 The intervening party is given leave to intervene on the matter as third applicant. 2 The further execution of the writs of attachment dated 11 March 2016, including the removal of the attached movables, is stayed pending the final determination of application for leave to appeal the court order of Beshe J dated 16 February 2021 (case number 2610/2019), including any consequent appeals. 3 The first respondent is to pay the costs of intervention, the costs occasioned by the Rule 30 applications dated 22 June 2021 and 30 July 2021 and the reserved costs of the hearing of the application on 5 August 2021, such costs to include the costs of two counsel where so employed, but excluding any costs associated with the presentation of the ‘Majiki J bundle’ and the ‘SCA bundle’ to the court. 4 The costs of the first respondent’s supplementary and confirmatory affidavits dated 21 July 2021 and the applicants’ answering affidavit dated 28 July 2021 are to be paid by the first respondent on the attorney and client scale’. 6 Procurement Policy Framework Act 2000 (PPPF), and the Regulations promulgated in terms of the PPPF. During the course of the litigation, Ikamva called upon the Departments to make discovery in terms of Rule 35(1). When they failed to do so, Ikamva obtained an order compelling them to make discovery within 10 days, on pain of having their defence struck out. [5] In compliance with that court order, the appellants made discovery. Ikamva was not satisfied and obtained a court order directing them to make further and better discovery of listed documents, in terms of Rule 35(3). Further and better discovery was not made, leading to Ikamva approaching the high court, yet again, to obtain an order compelling further and better discovery within 10 days, failing which the defence filed by the appellants would be struck out and judgment would be sought ‘. . . based on the same papers, amplified if necessary’. (Majiki AJ order, granted on 10 November 2011). [6] When the appellants failed to comply with the order granted by Majiki AJ, Ikamva brought an application for default judgment before Dukada J. An issue arose as to whether the order granted by Majiki AJ meant that the defence tendered by the appellants was automatically struck out once they failed to comply with the order of Majiki AJ or whether Ikamva had to first approach the court to have the defence struck out. In the relevant part, the order granted by Majiki AJ was framed as follows: ‘The Defendants [are] granted a period of ten (10) days from the date of service hereof to reply to the Plaintiff’s Notice in terms of Rule 35(3) dated 22 July 2011, failing which the Defendant’s defence will be struck out and the plaintiff will apply for judgment against the Defendants based on the same papers, amplified if necessary.’ 7 Dukada J refused to grant default judgment, insisting that Ikamva should first bring an application for an order that the defence raised by the Departments be struck out.2 [7] Ikamva’s appeal to the full court against Dukada J’s refusal order was successful. The full court (in a judgment written by Plasket J) noted that Majiki AJ’s order was drafted differently from other orders of its type, in that it did not provide that in the event of non-compliance by the appellants, Ikamva could apply, on the same papers, amplified if necessary, for their defence to be struck out. The court concluded that the terms of the order indicated that an order having a different effect from the usual order was intended. It held that the order granted by Majiki AJ meant that ‘if the defendants have not complied within ten days of the date of service of the order on them, their “defence will be struck out” and then ‘the Plaintiff will apply for judgment against the Defendants, based on the same papers, amplified if necessary’. The full court found the conduct of the appellants, in failing to make discovery, to have been ‘startlingly contumacious’ in that they did not appeal the order granted by Majiki AJ, but simply failed to comply with it. It held that Ikamva was entitled to set the matter down for default judgment. However, the appellants could still comply with the order compelling discovery and then approach the court to have their defence reinstated.3 [8] The Departments merely brought an application for reinstatement of their defence without complying with the order of discovery. However, they withdrew the application for reinstatement on the day that it was due to be heard in court. On 1 December 2015, Ikamva obtained default judgment against the appellants 2 Ikamva Architect CC v MEC for Department of Public works and Another ECD (Bhisho) Case No 596/2008 (unreported decision handed down on 9 May 2013). 3 Ikamva Architects CC v MEC for the Department of Public Works and Another 2014 JDR 1700(ECG). 8 in the amount of R41 031 279 48 (the Malusi AJ order).4 The appellants’ application for leave to appeal the default judgment was refused by Malusi AJ. [9] On 11 March 2016 a warrant of execution against property was issued in relation to the judgment debt, at the instance of Ikamva. The appellants brought an application for stay of execution of the warrant, pending the finalisation of an application for rescission of the order granted by Malusi AJ. The application for rescission of the default judgment was dismissed (Hartle J’s order).5 In the judgment refusing rescission, Hartle J found that the appellants had litigated recklessly and ignored the prejudice they had caused to Ikamva and to the public purse. An appeal before a full court, against the order refusing rescission of judgment failed. This Court and the Constitutional Court refused to grant leave to appeal. [10] Subsequent to the dismissal of the rescission application, Ikamva took steps to execute in respect of the judgment debt. This led to an application by the appellants for a stay of further execution of the writ. An order staying execution of the warrant was granted by Rugunanan J by agreement between the parties. The order included a waiver by the appellants, of the right to raise the applicability of the in duplum rule on the interest payable on the judgment debt. [11] During September 2019, the appellants returned to the high court with a self-review application seeking an order that Ikamva’s appointment as a consultant for the Frere Hospital project, and the contract concluded pursuant to that appointment, be reviewed and set aside. In opposing the self-review application, Ikamva contended, amongst other things, that the Departments 4 Ikamva Architects CC v MEC for the Department of Public Works and Another ECD (Bhisho) Case No 596/2008. 5 MEC for the Department of Public Works and Another v Ikamva Architects ECD (Bhisho) Case No 596/2008 dated 19 September 2017. Majiki and Malusi AJJ have since been appointed as judges of the Eastern Cape Division of the High Court. 9 should be non-suited because of the delay in bringing the self-review application. Ikamva also maintained that the issue of the validity of the consultancy contract was rendered res judicata by the default judgment granted by Hartle J. [12] The high court agreed with Ikamva’s contentions and dismissed the self-review application (Bheshe J’s order). Ikamva again proceeded to take further steps to execute the writ. This led to attachment of all the office furniture, equipment and vehicles of the appellants. The Sheriff rendered inventories framed in similar terms, that the attached goods were: ‘All the office furniture and related office equipment and vehicles of the Department of Public Works Health, Eastern Cape, Qhasana [Dukumbana] Building, Bhisho’, to the value of R42 million. [13] The appellants approached the court, on an urgent basis, seeking a stay of execution of the writ. That application was struck from the roll for lack of urgency (Lowe J’s order).6 On the same day, Ikamva issued another warrant of attachment, dated 10 March 2021, specifically directing the Sheriff to execute against a bank account held by the Department of Health with the Standard Bank of South Africa. That writ was duly executed, leading to attachment of the right title and interest to moneys held by the Department of Health with the Standard Bank. The Sheriff rendered a notice of attachment which indicated that the right, title and interest of the MEC for Health, in respect of the Standard Bank account had been attached for the amount of the judgment debt and costs. [14] The appellants approached the high court once more, as a matter of extreme urgency, seeking an order staying further execution of the two notices of attachment dated March 2016, and that the attachment of the bank account of the 6 MEC for Public Works and Another v Ikamva Architects CC ECD (Bhisho) Case No 596/2008; an unreported decision dated 19 June 2015. 10 Department of Health, be set aside or stayed, pending determination of an application for leave to appeal, the dismissal of the self-review application, and any consequential appeals. [15] Following the first postponement of the urgent application, the court issued a directive, inviting the parties to make submissions on whether Ikamva was entitled to “freeze” the funds in the bank account held by the Department of Health without a court order. The full court (court a quo) was constituted to hear this application because of the attachment of a bank account held by a State organ. [16] Prior to hearing the application, the full court invited further submissions from the parties on whether: (1) Majiki AJ had jurisdiction to strike out the first and second applicants’ defence, and (2) if she did not have jurisdiction, and her order was a nullity, whether the order of Malusi AJ (default judgment) was valid. At this stage the MEC of Finance entered the fray, seeking leave to intervene and to also challenge the validity of the warrants of execution issued pursuant to the order of Malusi AJ. The MEC for Finance joined the appellants in contending that the attachment of State funds in execution of a money judgment was impermissible under the State Liability Act 20 of 1957. [17] Ikamva filed two notices in terms of Rule 30, objecting to the directives issued by the court. In a related affidavit, Ikamva’s legal representatives expressed concern about the involvement of the Judge President of the Division in the case management of this application as he had signed some of the pleadings and represented the appellants in the application prior to his appointment to the bench. They asserted that the issues raised in the directives were never raised by the parties. They pleaded irremediable prejudice as a result of the raising of further issues by the court. They suggested that the raising of the new issues reinforced a perception that the court had “descended into the arena”, and they 11 requested that the directives be withdrawn. It is these contentions by Ikamva that led to the punitive costs order against it. [18] In granting the order staying further execution of the attachment notices, the full court found that the order of Majiki AJ was erroneous as provided under Rule 42(1)(a) because the court followed a one-stage, instead of a two-stage procedure, in striking out the Defendants’ defence. However the order was not invalid, so said the full court. It was binding because Majiki AJ had the necessary power under Rule 35(7) to grant the order striking out the appellants’ defence. Consequently, Malusi AJ was duly empowered to grant judgment. [19] In addition, the full court found that the attachment of incorporeal movable property of government departments, more particularly in relation to this appeal, the attachment of the right to the funds in the bank account held by the Department of Health with the Standard Bank, was in accordance with the law and the Constitution. The full court, however, found that the second warrant of execution was over-specific in requiring the sheriff to attach, specifically, the funds held in the bank account of the Department of Health. It found that, contrary to Rule 45(1), the wording of the second writ did not correspond substantially with Form 18 of the First Schedule to the Uniform Rules of Court. This resulted in the Sheriff being unable to comply with the steps prescribed under Rule 45, such as, demanding that the writ be satisfied, and affording a representative of the relevant Department opportunity to point out sufficient movable property, other than the bank account, to satisfy the debt. [20] In their application to this Court for leave to appeal against the dismissal of the self-review application,7 the appellants contended that the findings of the 7 See para 14 above. 12 full court, on nullity of Majiki J’s order and its interpretation of the provisions of the State Liability Act were obiter. That application for leave to appeal was referred for hearing before an open court in terms of s 17(2)(d) of the Superior Courts Act 10 of 2013. This Court, in a unanimous judgment (penned by Gorven JA) dismissed the application.8 Significantly, amongst the issues considered in that application was that in the self-review application the appellants had sought, as a just and equitable relief under s 172 of the Constitution, orders reviewing the decisions to appoint Ikamva as a professional consultant, together with orders that: ‘3. The contract concluded between the Department of Public Works and Ikamva Architects CC in September 2003 . . . is declared void ab initio; 4. [Ikamva was] entitled to no further payments under the contract referred to in paragraph 3 above and in terms of the default and in terms of the default order of Malusi AJ’. [21] In dismissing the application for leave to appeal, Gorven JA, considered that, during argument, the appellants had accepted that the application for rescission had been definitely disposed of. Consequently, ‘any contention that the default judgment was anything other than competent, valid and binding was expressly abandoned [by the Departments]’.9 [22] Gorven JA further referred to the appellants’ reply in the self-review application, to the effect they were resisting payment of the judgment debt by way of self- review. They sought to render the default judgment nugatory. In the circumstances there was no legal basis for the order sought by the Departments, of permanently preventing execution of a valid and binding order, which was not susceptible of being set aside. 8 MEC for Department of Public Works, Eastern Cape and Another v Ikamva Architects CC (544/2021) [2022] ZASCA 184 (20 December 2022). 9 MEC for Department of Public Works, Eastern Cape and Another v Ikamva Architects CC [2022] ZASCA 184 para 9. 13 [23] Gorven JA also highlighted that the source of the judgment debt was the judgment or order of Malusi AJ, rather than the decisions sought to be reviewed. He emphasised that the judgment of Malusi AJ was not susceptible to being rescinded or set aside. Consequently, the effect of the relief sought by the appellants in prayer 4 of the Notice of Motion, amounted to permanent prevention of execution of a valid and binding judgment, which had not been abandoned or set aside. The Court held that an order preventing enforcement of an order of another court could not be just and equitable. Furthermore, the novel order sought by the appellants in prayer 4 of the Notice of Motion was an attempt to enlist the assistance of the court in their efforts to undermine the “dignity and authority of the courts, by rendering nugatory a perfectly valid, binding, enforceable, and extant judgment’. That could not be countenanced, the Court held.10 Discussion [24] In this appeal the appellants advanced the same arguments that they made in the full court (court a quo) in relation to the directives issued by the court. These include the distinction drawn by the full court in the judgment by Plasket J between the power that Majiki AJ had to consider the application that served before her in terms of Rule 35 (7) and her granting of the ‘impermissible’ order striking out their defence. They contended that the full court erred in not rescinding the order of Majiki AJ as provided in Rule 42(1)(a). They persist in the argument they made in the full court that, because the order granted by Majiki AJ was a nullity, the consequential order granted by Malusi AJ, and further court processes resulting from the incompetent order, were all a nullity. They denied having accepted the finality of the orders granted by Majiki AJ and Malusi AJ and argued that they demonstrated their non-acquiescence to these orders by 10 Ibid para 35. 14 repeatedly resisting the application for default judgment and the execution of the order. They maintained that they could not consent to invalid orders. [25] I need only refer to the findings of this Court (per Gorven JA) in paragraphs 22 to 23 above, in terms which this Court found that there were no prospects of success to the appellants’ attempts to nullify the orders of Majiki and Malusi AJJ. The contentions made by the appellants in this appeal were conclusively considered by this Court in that application. There is no reason to depart from the findings made in that instance. [26] At the start of the hearing of this appeal, counsel for the appellants was asked to make submissions on whether this Court can grant an order that was never sought in the full court. For clarity, in their urgent application, brought on the basis of extreme urgency, to set aside or stay execution of the writs, the applicants sought an order in the following terms: ‘2 The following writs and attachments are declared invalid and set aside: 2.1 the second respondent’s [Sheriff’s] notice of attachment dated 11 March 2016 of “all the office furniture and related office equipment and vehicles of the Department of Health, Eastern Cape”, which vehicles and movables have not been properly identified and inventoried pursuant to this attachment; 2.2 the second respondent’s [Sheriff’s] notice of attachment dated 11 March 2016 issued by the sheriff of “all the office furniture and related office equipment and vehicles of the Department of Public Works, Eastern Cape” which vehicles and movables have not been properly identified and inventoried pursuant to this attachment; 2.3 the writ of attachment dated 10 March 2021 issued by the first respondent, 2.4 the second respondent’s attachment of the Department of Health’s Standard Bank account number 273021567 on 11 March 2021, Alternatively, to the relief set out in prayer 2 15 3 The further execution of the writs of attachment dated 11 March 2016 including the removal of the attached movables is stayed and the attachment of the Department of Health’s Standard Bank account number 273021567 on 11 March 2021 by the second respondent is uplifted, pending the final determination of the application for leave to appeal the whole judgment and order of her Ladyship Bheshe J dated and handed down on 16 February 2021 in case number 2610/2019 including any consequent appeals.’ [27] The full court granted an order in terms of the appellants’ alternative prayer. In their notice of appeal to this Court, the appellants (including the MEC of Finance), seek an order that: ‘1. the orders of Majiki AJ of 11 November 2011 and Malusi AJ of 1 December 2015, are declared to be nullities and as such, may be disregarded as having no binding effect in law; 2. the Third Respondent’s (Sheriff) notices of attachment dated 11 March 2016, are declared to be unlawful and of no legal force and effect; 3. an attachment of the banking account of either the First or the Second Appellant or any organ of state for that matter, is unconstitutional and/unlawful and as such, invalid.’ [28] The order sought as per the Notice of Appeal was never sought in the high court. Counsel for the applicant acknowledged the ‘novelty’ of their appeal - in which the order sought on appeal was never sought in the court a quo. He explained that this appeal has its roots in the issues raised in the full court’s directives. If that court had granted an order of nullity, that would have put an end to this case, including the self-review, he explained. He urged this Court to ‘advance the frontiers of the law’ by entertaining the appeal, and granting the order sought in the notice of appeal, even if that was not the order sought by the appellants in the high court. Unsurprisingly, when pressed to provide authority for a court’s power to grant an order which was never sought, he could not recall 16 any. This is because, generally, courts do not have the power to grant orders that were never sought by the parties.11 [29] Regarding the directives of the full court it is so that a court may, on its own, raise a point of law that is apparent on the papers. This is necessary where the common approach of the parties, on the papers, is premised on a wrong approach of what the law is, and the decision of the court would therefore be founded on an incorrect application of the law.12 That was not the case with the application for a stay of the writs. The appellants sought to set aside or to stay execution of the warrants. They acknowledged the validity of the judgment debt. However, they explained that after consulting a fresh team of legal representatives and reconsidering ‘the entire matter’, they resolved to launch the self-review application. [30] The case made by the appellants in their application to set aside the writs was based on a contention that the writs were ‘not preceded by compliance with ss 3(4) to (6) of the State Liability Act. In the alternative they sought ‘upliftment of the attachment until the final determination of the leave to appeal [the] application before Bheshe J, including any consequent appeals’. The full court (Plasket J) had considered comprehensively the issues raised in the directives. It seems to me that if the full court (court a quo) had to consider the question of nullity of the order of Majiki J, it had to take into account the conclusions reached in the judgment written by Plasket J. There is no indication in its judgment that it did. 11 The National Commissioner of Police and Another v Gun Owners of South Africa [2020] ZASCA 88; [2020] All SA 1 (SCA) 2020 (6) SA 69 (SCA); 2021 SACR 44 (SCA) at 27-29. 12 Quartermark Investments (Pty) Ltd v Mkhwanazi 2014 (3) SA 96 (SCA). 17 [31] Furthermore, it is trite law that an appeal is directed at undoing the result of a judgment. For that reason, an appeal can only lie against a substantive order of court and not against the reasons given for the order or findings made in the judgment. This Court has repeatedly held as much. 13 In Tecmed Africa (Pty) Ltd v Minister of Health and another14 this Court explained the principle as follows: ‘First, appeals do not lie against the reasons for the 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’. [32] Apart from having no power to grant an order that was not sought in the high court, this Court has no jurisdiction to consider an appeal which is primarily directed only at the reasons. This is particularly so in this case, in which the contested reasons did not form the basis of the order granted by the court a quo. [33] In any event, the order granted by the full court in August 2021, including the order granting the intervention by the Minister of Finance was of no practical effect. So would any order that this Court would make on both the appeal and the cross-appeal. By 3 May 2021 the attached Standard Bank account had been closed by the Department of Health. It was operating a ‘Paymaster General (PMG) bank account with ABSA Bank. This fact was not in dispute before us. The details appear in an affidavit deposed to by the Head of the Eastern Cape Treasury Department, Mr Daluhlanga Majeke, which was filed in Member of the Executive Council for Finance, Economic Development, Environmental Affairs and 13 Manana v King Sabata Dalindyebo Municipality All SA [2011] 3 (SCA 140; S A Reserve Bank v Khumalo and Another All SA 26 (SCA); Atholl Developments (Pty) Limited v Valuation Appeal Board for the City of Johannesburg JOL 33081 (SCA) [2012] 4 All SA 149 (SCA) para 1. The Law of South Africa, vol 4, 3rd ed, para 785. In Lebea v Menye and Another 2023 (3) BCLR 257 (CC) the Constitutional Court refused leave to intervene to an applicant who sought to have set aside adverse credibility finding that had been made against him; See also; Uniform Court Rule 49(4)(a). 14 Tecmed Africa v Minister of Health and Another (495/11) [2012] ZASCA 64; [2012]4 All SA 149 (SCA). 18 Tourism (Eastern Cape) and Others v The Legal Practice Council and Others15(LPC). [34] LPC was a test case, as agreed between the parties in that matter, to determine the lawfulness of attachment of moneys in bank accounts held by government departments. In that case too, the MEC for Finance had challenged the attachment of the rights title and interest to the credit balance in the Department’s ABSA Bank account. He advanced the same basis in that case, as in this one, arguing that the Paymaster General account in which the funds of the Department of Health were held, was a subsidiary of the Provincial Revenue Fund account, from which payments could only be made in accordance with s 226(2) of the Constitution and s 22 of the PFMA.16 The full court, in a judgment penned by Eksteen J, held that neither the Constitution nor the PFMA made reference to the Paymaster General account in which the attached funds were held. It found that moneys allocated to the various government departments in terms of the Provincial Appropriation Act 8 of 2023, were withdrawn from the Provincial Revenue Fund account and paid over to the account of the relevant department under s 226(2)(a) of the Constitution. The Paymaster General account is therefore not an account protected under s 226 of the Constitution. This finding is consistent with the position expressed by the Constitutional Court in Provincial Government: North West Province v Tsoga Developers and Others (Tsoga).17 15 Member of the Executive Council for Finance, Economic Development, Environmental Affairs and Tourism (Eastern Cape) and Others: The Legal Practice Council and Others Case No 2091/2021. This application was dismissed by the high court on 21 June 2022. 16 Section 226 of the Constitution provides that: ‘1 There is a Provincial Revenue Fund for each Province into which all moneys received by the provincial government must be paid, except money reasonably excluded by an Act of Parliament. 2 Money may be drawn from a Provincial Revenue Fund only a in terms of an appropriation by a provincial Act, or b as a direct charge against the Provincial Revenue Fund, when it is provided for in the Constitution or a provincial Act’. 17 Provincial Government: North West Province v Tsoga Developers CC and Others [2016] ZACC 9; 2016 (5) BCLR 687 (CC). 19 [35] As in this case, the argument in Tsoga was that attachment of the right to funds held in a departmental account is impermissible, being contrary to s 226(2) of the Constitution. Although the Court did not make a firm finding in this regard, at para 23, Madlanga J, writing for a unanimous court, said: ‘[23] Not unmindful of the provisions of sections 7 and 21 of the PFMA and regulation 15.2, the question arises whether – once monies are sitting in an account held by a government department – they have not, in fact, been appropriated to that department as envisaged in s 226(a). If they have been, can their attachment amount to a contravention of this section? If – in accordance with section 226(2) – “appropriate” includes the transfer of monies from a Provincial Revenue Fund to an account held by a department, can that understanding be trumped by the provisions of sections 7 and 21of the PFMA and Regulation 15.2? [24] Section 3(3)(b)(ii) of the State Liability Act makes specific reference to funds appropriated to a department. The section provides that payment of a judgment debt by the accounting officer of a department “must be charged against the appropriated budget of the department concerned”. If payment is expected to be from the appropriated budget, how is it that funds held under that same budget are somehow no longer “appropriated” and thus no longer available for attachment, as the applicants appear to contend?’ (emphasis in the original text) [36] Mr Majeke who deposed to the founding affidavit in LPC deposed to the founding affidavit on behalf of the MEC for Finance in this case. I therefore agree with the submission on behalf of Ikamva that, when prosecuting the application for leave to intervene and this appeal, all the appellants must have known that the attachment in relation to the bank account in this case, and the issues pertaining to s 226(2) of the Constitution and the State Liability Act had become moot. And although, notionally, the issue of attachment of incorporeal moveables owned by State organs might arise in the future, apart from LPC, the Constitutional Court considered the issue conclusively in Nyathi v Member of the Executive Council for the Department of Health, Gauteng and another.18 18 Nyathi v Member of the Executive Council for the Department of Health, Gauteng and Another 2008 (5) SA 94 (CC). 20 Costs [37] Ultimately, the only issue that required consideration in the order of the full court was that of costs. Ordinarily, an appeal against an order of costs only is not lightly granted. It may be granted where a matter of principle is involved, and where the amount of costs is not insubstantial.19 It is evident from the above discussion that grave injustice has been done to Ikamva. For an exceptionally long period it has been repeatedly prevented from executing on a valid judgment debt. Various courts, including this Court, have pronounced on the validity of the judgment debt. Despite the repeated pronouncements by the courts on the absence of prospects of reversal of the judgment debt, the appellants persistently used the courts and public funds to frustrate execution. [38] Consequently, it is in the interests of justice that the appellants bear the costs of this appeal and the proceedings in high court. As to the costs of the cross-appeal, again it is apparent, particularly from the judgment of Gorven JA and this judgment that Ikamva was entitled to execute on the order granted by Malusi AJ, which is not likely to be rescinded. Added to that, is the fact that Ikamva was dragged to this Court for an unmeritorious appeal. When it had been attempting to execute on the judgment debt for over a decade, its exasperation is understandable. Consequently, it is appropriate that each party pay its own costs for the cross appeal. [39] As to the punitive costs order made against Ikamva, the full court was displeased with the filing the supplementary affidavit in which it was suggested that the court had descended into the arena and ‘was threatened with an application for recusal unless the legal points raised were withdrawn’. The court 19 Section 16(2)(a)(i) of the Superior Courts Act 10 of 2013. 21 found the ‘conduct and tone’ of Ikamva’s objections to the directives to border on contempt and undermining respect for the judiciary. [40] The full court, however, did not find that the factual basis on which the threat of a recusal application was made, was unfounded. Ikamva was entitled to express its anxiety regarding the directives, particularly when the issues raised in the directives had been considered by the full court (Plasket J) on appeal. Parties should be afforded the latitude, subject to applicable ethical boundaries, to express their dissatisfaction with matters they consider to affect the fairness of the conduct of their cases. Perhaps in a case where the facts on which a threatened recusal application is based is fabricated, incorrect, made in bad faith, or ethical boundaries, there could be reason for punitive costs. The fact that the threatened recusal application never materialised is not the central inquiry. In addition, where the court’s displeasure lies with the conduct of a practitioner, rather than the veracity or good faith of the underlying basis, an alternative route of reporting the professional misconduct to the relevant authority, seems more appropriate than punishing the litigant itself. [41] Consequently the following order shall issue: 1. The appeal is dismissed. 2. The appellants are ordered to pay the costs of the appeal, including the costs of two counsel, on the attorney and client scale, jointly and severally, the one paying the other (s) to be absolved. 3. Save to the extent set out in paragraphs 4 and 5 below, the cross-appeal is dismissed. 4. Each party is ordered to pay its own costs in relation to the cross-appeal. 5. The order of the full court is amended to read as follows: ‘1. The intervening party is given leave to intervene in the matter as the third applicant. 22 2. The third appellant is to pay the first respondent’s costs of the application for intervention, including the costs of two counsel. 3. The further execution of the writs of attachment dated 11 March 2016, including the removal of the attached movables, is stayed pending the final determination of the application for leave to appeal the order of Bheshe J dated 16 February 2021 (case number 2610/2019), including any consequent appeals. 4. The appellants are to pay the first respondent’s costs of the application, jointly and severally, including the costs occasioned by the Rule 30 applications dated 22 June 2021 and 30 July 2021, and the reserved costs of the hearing of the application on 5 August 2021, such costs to include the costs of two counsel where so employed.’ ___________________ N DAMBUZA JUDGE OF APPEAL 23 Appearances: For the first to third appellants: M A Albertus SC with S Sephton Instructed by: State Attorney, Cape Town State Attorney, Bloemfontein For the first respondent: I J Smuts SC with A G Dugmore SC Instructed by: State Attorney, Cape Town State Attorney, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 13 June 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 MEC for the Department of Public Works & Others v Ikamva Architects CC and Others (867/2022) [2024] ZASCA 95 (13 June 2024) Today the Supreme Court of Appeal (SCA) dismissed an appeal by various Departments of the Eastern Cape Government against parts of the judgment of the Eastern Cape Division of the High Court, Bhisho. That court had granted a provisional order staying execution of two warrants issued at the instance of Ikamva CC against the Eastern Cape MECs for Public Works, Health, and Finance. The order staying execution of the warrants was granted provisionally, pending finalisation of appeal processes launched by the Departments of Health and Public Works against a dismissal of their self-review application. During 2003 the Department of Public Works offered to appoint Ikamva as ‘Consulting Architects Agents’ for upgrades to Frere Hospital, East London. A written agreement to that effect was concluded on 15 September 2003. During March 2007, the Department of Public Works appointed Coega Development Agency as the implementing agent for the same project. Coega appointed a different firm of architects to do the work that Ikamva had been contracted to do. On 9 July 2007 the Department of Public Works wrote to Ikamva advising that it would not be honouring its obligations under the contract. Ikamva accepted the repudiation of the contract and instituted an action against the two Departments, claiming an amount of R41 031 279.48 as damages for breach of contract. In the action for damages, the Departments pleaded that the consultancy contract, in terms of which Ikamva was appointed, was invalid because it was concluded contrary to the provisions of the Constitution, the PPPF, and the Regulations promulgated in terms of the PPPF. During the course of the litigation, Ikamva called upon the Departments to make discovery in terms of Rule 35(1). When they failed to do so, Ikamva obtained an order compelling them to make discovery within 10 days, on pain of having their defence struck out. In compliance with that court order, the appellants made discovery. Ikamva was not satisfied and obtained a court order directing them to make further and better discovery of listed documents. Further discovery was not made, leading to Ikamva approaching the high court again, for an order compelling further discovery within 10 days. Ultimately the defence that the Departments had filed was struck out 2 due to their failure to make discovery. Judgment was granted against the Departments for the claimed amounts. Subsequent to the granting of the judgment the warrant of execution against property was issued. The Department launched various proceeding in an attempt to avoid execution, including an application to rescind the judgment, applications to stay execution of the warrant, including a challenge to attachment of moneys in a bank account held by the Department of Health, and an application for review and the setting aside of the decision to appoint Ikamva as a consultant and the related contract. The SCA found that the issues relating to the stay of execution were moot as the attached bank account had long been closed and the Department of Health was operating a different bank account. It further found that the only issue that required consideration in the order of the full court was that of costs. The Court held that although an appeal against an order of costs is not lightly granted, it was appropriate that the costs of the application for stay, which the high court had granted against Ikamva, should be borne by the government Departments. This was because of the manner in which the government Departments had pursued meritless litigation and ignored various court judgments in terms of which Ikamva’s judgment debt was confirmed. For the same reasons the Court held the costs of the application for the MEC for Finance to intervene in the proceedings should be borne by that Department. The Court ordered the government Department to bear the costs of the appeal. ~~~~ends~~~~

4293

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case Nos: 945/2022 and 40/2023 In the matter between: INDEPENDENT REGULATORY BOARD FIRST APPELLANT FOR AUDITORS CHAIRPERSON OF THE INDEPENDENT SECOND APPELLANT REGULATORY BOARD FOR AUDITORS CHIEF EXECUTIVE OFFICER OF THE THIRD APPELLANT INDEPENDENT REGULATORY BOARD FOR AUDITORS and EAST RAND MEMBER DISTRICT OF FIRST RESPONDENT CHARTERED ACCOUNTANTS RUDOLF JOHANNES BRITS SECOND RESPONDENT MINISTER OF FINANCE THIRD RESPONDENT Neutral citation: Independent Regulatory Board for Auditors and Others v East Rand Member District of Chartered Accountants and Others (Case no 945/2022 and 40/2023) [2024] ZASCA 114 (22 July 2024) Coram: ZONDI, SCHIPPERS and WEINER JJA and KEIGHTLEY and BLOEM AJJA 2 Heard: 11 March 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The time and date for hand-down is deemed to be 11h00 on 22 July 2024. Summary: Administrative Law – powers of Independent Regulatory Board for Auditors under Auditing Profession Act 26 of 2005 – whether their exercise constitutes executive or administrative action – whether review of impugned decisions time barred – whether prescribing assurance and tax practitioner fees beyond the Board’s powers – procedural unfairness – whether the Board should allow representations before prescribing fees and removing fee concession granted to senior auditors – whether gazetting of fees mandatory. 3 ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Janse Van Nieuwenhuizen J, sitting as court of first instance): 1 The appeal succeeds in part. 2 Paragraphs 117 (save for paragraph 117.3), 118, 119 and 120 of the High Court’s order are set aside and replaced with the following: ‘1. The decisions taken by the first respondent: 1.1 published under Board Notice 24 of 2019 in Government Gazette No 42258 dated 1 March 2019, in terms of which it removed the concession to registered auditors over the age of 65 in the form of a 50% discount of their individual annual fees (the fee concession); and 1.2 published under Board Notice 47 of 2020 in Government Gazette No 43110 dated 20 March 2020, in terms of which it failed to reverse its previous decision to remove the fee concession, are remitted to the first respondent for a decision to be taken afresh, by no later than 31 March 2025, after it has given effect to the right of registered auditors to procedurally fair administrative action, as contemplated in the Promotion of Administrative Justice Act 3 of 2000 (PAJA). 2. The decisions taken by the first respondent to prescribe the following fees published under: (a) Board Notice 24 of 2019 in Government Gazette No 42258 dated 1 March 2019; (b) Board Notice 82 of 2019 in Government Gazette No 42511 dated 5 June 2019; and (c) Board Notice 47 of 2020 in Government Gazette No 43110 dated 20 March 2020, namely: 4 (i) all assurance fees prescribed in respect of Category C assurance work; (ii) all fees regarding the recognition of tax practitioners by the first respondent as the registered controlling body; (iii) all administration fees in respect of assurance fees; and (iv) that portion of the fees set out in paragraphs 2.1 and 2.3 of Board Notice 24 of 2019 and Board Notice 47 of 2020, which represents an increase of more than consumer price inflation compared to the equivalent fees during the first respondent’s 2018/2019 financial year, are remitted to the first respondent for these decisions to be taken afresh, by no later than 31 March 2025, after it has given effect to the right of registered auditors, and tax practitioners whose registered controlling body is the first respondent, to procedurally fair administrative action, as contemplated in the PAJA. 3. The Board is directed to repay or pass credits to the first applicant’s members in respect of Category C assurance fees for the 2020 and 2021 financial years, calculated on the difference between the assurance fees charged by the Board and the amounts recoverable based on the costs of inspections under s 47(2) of the Auditing Profession Act 26 of 2005, that would have been due had the Board charged for inspections actually conducted. 4. Save as aforesaid, the appeal is dismissed with costs including the costs of two counsel.’ 5 ________________________________________________________________ JUDGMENT ________________________________________________________________ Schippers JA (Zondi, Weiner JJA and Keightley and Bloem AJJA concurring) [1] The first appellant, the Independent Regulatory Board for Auditors (the Board), is a body established under the Auditing Profession Act 26 of 2005 (the Act) to regulate the auditing profession. Its objects include the protection of the public by regulating audits performed by registered auditors, and taking measures to advance the implementation of appropriate standards of competence and ethics in the auditing profession. The second appellant is the Chairperson of the Board and the third appellant, its Chief Executive Officer (CEO). [2] The first respondent, the East Rand Member District of Chartered Accountants (respondent) is a voluntary association whose members are auditors registered under the Act. The second respondent, a former chartered accountant and auditor, passed away prior to the hearing of the matter and the executor of his estate elected not to pursue it. The third respondent, the Minister of Finance (the Minister), was a respondent in the proceedings before the High Court. The Minister did not participate in those proceedings, nor in this appeal. [3] This is an appeal against an order of the Gauteng Division of the High Court, Pretoria (the High Court), in terms of which it reviewed and set aside the Board’s decisions to prescribe fees and penalties payable by auditors under the Act, for the 2020 and 2021 financial years. The High Court granted the Board leave to appeal on limited grounds. It was granted leave to appeal by this Court in respect of the grounds refused by the High Court. 6 Factual background [4] The Board’s general functions are set out in s 4 of the Act. It provides: ‘(1) The Regulatory Board must, in addition to its other functions provided for in this Act- (a) take steps to promote the integrity of the auditing profession, including- (i) investigating alleged improper conduct; (ii) conducting disciplinary hearings; (iii) imposing sanctions for improper conduct; and (iv) conducting practice reviews or inspections; (b) take steps it considers necessary to protect the public in their dealings with registered auditors; (c) prescribe standards of professional competence, ethics and conduct of registered auditors; (d) encourage education in connection with, and research into, any matter affecting the auditing profession; and (e) prescribe auditing standards.’ [5] The Board is required, under s 8 of the Act, to prescribe, inter alia, accreditation and registration fees; annual fees; and the date on which any fee is payable. These fees, and monies received by way of sanctions imposed by the Board, are among the sources of its funds.1 Section 9(c) of the Act empowers the Board to ‘collect fees and invest funds’ and s 9(o), to ‘do anything that is incidental to the exercise of any of its functions or powers’. [6] In 2019 the Board prescribed the following fees payable for the 2020 financial year (1 April 2019 to 31 March 2020), published under Board Notice 82 of 2019 (the impugned fees):2 (a) a percentage fee model for Category C (low risk) assurance work which includes voluntary audits, reviews required by the Companies Act 71 of 2008 (the Companies Act), and other assurance work not included in Category A (high risk audits and related assurance work); 1 Section 25 of the Act provides that the Board is funded from, amongst other sources, the collection of prescribed fees and sanctions it imposes. 2 Board Notice 82 of 2019 was published in GG 42511, 5 June 2019. 7 (b) tax practitioner fees; (c) penalty fees for late submission of the requisite documents for assurance work and the under-declaration of assurance fees; and (d) above inflation increases in the annual renewal fee for registration and the administration fee for reinstatement, published in Board Notice 24 of 2019.3 [7] The Board also withdrew a fee concession to registered auditors over the age of 65 who previously had received a 50% discount on their annual fees (the fee concession). It did so without giving those auditors an opportunity to make representations as to why the fee concession should not be withdrawn. [8] On 28 August 2019 the respondent launched an application in the High Court under case number 64848/2019, to review and set aside, alternatively to declare unlawful, the impugned fees and the Board’s decision to withdraw the fee concession. The application was brought in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA); alternatively, the principle of legality (the first application). [9] On 29 May 2020 the Board issued a notice concerning assurance fees payable with effect from 1 April 2020 (to 31 March 2021). The notice stated that the Board had approved the rates applicable to assurance fees payable and that the rates would remain the same as those published in Board Notice 82 of 2019 (the 2020 notice). [10] On 14 September 2020, the respondent launched a second application, under case number 46298/2020, for an order declaring that the 2020 notice was not a decision of the Board; alternatively, that it is of no force or effect; further 3 Board Notice 24 of 2019 was published in GG 42258, 1 March 2019. 8 alternatively, reviewing and setting aside the notice. The respondent also sought an order reviewing and setting aside, inter alia, the Board’s decisions prescribing the same categories of fees in respect of the 2021 financial year, published under Board Notice 47 of 2020;4 and its refusal to withdraw its previous decision to remove the fee concession (the second application). [11] The review grounds, some of which tend to overlap, in summary, were these. The Board was not authorised by the Act to impose the assurance fees that it did. The impugned decisions were materially influenced by an error of law. The Board took into account irrelevant considerations and ignored relevant ones. The administrative action was procedurally unfair, not rationally connected to the purpose of the empowering provision, and unreasonable. The decisions sought to be reviewed and set aside in the second application were challenged mainly on the ground that their validity was dependent on the validity of the decisions challenged in the first application. The High Court’s judgment [12] The Board raised a preliminary point that the first application was time-barred in terms of s 7(1) of the PAJA. It contended that the impugned decisions and the reasons for them were communicated to the respondent well before the prescribed fees were published in the Government Gazette. The High Court (Janse Van Nieuwenhuizen J) disagreed. It held that the 180-day period within which review proceedings must be instituted as envisaged in s 7(1) of the PAJA, commenced once the fees were published in the Gazette. [13] The High Court reviewed and set aside the decision to impose a percentage fee for Category C assurance work on the ground that the imposition of that fee was beyond the Board’s powers (ultra vires). More specifically, it held that the 4 Board Notice 47 of 2020 was published in GG 43110, 20 March 2020. 9 Act does not provide for assurance fees, and the percentage fee model is inconsistent with the method of recovering costs from particular registered auditors for work done as contemplated in the Act. [14] The decision to impose tax practitioner fees was set aside essentially on the basis that the Act does not authorise the imposition of any fees in relation to the Board’s statutorily conferred position as the recognised controlling body (RCB) for tax practitioners. Further, the Board’s reliance on s 8(2)(c) of the Act, which empowers it to prescribe fees ‘for any other service rendered’, was insupportable on the facts. [15] The decisions concerning the increases in the annual renewal fee for registration and the administration fee for reinstatement were reviewed and set aside on the ground of procedural unfairness. So too, the Board’s decision to remove the fee concession. [16] The High Court concluded that the Act does not authorise the Board to prescribe penalties for the late submission of documents and the under-declaration of fees. There is no appeal against those orders and no more need be said about them. [17] The High Court ordered the Board to pass credits by 1 April 2023 to all registered auditors in respect of the fees and penalties levied on them pursuant to Board Notice 82 of 2019, Board Notice 24 of 2019 and Board Notice 47 of 2020. The Board was also ordered to pay the costs of the applications, including the costs of two counsel, on an attorney and client scale. The issues [18] The following issues are raised by this appeal: 10 (a) Are the impugned decisions taken by the Board executive or administrative action? (b) Is the first application time-barred by s 7 of the PAJA? (c) Is the decision to impose a percentage fee for Category C assurance work beyond the Board’s powers? (d) Does the Act authorise the Board to impose tax practitioner fees? (e) Is the Board obliged to consult with all registered auditors prior to prescribing any of the impugned fees? (f) Did the Board’s failure to gazette the assurance fees in the 2021 financial year result in the cessation, on 31 March 2020, of the obligation to pay those fees? (g) Is the remedy granted by the High Court appropriate in the circumstances? Do the impugned decisions constitute executive action? [19] The case advanced in the answering affidavit that the impugned decisions constitute executive action, is this. The decisions are ‘tied up with the government and the IRBA’s policy to fund the regulatory activities of the IRBA from the fee which the Act authorises the IRBA to prescribe’. These are policy issues which the Board took into account and ‘not issues with which a Court must interfere in judicial review proceedings’. The court ‘is not in a position to make any pronouncement on the policy choices made by the executive branch of the State relating to funding the regulatory activities of the IRBA’. Granting the relief sought by the respondent would infringe the principle of the separation of powers. [20] The courts have held that there is no universal test to distinguish between executive and administrative action, and consider a range of factors in 11 determining whether a power or function is executive or administrative, on a case-by-case basis. The focus is particularly on the nature of the power or function.5 [21] In Motau,6 a majority of the Constitutional Court identified three pointers in determining whether a decision constitutes executive or administrative action. The first is the source of the power: a power sourced directly in the Constitution ‘could indicate that it is executive rather than administrative in nature, as administrative powers are ordinarily sourced in legislation’.7 The second pointer is the constraints on the power or the level of discretion afforded to the decision-maker: closely circumscribed powers tend to be administrative in nature.8 And the third is ‘whether it is appropriate to subject the exercise of the power to the higher level of scrutiny under administrative-law review’.9 [22] Applied to the present case, it is clear that the powers exercised by the Board are not of an executive but administrative nature. First, the source of the Board’s power is not the Constitution but the Act. The Board is established and its legal status is determined in Part 1 of the Act. Part 2 sets out the functions and powers of the Board, more specifically, its general functions;10 and its functions with regard to accreditation of professional bodies,11 registration of auditors,12 education, training and professional development,13 and fees and charges.14 The Board’s general powers and in particular, its powers to make rules are contained in Part 3.15 5 C Hoexter and G Penfold Administrative Law in South Africa 3 ed (2021) at 238; President of the Republic of South Africa and Others v South African Rugby Football Union and Others 2000 (1) SA 1 para 141; Minister of Home Affairs and Others v Scalabrini Centre and Others 2013 (6) SA 421 (SCA) para 53. 6 Minister of Defence and Military Veterans v Motau and Others 2014 (5) SA 69 (CC). 7 Motau fn 6 para 39. 8 Motau fn 6 para 44. C Hoexter and G Penfold op cit at 244, are of the opinion that this indicator is unhelpful, because it is common for administrative discretion to be conferred in broad terms. 9 Motau fn 6 para 44. 10 Section 4 of the Act. 11 Section 5 of the Act. 12 Section 6 of the Act. 13 Section 7 of the Act. 14 Section 8 of the Act. 15 Sections 9 and 10 of the Act. 12 [23] The funding of the Board is likewise sourced in the Act and administrative in nature. Section 25 provides: ‘The Regulatory Board is funded from- (a) the collection of prescribed fees; (b) all other monies which may accrue to the Regulatory Board from any other legal source, including sanctions imposed by the Regulatory Board; and (c) moneys appropriated for that purpose by Parliament.’ [24] The Board’s powers to prescribe fees and to obtain funding from other legal sources such as sanctions it imposes, are founded squarely on the Act. So too, its entitlement to monies from Parliament – this is not a policy issue that arises in this case. [25] Second, the Board’s functions – particularly when prescribing fees – are strictly circumscribed, and are simply not of an executive nature. It is authorised to prescribe only the mandatory fees as defined in s 8(1) of the Act, for example accreditation, registration and annual fees; and discretionary fees as defined in s 8(2). [26] The third pointer – whether it is appropriate to subject the impugned decisions to administrative-law review – places it beyond question that they constitute administrative action. The clearest examples of this are the decisions to prescribe assurance fees in Board Notice 82 of 2019, tax practitioner fees and to withdraw the fee concession. These decisions are not ‘limited to matters of high policy or high politics that lie at the heart of executive power such that it would be inappropriate to subject them to administrative-law scrutiny’.16 16 C Hoexter and G Penfold op cit fn 5 at 246. 13 [27] Instead, the impugned decisions constitute administrative action as defined in the PAJA: ‘“administrative action” means any decision taken, or any failure to take a decision, by . . . an organ of state, when . . . exercising a public power or performing a public function in terms of any legislation . . . which adversely affects the right of any person and which has a direct, external legal effect . . .’. 17 [28] It follows that the argument that the impugned decisions constitute executive action, is unsound. The High Court correctly held that they constitute administrative action. Is the first application time-barred by s 7 of the PAJA? [29] Section 7(1) of the PAJA requires review proceedings to be instituted without unreasonable delay and not later than 180 days after internal remedies have been exhausted. The 180-day period may however be extended by an application to court under ss 9(1)(b) and 9(2) of the PAJA where the interests of justice so require. The respondent did not apply for an extension of the 180-day period. [30] It is common ground that the first application concerning the Board’s decisions for the 2020 financial year was launched on 28 August 2019, within 180 days of the decisions sought to be reviewed and set aside. These decisions were published in the Government Gazette on 5 June 2019 (regarding the Category C assurance fees) and 1 March 2019, respectively (regarding the other impugned fees). [31] The Board contends that the first application is time-barred by s 7(1) of the PAJA, because the respondent was informed prior to 1 March 2019 of the 17 Section 1(a) of the PAJA. 14 'underlying decisions’ in relation to three of the impugned fee categories, namely Category C assurance fees, tax practitioner fees and the withdrawal of the fee concession. The underlying decisions were set out in a notice issued on 14 June 2012, a memorandum dated 25 January 2018 and a notice issued on 14 December 2018 (the notices): (a) In the notice of 14 June 2012, the Board informed the respondent that registered auditors would be charged a fee based on a percentage of annual invoices in respect of Category A and B assurance work. (b) In the memorandum dated 25 January 2018, the respondent was informed of the extension of the percentage fee regime to Category C work. (c) In a notice dated 21 August 2018 the Board informed the respondent of its decision to impose tax practitioner fees by issuing a notice. In the latter notice the Board stated its intention to levy a separate additional annual fee payable by tax practitioners who had chosen the Board as their RCB, with effect from the 2019 financial year, commencing on 1 April 2019. (d) By notice dated 14 December 2018, the Board informed the respondent of its decision to withdraw the fee concession with effect from 1 April 2019. [32] The Board submits that on the plain wording of s 7(1) of the PAJA, where there are no internal remedies, as in this case, the 180-day period began to run when the respondents became aware of the administrative action and the reasons for it, or when they might reasonably have been expected to have become aware of the action and the reasons. [33] The argument that the first application is time-barred does not withstand scrutiny for three reasons. First, the notices on which the Board relies – not published in the Gazette – do not constitute ‘administrative action’ as defined in the PAJA. Second, the notices were issued by functionaries of the Board who do 15 not have the power to take binding decisions. And third, the resolutions referred to in the notices were not ripe for review. [34] As already stated, the impugned decisions constitute administrative action. They were made by an organ of state exercising a public power or performing a public function in terms of the Act, which adversely affected the respondent’s rights and had a direct external legal effect. [35] The notices do not prescribe the payment of any fees. Neither does the notice of 14 December 2018 take away the fee concession. That being so, the notices do not adversely affect the rights of auditors: they do not deprive auditors of any right nor adversely determine their rights.18 [36] Rather, the notices do no more than inform auditors of the following: the manner in which the Board intends to bill auditing firms for assurance work; its intention to levy a separate additional annual fee to be paid by tax practitioners who have chosen the Board as their RCB; and its resolution to remove the fee concession. So construed, the notices have no direct external legal effect – they are merely steps taken within the sphere of public administration, and do not impact directly and immediately on individuals.19 [37] That the notices have no direct external legal effect is buttressed by the fact that they were not published in the Gazette. In terms of s 8(1) of the Act, the Board is enjoined to prescribe fees and the date on which any fee is payable. The Act defines ‘prescribe’ as meaning ‘prescribe by notice in the Gazette’. In other 18 C Hoexter and G Penfold op cit fn 5 at 316. 19 Grey's Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others 2005 (6) SA 313 (SCA) para 23, affirmed by the Constitutional Court in Joseph and Others v City of Johannesburg and Others [2009] ZACC 30; 2010 (3) BCLR 212 (CC); 2010 (4) SA 55 (CC) para 27. 16 words, the administrative action comes into effect only once the fees are published, or the fee concession is withdrawn, in the Gazette. [38] The first application was launched within 180 days of the publication of the impugned fees and the removal of the fee concession in the Gazette. On this basis alone, the Board’s contention that the review is time-barred must fail. [39] The notices do not constitute decisions taken by the Board. Section 8(1) of the Act makes it clear that absent a delegation of powers or assignment of its duties as contemplated in s 19 of the Act, the function of prescribing fees is that of the Board itself. The underlying decisions contained in the notices and which form the basis of the Board’s contention that the first application is time-barred, were not taken by the Board, but constitute recommendations by its officials. [40] It is common ground that the Board did not delegate its powers nor assign the function of prescribing fees to any of its functionaries. In fact, in the second application the Board conceded that the approval of fees and the overall budget was not delegated, but formed part of a process in which functionaries make recommendations to the Board, which retained the power to adopt or reject those recommendations. [41] It is clear from the evidence that the impugned decisions were taken by the Board at its meetings on 29 January 2019 and 29 May 2019. Thereafter they were prescribed and published in the relevant Gazettes, and thus came into force. [42] Finally, administrative decisions that are required to be published in the Gazette, become ripe for review only when they are so published. Until that 17 happens, they have no ‘direct, external legal effect’ and may not be challenged in review proceedings.20 [43] For the above reasons, the argument that the 2019 review is time-barred, is unsound. It was rightly rejected by the High Court. The review of Category C assurance fees [44] Auditors are registered with the Board as either assurance or non-assurance auditors. Those registered as assurance auditors do both assurance and non-assurance work. Those who are registered as non-assurance auditors are not permitted to do assurance work. [45] The Code of Professional Conduct for Registered Auditors defines an ‘assurance engagement’ as ‘. . . an engagement in which a registered auditor in public practice expresses a conclusion designed to enhance the degree of confidence of the intended user other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria.’ [46] Category A or high-risk assurance work, refers to audits that are performed by registered auditors and firms which are required in terms of legislation or regulation. These include audits of public companies required by the Companies Act 71 of 2008 and state-owned enterprises; audits of banks and regulatory returns to the South African Reserve Bank in terms of the regulations made under the Banks Act 94 of 1990; audits of insurance companies, collective investment schemes, pension, retirement and provident funds; audits of medical aid schemes; and audits on behalf of the Auditor-General. 20 Esau and Others v Minister of Co-operative Governance and Traditional Affairs and Others [2021] ZASCA 9; [2021] 2 All SA 357 (SCA); 2021 (3) SA 593 (SCA) paras 34 and 45. 18 [47] Category C assurance work is low-risk assurance work which is not included in the definition of Category A assurance work, and involves voluntary audits by decision, independent reviews required in terms of the Companies Act 71 of 2008 and other assurance work. The respondent’s members generally practice in small to medium-sized firms and the bulk of their work comprises Category C assurance work. [48] It is common ground that the Board focuses on inspections of Category A assurance work, which has a higher public interest exposure, demanding more in-depth inspections that take longer to perform and which the Board terms a ‘risk-based approach’ to inspections. The Board inspects Category C assurance work on a reactive basis only – if information is brought to its attention and where it is deemed necessary or appropriate to perform an inspection, typically in response to a complaint. Such inspections are thus rare. [49] From the Board’s inception in 2006 until 2012, it annually prescribed hourly fees for its inspectors conducting inspections and reviews in terms of s 47 of the Act. Those fees applied to all inspections, whether mandatory or discretionary. [50] In 2011 the Board altered its fee model with effect from 2012. It ceased charging an hourly fee for inspections in respect of Category A assurance work. Instead, auditors doing that work were obliged to pay the Board a fee twice a year, based on a percentage of the revenue that they derived from their Category A assurance work in the previous calendar year. Registered auditors doing only Category C assurance work, continued to pay for inspections on a prescribed hourly rate. In the second application the respondent indicated that this change entailed a name change from ‘inspection fees’ to ‘assurance fees’. 19 [51] At the end of 2018 the Board’s functionaries prepared a draft budget for 2020 and indicated that drastic measures in the form of increased fees, were necessary. One way of increasing fees was to extend the percentage fee model – previously only applicable to Category A assurance work – to Category C assurance work. The budget thus envisaged that those registered auditors whose practices were rarely, if ever, inspected, would contribute an amount in excess of R14 million for 2020 as an ‘assurance fee’, purportedly to cover the costs of inspections as contemplated in s 47(2) of the Act. [52] On 29 May 2019 the Board resolved to adopt a schedule setting out assurance fees that would be payable for 2020, based on a percentage of the total audit and other assurance work invoiced by audit firms and declared for the previous calendar year by each registered auditor. This meant that assurance fees would not, as in the past, be calculated on the percentage of Category A assurance work only, but on the basis of all assurance work, including Category C assurance work. The resolution was published in the Gazette on 5 June 2019. [53] The main grounds upon which the respondent sought to review the decision to impose Category C assurance fees, were the following. The Board is not empowered under s 8(2)(b) of the Act to impose assurance fees on an inverted sliding scale, based upon a percentage of the fees earned for assurance work and to extend such assurance fees to Category C assurance work. The Act does not permit the recovery of fees (ostensibly for inspections) ‘at a percentage of the total audit fee base declared’. The decision was taken ‘in order to serve as a general source of revenue for [the Board] and to build up a “war chest” to cater for its increased expenditure on disciplinary hearings’. Section 8(2)(b) envisages the recovery of costs in relation to practice reviews or inspections. Therefore, the decision as implemented in Board Notice 82 of 2019 is reviewable because it is not authorised by an empowering provision as contemplated in ss 6(2)(a)(i) and 20 6(2)(f)(i) of the PAJA.21 It is also irrational within the meaning of s 6(2)(f) of the PAJA.22 [54] The Board’s answer to these review grounds is this. It is authorised under the Act to prescribe fees, and the Act does not stipulate the funding model that must be utilised to recover the costs it incurs in inspecting the practices of registered auditors, but leaves that determination to the Board. It submits that its decision to implement assurance fees for Category C assurance work based on a percentage of the total audit and other assurance work invoiced by audit firms in the previous calendar year, is connected to the actual costs incurred by the Board in inspecting the practices of registered auditors. [55] Notice 82 of 2019 states that the notice of an adjustment to the assurance fees payable to the Board is given in terms of s 8(2)(b) of the Act. Section 8 of the Act provides: ‘Functions with regard to fees and charges (1) The Regulatory Board must prescribe- (a) accreditation, registration, registration renewal and re-registration fees; (b) annual fees, or a portion thereof in respect of a part of a year; (c) the date on which any fee is payable; and (d) the fees payable in respect of any examination referred to in section 37, conducted by an accredited professional body or the Regulatory Board. (2) The Regulatory Board may prescribe- (a) any fees payable for the purposes of the education fund referred to in section 7(2); (b) fees payable for an inspection or review undertaken by the Regulatory Board in terms of section 47; and (c) fees payable for any other service rendered by the Regulatory Board. 21 Section 6(2)(a)(i) of the PAJA provides that a court has the power to judicially review an administrative action if the administrator who took it was not authorised to do so by the empowering provision. Section 6(2)(f)(i) states that it is reviewable if the action itself contravenes a law or is not authorised by the empowering provision. 22 Section 6(2)(f)(ii)(bb) of the PAJA states that an administrative action is reviewable if the action itself is not rationally connected to the purpose of the empowering provision. 21 (3) The Regulatory Board may grant exemption from payment of any fees referred to in subsection (1) or (2).’ [56] Section 47 of the Act reads: ‘Inspections (1) (a) The Regulatory Board, or any person authorised by it, may at any time inspect or review the practice of a registered auditor and the effective implementation of any training contracts and may for these purposes inspect and make copies of any information, including but not limited to any working papers, statements, correspondence, books or other documents, in the possession or under the control of a registered auditor. (b) Despite the generality of paragraph (a), the Regulatory Board, or any person authorised by it, must at least every three years inspect or review the practice of a registered auditor that audits a public company as defined in section 1 of the Companies Act, 2008 (Act 71 of 2008). (2) The Regulatory Board may recover the costs of an inspection under this section from the registered auditor concerned.’ [57] It is a settled principle that when construing a statute, the inevitable point of departure is the language of the provision, understood in the context in which it is used, having regard to its purpose. This constitutes the unitary exercise of interpretation.23 In Capitec Bank Holdings24 this Court said: ‘[T]he triad of text, context and purpose should not be used in a mechanical fashion. It is the relationship between the words used, the concept expressed by those words in the place of the contested provision within the scheme of the agreement (or instrument) as a whole that constitute the enterprise by recourse to which a coherent and salient interpretation is determined.’ [58] Section 8, which contains the power of the Board to prescribe fees, is at the heart of this appeal. On its plain language, the power in s 8 must be construed in 23 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 18. 24 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. 22 the context of the scheme of Part 2 of the Act, of which s 8 forms part, and in the light of its purpose, having regard to the objects of the Act as a whole. [59] Part 2 contains s 4, which sets out the general functions of the Board. Section 4(1)(a) states that in addition to its other functions provided for in the Act, the Board must take steps to promote the integrity of the auditing profession by conducting practice reviews or inspections.25 The Act specifically defines the Board’s functions with regard to accreditation of professional bodies (s 5); registration of auditors and candidate auditors (s 6); education, training and professional development (s 7); and fees and charges (s 8). [60] Section 8 draws a clear distinction between mandatory fees which the Board must prescribe (s 8(1)) and fees which the Board may prescribe in the exercise of its discretion (s 8(2)). In both instances the type of the fees prescribed is clearly defined, with reference to the Board’s functions in ss 5 to 8. It follows that the exercise of the power to prescribe fees must conform to the purpose and type of fees contemplated in s 8 of the Act. [61] Thus, accreditation, registration, or annual fees may not be prescribed under s 8(2) of the Act. Likewise, s 8(1) may not be utilised to prescribe fees for the purposes of the education fund contemplated in s 7(2). In similar vein, fees levied under s 8(2)(b) of the Act may not be prescribed for anything other than inspections or reviews undertaken by the Board in terms of s 47. This is reinforced by s 47(2) of the Act which provides that the Board ‘may recover the costs of an inspection under this section from the registered auditor concerned’. [62] The plain wording of s 8(2)(b) read with s 47(2) permits of only the following construction: First, the Board must prescribe the fees for an inspection 25 Section 4(1)(a)(iv) of the Act. 23 or review it undertakes, before it may recover the costs thereof. Second, the costs of the inspection or review must be recovered from the registered auditor who is the subject of that inspection. This is one of those cases where the word ‘may’, construed in its proper context and in the light of the purpose of s 8(2)(b) read with s 47(2), means ‘must’.26 Otherwise construed, s 47(2) of the Act would be rendered meaningless. [63] The Board correctly applied these provisions between 2006 and 2012 when it prescribed fees for inspections ‘on a cost per hour recovery basis’. Auditors were thus charged an hourly rate for inspections, which the Board designated as ‘inspection fees’. Those fees were prescribed in accordance with the language, context and purpose of s 8(2)(b) read with s 47(2) of the Act. [64] It will immediately be noted that s 8(2)(b) read with s 47(2) does not empower the Board to recover fees for inspections at a percentage of the total audit fee base declared, in particular, ‘based on a percentage of the total audit and other assurance work invoiced by the firm, and declared every calendar year by the firm for each Registered Auditor’. A firm of auditors typically charges its client a fee for services rendered, by applying a time and materials pricing model, based on hourly billing and the actual time spent on a project. All of this has nothing to do with an inspection or review under s 47 of the Act. [65] It follows that s 8(2)(b) read with s 47(2) envisages the recovery of costs in relation to inspections. They do not permit the Board to prescribe those fees on the basis of a percentage of Category C assurance work, where the costs of inspections bear no relation to the fees charged, such as voluntary audits by decision, or work by auditors in preparing requests for proposals (tenders) or turnover compliance certificates. 26 Commissioner for Inland Revenue v I H B King; Commissioner for Inland Revenue v A H King 1947 (2) SA 196 (A) at 209-210. 24 [66] Indeed, in the answering affidavit in the second application, the Board, with reference to its Inspection Strategy and Process Seventh Inspections Cycle 2018/2019, concedes that there is no link between the fee charged for inspections of firms and the time spent on inspections and related activities. Instead of determining its expenses in relation to inspections and reviews and prescribing specific fees for those functions, the Board simply looked at its budget and determined such fees accordingly. [67] The Board however contends that Category C assurance fees are connected to the actual costs it incurs in inspecting the practices of registered auditors. This contention firstly, is at odds with the Board’s concession that there is no link between the fees charged and the time spent on inspection and related activities. Secondly, as the Board itself states, assurance fees are treated as another source of income for the Board – an ‘indirect method’ of recovering the costs of inspections under s 47 of the Act. [68] Thirdly, the Board’s methodology in determining fees for Category C assurance work not only bears no resemblance to the costs of inspections of that work, but also results in the irrational levying of higher fees on registered auditors doing Category C assurance work. The evidence shows that after the levying of Category C assurance fees, the Board recovers more than double in assurance fees than it expends on its inspection department. [69] Finally, the contention fails on the level of the law. Bertie van Zyl (Pty) Ltd27concerned the determination of inspection fees under the Agricultural Product Standards Act 119 of 1990. This Court held that it was irrational to levy inspection fees – designed to permit the relevant authority to be compensated for 27 Bertie van Zyl (Pty) Ltd t/a ZZ2 and Others v Minister of Agriculture, Forestry and Fisheries and Others [2021] ZASCA 101; [2021] 4 All SA 1 (SCA) paras 32-35. 25 the cost of carrying out its duties – on a basis that has no connection to the costs incurred by the authority in carrying out those duties. [70] The extension of assurance fees to Category C assurance work is thus not rationally connected to the purpose for which it was taken, the purpose of the empowering provision and the information before the Board. For this reason also, that decision was reviewable. [71] The High Court thus correctly concluded that the imposition of Category C assurance fees was beyond the Board’s powers and accordingly invalid. Board Notice 82 of 2019 was rightly reviewed and set aside. Tax practitioner fees [72] In terms of s 240 of the Tax Administration Act 28 of 2011 (TAA), all tax practitioners are required to be registered with a RCB. The Board is by the operation of law, and by virtue of s 240A of the TAA, not required to apply to the South African Revenue Service (SARS) for recognition as a RCB. By contrast, the South African Institute for Chartered Accountants (SAICA) is required to do so. [73] SAICA decided to levy a separate subscription fee on all its members (chartered accountants) who chose SAICA as their RCB. As a result, registered auditors who were tax practitioners and members of SAICA informed SARS that the Board was their RCB, so as to avoid the fees charged by SAICA. [74] The Board furnished the following reasons for prescribing tax practitioner fees. As a RCB, it has added regulatory and administrative functions. These include registration of tax practitioners; strengthening and monitoring compliance by tax practitioners with the Board’s continuing professional 26 development requirements; receipt of complaints from SARS and the public relating to the conduct of tax practitioners; the duty to take disciplinary action against tax practitioners who breach professional rules; and annual reporting to and participation in structures within SARS. Moreover, not all tax practitioners are registered auditors. [75] These functions, more specifically registration services, the receipt and investigation of complaints against tax practitioners, and instituting disciplinary proceedings against them where appropriate, self-evidently are duties carried out by a RCB, whether it is SAICA or the Board. The evidence is that some auditors cancelled their registration with SAICA in order to avoid the payment of a fee which, it must be accepted, is for services rendered by a RCB to tax practitioners. The respondent however expects similar services to be rendered free of charge by the Board. And when they are not, it challenges the Board’s decision on the basis that the Board has no power to prescribe tax practitioner fees and that it exercised this power for an ulterior purpose. [76] The respondent’s contention that tax practitioner fees have no factual basis because the Board incurs no costs linked to the registration of tax practitioners, is absurd. Common sense dictates that the Board would incur expenses in carrying out the functions outlined above. In any event, having regard to the Plascon-Evans rule,28 the Board’s version on this score is neither far-fetched nor untenable and must be accepted. [77] In performing the functions relating to tax practitioners, the Board plainly provides a service in respect of which it is authorised to prescribe fees in terms of s 8(2)(c) of the Act. The High Court erred in holding that it has no such power 28 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634E-635C. 27 and consequently that the imposition of tax practitioner fees is unlawful and invalid. [78] This however is not the end of the inquiry regarding tax practitioner fees. The respondent also challenged that decision on the ground of procedural unfairness. This issue is dealt with below. Procedural unfairness [79] The High Court held that the Board had a duty to consult affected parties in terms of the audi alteram partem principle (the audi principle) before imposing increases on its annual renewal of registration fees and administration fees for reinstatement. The court found that the Board’s failure to engage in a consultative process before removing the fee concession was procedurally unfair and reviewable in terms of s 6(2)(c) of the PAJA. [80] The High Court’s finding that the Board acted procedurally unfairly was founded on the ostensibly free-floating requirements imposed by the audi principle. However, the review of the impugned decisions is exclusively controlled by the Constitution and the PAJA.29 [81] It is trite that whether the audi principle applies is contextual and relative. The statutory context is a crucial consideration in determining what procedural fairness demands of the Board.30 Consequently, the requirement to consult to ensure procedural fairness under s 3 of the PAJA and the audi principle depends on the circumstances of the case.31 29 Notyawa v Makana Municipality and Others [2019] ZACC 43; 2020 (2) BCLR 136 (CC); [2020] 4 BLLR 337 (CC); (2020) 41 ILJ 1069 (CC). 30 Minister of Environmental Affairs and Tourism and Others v Atlantic Fishing Enterprises (Pty) Ltd and Others 2004 (3) SA 176 (SCA). 31 Chairman, Board on Tariffs and Trade, and Others v Brenco Inc and Others 2001 (4) SA 511 (SCA) paras 13-14. 28 [82] The Act nowhere imposes a consultative process in respect of fee increases. By contrast, s 10 imposes a statutory duty to consult before the Board prescribes rules: ‘it must publish a draft of the proposed rule in the Gazette together with a notice calling on the public to comment in writing within the period stated in the notice’. Given the scheme and objects of the Act and the powers and functions of the Board, in my view this is an aspect of the expressio unius est inclusio alterius principle (to express one thing is to exclude another). There seems to be no reason to require consultation only when the Board prescribes rules, unless that was Parliament’s intention. [83] What is more, there is a need for decisions to be taken promptly, having regard to the Board’s function in prescribing accreditation, registration and annual fees. Consultation would impede this process and the functioning of the Board. In this regard, the dictum by the Court of Appeal in R (MP) v Secretary of State for Health and Social Care that when a public body engages in consultation, it must do so properly,32 shows why the Board’s decisions must be taken expeditiously: ‘[C]onsultation must be undertaken at a time when proposals are still at a formative stage; it must include sufficient reasons for particular proposals to allow those consulted to give intelligent consideration and an intelligent response; adequate time must be given for this purpose; and the product of consultation must be conscientiously taken into account when the ultimate decision is taken.’ [84] For these reasons, the High Court erred in finding that the Board was required to consult before prescribing fees. However, the duty to give effect to the right to procedurally fair administrative action contemplated in the PAJA, stands on a different footing. 32 R (MP) v Secretary of State for Health and Social Care [2020] EWCA Civ 1634 para 29. 29 [85] In the founding affidavit the respondent alleged that a fair administrative procedure, at a minimum, requires that an administrator proposing to make an administrative decision must afford everyone likely to be adversely affected by that decision, a fair opportunity to make representations on the issue. The Board failed to comply with the procedure laid down in s 3 of the PAJA.33 It was further alleged that the Board failed to follow a notice and comment procedure under s 4 of the PAJA as it was obliged to do, given that the administrative action materially and adversely affected the rights of a group or class of the public.34 [86] The respondent also challenged the Board’s decision to increase for 2020, the annual renewal of registration fee by 35% and the administration fee by some 50%. Since the more moderate increases for the 2021 financial year were based on the 35% and 50% increases in the 2020 financial year, the validity of the 2021 fees is dependent on the validity of the earlier increases. 33 Section 3(2)(b) of the PAJA reads: ‘In order to give effect to the right to procedurally fair administrative action, an administrator, subject to subsection (4), must give a person referred to in subsection (1)- (i) adequate notice of the nature and purpose of the proposed administrative action; (ii) a reasonable opportunity to make representations; (iii) a clear statement of the administrative action; (iv) adequate notice of any right of review or internal appeal, where applicable; and (v) adequate notice of the right to request reasons in terms of section 5.’ 34 Section 4(1) of the PAJA provides inter alia: ‘Administrative action affecting public (1) In cases where an administrative action materially and adversely affects the rights of the public, an administrator, in order to give effect to the right to procedurally fair administrative action, must decide whether- (a) to hold a public inquiry in terms of subsection (2); (b) to follow a notice and comment procedure in terms of subsection (3); (c) to follow the procedures in both subsection (2) and (3); . . . (3) If an administrator decides to follow a notice and comment procedure, the administrator must- (a) take appropriate steps to communicate the administrative action to those likely to be materially and adversely affected by it and call for comments from them; (b) consider any comments received; (c) decide whether or not to take the administrative action, with or without changes; and (d) comply with the procedures to be followed in connection with notice and comment procedures, as prescribed.’ 30 [87] Consequently, the decisions to prescribe assurance fees, tax recognition fees, the increase in the annual renewal of registration fees and administrative fees in excess of consumer price inflation, and the removal of the fee concession, fell to be reviewed and set aside. [88] In the answering affidavit, the Board contended that the impugned decisions do not constitute administrative action as defined in the PAJA. For this reason, the notice and comment procedure contemplated in s 4 of the PAJA does not apply. In any event, the respondent was time-barred from seeking to review and set aside the impugned decisions. These contentions fail: as stated above, the impugned decisions constitute administrative action. [89] It follows that the submissions on behalf of the Board that the requirements of s 3 of the PAJA, insofar as they applied, had been satisfied in a way that was practical and context appropriate; that adequate notice of the decisions was given; and that affected parties were given a reasonable opportunity to make representations, are unsustainable on the evidence. So too, the submission that even if the minimum requirements of s 3(2) of the PAJA had not been met, it was reasonable and justifiable for the Board to depart from those requirements, given the factors listed in s 3(4) of the PAJA.35 No such case was made out in the answering papers. On the contrary, the Board’s stance was that the impugned 35 Section 3(4) of the PAJA states: ‘Procedurally fair administrative action affecting any person (4) (a) If it is reasonable and justifiable in the circumstances, an administrator may depart from any of the requirements referred to in subsection (2). (b) In determining whether a departure as contemplated in paragraph (a) is reasonable and justifiable, an administrator must take into account all relevant factors, including- (i) the objects of the empowering provision; (ii) the nature and purpose of, and the need to take, the administrative action; (iii) the likely effect of the administrative action; (iv) the urgency of taking the administrative action or the urgency of the matter; and (v) the need to promote an efficient administration and good governance.’ 31 decisions do not constitute administrative action; therefore, the procedural fairness requirements in s 3(1) and s 4(1) of the PAJA were inapplicable. [90] The Board also submits that the requirement of procedural fairness was met in that a notice was distributed to registered auditors in a COVID-19 communiqué, informing them of the fee increases approved by the Board for the 2021 financial year, which solicited feedback. This submission has no foundation in the evidence. The communiqué was focused on the Board’s arrangements for the COVID-19 lockdown and provided an email address soliciting feedback regarding those arrangements. [91] The Board’s functionaries appreciated that in prescribing the 35% and almost 50% increases in registration and administration fees, registered auditors had to be given a proper explanation. The Board itself states that in the light of developments in the profession, when drafting its Strategic Plan, ‘drastic measures were called for in the form of increased fees’. The fee concession was removed on the basis that the Board has a discretion under s 8(3) of the Act to grant an exemption from payment of any fees, without more. [92] These decisions taken by the Board plainly affected the rights of the respondents and in particular, the legitimate expectations of auditors receiving the benefit of the fee concession, materially and adversely, as envisaged in s 3(1) and s 4(1) of the PAJA. Therefore, the respondents had to be given an opportunity to make representations so as to influence the outcome of those decisions. This safeguard not only signals respect for their dignity, but is also likely to improve the quality, rationality and legitimacy of administrative decision-making.36 36 C Hoexter and G Penfold op cit fn 5 at 302, approved in Joseph and Others v City of Johannesburg and Others 2010 (4) SA 55 (CC) para 42. 32 [93] The respondents’ complaint is essentially that the Board should have followed a notice and comment procedure in terms of s 4 of the PAJA. There is no reason why an order to that effect should not be made, given that the impugned decisions materially and adversely affect a group of the public – registered auditors and tax practitioners, albeit that s 4(1) does not include legitimate expectations. However, this does not mean that ss 3 and 4 of the PAJA are mutually exclusive.37 [94] The impugned decisions were thus correctly reviewed and set aside on the ground of procedural unfairness, save that consultation with the respondents was not required. By reason of the conclusion to which I have come, it is unnecessary to consider the challenge to the removal of the fee concession on the grounds of bias, arbitrariness, ulterior purpose or irrationality. The failure to gazette the assurance fees in the 2021 financial year [95] The High Court found that the Board’s failure to gazette the assurance fees in the 2021 financial year resulted in the obligation to pay such fees ceasing on 31 March 2020. [96] The Board contends that the Act does not require it to publish fees every year in the Gazette if they remain unchanged. Since assurance fees had already been prescribed by notice in the Gazette the previous year, so it is contended, it was not necessary for the Board to prescribe those fees again in the 2021 financial year – the same fees merely continued to apply as before. [97] The short answer to these contentions is that the prescription of annual fees – continuing for the period of one year – is a peremptory requirement under s 8(1)(b) of the Act. In other words, fees prescribed in a particular year relate to 37 Esau fn 20 paras 90 and 91; C Hoexter and G Penfold op cit fn 5 at 558-9. 33 only that year. That is why Board Notice 82 of 2019 states that the fees prescribed in that notice are payable from 1 April 2019 to 31 March 2020. The obligation to pay those fees ceased on 31 March 2020. [98] The High Court was thus correct in holding that the Board’s failure to gazette the assurance fees in the 2021 financial year resulted in the cessation, on 31 March 2020, of the obligation to pay those fees. Is the remedy appropriate? [99] The Board submits that the High Court should have remitted the decisions on both the quantum of the fee increases and the manner in which credits should be dealt with to the Board, for the following reasons. The decision to prescribe fees is policy-driven and polycentric and the High Court was not in as good a position as the Board to take this decision. The court limited the fee increases to the Consumer Price Index (CPI) without considering their impact on the Board. The respondent adduced no evidence of exceptional circumstances to justify non-remittal for the Board to take the relevant decisions afresh. [100] The respondent contends that the High Court did not substitute its decision with that of the Board: it merely reversed the consequences of the invalid decisions. Then it is contended, on the authority of NERSA,38 that there is no compelling reason to depart from the default remedy that unlawful administrative action ceases to have any effect, is regarded as if it never existed and that the Board should pay back the fees it had unlawfully prescribed. [101] The respondent is however mistaken. In terms of the PAJA a court may grant any order that is just and equitable and, in exceptional cases, substitute the 38 National Energy Regulator of South Africa and Another v PG Group (Pty) Ltd and Others [2019] ZACC 28; 2019 (10) BCLR 1185 (CC); 2020 (1) SA 450 (CC) paras 89 and 91. 34 administrative action.39 But as the Constitutional Court held Trencon,40 substitution is an extraordinary remedy; remittal ‘is still almost always the prudent and proper course’; and the principle of separation of powers dictates that ‘courts are ordinarily not vested with the skills and expertise required of an administrator’. Further, two weighty factors concerning remittal are whether the court is in as good a position as the administrator to substitute the administrative action; and whether the decision is a foregone conclusion.41 [102] The High Court should have remitted the matter to the Board by virtue of its expertise, experience and access to sources of relevant information.42 The unchallenged evidence is that the impugned decisions were made in the light of the Board’s budgetary needs to ensure effective delivery of its statutory mandate and strategic objectives. The decisions were informed by the Treasury’s decision to reduce the Board’s budgetary allocation by R8.7 million and the need for the Board to increase its oversight responsibilities, and engage in additional activities to restore public confidence in the profession. [103] In addition, the mandatory functions of the Board in s 4(1) and s 8(1) of the Act involve policy questions. These relate to the protection of the public in their dealings with registered auditors; determining a regulatory strategy for performing its functions in terms of s 4(1);43 and prescribing accreditation, registration and annual fees, and fees payable for inspections or reviews undertaken by the Board. [104] All of this shows that the High Court was nowhere near in as good a position as the Board. This is particularly so given that the collection of prescribed 39 Section 8(1)(c)(ii) of the PAJA. 40 Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd and Another [2015] ZACC 22; 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC) paras 42, 43 and 47. 41 Trencon fn 40 para 47. 42 Gauteng Gambling Board v Silverstar Development Ltd and Others 2005 (4) SA 67 (SCA) para 29; Trencon fn 40 para 42. 43 Section 4(3)(a) of the Act. 35 fees is one of the main sources of the Board’s funds, which, in turn, has a direct impact on its budget and its ability to carry out its statutory functions. Moreover, the Board presented evidence that a CPI-linked increase in fees would be wholly inadequate and posed a threat to its financial viability. Despite this, and in the absence of any countervailing evidence, the High Court limited the fee increases to the CPI without considering the financial impact on the Board. [105] Moreover, the Board demonstrated – and the respondent accepted – that the Board is in dire financial straits. The effect of the High Court’s order is that the Board will have to anticipate and budget for additional deductions from the fees it may prescribe in future, to fulfil its statutory mandate. And the unchallenged evidence is that as a public entity, the Board may not budget for a deficit or accumulate any surplus. [106] Further, it cannot be said that the appropriate remedy is a foregone conclusion, a fortiori as regards the decision to impose tax practitioner fees and to withdraw the fee concession – plainly issues of policy. In any event, the courts have held that a legitimate expectation is procedural: it does not give rise to a substantive benefit.44 [107] For these reasons, remittal was the prudent and proper course. The High Court did not have the skills and expertise of the Board. The remedy was not a foregone conclusion. The court was simply in no position to make the orders in paragraphs 117 to 120 of its judgment. Consequently, they must be set aside. [108] It goes without saying that the Board must repay to, or credit the accounts of the respondent’s members with, all amounts paid by them in respect of fees that the Board was not authorised to prescribe under the Act. This applies in 44 Bel Porto School Governing Body and Others v Premier, Western Cape, and Another 2002 (3) SA 265 (CC) para 96; South African Veterinary Council and Another v Szymanski 2003 (4) SA 42 (SCA) para 14. 36 particular to the Board’s decision to prescribe assurance fees based on a percentage of the fees earned for assurance work and to extend such assurance fees to Category C assurance work, purportedly in terms of s 8(2)(b) of the Act. [109] In the result, the following order is issued: 1 The appeal succeeds in part. 2 Paragraphs 117 (save for paragraph 117.3), 118, 119 and 120 of the High Court’s order are set aside and replaced with the following: ‘1. The decisions taken by the first respondent: 1.1 published under Board Notice 24 of 2019 in Government Gazette No 42258 dated 1 March 2019, in terms of which it removed the concession to registered auditors over the age of 65 in the form of a 50% discount of their individual annual fees (the fee concession); and 1.2 published under Board Notice 47 of 2020 in Government Gazette No 43110 dated 20 March 2020, in terms of which it failed to reverse its previous decision to remove the fee concession, are remitted to the first respondent for a decision to be taken afresh, by no later than 31 March 2025, after it has given effect to the right of registered auditors to procedurally fair administrative action, as contemplated in the Promotion of Administrative Justice Act 3 of 2000 (PAJA). 2. The decisions taken by the first respondent to prescribe the following fees published under: (a) Board Notice 24 of 2019 in Government Gazette No 42258 dated 1 March 2019; (b) Board Notice 82 of 2019 in Government Gazette No 42511 dated 5 June 2019; and (c) Board Notice 47 of 2020 in Government Gazette No 43110 dated 20 March 2020, namely: 37 (i) all assurance fees prescribed in respect of Category C assurance work; (ii) all fees regarding the recognition of tax practitioners by the first respondent as the registered controlling body; (iii) all administration fees in respect of assurance fees; and (iv) that portion of the fees set out in paragraphs 2.1 and 2.3 of Board Notice 24 of 2019 and Board Notice 47 of 2020, which represents an increase of more than consumer price inflation compared to the equivalent fees during the first respondent’s 2018/2019 financial year, are remitted to the first respondent for these decisions to be taken afresh, by no later than 31 March 2025, after it has given effect to the right of registered auditors, and tax practitioners whose registered controlling body is the first respondent, to procedurally fair administrative action, as contemplated in the PAJA. 3. The Board is directed to repay or pass credits to the first applicant’s members in respect of Category C assurance fees for the 2020 and 2021 financial years, calculated on the difference between the assurance fees charged by the Board and the amounts recoverable based on the costs of inspections under s 47(2) of the Auditing Profession Act 26 of 2005, that would have been due had the Board charged for inspections actually conducted. 4. Save as aforesaid, the appeal is dismissed with costs including the costs of two counsel.’ __________________ A SCHIPPERS JUDGE OF APPEAL 38 Appearances: For appellants: I V Maleka SC (with R A Solomon SC, P B Khoza and I B Currie) Instructed by: Mothle Jooma Sabdia Inc, Pretoria Matsepes Inc, Bloemfontein For first and second respondent: H F Oosthuizen SC (with D J Smit and M Viljoen) Instructed by: Serfontein, Viljoen & Swart, Pretoria Van der Berg Van Vuuren Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 22 July 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 judgment of the Supreme Court of Appeal Independent Regulatory Board for Auditors and Others v East Rand Member District of Chartered Accountants and Others (Case no 945/2022 and 40/2023) [2024] ZASCA 114 (22 July 2024) Today the Supreme Court of Appeal (SCA) handed down judgment in an appeal by the Independent Regulatory Board for Auditors (the Board) against an order of the Gauteng Division of the High Court, Pretoria (the High Court). The appeal was partially successful. The Board is a statutory body established under the Auditing Profession Act 26 of 2005 (the Act) to regulate the auditing profession. In 2019 and 2020 the Board prescribed fees payable by registered auditors, including a percentage-based fee model for Category C assurance work; tax practitioner fees for auditors registered with the Board as their controlling body; annual registration and reinstatement fees; and it withdrew a 50% fee concession previously granted to auditors over the age of 65 (the impugned decisions). The East Rand Member District of Chartered Accountants (the respondent), a voluntary association of registered auditors, applied to the High Court for an order reviewing and setting aside the impugned decisions, and directing the Board to pass credits in respect of fees paid by registered auditors, which the Board was not authorised to prescribe. The High Court granted the order, which was the subject of the appeal before the SCA. The SCA upheld the High Court’s finding that the Board was not empowered under the Act to prescribe a percentage-based fee model for Category C assurance work. The Board purported to do so in terms of section 8(2)(b) of the Act, which allows it to prescribe fees payable for inspections or reviews of the practice of auditors undertaken by the Board under section 47, and to recover those fees from the auditor concerned. The Category C assurance fees bore no relation to the costs of those inspections. Consequently, the Board was ordered to repay or pass credits to the respondent’s members in respect of Category C assurance fees for the 2020 and 2021 financial years. 2 The SCA set aside the High Court’s order directing the Board to pass credits to all registered auditors regarding amounts paid in respect of tax practitioner fees; annual registration and reinstatement fees; and the fee concession granted to auditors over the age of 65. The SCA held that these decisions involve policy questions; and that the High Court should have remitted them to the Board for it decide these matters afresh. The SCA therefore remitted the determination of tax practitioner fees, annual registration and reinstatement fees, and the withdrawal of the fee concession to the Board, which was ordered to take the decisions afresh by 31 March 2025, after granting registered auditors and tax practitioners the right to procedurally fair administrative action, as envisaged in the Promotion of Administrative Justice Act 3 of 2000. ~~~~ends~~~~

4287

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 696/2023 In the matter between: SANOJ JEEWAN APPELLANT and TRANSNET SOC LIMITED FIRST RESPONDENT ERNEST & YOUNG (EY) SECOND RESPONDENT Neutral citation: Sanoj Jeewan v Transnet SOC Limited and Another (696/2023) [2024] ZASCA 108 (4 July 2024) Coram: MOLEMELA P and WEINER and MOLEFE JJA and KOEN and SEEGOBIN AJJA Heard: 3 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 4 July 2024. 2 Summary: Civil procedure – prescription – whether the high court was correct in finding that the appellant’s claim for contractual and delictual damages had prescribed – whether s 39(2) read with s 34 of the Constitution should be invoked in order to re-interpret the Prescription Act 69 of 1969 – whether the Biowatch principle on the issue of costs should apply in this case. ORDER On appeal from: Gauteng Division of the High Court, Pretoria (Mabuse J sitting as a court of first instance): 1 The appeal is dismissed, save to the extent set out below. 2 The appeal in relation to the orders upholding the special pleas of jurisdiction and res judicata is upheld. 3 The order of the High Court is set aside and replaced with the following order: ‘3.1 The special plea of prescription is upheld. 3.2 The special pleas of jurisdiction and res judicata are dismissed. 3.3 The plaintiff’s claim is dismissed. 3.4 There is no order as to costs.’ 4 There is no order as to costs in this Court. 3 JUDGMENT Seegobin AJA (Molemela P and Weiner and Molefe JJA and Koen AJA concurring): Introduction [1] This appeal lies against the judgment and order of the Gauteng Division of the High Court, Pretoria, (the high court) (per Mabuse J). The high court upheld three special pleas in respect of jurisdiction, prescription and res judicata raised by the first respondent against the appellant’s claim for damages arising out of his alleged unfair dismissal which occurred on 14 May 2010. Leave to appeal was refused by the high court on 14 March 2023 but granted by this Court on 13 June 2023. Background facts [2] The appellant, Mr Sanoj Jeewan (Mr Jeewan), was employed by the first respondent, Transnet SOC Limited (Transnet), as a Corporate Governance Manager, in terms of a written contract of employment (the employment contract) which came into effect on 2 October 2006. Transnet had a Fraud Prevention Plan which included such policies as a Code of Ethics, a Policy on Declaration of Interest and Related Disclosures, a Gift Policy and an Anti-Fraud Policy. [3] As Corporate Governance Manager, Mr Jeewan was regarded as the forensic champion of Transnet. His duties included the co-ordination of investigations, forensic fraud prevention and detection, the taking of remedial and corrective action, reporting non-compliance with the Fraud Prevention Plan to Transnet’s Forensic Working Group and ensuring that everyone in his division was familiar with the contents of the plan and all concomitant policies. Mr Jeewan also oversaw the internal control and compliance functions at Transnet. Following a forensic 4 investigation conducted by the second respondent, Ernest & Young (EY), Transnet preferred charges of misconduct against Mr Jeewan. The essence of the charges was that he had breached his contract of employment and code of ethics by establishing and participating in a fraudulent scheme with an external recruitment service provider. [4] After interviewing him in connection with such charges on 20 April 2010, Transnet suspended Mr Jeewan on 21 April 2010. On the same date he submitted a letter of resignation. Despite the letter of resignation, Transnet decided to institute disciplinary proceedings against him. Mr Jeewan was notified on 7 May 2010 that he was required to attend a disciplinary hearing on 14 May 2010. The hearing commenced on 14 May 2010 and was thereafter postponed to 17 May 2010. Mr Jeewan was subsequently found guilty. He was dismissed with immediate effect in terms of a letter signed by Transnet on 14 May 2010. [5] The termination letter further informed Mr Jeewan that he had the right to refer his dismissal to either the Commission for Conciliation, Mediation and Arbitration (CCMA) or to the Transnet Bargaining Council (TBC) within thirty days of his dismissal. Mr Jeewan indeed referred a dispute of unfair dismissal to the TBC in terms of s 191 of the Labour Relations Act 66 of 1995 (LRA) on the grounds that his dismissal was procedurally and substantively unfair. The relief he sought before the TBC was reinstatement to his former employment. [6] Arbitration of the dispute between Mr Jeewan and Transnet took place before the TBC on 1 and 2 September 2011, and thereafter on 24 and 25 January 2012 before Commissioner, Ms Esther van Kerken (Ms Van Kerken). On the last day of the hearing, Mr Jeewan withdrew the ground predicated on substantive unfairness, 5 but persisted with the ground that his dismissal was procedurally unfair. On 1 February 2012 Ms Van Kerken issued an award in terms of which she held that Mr Jeewan’s dismissal was procedurally fair. Neither Mr Jeewan nor Transnet sought to review the arbitration award or make it an order of court. [7] On 29 January 2015, Mr Jeewan served summons on Transnet and EY claiming damages in the amount of R57 374 996.02 for breach of his employment contract, alternatively, for delictual damages in the same amount in terms of the common law. The damages claimed were calculated to run from 2010 to 2034, the latter date being the year when Mr Jeewan would have retired upon turning sixty-three years of age as provided for in clause 15.1.3.1 In essence, Mr Jeewan’s delictual claim against Transnet was premised on the fact that Transnet had acted wrongfully and unlawfully when it dismissed him prematurely on 14 May 2010. In response, Transnet delivered a detailed plea which incorporated three special pleas. The first concerned an absence of jurisdiction on the part of the high court to entertain the matter, the second was that Mr Jeewan’s claim had prescribed in terms of s 11(d) of the Prescription Act 68 of 1969 (Prescription Act), and the third related to res judicata. [8] The parties subsequently agreed that the three special pleas should be adjudicated by the high court before all else. This was achieved through a special case based on an agreed set of facts in terms of rule 33(1) of the Uniform Rules. As 1 Clause 15 of the employment contract deals with termination of employment. It provides as follows: ‘15. TERMINATION OF EMPLOYMENT 15.1 This contract of employment will terminate: 15.1.1 At the instance of the employee (resignation); or 15.1.2 At the instance of Transnet if Transnet terminates the Employee’s employment for reasons relating to the employee’s conduct, capacity or the operational requirements of Transnet or any other reason that is recognised by law as being sufficient; or 15.1.3 At the end of the month in which he turns sixty-three years of age, unless the Employee and Transnet agree otherwise in writing, or the Employee’s employment has been terminated for any other lawful reason.’ 6 alluded to already, the high court upheld each of Transnet’s special pleas and dismissed Mr Jeewan’s claim with costs. EY, although cited as a second defendant in the action, did not participate in the special case before the high court, nor does it participate in this appeal. In this Court Mr Jeewan represents himself as he did in the high court. Issues on appeal [9] In the heads of argument filed in this Court, Transnet conceded, correctly, that it could no longer defend the high court’s judgment on the special pleas of jurisdiction and res judicata. In oral submissions before us, counsel for Transnet effectively abandoned the high court’s judgment on these two issues. What effect this late abandonment will have on the issue of costs in this appeal, will be dealt with below. In the result, the central issue to be determined herein is whether Mr Jeewan’s claim against Transnet had prescribed within a period of three years from his alleged unfair dismissal on 14 May 2010 in terms of s 11(d) of the Prescription Act, as contended for by Transnet, or whether, the debt which Mr Jeewan relies on for the relief claimed in his action against Transnet, only arose on 1 February 2012 when the arbitration award was issued, as contended for by Mr Jeewan. The special case [10] After a brief introductory paragraph, the agreed special case placed before the high court for adjudication, was the following: ‘A. THE PARTIES 1. The plaintiff is SANOJ JEEWAN (aka MARK), an adult male whose residential address is at 1A Wahlberg Eagle Street, Amberfield Crest, Rooihuiskraal North, Centurion, PRETORIA. 2. The first defendant is TRANSNET SOC LIMITED, a state-owned company, duly established in terms of the Legal Succession to the South African Transport Services Act 9 of 1989 and incorporated with share capital in accordance with the company laws of the Republic of South 7 Africa, and operating through its TRANSNET ENGINEERING division, with its principal place of business at 160 Lynette Street, Kilner Park, PRETORIA. 3. The second defendant is ERNEST & YOUNG (‘EY’), South Africa, a registered firm of accountants and auditors with full legal capacity, with its principal place of business at 102 Rivonia Road, Sandton, JOHANNESBURG. At all material [times] hereto EY rendered internal audit and forensic services to the first defendant. B. AGREED FACTS Plaintiff’s employment until dismissal on 14 May 2010 4. The plaintiff was employed by the first defendant as Corporate Governance Manager and the related contract of employment came into effect on 2 October 2006. 5. At all material times hereto, the first defendant had a Fraud Prevention plan which included such policies as Code of Ethics, Policy on Declaration of Interest and Related Disclosures, Gift Policy and Anti-Fraud Policy. 6. As Corporate Governance Manager the plaintiff was the forensic champion of the first defendant and his duties included the coordination of Investigations, forensic fraud prevention and detection, taking remedial and corrective action, reporting to the first’s defendant’s Forensic Working Group and ensuring that everyone in his division knew the contents of the Fraud Prevention Plan and all the concomitant policies. The plaintiff also oversaw the internal control and compliance function at the first defendant. 7. Following a forensic investigation conducted by the second defendant, the first defendant laid charges of misconduct against the plaintiff. The charges against the plaintiff were mainly that he had breached his contract of employment and the Code of Ethics in that he had established and participated in a fraudulent scheme with an external recruitment service provider. 8. Subsequent to the disciplinary hearing, the plaintiff was found guilty and was summarily dismissed on 14 May 2010. Dispute at Transnet Bargaining Council 9. The plaintiff referred a dispute of unfair dismissal to the Transnet Bargaining Council in terms of section 191 of the Labour Relations Act 66 of 1995 (“LRA”) on the grounds that his dismissal was procedurally and substantively unfair. 10. Arbitration of the dispute between the plaintiff and the first defendant took place at the Transnet Bargaining Council on 1 and 2 September 2011 and on 24 and 25 January 2012 before Commissioner Ms Esther Van Kerken (“Van Kerken”). 8 11. With regard to his allegation that his dismissal was procedurally unfair, the plaintiff raised five objections but dropped two and persisted with three, namely 11.1. Lack of impartiality on the part of the chairperson of the disciplinary hearing evidenced by statements he had made during the course of the disciplinary hearing; 11.2. Inadequate time given to the plaintiff to prepare for the disciplinary hearing; and 11.3. Failure on the part of the first defendant to call viva voce evidence at the disciplinary hearing, thereby depriving the plaintiff of any opportunity to cross-examine witnesses. 12. On the last day of the arbitration, namely 25 January 2012, the applicant withdrew the dispute as regards substantive unfairness of his dismissal, and remained with procedural unfairness. The plaintiff did not testify. Award of Commissioner 13. On 1 February 2012, Commissioner Van Kerken issued an award in terms of which she held, amongst others, that the first defendant effected the dismissal of the plaintiff with a fair procedure. Copy of the award is attached hereto duly marked as “SC1”. 14. Neither the plaintiff not the first defendant made application for the review of the arbitration award nor application to make the award an order of the Court. Plaintiff’s current civil action 15. On 29 January 2015, the plaintiff served summons on the first defendant, claiming damages in the amount of R57 374 996.02 for breach of his contract of employment, alternatively a delictual claim for the same amount of money in terms of common law. Copy of the amended particulars of claim is attached hereto duly marked as Annexure “SC2”. 16. The essence of the plaintiff’s claim in delict against the first defendant is that the first defendant acted wrongfully when it prematurely dismissed him on 14 May 2010. First defendant’s plea 17. The first defendant delivered a plea, comprising of three special pleas and a plea-over to the plaintiff’s claim, copy whereof is attached hereto and duly marked as Annexure “SC3”. The first defendant’s three special pleas, which appear in paragraphs 1 to 14 of its plea, are the following: – 17.1. Absence of Jurisdiction of this Honourable Court; 17.2. Prescription of the claim; and 17.3. Res judicata 9 18. The parties have agreed that the three special pleas which the first defendant has raised be decided separately by this Honourable Court as each of them has the potential to dispose of this case, thereby saving the Court time and the parties time and costs. Accordingly, the parties have also agreed that the determination of the merits of the plaintiff’s claim be stayed pending the determination of the three special pleas. C. QUESTIONS OF LAW IN DISPUTE 19. The questions of law in dispute to be adjudicated by this Honourable Court are the following: 19.1. Whether this Honourable Court has jurisdiction to hear the claim of the plaintiff. 19.2. Whether the claim of the plaintiff has become prescribed in terms of sections 11(d) of the Prescription Act 68 of 1969. 19.3. Whether the plaintiff’s claim stands to be dismissed on the basis of the principle of res judicata. D. CONTENTIONS OF THE PARTIES First defendant’s contentions 20. As regards the special plea of absence of jurisdiction, the following are the contentions of the first defendant: – 20.1. This Honourable Court has no jurisdiction to hear the plaintiff’s claim for damages because: – 20.1.1. The basis of the plaintiff’s claim is that the first defendant dismissed him substantively and procedurally unfairly on 14 May 2010 (Vide paragraphs 3.6, 4.1.1, 4.21, 4.2.2, 5.2 and 5.7 of the plaintiff’s particulars of claim). 20.1.2. In terms of section 191 of the Labour Relations Act 66 of 1995 (“LRA”), the power to determine whether a dismissal is procedurally or substantively unfair lies with the Commission for Conciliation, Mediation and Arbitration (“CCMA”) or the relevant bargaining council. 20.1.3. In the case of the plaintiff the power lies with the Transnet Bargaining Council. 20.2. Accordingly, the first defendant contends that this Honourable Court does not have jurisdiction to hear the plaintiff’s claim and that the plaintiff’s claim be dismissed with costs. 21. With regard to the special plea of prescription, the first defendant contends as follows: – 21.1. The basis of the plaintiff’s claim for damages against the first defendant is his alleged unfair dismissal from employment which took place on 14 May 2010. 10 21.2. The claim constitutes a debt for purposes of sections 11(d) and 12 of the Prescription Act 68 of 1969. 21.3. The debt was due and owing by the first defendant on 14 May 2010, the date on which the first defendant dismissed the plaintiff. 21.4. The plaintiff commenced action by means of summons which he served on the first defendant on 29 January 2015 which is more than three years after the date on which the debt arose. 21.5. In the premises the Plaintiff’s claim has become prescribed in terms of section 11(d) of the Prescription Act 68 of 1969. 21.6. Accordingly, the first defendant contends that the plaintiff’s claim be dismissed with costs. 22. With regard to the special plea of res judicata the first defendant contends as follows: – 22.1. The basis of the plaintiff’s claim is that he was procedurally and substantively unfairly dismissed by the First Defendant from his employment on 14 May 2010. 22.2. The plaintiff referred a dispute to the Transnet Bargaining Council (“Council”) in terms of section 191 of the Labour Relations Act 66 of 1995 (“LRA”), alleging that his dismissal was substantively and procedurally unfair. (Vide paragraph 3.7 of the plaintiff’s particulars of claim). 22.3. On 1 February 2012 a Commissioner of the Council issued an award to the effect that the dismissal of the plaintiff was procedurally and substantively fair. 22.4. In terms of section 143 of the LRA the arbitration award issued by the Commissioner is final and binding on the parties. 22.5. The plaintiff’s current claim for payment of damages suffered as a result of his alleged unfair dismissal by the first defendant is a claim for the same thing on the same ground and against the same party. 22.6. The first defendant accordingly pleads that the plaintiff’s claim was finally adjudicated by the Council, a forum of competent jurisdiction and should therefore be dismissed with costs. Plaintiff’s contentions 23. The contentions of the plaintiff appear in paragraphs 1 to 9 his replication to the first defendant’s plea, copy whereof is attached hereto duly marked as Annexure “SC4”. 24. The following are the contentions of the plaintiff as regards the first defendant’s special plea of absence of jurisdiction. 24.1. The plaintiff’s claim is not for relief available to him in terms of the Labour Relations Act, Act 66 of 1995 (“the LRA”). The plaintiff seeks no relief in terms of the LRA. 11 24.2. The plaintiff’s claim is premised on common law breach of his contract of employment, and alternatively delict. 24.3. Accordingly, this Honourable Court does have jurisdiction to hear the plaintiff’s claim. 25. With regard to the first defendant’s special plea of prescription, the plaintiff’s contentions appear in paragraphs 4 to 6 of his replication to the first defendant’s plea and are the following: – 25.1. It is denied that the debt was due and owing by the first defendant on 14 May 2010. 25.2. The plaintiff’s claim arose on 1 February 2012 when the arbitration award was issued. 25.3. The plaintiff’s claim is therefore not prescribed. 26. With regard to the first defendant’s special plea of re judicata, the plaintiff’s contentions appear in paragraphs 7 to 9 of his replication to the first defendant’s plea and are the following: 26.1. The plaintiff’s claim is for damages on the basis of his unlawful dismissal, and alternatively delict. 26.2. The plaintiff’s cause of action in his present cases is different to the cause of action at the arbitration. 26.3. The plaintiff’s present claim is, accordingly, not for the same thing, and on the same ground. E. RELIEF SOUGHT BY THE PARTIES 27. The parties seek the following relief: – 27.1. The first defendant seeks an order upholding all or any of its three special pleas and dismissing the plaintiff’s claim against it with costs. 27.2. The plaintiff prays for an order dismissing first defendant’s three special pleas with costs in the cause. F. HEADS OF ARGUMENT 28. For the purpose of the hearing of this Special Case, the first defendant is to deliver a paginated index and its heads or argument by 23 April 2021. 29. The plaintiff is to deliver his heads of argument by 23 May 2021.’ [11] As the special case indicates, the pleadings that formed the basis of the agreed facts and issues to be determined, were attached to the document. The pleadings included the amended particulars of claim, Transnet’s plea and Mr Jeewan’s replication to the special pleas. 12 High Court’s findings on the special pleas raised by Transnet [12] In summary, the high court made the following findings regarding the issue of jurisdiction. It held that the focal point of this matter relates to the unfair dismissal of Mr Jeewan by Transnet, which is in essence an employment related matter. In order for the high court to determine whether Transnet breached the employment contract, the court would have to apply the requirements found in the LRA to determine if Mr Jeewan was unfairly dismissed. Therefore, Mr Jeewan cannot distance himself from the application of the LRA. It further held that Mr Jeewan had misdirected himself by attempting to resolve his dispute with Transnet via the high court instead of making use of the mechanisms set out in the LRA. He should have, according to the high court, first started with the LRA instead of bringing the matter to the high court for adjudication as it did not have jurisdiction regarding this matter. [13] Regarding the issue of prescription the high court made the following findings. It accepted that in respect of both of Mr Jeewan’s contractual and constitutional rights, the high court retained its jurisdiction in terms of the Constitution. It further accepted that, based on his particulars of claim, Mr Jeewan had two claims arising from the same set of facts. The one arises from an infringement of his rights in terms of the LRA over which the labour forums have exclusive jurisdiction to the exclusion of the high court. The other arises from an infringement of his common law rights or, since he was employed in the public sector, an infringement of his constitutional rights over which both the high court and the labour court have concurrent jurisdiction. The high court accordingly concluded that, having regard to the allegations contained in his particulars of claim, Mr Jeewan should have asserted his claim based on an infringement of his common 13 law or constitutional rights, within three years of 14 May 2010. The fact that he did not do so meant that any claim he had was extinguished by prescription. [14] On the issue of res judicata, the high court held that Transnet had managed to prove res judicata in that on 1 February 2012, the Commissioner of the TBC (a forum of competent jurisdiction) had delivered an award to the effect that the dismissal of Mr Jeewan was procedurally and substantively fair. Therefore, his current claim for payment of damages suffered as a result of his alleged unfair dismissal by Transnet, is a claim for the same relief based on the same ground and against the same party. The court further held that Mr Jeewan’s matter had fully and finally been adjudicated upon. Furthermore, as held by the high court, Transnet managed to show that the matter brought before it constituted the same matter that Mr Jeewan had brought before the TBC and therefore Transnet’s special plea of res judicata was upheld. Mr Jeewan’s case [15] Mr Jeewan contends that his claim against Transnet became due only on 1 February 2012 when the arbitration award was issued, and not on 14 May 2010 when he was dismissed. He proffers three arguments in this regard. The first is that the debt was not immediately claimable by him on 14 May 2010. The second is that there was no immediate obligation on Transnet to perform, in relation to the debt, on 14 May 2010. The third is that the high court, in dealing with the issue of prescription, failed to apply the provisions of s 39(2)2 read with s 343 of the Constitution. 2 Section 39(2) compels every court, tribunal or forum, when interpreting any legislation, and when developing the common law, to promote the spirit, purport and objects of the Bill of Rights. 3 Section 34 accords to every person 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 [16] In advancing his first argument, Mr Jeewan relies on this Court’s judgment in Deloitte Haskins & Sells Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd4 (Deloitte Haskins) which held, with regard to s 12(1)5 of the Prescription Act, that ‘prescription shall commence to run as soon as the debt is due. This means that there has to be a debt immediately claimable by the creditor or, stated in another way, that there has to be a debt in respect of which the debtor is under an obligation to perform immediately. It follows that prescription cannot begin to run against a creditor before his cause of action has fully accrued ie before he is able to pursue his claim’. [17] With regard to s 12(1) of the Prescription Act, Mr Jeewan contends that no debt was due on 14 May 2010 because he was advised by Transnet to refer his dismissal for arbitration to either the CCMA or the TBC. He contends that by referring the dispute to the TBC, prescription of his claim was not interrupted but merely delayed or postponed until the proceedings before the TBC were finalised. As authority for that proposition, he relied on a dictum in Chirwa v Transnet Limited and Others6 (Chirwa) which held that ‘[w]here an alternative cause of action can be sustained in matters arising out of an employment relationship, in which the employee alleges unfair dismissal or an unfair labour practice by the employer, it is in the first instance through the mechanisms established by the LRA that the employee should pursue her or his claims’. Relying on Deloitte Haskins, he argued that since the proceedings before the TBC were finalised on 1 February 2012, this 4 Deloitte Haskins & Sells Consultants (Pty) Ltd. v Bowthorpe Hellerman Deutsch (Pty) Ltd [1990] ZASCA 136; 1991 (1) SA 525 (A); [1991] 1 All SA 400 (A) at 532H-I. 5 Section 12(1) of the Prescription Act provides that ‘subject to the provisions of subsection (2), (3), and (4), prescription shall commence to run as soon as the debt is due’. 6 Chirwa v Transnet Limited and Others [2007] ZACC 23; 2008 (4) SA 367 (CC); 2008 (3) BCLR 251 (CC); [2008] 2 BLLR 97 (CC); (2008) 29 ILJ 73 (CC) para 41. 15 was the date when Transnet became under an immediate obligation to perform. In other words, this was when all the necessary elements of his cause of action came into existence, thus entitling him to enforce his claim. [18] With regard to the third argument advanced by Mr Jeewan, he contends that since the provisions of the Prescription Act limit rights guaranteed by s 34 of the Constitution, the high court was obliged to invoke the provisions of s 39(2) of the Constitution when interpreting the Prescription Act, as was done by Froneman J in Myathaza v Johannesburg Metropolitan Bus Services (SOC) Limited t/a Metrobus and Others7 (Myathaza). One of the findings made by Froneman J was that since arbitrations under the LRA were in fact adjudicative proceedings as contemplated by s 34 of the Constitution, prescription would commence to run only on finality of such proceedings. On this basis, Mr Jeewan argues that the referral of his dismissal to the TBC for arbitration constituted ‘adjudicative proceedings’ which involved the ‘service of a process’ that interrupted prescription in terms of s 15(1)8 of the Prescription Act. Furthermore, his unfair dismissal constitutes a ‘debt’ for purposes of the Prescription Act and in the circumstances, prescription was delayed in terms of s 13(1)(f).9 Finally, on the issue of costs, Mr Jeewan argues that since he raises fundamental issues which have a bearing on an infringement of his rights guaranteed in s 39(2) and s 34 of the Constitution, the principles laid down in Biowatch Trust v Registrar Genetic Resources and Others10 (Biowatch) should apply. 7 Myathaza v Johannesburg Metropolitan Bus Services (SOC) Limited t/a Metrobus and Others [2016] ZACC 49; (2017) 38 ILJ 527 (CC); [2017] 3 BLLR 213 (CC); 2017 (4) BCLR 473 (CC); 2018 (1) SA 38 (CC). 8 Section 15(1) of the Prescription Act provides that the running of prescription shall, subject to the provisions of subsection (2) be interrupted by the service on the debtor of any process whereby the creditor claims payment of the debt. 9 Section 13(1)(f) of the Prescription Act provides that if the debt is the object of a dispute subjected to arbitration, the period of prescription shall not be completed before a year has elapsed after the day referred to in paragraph (i). 10 Biowatch Trust v Registrar Genetic Resources and Others [2009] ZACC 14; 2009 (6) SA 232 (CC); 2009 (10) BCLR 1014 (CC). 16 Transnet’s case [19] In broad terms, Transnet contends that whereas before the TBC Mr Jeewan was asserting his rights in terms of the LRA not to be unfairly dismissed, his claim before the high court is one for damages arising from an alleged breach of his employment contract and an infringement of his rights in terms of the common law. Relying on this Court’s judgment in Makhanya v University of Zululand,11 (Makhanya) Transnet argues that the service of any process on it by Mr Jeewan for the enforcement of his LRA rights could not, in the circumstances, interrupt the running of prescription involving his rights in terms of the common law. On this basis, so it argues, his claim for damages, which arise from an alleged breach of his employment contract, constitutes a ‘debt’ which arose as soon as he was dismissed on 14 May 2010. [20] As far as the provisions of s 39(2) and s 34 of the Constitution are concerned, Transnet argues that there would be no need for this Court to interpret the provisions of the Prescription Act as was done by Froneman J in Myathaza. It contends that the two cases are clearly distinguishable. In Myathaza the applicant had secured an arbitration award in his favour which became the subject of review proceedings before the labour court when his former employer, Metrobus, made application for the award to be reviewed and set aside. This meant that the applicant could not implement or execute the award whilst the review proceedings were still pending in the labour court. When the applicant subsequently applied to have the award made an order of court, he was faced with a plea by Metrobus that the arbitration award had prescribed in terms of the Prescription Act three years after it was issued. Mr Jeewan’s case is different, so it is argued. Since he is asserting his rights in terms of 11 Makhanya v University of Zululand [2009] ZASCA 69; 2010 (1) SA 62 (SCA); [2009] 8 BLLR 721 (SCA); [2009] 4 All SA 146 (SCA); (2009) 30 ILJ 1539 (SCA) paras 12-13. 17 his employment contract and the common law, nothing prevented him from instituting his action for damages on termination of his employment on 14 May 2010. [21] As to the applicability of the Biowatch principle on the issue of costs, Transnet contends that Biowatch is not intended to protect every private individual who sues or litigates against the State. In Mr Jeewan’s case, it is argued that he was not asserting rights protected by the Constitution and as such, Biowatch finds no application. Discussion and findings [22] Since the primary issue in this appeal is one of prescription, it is perhaps convenient to preface this discussion with what was said by the Constitutional Court in Road Accident Fund and Another v Mdeyide12 (Mdeyide) regarding the important role that time limits play in litigation. The Court said the following: ‘In the interests of social certainty and the quality of adjudication, it is important though that legal disputes be finalised timeously. The realities of time and human fallibility require that disputes be brought before a court as soon as reasonably possible. Claims thus lapse, or prescribe, after a certain period of time. If a claim is not instituted within a fixed time, a litigant may be barred from having a dispute decided by a court. This has been recognised in our legal system – and others – for centuries.’13 The Court also said the following: ‘This Court has repeatedly emphasised the vital role time limits play in bringing certainty and stability to social and legal affairs and maintaining the quality of adjudication. Without prescription periods, legal disputes would have the potential to be drawn out for indefinite periods of time bringing about prolonged uncertainty to the parties to the dispute. The quality of 12 Road Accident Fund and Another v Mdeyide [2010] ZACC 18; 2011 (1) BCLR 1 (CC); 2011 (2) SA 26 (CC); See also the remarks of Didcott J in Leach Mokela Mohlomi v Minister of Defence 1996 (12) BCLR 1559; 1997 (1) SA 124. 13 Mdeyide para 2. 18 adjudication by courts is likely to suffer as time passes, because evidence may have become lost, witnesses may no longer be available to testify, or their recollection of events may have faded.14 The quality of adjudication is central to the rule of law. For the law to be respected, decisions of courts must be given as soon as possible after the events giving rise to disputes and must follow from sound reasoning, based on the best available evidence.’15 [23] In order to decide the issue of prescription in this appeal, it is necessary, I believe, to first examine the nature of the claim that Mr Jeewan seeks to assert in the high court. As the agreed facts in the special case show, he seeks no relief in terms of the LRA. His claim is one for damages arising from an alleged unlawful termination (by Transnet) of his employment contract. In other words, his claim is based on an infringement of his common law rights and not the LRA. The contractual basis for the relief he seeks is that his employment contract was terminated wrongfully and unlawfully on 14 May 2010. Had this not occurred, his contract would have terminated naturally when he retired at the age of sixty-three in 2034. [24] It is perhaps convenient to briefly set out the current state of the law in circumstances where a litigant, such as Mr Jeewan, may be faced with several different causes of action arising from the same set of facts. In Makhanya,16 this Court said the following: ‘The LRA creates certain rights for employees that include “the right not to be unfairly dismissed and [not to be] subjected to unfair labour practices”.17 I will refer to those rights interchangeably as ‘LRA rights’. Yet employees also have other rights, in common with other people generally, arising from the general law. One is the right that everyone has (a right emanating from the 14 See Mohlomi v Minister of Defence 1997 (1) SA 124 (CC); 1996 (12) BCLR 1559 (CC) para 11. See also Engelbrecht v Road Accident Fund and Another [2007] ZACC 1; 2007 (6) SA 96 (CC); 2007 (5) BCLR 457 (CC) para 29 and Brümmer v Minister for Social Development and Others [2009] ZACC 21; 2009 (6) SA 323 (CC); 2009 (11) BCLR 1075 (CC) paras 64-67. 15 Mdeyide fn 12 para 8. 16 Makhanya fn 11 paras 11-13. 17 Section 185 of the LRA. 19 common law) to insist upon performance of a contract. Another is the right that everyone has (a right emanating from the Constitution and elaborated upon in the Promotion of Administrative Justice Act) to just administrative action.18 Thus there is the potential (I emphasise that I refer only to the potential) for three separate claims to arise when an employee’s contract is terminated. One is for infringement of his or her LRA right. Another is for infringement of his or her common law right. And where it occurs in the public sector, a third is for infringement of his or her constitutional right. An LRA right is enforceable only in the Commission for Conciliation, Mediation and Arbitration (CCMA)19 or in the Labour Court.20 (I will refer to them interchangeably as the ‘Labour Forums’ except where it becomes necessary to distinguish them). The common law right is enforceable in the high courts21 and in the Labour Court.22 And the constitutional right is enforceable in the high courts23 and in the Labour Court.’24 [25] Whilst some confusion and uncertainty may have existed with regard to the issue of jurisdiction,25 exclusive or otherwise, between the high court and the labour 18 Section 33(1) of the Constitution: ‘Everyone has the right to administrative action that is lawful, reasonable and procedurally fair.’ The Interim Constitution provided a right in comparable terms in s 24. 19 Created by s 112 of the LRA. 20 So far as disputes fall within the jurisdiction of the CCMA the exclusivity of its powers is implicit in the procedures for resolution of such disputes. As for the Labour Court, s 157(1) of the LRA provides: ‘. . . [T]he Labour Court has exclusive jurisdiction in respect of all matters that elsewhere in terms of this Act … are to be determined by the Labour Court.’ (see Fedlife Assurance Ltd v Wolfaardt 2002 (1) SA 49 (SCA) (Fedlife), on the meaning of that subsection, approved in Fredericks v MEC for Education and Training, Eastern Cape 2002 (2) SA 693 (CC)). 21 Section 169(b) of the Constitution. The section assigns judicial authority to the high courts in the following terms: ‘A High Court may decide – (a) any constitutional matter except a matter that: (i) only the Constitutional Court may decide; or (ii) is assigned by an Act of Parliament to another court of a status similar to a High Court; and (b) any other matter not assigned to another court by an Act of Parliament. 22 Section 77(3) of the Basic Conditions of Employment Act: ‘The Labour Court has concurrent jurisdiction with the civil courts to hear and determine any matter concerning a contract of employment …’ 23 Section 169(a)(ii) quoted above. 24 Section 157(2) of the LRA: ‘The Labour Court has concurrent jurisdiction with the High Court in respect of any alleged or threatened violation of any fundamental right entrenched in Chapter 2 of the [Constitution] and arising from … employment and from labour relations.’ 25 Fredericks and Others v MEC for Education and Training Eastern Cape and Others 2002 (2) BCLR 113; 2002 (2) SA 693; [2002] 2 BLLR 119 (CC) (Fredericks). 20 court arising from certain relevant provisions of the Constitution,26 the LRA27 and the Basic Conditions of Employment Act28 (BCEA), when dealing with certain labour related matters, this was authoritatively put to rest by the Constitutional Court in Baloyi v Public Protector and Others29 (Baloyi). [26] The facts in Baloyi were the following: Ms Baloyi was employed by the Office of the Public Protector on a five-year contract with effect from 1 February 2019. The contract provided for a six-month probation period (ending on 31 July 2019), which could be extended for not more than twelve months. At the end of the probationary period, the Office of the Public Protector would be entitled to either terminate Ms Baloyi’s employment in terms of clause 5.3 or confirm her appointment if it was satisfied with her ‘level of performance’ in terms of clause 5.5. [27] Ms Baloyi’s six-month probation period ended on 31 July 2019. On 8 October 2019, Ms Baloyi received a letter from Mr Mahlangu, the Chief Executive Officer of the Public Protector, inviting her to make representations on the confirmation of her employment contract. She did so in writing on 15 October 2019. On 21 October 2019, Ms Baloyi received another letter from Mr Mahlangu, stating that the Office of the Public Protector was unable to confirm her permanent employment and that 26 Section 169(1) of the Constitution provides: ‘The High Court of South Africa may decide – (a) any constitutional matter except a matter that – (i) the Constitutional Court has agreed to hear directly in terms of section 167 (6)(a); or (ii) is assigned by an Act of Parliament to another court of a status similar to the High Court of South Africa; and (b) any other matter not assigned to another court by an Act of Parliament.’ 27 Section 157(1) of the LRA reads: ‘Subject to the Constitution and section 173, and except where this Act provides otherwise, the Labour Court has exclusive jurisdiction in respect of all matters that elsewhere in terms of this Act or in terms of any other law are to be determined by the Labour Court.’ 28 Section 77(1) of the BCEA provides: ‘Subject to the Constitution and the jurisdiction of the Labour Appeal Court, and except where this Act provides otherwise, the Labour Court has exclusive jurisdiction in respect of all matters in terms of this Act.’ 29 Baloyi v Public Protector and Others [2020] ZACC 27; 2021 (2) BCLR 101 (CC); [2021] 4 BLLR 325 (CC); (2021) 42 ILJ 961 (CC); 2022 (3) SA 321 (CC). 21 her contract would terminate on 31 October 2019. The reasons provided were that she was ‘not suitable for the role of COO taking into account her overall capability, skills, performance and general conduct in relation to the position’. [28] Ms Baloyi launched an urgent application in the Pretoria high court, on the basis that the termination of her employment was unlawful and that Ms Mkhwebane, in her capacity as the Public Protector, had not complied with her constitutional obligations in terms of s 181(2) of the Constitution. The alleged unlawfulness of the termination had two aspects: first, the termination amounted to a breach of contract and, secondly, it amounted to an exercise of public power that breached the principle of legality, a standard to which all exercises of public power are measured. Ms Baloyi founded her case on ‘contract, the Constitution and the Public Protector’s public duties as an organ of state’. [29] The relief sought by Ms Baloyi in the high court was three-fold. First, a declaratory order that the decision to terminate her employment contract was unconstitutional, unlawful, invalid and of no force and effect. Second, flowing from that, an order setting aside the termination decision. Third, a declaratory order to the effect that Ms Mkhwebane, in her official capacity, had failed to fulfil her obligations under s 181(2) of the Constitution. [30] The high court dismissed Ms Baloyi’s application on the basis that it did not have jurisdiction over the dispute and that it should have been brought before the labour court. The high court reasoned that Ms Baloyi’s contention that her employment contract had been terminated unlawfully rested on the allegation that it was terminated contrary to the Policy on Probation and Disciplinary Policy of the Office of the Public Protector and was taken by an official without the necessary 22 authority. It also attributed significance to the fact that Ms Baloyi’s employment contract contained a clause stating that the employment relationship could be terminated at the end of the probationary period in accordance with the requirements of the LRA. The high court also noted that Ms Baloyi’s employment contract incorporated the Policy on Probation of the Office of the Public Protector, which stipulates that ‘following the recommendation to annul the appointment, Human Resource Division should take the necessary steps as per the provisions of the [LRA]’. [31] The high court concluded that not only did Ms Baloyi make allegations that in essence raised ‘a labour dispute as envisaged by the LRA, the employment contract itself point[ed] to the LRA as the vehicle for vindicating the rights under it’. Relying on dicta from the Constitutional Courts judgments in Chirwa30 and Gcaba v Minister of Safety and Security,31 (Gcaba) the high court concluded that it was precluded from hearing the matter. The high court did not consider whether the decision to terminate Ms Baloyi’s employment was taken for an ulterior purpose, nor did it consider whether the conduct of Ms Mkhwebane was otherwise unconstitutional insofar as it allegedly fell short of what is required by s 181(2) of the Constitution. It made no ruling regarding the declaratory relief. [32] Significantly in Baloyi, the Constitutional Court found, amongst others, that s 157(1) of the LRA does not afford the labour court with general jurisdiction in employment matters and, as a result, the high court’s jurisdiction will not be ‘ousted by s 157(1) simply because a dispute is one that falls within the overall sphere of 30 Chirwa fn 6 para 161. 31 Gcaba v Minister of Safety and Security and Others [2009] ZACC 26; 2010 (1) SA 238 (CC); 2010 (1) BCLR 35 (CC); (2010) 31 ILJ 296 (CC); [2009] 12 BLLR 1145 (CC) para 8. 23 employment relations’.32 It found that both the LRA and the BCEA expressly recognise that there are certain matters in respect of which the labour court and the high court enjoy concurrent jurisdiction. In relevant part, s 157(2) of the LRA provides: ‘The Labour Court has concurrent jurisdiction with the High Court in respect of any alleged or threatened violation of any fundamental right entrenched in Chapter 2 of the Constitution of the Republic of South Africa, 1996, and arising from – (a) employment and from labour relations; (b) . . . (c) . . . .’ [33] It recognised that similarly, s 77(3) of the BCEA33 provides that the Labour Court ‘has concurrent jurisdiction with the civil courts to hear and determine any matter concerning a contract of employment, irrespective of whether any basic condition of employment constitutes a term of that contract’. It found that disputes arising from employment contracts do not, without more, fall within the exclusive jurisdiction of the labour court is further made clear by s 77(4) of the BCEA, which emphasises that the exclusive jurisdiction of the labour court referred to in s 77(1) – ‘does not prevent any person relying upon a provision of [the Employment Act] to establish that a basic condition of employment constitutes a term of a contract of employment in any proceedings in a civil court or an arbitration held in terms of an agreement.’ [34] Apart from its other findings relating to the exclusive jurisdiction of the labour court to hear labour related matters as well as the concurrent jurisdiction of both the labour court and the high court to deal with other rights of employees arising from 32 Fredericks fn 25 para 40. See also Fedlife fn 20 para 25, in which Nugent JA held that: ‘s 157 (1) does not purport to confer exclusive jurisdiction upon the Labour Court generally in relation to mattes concerning the relationship between employer and employees’. The approach endorsed in Fredericks and FedLife was also followed in various judgments of the High Court, including Jacot-Guillarmod v Provincial Government 1999 (3) SA 594 (T) at 600E-G and Runeli v Minister of Home Affairs 2000 (2) SA 314 (TKH) at 323-324. 33 While reference is made herein to the BCEA as it was done in Baloyi, it finds no application in this matter. 24 the general law, the following passage from Baloyi insofar as it is relevant to the nature of the right being asserted by Mr Jeewan, is instructive: “The LRA creates certain rights for employees that include the right not to be unfairly dismissed and [not to be] subjected to unfair labour practices. . . . Yet employees also have other rights, in common with other people generally, arising from the general law. One is the right that everyone has (a right emanating from the common law) to insist upon performance of a contract. When a claimant says that the claim arises from the infringement of the common-law right to enforce a contract, then that is the claim, as a fact, and the court must deal with it accordingly. When a claimant says that the claim is to enforce a right that is created by the LRA, then that is the claim that the court has before it, as a fact. When he or she says that the claim is to enforce a right derived from the Constitution, then, as a fact, that is the claim. That the claim might be a bad claim is beside the point.”’34 Although these remarks were made in the context of a jurisdiction issue, they are equally apposite in relation to the plea of prescription that was raised in this matter. [35] As the Constitutional Court accepted in Baloyi,35 the approach endorsed in Makhanya aligns with a series of judgments of this Court36 that have confirmed that a contractual claim arising from a breach of a contract of employment falls within 34Baloyi fn 29 para 40. 35 Baloyi fn 29 para 41. 36 Lewarne v Fochem International (Pty) Ltd [2019] ZASCA 114; (2019) 40 ILJ 2473 (SCA); [2020] 1 BLLR 33 (SCA) para 9; South African Maritime Safety Authority v McKenzie [2010] ZASCA 2; 2010 (3) SA 601 (SCA); [2010] 3 All SA 1 (SCA) para 7 (McKenzie). Manana v King Sabata Dalindyebo Municipality [2010] ZASCA 144; [2011] 3 All SA 140 (SCA); [2011] 3 BLLR 215 (SCA); (2011) 32 ILJ 581 (SCA) para 23 (Manana); and Fedlife fn 20 paras 4-5 and 24. 25 the ordinary jurisdiction of the high court, notwithstanding the fact that the contract is one of employment. [36] The following further extracts from Baloyi confirm that employees are not deprived of their common law remedies on termination of a contract of employment: ‘Indeed, contractual rights exist independently of the LRA. As the Supreme Court of Appeal has on numerous occasions emphasized, section 23 of the Constitution does not deprive employees of a common law right to enforce the terms of a fixed-term contract of employment and the LRA, in turn, does not confine employees to the remedies for “unfair dismissal” provided for in the Act.37 Chapter VIII of the LRA is “not exhaustive of the rights and remedies that accrue to an employee upon termination of contract of employment.”38 Matters “concerning a contract of employment, irrespective of whether any basic condition of employment constitutes a term of that contract”, are expressly noted in section 77(3) of the Employment Act as falling within the concurrent jurisdiction of the High Court and the Labour Court. The question whether contractual claims arising from employment contracts fall within the concurrent jurisdiction of the High Court and the Labour Court has not explicitly arisen before this Court. However, as noted above, the Supreme Court of Appeal has explained on numerous occasions, with reference to the reasoning of this Court regarding jurisdiction over claims based on administrative action in the labour sphere, that the High Court retains its jurisdiction in respect of claims arising from the enforcement of contractual rights in the employment context.39 This finding is borne out by the plain language of section 77(3) of the Employment Act, quoted above, and sections 157(1) and 157(2) of the LRA.’40 37 Fredericks fn 25 para 40. See also Fedlife fn 20 para 25, in which Nugent JA held that:‘s 157(1) does not purport to confer exclusive jurisdiction upon the Labour Court generally in relation to mattes concerning the relationship between employer and employees’. The approach endorsed in Fredericks and FedLife was also followed in various judgments of the High Court, including Jacot-Guillarmod v Provincial Government 1999 (3) SA 594 (T) at 600E-G and Runeli v Minister of Home Affairs 2000 (2) SA 314 (TKH) at 323-324, see fn 32 above. 38 Fedlife fn 20 para 22. 39 See, for example, Makhanya fn 11 paras 12-13 and 18; Fedlife fn 20 paras 4-5 and 24; Manana fn 36 para 23; and McKenzie fn 36 paras 7-9. 40 Baloyi fn 29 paras 46-47. 26 [37] On the above reasoning, the Constitutional Court held that: ‘A claim for contractual breach, absent reliance on any provision of the LRA, can be identified on Ms Baloyi’s papers. The LRA does not extinguish contractual remedies available to employees following a breach of their contract of employment, or unlawful termination thereof. While she may also have a claim for unfair dismissal in terms of the LRA, Ms Baloyi has elected not to pursue this claim. Nothing in the LRA, or the BCEA, required her to advance that claim in the Labour Court.’41 [38] Against the backdrop of the legal principles enunciated by this Court in the number of decisions referred to above, and as confirmed by the Constitutional Court in Baloyi, there can be no doubt that Mr Jeewan’s claim as well, which is located in the common law, falls within the ordinary jurisdiction of the high court. It follows that the high court’s conclusion on the issue of jurisdiction was incorrect. Furthermore, since the LRA does not extinguish contractual remedies available to employees following a breach of or unlawful termination of a contract of employment,42 it further follows, by parity of reasoning, that the high court’s finding that the matter was res judicata on account of the claim pursued at the TBC and finalised in terms of the arbitration award was similarly incorrect. In the circumstances, Transnet’s concessions on the issue of jurisdiction and res judicata, albeit late, are nonetheless correct. The real issue of course is whether his claim has prescribed in terms of s 11(d) of the Prescription Act. It is to this issue that I now turn. [39] Section 12(1) of the Prescription Act provides that ‘subject to the provisions of ss (2), (3) and (4), prescription shall commence to run as soon as the debt is due’. For purposes of the Act, the term ‘debt due’ means a debt, including a delictual debt, 41 Ibid para 48. 42 Ibid. 27 which is owing and payable. A debt is due in this sense when the creditor acquires a complete cause of action for the recovery of the debt, that is when the entire set of facts which the creditor must prove in order to succeed with his or her claim against the debtor is in place or, in other words, when everything has happened which would entitle the creditor to institute action and to pursue his or her claim.43 A ‘cause of action’ for purposes of prescription means – ‘. . . every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved.’44 [40] A close examination of the allegations set out in his amended particulars of claim as well as the agreed facts contained in the special case, indicates that Mr Jeewan pursues a claim for contractual breach alternatively delictual damages arising from the unlawful termination of the contract. The series of allegations he relies on in paragraph 4 of the particulars of claim for a contractual breach are precisely the same as for his delictual claim in paragraph 5, save that he now pleads wrongfulness, intention and/or negligence on the part of Transnet. [41] As correctly pointed out by Transnet’s counsel, Mr Jeewan makes the following concession: ‘It is common cause that my LRA claim at the TBC is not the same as my contractual claim in the High Court.’ The significance of this concession is that whilst he pursued a claim for reinstatement before the TBC, his claim before the high court is for damages arising out of a breach of his contract of employment alternatively delictual damages for unlawful termination of his contract in terms of the common law. As the background facts 43 See, for example, Truter and Another v Deysel [2006] ZASCA 16; 2006 (4) SA 168 (SCA) para 16 (Truter); Evins v Shields Insurance Co. Ltd 1980 (2) SA 814 (A) (Evins) at 838D-H, and Deloitte Haskins fn 4 at 532H-I. 44 McKenzie v Farmers’ Co-operative Meat Industries Ltd 1922 AD 16 at 23, cited with approval in Evins at 838D-F. 28 indicate, Mr Jeewan was fully aware of the sequence of events that led to the holding of the disciplinary hearing against him on 14 and 17 May 2010. He was also fully aware of the fact that despite the hearing being postponed to 17 May 2010, he was effectively dismissed on 14 May 2010 when Transnet had signed the termination letter. He was consequently aware, on 14 May 2010, of the fact that his dismissal was unlawful. And, of course, he was aware of the identity of the debtor. All this points to the fact that his ‘cause of action’ for contractual damages arose on 14 May 2010. [42] For his delictual claim, the requirements of fault and unlawfulness do not constitute factual ingredients of the ‘cause of action’, but amount to legal conclusions to be drawn from the facts: ‘A cause of action means the combination of facts that are material for the plaintiff to prove in order to succeed with his action. Such facts must enable a court to arrive at certain legal conclusions regarding unlawfulness and fault, the constituent conclusions regarding the unlawfulness of a delictual cause of action being a combination of factual and legal conclusions, namely, a causative act, harm, unlawfulness and culpability or fault.’45 (Emphasis added.) [43] Mr Jeewan’s argument that there was no immediate obligation on the part of Transnet to perform, in relation to the debt, on 14 May 2010, is not borne out by the agreed facts contained in the special case. In the special case, Transnet admitted firstly that Mr Jeewan’s claim constituted a ‘debt’ for purposes of ss 11(d) and 12 of the Prescription Act. And secondly, that the debt was due and owing by it on 14 May 2010 when it dismissed him. The fact that Mr Jeewan referred his unfair dismissal to the TBC for arbitration, as he was advised to do by Transnet, is an election that he made at the time. This does not, in any way, detract from the fact that his 45 See M M Loubser Extinctive Prescription 1 ed (1996) para 4.6.2 at 80-81; Evins fn 43 at 838D-H; Deloitte Haskins fn 4 at 532H-I; Truter fn 43 para 17. 29 contractual debt became due on 14 May 2010 and as such was hit by the provisions of s 11(d) of the Prescription Act. [44] The final submission to consider is whether the high court was obliged to re-interpret the provisions of the Prescription Act having regard to s 39(2) and s 34 of the Constitution on the basis that the Prescription Act limits rights in terms of the Bill of Rights. Inasmuch as the high court’s judgment is silent on this aspect, we were informed by Mr Jeewan that this issue was raised by him in his heads of argument before that court. Counsel for Transnet did not contend otherwise. Whilst it is true that the Prescription Act does limit rights in the Bill of Rights, I do not believe, for the reasons set out herein, that s 12 of the Prescription Act needs to be interpreted any differently in respect of the claim being asserted by Mr Jeewan in these proceedings. As mentioned already, his present claim is for damages arising out of a contractual breach that took place on 14 May 2010. This claim was not dependent on the outcome of any other claim for relief arising out of an infringement of the LRA. As the ratios both in Makhanya and Baloyi confirm, on the termination of an employment contract an employee can find a claim for relief for infringement of the LRA, and a claim for enforcement of a right that does not emanate from the LRA, for example, a contractual right. It is clear from Baloyi that there is no obligation on such a litigant to wait for the LRA processes to be exhausted before invoking common law remedies. In Mr Jeewan’s case, the route he elected to follow was to seek re-instatement of his employment. From the date of dismissal, the running of prescription was triggered. It was only when the award was made against him that he decided to follow a different route, that is, sue for damages. By then it was already five years down the line and his claim had already prescribed. 30 [45] I am accordingly of the view that Mr Jeewan’s reliance on the judgment of Froneman J in Myathaza is misconceived. As Transnet correctly argues, the two cases are distinguishable in the manner already alluded to in paragraph 18 above. [46] As alluded to earlier, the facts in Myathaza are clearly distinguishable from the present matter. Mr Myathaza was asserting rights solely in terms of the LRA whereas Mr Jeewan, having failed with his dispute before the TBC, then decided to pursue a claim for damages arising out of a contractual breach and in terms of the common law. Mr Jeewan was aware of every fact which it would be necessary for him to prove, if traversed, in order to support his litigation in the high court. Whilst there may have been a need to re-interpret the Prescription Act in terms of s 39(2) and s 34 of the Constitution in Mr Myathaza’s case, no such need arises in Mr Jeewan’s case. As observed by the Constitutional Court in Baloyi, where more than one potential cause of action arises because of a dismissal dispute, ‘a litigant must choose the cause of action she wishes to pursue and prepare her pleadings accordingly’.46 Thus, pursuant to Mr Jeewan’s dismissal, nothing stopped him from approaching the high court sooner for purposes of pursuing his common law claim. All in all, I am of the view that none of the arguments advanced by Mr Jeewan regarding the issue of prescription in this appeal are sustainable. The appeal directed to that leg of the appeal must accordingly fail. [47] However, as stated before, Transnet’s concessions in respect of the special pleas pertaining to jurisdiction and res judicata, respectively, were correctly made, and the appeal directed at the orders of the high court upholding those two special pleas must succeed, as these orders were not formally abandoned and therefore still stand. This, however, does not detract from the fact that in the stated case, Transnet 46 Baloyi fn 29 para 38. 31 sought an order ‘upholding all or any of its three special pleas’. Thus, Transnet would have been entitled to the dismissal of Mr Jeewan’s claim. This brings me to the issue of costs. Costs [48] As I pointed out at the outset of this judgment, Mr Jeewan represents himself in these proceedings. Ordinarily he would not have incurred any legal costs except for certain out of pocket expenses for travel and accommodation, etc. and certain disbursements for procuring the record. The general rule for the award of costs in constitutional litigation between a private party and the State is that, if the private party is successful, costs should be paid by the State, and if unsuccessful, each party should pay its own costs.47 This is known as the ‘Biowatch principle’. Mr Jeewan contends that the principles in Biowatch48 should apply. Relying on Makate v Vodacom (Pty) Ltd49 (Makate), he contends that courts must always bear in mind the provisions of s 39(2) when interpreting legislation. If the provision under consideration implicates the rights in the Bill of Rights, then the obligation to apply s 39(2) is activated, thus enjoining the court to promote the purport, spirit and objects of the bill of rights when interpreting the specific provision. In that judgment, the Constitutional Court found that it could not be disputed that s 10 read with ss 11 and 12 of the Prescription Act limits the rights guaranteed by s 34 of the Constitution.50 It went on to find that in construing those provisions, the high court ‘was obliged to follow s 39(2) irrespective of whether the parties had asked for it or not’. 47 Biowatch fn 10 para 43. 48 Biowatch fn 10. 49 Makate v Vodacom (Pty) Ltd [2016] ZACC 13; 2016 (4) SA 121 (CC); 2016 (6) BCLR 709 (CC). 50 Ibid para 90. 32 [49] There are, however, exceptions to the Biowatch principle as set out in Affordable Medicines Trust v Minister of Health,51 a case decided before Biowatch, in which Nqcobo J (as he then was) observed that there may be circumstances which justify the departure from the general rule on costs in constitutional litigation, such as where the litigation is frivolous or vexatious. Later on, in Lawyers for Human Rights v Minister in the Presidency and Others,52 the Constitutional Court explained the exceptions to the Biowatch principle as follows: ‘What is “vexatious”? In Bisset this Court said this was litigation that was frivolous, improper, instituted without sufficient ground, to serve solely as an annoyance to the defendant”. And a frivolous complaint? That is one with no serious purpose or value. Vexatious litigation is initiated without probable cause by one who is not acting in good faith and is doing so for the purpose of annoying or embarrassing an opponent. Legal action that is not likely to lead to any procedural result is vexatious.’53 [50] Should Mr Jeewan be held liable for any costs now that he is unsuccessful? Considering the dictum in Chirwa, which has been alluded to earlier, I do not believe that the litigation that Mr Jeewan embarked upon can be said to be improper, frivolous or vexatious. In my view, the Biowatch principle is applicable both in respect of this appeal and the high court litigation. [51] There is a further reason why I do not believe that Mr Jeewan should be liable for any costs. This arises from Transnet’s late abandonment of the issues of jurisdiction and res judicata in this Court. Having concluded, correctly, that the high court was wrong on these issues and that it could no longer defend the appeal in that regard, Transnet could have abandoned the judgment on these issues at a much 51 Affordable Medicines Trust v Minister of Health [2005] ZACC; 2006 (3) SA 247 (CC); 2005 (6) BCLR 529 (CC) para 138. 52 Lawyers for Human Rights v Minister in the Presidency and Others [2016] ZACC 45; 2017 (1) SA 645 (CC); 2017 (4) BCLR 445 (CC). 53 Ibid para 19. 33 earlier stage.54 Instead it put Mr Jeewan to the inconvenience of having to prepare his heads of argument on these issues as well. As a result, two of the orders granted by the high court fall to be set aside. In all the circumstances, I consider that it would be fair if both parties carried their own costs herein. Order [52] In the result, the orders I make are the following: 1 The appeal is dismissed, save to the extent set out below. 2 The appeal in relation to the orders upholding the special pleas of jurisdiction and res judicata is upheld. 3 The order of the High Court is set aside and replaced with the following order: ‘3.1 The special plea of prescription is upheld. 3.2 The special pleas of jurisdiction and res judicata are dismissed. 3.3 The plaintiff’s claim is dismissed. 3.4 There is no order as to costs.’ 4 There is no order as to costs in this Court. __________________________ R SEEGOBIN ACTING JUDGE OF APPEAL 54 Rule 41(2) of the Uniform Rules. 34 Appearances For the appellant: S Jeewan (in person) For the first respondent: Adv M K Mathipa Instructed by: Ningiza Horner Incorporated, Sandton McIntyre van der Post, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 4 July 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 Sanoj Jeewan v Transnet SOC Limited and Another (696/2023) [2024] ZASCA 108 (4 July 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing with no order to costs, an appeal against the decision of the Gauteng Division of the High Court, Pretoria. The appellant, Mr Sanoj Jeewan (Mr Jeewan), was employed by the first respondent, Transnet SOC Limited (Transnet), as a Corporate Governance Manager, in terms of a written contract of employment (the employment contract) which came into effect on 2 October 2006. As Corporate Governance Manager, Mr Jeewan was regarded as the forensic champion of Transnet. Following a forensic investigation conducted by the second respondent, Ernest & Young (EY), Transnet preferred charges of misconduct against Mr Jeewan. The essence of the charges was that he had breached his contract of employment and code of ethics by establishing and participating in a fraudulent scheme with an external recruitment service provider. After interviewing him in connection with such charges on 20 April 2010, Transnet suspended Mr Jeewan on 21 April 2010. On the same date he submitted a letter of resignation. Despite the letter of resignation, Transnet decided to institute disciplinary proceedings against him. Mr Jeewan was notified on 7 May 2010 that he was required to attend a disciplinary hearing on 14 May 2010. The hearing commenced on 14 May 2010 and was thereafter postponed to 17 May 2010. Mr Jeewan was subsequently found guilty. He was dismissed with immediate effect in terms of a letter signed by Transnet on 14 May 2010. The termination letter further informed Mr Jeewan that he had the right to refer his dismissal to either the Commission for Conciliation, Mediation and Arbitration (CCMA) or to the Transnet Bargaining Council (TBC) within thirty days of his dismissal. Mr Jeewan indeed referred a dispute of unfair dismissal to the TBC in terms of s 191 of the Labour Relations Act 66 of 1995 (LRA) on the grounds that his dismissal was procedurally and substantively unfair. The relief he sought before the TBC was reinstatement to his former employment. Arbitration of the dispute between Mr Jeewan and Transnet took place before the TBC on 1 and 2 September 2011 and thereafter on 24 and 25 January 2012 before Commissioner. On the last day of the hearing, Mr Jeewan withdrew the ground predicated on substantive unfairness, but persisted with the ground that his dismissal was procedurally unfair. On 1 February 2012 the Commissioner issued an award in terms of which she held that Mr Jeewan’s dismissal was in fact procedurally fair. Neither Mr Jeewan nor Transnet sought to review the arbitration award or make it an order of court. On 29 January 2015, Mr Jeewan served summons on Transnet and EY claiming damages in the amount of R57 374 996.02 for breach of his employment contract, alternatively, for delictual damages in the same amount in terms of the common law. The damages claimed were calculated to run from 2010 to 2034, the latter date being the year when Mr Jeewan would have retired upon turning sixty-three years of age as provided for in his employment contract. In response, Transnet delivered a detailed plea which incorporated three special pleas. The first concerned an absence of jurisdiction on the part of the high court to entertain the matter, the second was that Mr Jeewan’s claim had prescribed in terms of s 11(d) of the Prescription Act 68 of 1969 (Prescription Act), and the third related to res judicata. The high court upheld each of Transnet’s special pleas and dismissed Mr Jeewan’s claim with costs. Aggrieved by the order of the high court Mr Jeewan applied for leave to appeal the high court’s 2 order, which was dismissed by the high court. However, on 13 June 2023, leave to appeal was granted by this Court. The issues of jurisdiction and res judicata where subsequently abandoned in this Court by Transnet. Therefore, the central issue to be determined by this Court was whether Mr Jeewan’s claim against Transnet had prescribed within a period of three years from his alleged unfair dismissal on 14 May 2010 in terms of s 11(d) of the Prescription Act? In its findings, the SCA held that in terms of s 12(1) of the Prescription Act subject to the provisions of ss (2), (3) and (4), prescription commenced to run as soon as the debt was due. According to the SCA, a debt was due in this sense when the creditor acquired a complete cause of action for the recovery of the debt, that is when the entire set of facts which the creditor had to prove in order to succeed with his or her claim against the debtor was in place or, in other words, when everything had happened which would have entitled the creditor to institute action and to pursue his or her claim. The SCA further held that Mr Jeewan was fully aware of the sequence of events that led to the holding of the disciplinary hearing against him on 14 and 17 May 2010. He was also fully aware of the fact that despite the hearing being postponed to 17 May 2010, he was effectively dismissed on 14 May 2010 when Transnet had signed the termination letter. He was consequently aware, on 14 May 2010, of the fact that his dismissal was unlawful. And, of course, he was aware of the identity of the debtor. All that, according to the SCA, pointed to the fact that his ‘cause of action’ for contractual damages arose on 14 May 2010. The fact that Mr Jeewan referred his unfair dismissal to the TBC for arbitration, as he was advised to do by Transnet, was an election that he made at the time. This, held the SCA, did not in any way, detract from the fact that his contractual debt became due on 14 May 2010 and as such was hit by the provisions of s 11(d) of the Prescription Act. From the date of dismissal, the running of prescription was triggered. It was only when the award was made against him that he decided to follow a different route that was, to sue for damages. By then it was already five years down the line and his claim had already prescribed. Nothing stopped him from approaching the high court sooner for purposes of pursuing his common law claim. As such, the appeal must accordingly fail. ~~~~ends~~~~

4302

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 923/2023 In the matter between: MFANA IGNITIUS KUBAI APPELLANT and THE STATE RESPONDENT Neutral citation: Mfana Ignitius Kubai v The State (923/2023) [2024] ZASCA 123 (30 August 2024) Coram: MOKGOHLOA, SMITH and UNTERHALTER JJA and MJALI and DIPPENAAR AJJA Heard: 16 August 2024 Delivered: 30 August 2024 Summary: Criminal law – sentence – rhino poaching – maximum sentence – s 117(1)(a) of the Limpopo Environment Management Act 7 of 2003 – accounting for time spent in custody. 2 ORDER On appeal from: Limpopo Division of the High Court, Thohoyandou (Phatudi and Tshidada JJ sitting as court of appeal): 1 The appeal is upheld. 2 The order of the high court is set aside and substituted with the following: ‘The sentence imposed by the regional court on the appellant is set aside and substituted with the following: (i) The accused, Mfana Ignitius Kubai, is sentenced to a term of imprisonment of 9 years; (ii) The carcass of the rhinoceros is forfeited to the Environmental Management Authority in terms of s 118(1)(a) of the Limpopo Environmental Management Act 7 of 2003; (iii) The fire arm and knife used in connection with the unlawful hunting are forfeited to the Environmental Management Authority.’ JUDGMENT Unterhalter JA (Mokgohloa and Smith JJA and Mjali and Dippenaar AJJA concurring): Introduction [1] The appellant, Mr Kubai, together with two other accused, were arraigned in the Regional Court held at Makhado (the regional court) on various charges, including the illegal hunting of rhino. He was convicted on the charge of illegal hunting in contravention of s 31(1)(a) of the Limpopo Environmental Management Act 7 of 2003 (LEMA), and sentenced to 11 years of imprisonment by the regional court. Mr Kubai was granted leave to appeal to the Limpopo Division of the High Court, Thohoyandou (the high court) in respect of the sentence imposed. The high 3 court gave notice to Mr Kubai to show cause why it should not, on appeal, increase the sentence imposed by the regional court. Having heard the appeal, the high court did just that, and imposed, upon Mr Kubai, a sentence of 15 years’ imprisonment. By way of special leave to appeal, Mr Kubai appeals the sentence imposed by the high court. [2] The high court considered itself to be bound to interfere with the sentence imposed by the regional court. The high court found that the regional court had sentenced Mr Kubai in terms of s 276(1)(b) of the Criminal Procedure Act 51 of 1977 (the CPA), rather than under the penalty provision of s 117(1)(a) of LEMA. This, the high court reasoned, was an error that required correction, and the consideration afresh of an appropriate sentence. It thought the sentence of 11 years imprisonment to be ‘shockingly inappropriate’. The high court found that Mr Kubai had been involved in rhino poaching cases in 2008; that he had found ‘his niche in rhino poaching’; that rhinoceros are specially protected wild animals under LEMA; that the statistics indicated that Limpopo had the highest incidence of rhino poaching; and that the protection and preservation of the environment required that the illegal poaching of rhino should exact serious punishment. Whether or not Mr Kubai was a first offender, his offence required the imposition of the maximum period of imprisonment permitted under LEMA, and thus the high court set aside the sentence imposed by the regional court, and sentenced Mr Kubai to ‘15 years of direct imprisonment as envisaged in terms of s 117 of LEMA’. [3] Counsel for Mr Kubai submitted that there was no legal error of the kind relied upon by the high court to justify its intervention. Nor was the imposition of the maximum period of imprisonment by the high court warranted. Mr Kubai was a first offender. In 2008, he had assisted the police to arrest a foreign national suspected of complicity in rhino poaching. That should not have been held against Mr Kubai, 4 much less permit of his being considered an experienced rhino poacher. Furthermore, the high court was influenced by misleading evidence as to the incidence of rhino poaching and the financial losses caused thereby. Mr Kubai was sentenced to the maximum custodial sentence in terms of LEMA, as if a repeat offender, when he was not. He had contributed to society by running a business that employed people. The high court had also failed to take account of the time that Mr Kubai had been held in custody from the date of his arrest until the date he was admitted to bail (some 2 years and 3 months). It was submitted that, upon a proper consideration of all of these matters, and acknowledging that rhino poaching is an offence of considerable seriousness, a prison sentence of 8 years was the appropriate sentence. [4] Counsel for the State resisted this conclusion. He contended that there was no basis for us to interfere with the sentence imposed by the high court. LEMA required that sentences should deter the on-going dangers of rhino poaching that placed the species at risk. LEMA provided for a sentence of 15 years’ imprisonment for the most serious of cases, and this was such a case. [5] I commence with the basis upon which the high court decided it must interfere with the sentence imposed by the regional court. The high court concluded that the regional court had sentenced Mr Kubai in terms of s 276(1)(b) of the CPA, and not in terms of s 117(1)(a) of LEMA. That conclusion cannot be sustained. The reasoned judgment of the regional court references s 117(1)(a) of LEMA, and determined the appropriate sentence in contemplation of the maximum term of imprisonment stipulated in this provision. While the sentence imposed on Mr Kubai is framed in terms of s 276(1)(b) of the CPA, this provision contains the proviso that it is subject to any other law. LEMA is such a law, and the regional court plainly had this 5 legislation in mind when it sentenced Mr Kubai. I cannot fault the regional court on this score, and the high court was in error to do so. [6] A fair reading of the high court’s judgment indicates, however, that quite apart from the formulation of the regional court’s order, the high court set aside the sentence of the regional court on the basis that it was ‘shockingly inappropriate’. The appeal before us engages the order made by the high court, and hence the question for us is whether we should interfere with that order. I turn to this question. [7] There are three features of the high court judgment that warrant scrutiny. First, the high court was much influenced by testimony given at Mr Kubai’s bail application that he was involved in the commission of poaching offences (beyond the offense with which he was charged and convicted in the regional court) and the assistance rendered by him to the police in 2008 to arrest a foreign national suspected of selling rhino horns. In essence, the high court considered Mr Kubai to have fashioned a career as a rhino poacher, and hence he could not de facto be considered a first offender. [8] A court sentencing an offender should exercise care in reaching conclusions of this kind. The precise role of Mr Kubai in rendering assistance to the police in 2008 is far from clear. Nor does it support the conclusion that Mr Kubai is a serial offender. The high court misdirected itself on this score. [9] Second, the high court reasoned that, whether or not Mr Kubai was a first offender, the seriousness of his crime warranted the imposition of the maximum punishment permitted under LEMA. It was common ground before us that rhino poaching is a serious crime. While counsel for Mr Kubai levelled criticisms against the evidence led as to statistics supporting the incidence of poaching in Limpopo and 6 the value of rhino horn, he agreed that any rhino poaching of this much endangered species is a crime of considerable gravity. [10] It appears from the reasoning of the high court that every rhino that is poached that results in a conviction justifies the imposition of the maximum period of imprisonment permitted by LEMA. But that is not what LEMA provides. Section 117(1)(a) stipulates for a maximum period of imprisonment. A sentencing court must give consideration to the degree of seriousness that attaches to the particular crime. If the poaching of a rhino warrants the sentence of 15 years imprisonment, what then of an accused convicted of multiple counts of rhino poaching? Is such a case not more serious? And if it is, how then is the same term of imprisonment appropriate? It may be that the time has come that every act of rhino poaching should attract a minimum sentence of 15 years, but that is not what the legislature has determined in s 117(1)(a) of LEMA. The high court paid no regard to degrees of seriousness, but was rather determined to impose the maximum penalty, and give no weight to the fact that Mr Kubai was a first offender who ran his own business. The well-known principles of application to the imposition of an appropriate punishment are not to be disregarded simply because rhino poaching is a scourge that has placed the species in peril. This too constitutes a misdirection that require our intervention. [11] Third, the high court failed to weigh in the balance the time that Mr Kubai had been in custody awaiting the final outcome of the proceedings. He was admitted to bail pending the outcome of his appeal from the regional court to the high court. But he had been in custody, as I understood counsel for Mr Kubai, for a period of 2 years and 3 months. While there is no rigid metric by recourse to which time in custody is to be reckoned in the imposition of a sentence, it cannot count for nothing. Yet that is what the high court, in effect, did. Mr Kubai was sentenced to 15 years imprisonment by the high court, with no allowance for the time he had spent in 7 custody. That entails that he was given an effective sentence of 17 years and 3 months of imprisonment. A period of time in excess of the maximum allowed by LEMA. That too is a misdirection. [12] For these reasons, the sentence imposed by the high court cannot be allowed to stand. We must determine what sentence should have been imposed by the high court. [13] I consider that, save in one respect, the regional court provided a carefully balanced assessment of an appropriate punishment. Mr Kubai is a first offender. The evidence of his other involvements in poaching, and in particular the events of 2008, are too speculative to permit of recognition. However, the poaching of rhino is an offence of considerable gravity. The risk of extinction of this species is well-known and, those who would seek to profit from the poaching of rhino further contribute to this risk. They must know that poaching rhino, even as in this case, the killing of a single rhino, will warrant a lengthy custodial sentence. [14] The maximum sentence that LEMA permits is 15 years imprisonment. That sentence is not appropriate in this case for three principal reasons. First, Mr Kubai is a first offender. There must be some leeway in the computation of a custodial sentence for an offender who is a repeat offender or who is convicted of multiple counts of rhino poaching to be given the maximum sentence allowed under LEMA. Second, and in consequence, though Mr Kubai’s crime is a grave wrong, there are yet worse crimes of rhino poaching that must be taken into consideration when deciding upon a custodial sentence that has a statutory maximum. Third, and in this respect the regional court also erred, there must be recognition of time spent in custody in arriving at an appropriate custodial sentence. In this case, that period is 2 8 years and 3 months. A failure to do so may result in an unjust sentence that approaches or exceeds the maximum term of imprisonment. [15] In the result, the appropriate sentence that the high court should have imposed is a term of imprisonment of 9 years, together with the forfeiture orders that were given by the regional court. [16] In the result the following order is made: 1 The appeal is upheld. 2 The order of the high court is set aside and substituted with the following: ‘The sentence imposed by the regional court on the appellant is set aside and substituted with the following: (i) The accused, Mfana Ignitius Kubai, is sentenced to a term of imprisonment of 9 years; (ii) The carcass of the rhinoceros is forfeited to the Environmental Management Authority in terms of s 118(1)(a) of the Limpopo Environmental Management Act 7 of 2003; (iii) The fire arm and knife used in connection with the unlawful hunting are forfeited to the Environmental Management Authority.’ __________________________ D N UNTERHALTER JUDGE OF APPEAL 9 Appearances For the appellant: Adv P F Pistorius Instructed by: Anita Campbell Attorneys, Tzaneen Symington De Kok Attorneys, Bloemfontein For the respondent: Adv N T Mulangaphuma Instructed by: Director of Public Prosecutions, Thohoyandou Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 30 August 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 Mfana Ignitius Kubai v The State (923/2023) [2024] ZASCA 123 (30 August 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal and set aside and substituted the order of the Limpopo Division of the High Court, Thohoyandou (the high court). The appellant, Mr Kubai, together with two other accused, were arraigned in the Regional Court held at Makhado (the regional court) on various charges, including the illegal hunting of rhino. He was convicted on the charge of illegal hunting in contravention of s 31(1)(a) of the Limpopo Environmental Management Act 7 of 2003 (LEMA), and sentenced to 11 years of imprisonment by the regional court. Mr Kubai was granted leave to appeal to the high court in respect of the sentence imposed. The high court gave notice to Mr Kubai to show cause why it should not, on appeal, increase the sentence imposed by the regional court. Having heard the appeal, the high court imposed upon Mr Kubai a sentence of 15 years’ imprisonment, holding that it was bound to interfere with the sentence imposed by the regional court in that the regional court had sentenced Mr Kubai in terms of s 276(1)(b) of the Criminal Procedure Act 51 of 1977 (the CPA), rather than under the penalty provision of s 117(1)(a) of LEMA which was an error that required correction, and the consideration afresh of an appropriate sentence. Similarly, the high court reasoned that the sentence of 11 years’ imprisonment imposed by the regional was ‘shockingly inappropriate’ considering the circumstances. As to the basis upon which the high court considered it necessary to set aside the order of the regional court, the SCA reasoned that it could not fault the regional court’s finding as the regional court referenced s 117(1)(a) of LEMA, and determined the appropriate sentence in contemplation of the maximum term of imprisonment stipulated in that provision. The SCA pointed out that, while the sentence imposed on Mr Kubai was framed in terms of s 276(1)(b) of the CPA, that provision contained the proviso that it was subject to any other law and LEMA was such a law. As to whether it should interfere with the high court’s order, the SCA held that the sentence imposed by the high court cannot be allowed to stand as, first, the high court misdirected itself when it considered Mr Kubai to have fashioned a career as a rhino poacher, and consequently that he could not de facto be considered a first offender. Second, the high court reasoned that, whether or not Mr Kubai was a first offender, the seriousness of his crime warranted the imposition of the maximum punishment permitted under LEMA. This implied 2 that the conviction on a single count of poaching a rhino warranted the maximum period of imprisonment permitted by LEMA. This is not what LEMA provides. On this point, the SCA held that the high court paid no regard to degrees of seriousness, and turned the maximum sentence into a minimum sentence. Lastly, the SCA held that the high court failed to weigh in the balance the time of 2 years and 3 months that Mr Kubai had been in custody awaiting the final outcome of the proceedings. In effect, the high court sentenced Mr Kubai to an effective sentence of 17 years and 3 months of imprisonment – a period of time in excess of the maximum allowed by LEMA. In the result, the SCA found that the appropriate sentence that the high court should have imposed was a term of imprisonment of 9 years, together with the forfeiture orders that were given by the regional court. --------oOo--------

4273

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 640/2023 In the matter between: AIG SOUTH AFRICA LIMITED APPELLANT and 43 AIR SCHOOL HOLDINGS (PTY) LTD FIRST RESPONDENT 43 AIR SCHOOL (PTY) LTD SECOND RESPONDENT PTC AVIATION (PTY) LTD THIRD RESPONDENT JET ORIENTATION CENTRE (PTY) LTD FOURTH RESPONDENT Neutral Citation: AIG South Africa Limited v 43 Air School Holdings (Pty) Ltd and Others (640/2023) [2024] ZASCA 97 (13 June 2024) Coram: DAMBUZA, MOKGOHLOA, and MATOJANE JJA and COPPIN and TOLMAY AJJA Heard: 9 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 13 June 2024. Summary: Insurance law – interpretation of insurance policy – policy providing cover for loss resulting from interruption of business due to notifiable disease occurring within 25 km of business premises of the insured – multiple insured – whether claimant insured – whether cover joint or composite – whether insurer had 2 to be given notification of claim in terms of the contract – proof of the insured peril and causation. 3 __________________________________________________________________ ORDER __________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Mia J, sitting as court of first instance): 1. The appeal in respect of the order of the high court insofar as it relates to the third claim of the second respondent and in respect of the claims of the third and fourth respondents succeeds. 2. The appeal in respect of the first and second claims of the second respondent is dismissed. 3. The parties are to bear their own costs of the appeal. 4. The order of the high court is amended to read as follows: ‘1. The respondent is liable to compensate the second applicant in respect of its two claims for business interruption submitted, respectively, on 19 May 2020 for the period 26 April 2020 to 30 April 2020, and on 9 June 2020 for the period 1 May 2020 to 31 May 2020. 2. The respondent is directed to engage the second applicant meaningfully for the purpose of quantifying the monetary value of the claims referred to in paragraph 1. 3. The application is otherwise dismissed and each party is to bear its own costs.’ __________________________________________________________________ JUDGMENT __________________________________________________________________ Coppin AJA (Dambuza, Mokgohloa and Matojane JJA and Tolmay AJA concurring): Introduction [1] This appeal is about the liability of the appellant AIG South Africa Limited (AIG) to the respondents under a policy of insurance cover (the policy) for alleged business interruption brought about by the outbreak of the COVID-19 pandemic (Covid-19). The four respondents, 43 Air Holdings (Pty) Ltd (43 Air Holding), 43 Air School (Pty) Ltd (43 Air School), PTC Aviation (Pty) Ltd (PTC), and Jet Orientation 4 Centre (Pty) Ltd (JOC) refer to themselves as entities that are ‘part of the 43 Air school Group’. [2] On 1 July 2020 and 23 March 2021, AIG informed the second respondent (43 Air School) of its repudiation of two claims which had been submitted by 43 Air School to AIG in terms of the policy. These claims had been submitted by 43 Air School, respectively, on 19 May 2020 in respect of business interruption it alleged it experienced for the period 26 April 2020 to 30 April 2020 and on 9 June 2020 for business interruption it alleged it experienced for the period 1 May 2020 to 31 May 2020 (the first and second claims of 43 Air School). In substantiation of those claims 43 Air School had alleged that AIG’s liability under the policy for the business interruption had been triggered by the outbreak of Covid-19 within 25 km of its business premises in Port Alfred in the Eastern Cape. [3] AIG alleged that 43 Air School in respect of its first and second claims had not proved a causal connection between the outbreak of Covid -19 within a 25 km radius, as envisaged in the policy, and its loss. In response to that repudiation by AIG, the respondents, including 43 Air School, brought an application in the Gauteng Division of the High Court, Johannesburg (the high court) for an order: (a) declaring that AIG was liable to compensate 43 Air School, the third respondent (PTC) and the fourth respondent (JOC), respectively, for business interruption in terms of the policy, for the period 27 March 2020 to 31 May 2020; (b) directing AIG to engage 43 Air School, PTC and JOC ‘meaningfully for the purpose of quantifying the monetary value’ of their respective claims, ie as detailed in the application, in respect of business interruption for the period 27 March 2020 to 31 May 2020; and (c) directing AIG to pay the costs of the application. [4] In the application, 43 Air School not only sought to hold AIG liable for its first and second claims, it also sought to hold AIG liable for a third claim. This claim relates to the period after an outbreak of Covid-19 within 25 km of the business premises of 43 Air School’s subsidiary, 43 Advanced, in Lanseria and within 25 km of the business premises of PTC and JOC in Gqeberha (43 Air School’s third claim). PTC and JOC sought to hold AIG liable for their respective claims due to the outbreak of the disease within 25 kms of their business premises in Gqeberha. 5 [5] The application was opposed by AIG and after argument the high court granted an order in the terms sought by the respondents. This is an appeal with the leave of the high court against the whole of its order in the application. [6] AIG denies liability for the first and second claims of 43 Air School, contending that 43 Air School provided no evidence that triggered its liability under the policy. And, as an adjunct to that defence, AIG alleges that the nature of those claims had changed when they were incorporated in the application, because 43 Air School now also seeks to hold AIG liable under the policy based on the outbreak of Covid-19 in Gqeberha and Lanseria. The latter is based on its contention that the policy was a joint one in respect of 43 Air School, PTC and JOC. AIG denies that the policy was joint and contends that it was composite. AIG further contends that the third claim of 43 Air School is bad in law because it is clearly based on the respondents’ erroneous contention that the policy is a joint one, and because 43 Air School did not comply with the reporting clause in the policy in respect of the third claim. [7] AIG’s defences to the claim of PTC are essentially the following: (a) PTC is not an insured under the policy; and (b) PTC has not complied with the reporting clause in the policy. The defence of AIG to JOC’s claim is merely confined to the fact that JOC did not comply with the reporting clause in the policy. [8] Determining AIG’s liability for the claims of necessity involves the interpretation of the relevant clauses of the policy in their proper context. The same principles that apply to the interpretation of contracts also apply to the interpretation of insurance contracts and they are trite. Recently those principles have been restated by this Court in Centrique Insurance Company Ltd v Oosthuizen and Another1 (Centrique) as follows: ‘…Insurance contracts are contracts like any other and must be construed by having regard to the language, context and purpose in what is a unitary exercise. A commercially sensible meaning is to be adopted instead of one that is insensible or at odds with the purpose of the 1 Centrique Insurance Company Ltd v Oosthuizen and Another [2019] ZASCA 11; 2019 (3) SA 387 (SCA) para 17. See also Guardrisk Insurance Company Limited v Café Chameleon CC [2020] ZASCA 173; [2021] 1 All SA 707 (SCA); 2021 (2) SA 323 (SCA) paras 12-13. In this judgment the decision of the high court in that matter is referred to either by its reported name, or as ‘Café Chameleon’. 6 contract. The analysis is objective and is aimed at establishing what the parties must be taken to have intended, having regard to the words they used in the light of the document as a whole and of the factual matrix within which they concluded the contract. But because insurance contracts have a risk-transferring purpose containing particular provisions…any provision that places a limitation upon an obligation to indemnify is usually restrictively interpreted, for it is the insurer’s duty to spell out clearly the specific risks it wishes to exclude. In the event of real ambiguity the doctrine of interpretation, contra proferentem, applies and the policy is also generally construed against the insurer who frames the policy and inserts the exclusion ….’(Footnotes omitted.) [9] Regarding the second part of the above quotation from Centrique - the parties in this matter have specifically agreed in clause 21 of the policy that ‘[t]he contra proferentem rule does not apply to the interpretation of this [p]olicy’. Notwithstanding such an exclusion, the court, when interpreting the policy, is to opt for a commercially sensible, or businesslike construction in the case of an ambiguity.2 Background facts [10] The first respondent, 43 Air School Holdings (Pty) Ltd (Holdings), holds hundred percent of the shares in 43 Air School. The latter is described by the respondents in their founding papers in the application as the main operating entity of the ‘43 Air School Group’ which is said to consist of Holdings, 43 Air School, PTC and JOC. The place of business of, respectively, PTC and that of JOC seems to be at the same address in Gqeberha (but there is no indication that they share facilities). Those premises are owned by Green Gecko Trading (Pty) Ltd, an entity which has not been cited as a party in these proceedings, but which is wholly owned by Holdings. Fifty percent of the shares in PTC, at the time of the application, was held by Holdings and the balance was held by a trust which is not cited in these proceedings. Previously, the 50% held by Holdings vested in an entity, National Airways Corporation (Pty) Ltd (NAC), which is also not cited in these proceedings. It is not stated when exactly Holdings acquired the shares in PTC from NAC. The respondents aver that PTC and 43 Air School hold the shares in JOC in equal proportions. 2 Centrique (fn1) paras 18-21. 7 [11] It is not in issue that 43 Air School, at its premises in Port Alfred, in addition to other courses and training, provides basic pilot and a traffic control training to candidates from the Port Alfred aerodrome. The candidates are from the private, general, communal, airline and military sectors. PTC operates as an exclusive pilot preparation service to candidates from 43 Air School and provides Boeing 737NG and Airbus A320 flight training for newly qualified commercial pilots from the Gqeberha premises. JOC owns and provides flight simulators for lease at the Gqeberha premises. Some of these simulators are utilised by 43 Air School at its Lanseria premises, where it operates as 43 Advanced, but the simulators are used primarily by PTC in Gqeberha for the training of pilots. The policy [12] For many years AIG was the insurer of the NAC and 43 Air School and, in terms of the policy wording, also the insurer of their respective ‘subsidiary companies, managed, controlled, member companies, joint venture, sports, social and recreational clubs and societies and any other persons or entities for which they have the authority to insure, jointly or severally, each for their respective rights and interests’. The policy was arranged through a broker, Marsh. The insurance was on an annual basis and the periods of insurance ran from 1 July to 30 June of each respective year. The insurance for the year 1 July 2019 to 30 June 2020 was renewed through Marsh but the details of the insured as they appeared on policies for the previous years were not altered or amended. On 3 April 2020 Marsh confirmed in writing to 43 Air School that the insured were those entities as described in the first sentence of this paragraph. It further informed the insured, inter alia, that the property insured was ‘assets – R275 499 804’, that the business interruption cover was in the amount of ‘R66 443 230’ and that the insurance was in place for the period ‘1 July 2019 to 24:00 local Standard time on 30 June 2020 at locations where the Insured is situated.’ [13] The policy itself indemnified the insured against all the risks stipulated in the policy. The general operative clause of the policy states: ‘In consideration of payment of the premium by or on behalf of the Insured, the Insurer agrees to indemnify or compensate the Insured by payment or, where applicable, at the option of the Insurer, by replacement, reinstatement or repair, in respect of Defined Events provided for in terms of this Policy 8 occurring (unless otherwise stated herein) during the Period of Insurance up to the applicable Limits of Liability as stated herein. Unless otherwise stated herein, Specific Exclusions, Conditions and provisions shall override General Exclusions, Conditions and provisions. Any endorsement stated in the Specification shall override the specific Policy section to which it relates.’ [14] ‘Business interruption’ cover, which is dealt with in section C of the policy, is provided for interruptions to the business of the insured caused by a defined, or extended defined, event that occurs during the period of insurance. The basis of the indemnity in respect of business interruption is stipulated to be ‘gross profit’ which, according to the policy ‘is limited to (a) reduction in turnover; and (b) increase in [the] cost of working, less any sum saved during the indemnity’. Certain of the terms in the definition of gross profit are defined in the policy. The term, ‘turnover’ is defined as ‘the money paid or payable to the insured for goods sold and delivered and for services rendered in the cause of the business’. And ‘indemnity’ is defined as ‘the period beginning with the occurrence of the defined event and ending when the results of the business cease to be affected in consequence of the defined event but not exceeding the number of months stated in the specification.’ [15] The ‘extended defined event’ in terms of the policy includes (amongst others) the following which is relevant for present purposes: ‘…[the] outbreak of infectious or Contagious disease within a radius of 25 km of the Premises’. In the same clause in the policy the ‘disease’ referred to is defined as follows: ‘“Infectious or Contagious Disease” shall mean any human infectious or human contagious illness or disease which a competent authority has stipulated shall be notified to them or has caused a competent authority to declare a notifiable medical condition to exist or impose quarantine regulations or restrict access to any place.’ The term ‘premises’ is defined in the policy as ‘any premises used for the purpose of the Business’, and the term ‘Business’ is defined as ‘any activity of the Insured’. [16] The following is common cause: that the extended defined event applies in respect of Covid-19; that it was a notifiable disease; that at the beginning of 2020 it became apparent that this potentially fatal and highly infectious disease was spreading and affecting people worldwide; that on 11 March 2020 the World Health Organisation (WHO) declared Covid-19 a pandemic. It is also not in issue that with 9 effect from midnight of 26 March 2020 to midnight of 16 April 2020 South African citizens were placed under national lockdown by the South African government, when the Minister of Co-operative Governance and Traditional Affairs issued regulations on 25 March 2020 under Government Notice R398, in terms of s 27(2) of the Disaster Management Act 57 of 2002, to that effect. On 26 March 2020 Government Notice R419 was published in terms of which certain of those regulations were amended. Amended Regulation 11B(1)(b) provided that: ‘During lockdown, all businesses and other entities shall cease operations except for any business or entity involved in the manufacturing, supply or provision of an essential good or service, save when operations are provided from outside of the Republic or can be provided remotely by a person from their normal place of residence.’ [17] It is also not in dispute that on 29 April 2020 Government Notice R480 was published in Government Gazette 43258 in terms of which the period of the lockdown was stated to be from midnight on 26 March to 30 April 2020. The movement of persons was also restricted during this period and the country’s national borders were opened for limited purposes. It is not in dispute that on 30 May 2020 Government Notice 615 was published which had the effect of ameliorating this dire situation. Amongst others, aviation training organisations were allowed to provide virtual and contact training to pilot students that were in South Africa, albeit subject to the other Covid-19 regulations and directions. The period from 26 March 2020 to 30 April 2020 is referred to in this judgment as ‘the national lockdown.’ [18] It is also not in issue that an outbreak of Covid-19 occurred within a radius of 25 km of the business address of PTC and of JOC in Gqeberha on 21 March 2020, and within a radius of 25 km of the Port Alfred business premises of 43 Air School on 25 April 2020. Further, it is not disputed that 43 Air School, in respect of its third claim, and PTC and JOC in respect of their claims, have not complied with the general and specific reporting clauses in the policy. The Issues [19] Against the background of those facts, the issues arising from the respondents’ claims and AIG’s defences thereto, will be considered in turn. The 10 issues are the following: (a) whether the policy (ie in respect of business interruption) was joint or composite? (this relates to the claims of 43 Air School, PTC and JOC); (b) whether the respondents had to comply with the reporting clauses in the policy before bringing the application and before rendering AIG liable under the policy (this relates to the claims of 43 Air School, PTC and JOC); (c) whether PTC was insured under the policy; and (d) whether 43 Air School, in respect of its first and second claims, had proved that it ought to be indemnified for its loss, ie that its loss in respect of those claims was causally connected to the extended defined event as contemplated in the policy. Joint or composite policy/cover [20] In support of the claims of 43 Air School, it was contended for the first time by Mr Musson in the replying affidavit filed in the application on behalf of all the respondents that the policy was a joint one, essentially covering all the entities in the ‘43 Air School Group’. This group, according to Mr Musson, included 43 Air School, PTC and JOC. It was also contended in that regard that accordingly the outbreak of Covid-19 in Gqeberha on 21 March 2020, and the outbreak at Lanseria on 27 March 2020, constituted the extended defined event as envisaged in the policy and triggered AIG’s liability under the policy for business interruption cover in respect of all the claimants within the 43 Air School Group. [21] In contending that the policy was a joint one (ie as opposed to a composite policy) 43 Air School essentially relies on the following: (i) its version of the interrelationship between itself, PTC and JOC at ‘corporate and operational levels’; (ii) the definition of the term ‘insured’ in the policy; (iii) the definition of the term ‘business’ in the policy and its assertion that the respondents were part of a group, ‘43 Air School Group’; (iv) the fact that the cover for business interruption in the policy is stated to be in a globular amount of R 66 443 230 and that no distinction is made between the different insured entities in respect of the amount of cover; and (v) the fact that the premium payable under the policy was also expressed as a globular amount of R 59 600 plus VAT for all insured , ie, and not split as per insured. [22] According to the argument of 43 Air School: ‘When one bears in mind that the assets are combined under the umbrella of 43 Air School it is both logical and businesslike to conclude that response under the policy could be triggered by infections or contagious disease within a radius of 25 km of just one of the premises used for the business as this 11 had the effect of giving rise to a lockdown of all the business activities at all the premises.’ Thus, according to this argument, the outbreak within 25 km of the business premises in Lanseria or Gqeberha was sufficient to trigger AIG’s liability in respect of the claims of 43 Air school (and by extension, that of PTC and JOC). [23] According to AIG, the policy was a composite one in respect of the business interruption, because the gross profit was the basis of the insurance and the gross profit of each of the entities was separate and distinct. While one entity had an interest in its own gross profit, that same interest was not shared by the other entities. The interest of each entity in that gross profit, was at best, separate and different or diverse. [24] Determining whether a policy is joint, or composite is a matter of its interpretation and of the nature of the interest(s) of the insured.3 The definition of ‘insured’ in the policy may indicate whether it is one or the other, but not necessarily so. It may be necessary to consider other clauses or provisions in the policy that could indicate its nature. It is accepted that where a policy covers more than one insured, it may either be joint (which effectively means that there is only one policy), or composite (which means that there is in fact a bundle of policies contained in one document). [25] In Arnould 4 the difference between joint and composite policies is described as follows: ‘Generally, where two or more interests are insured under the same policy, the policy will be construed as a composite insurance, insuring each person interested severally in respect of his own interest. There can only be a joint insurance in the strict sense when the assureds have a joint interest in the insured property, as where they are joint owners. If the policy is joint, each assured must be joined in any proceedings, and defences arising from the conduct of any of them are available against them all. Payment to one joint assured operates as a good discharge under the policy.’ 3 General Accident Fire and Life Assurance Corporation, Limited, and another v Midland Bank, Limited and others [1940] 2 KB 388 at 404-407. 4 Gilman et al Arnould: Law of Marine Insurance and Average 20th ed (2021) at para 11-31. See also R M Merkin Colinvaux’s Law of Insurance 13th ed (2022) at paras 15-00 and 15-012; and E J MacGillivray MacGillivray on Insurance Law 15th ed (2014) at para 1-203. 12 [26] It is also pointed out in MacGillivray,5 with reference to the decision in Samuel Ltd v Dumas,6 that ‘there cannot be a joint insurance policy unless the interests of the several persons who are interested in the subject-matter are joint interests, so that they are exposed to the same risks and will suffer a joint loss by the occurrence of an insured peril.’ [27] The position in English law is that the question whether an insurance policy is joint, or composite, is a matter of construction, but if the words used are capable of either meaning they are to be construed according to the nature of the interest concerned.7 The same would apply in South African law. In Gordon & Getz,8 the subject is dealt with under the topic of ‘Divisibility’ and the position is stated as follows: ‘ Where the interests of several persons are covered by the same policy, and the question arises whether by the act of one the rights of all are to be affected, it must be considered whether the contract is entire in respect of all or may be construed as a separate insurance for each, It has been held that an insurance in one policy for the owners of a ship is not divisible, and the illegal act of one, without the knowledge of the others , avoids the entire contract as if all had concurred. The rule is the same in all cases where the persons for whose benefit the insurance is made, have a joint or common interest in the subject-matter insured.’ [28] The high court did not make an unequivocal finding that the policy in question was either composite or joint. But it found that even though the definition of the term ‘insured’ in the policy contained wording commonly used to identify a composite policy, namely, the words: ‘they have authority to ensure jointly and severally each for their respective rights or interests’, the ‘event which impacted the one facility has an impact on the other facilities as well’ and that AIG did not dispute the version of the respondents ‘regarding the losses suffered or that the business interruption of one facility did not impact the other.’ [29] The high court opted for what it termed ‘a common-sense approach’, which it held it derived from Guardrisk,9 namely, that the respondents were entitled to relief 5 MacGillivray para 1-202. 6 Samuel Ltd v Dumas 1924 A. C 431 at 445. 7 See Midland Bank (fn3) and New Hampshire Insurance Co. and Others v MGN Ltd and Others [1997] L.R.L.R 24. 8 D M Davis Gordon & Getz: The South African Law of Insurance 4 ed (1993) at 142. 9 Guardrisk Insurance Company Limited v Café Chameleon CC [2020] ZASCA 173; [2021] 1 All SA 707 (SCA); 2021 (2) SA 323 (SCA). 13 ‘especially [since] they shared the same facilities to conduct training and for support and ongoing or secondary training’. This latter finding was clearly incorrect as there was no evidence of any of the respondents ‘sharing the same facilities’. But also, because the approach did not consider the fact that the subject-matter of the insurance cover (ie for business interruption) was gross profit as defined in the policy. There was no evidence that the respondents had or shared a common gross profit, or that they had a joint and common interest in each other’s gross profit. [30] The definition of ‘insured’ in the policy is not helpful in determining whether the cover in question was joint or composite, but it does indicate that there were multiple insureds and that some of the insurance might have been joint and other insurance separate or composite. In that definition only two of the insured are identified by name, namely, NAC and 43 Air School. The other insured in terms of the policy are those whom the two named entities (respectively) ‘have the authority to insure’ ie those whom they are mandated to insure. According to the definition, these may include their respective subsidiaries, member companies managed or controlled by them, joint venture partners, social and recreational clubs, and societies (and any other persons or entities) whom they are authorised to insure. The nature of the insurance may either be joint, or several, in terms of which each of the insureds are covered in respect of their respective rights and interests. [31] The authorities referred to above, confirm that the mere fact that there are several persons or entities insured under one policy does not make that policy one of joint insurance. Whether it is a joint insurance policy depends on the interests of those persons or entities. If their interest in the subject matter of the insurance is joint, in the sense that they are exposed to the same risk and will suffer the same loss on occurrence of the peril insured against, that may be indicative of the policy being joint. However, where their interests are different, even though it is in respect of the same subject-matter, the policy would not be a joint one, but composite, which is intended to insure each of the insured separately in respect of its own interests. [32] The fact that they may share facilities or have an interrelationship at operational level, or the fact that the maximum cover is a singular globular amount or that the premium is payable in a singular globular amount, does not mean that the 14 policy is a joint one.10 The nature of the interest in the subject matter is the decisive determinant. [33] In this instance, the subject matter of the business interruption insurance is the gross profit of the insured entity. If the different entities do not have the same, or a common interest in each other’s ‘gross profit’, but have separate or different interest in that regard, the policy in respect of business interruption cannot be joint but is composite. AIG contends that 43 Air School, PTC and JOC do not have a joint interest, in the sense discussed, in each other’s gross profit, but, at best, have different interests in that regard. The fact that each of these entities has brought its own claim in respect of its own interest, and that the claim was not a joint one, underscores the conclusion that the business interruption insurance cover, in respect of each of them, was not joint, but composite. The ‘breach of conditions’ term of the policy appears to confirm this. It provides: ‘The Conditions of this policy shall apply individually to each insured entity and not collectively to them so that any breach shall prejudice only the Insured entity to which the breach applies.’ The reporting obligation [34] The first general condition of the policy, insofar as is relevant to these proceedings, provides as follows: ‘1. Reporting of Claims a) On the happening of any event which may result in a claim under this Policy the Insured shall, (subject to the provisions of any Claims Preparation Costs or similar extension) at their own expense [:] i) give notice thereof to the Insurer as soon as reasonably possible and provide particulars of any other insurance covering such events as are hereby insured; ii) … iii) As soon as practicable after the event submit to the Insurer full details in writing of any claim; iv) give the Insurer such proofs, information and sworn declarations as the Insurer may require and forward to the Insurer immediately any notice of claim or any communication, writ, summons or other legal process issued or commenced against the Insured in connection with the event giving rise to the claim …’ 10 See, inter alia, Corbin & King Ltd & Ors v AXA Insurance UK Plc (Rev1) [2022] EWHC 409 (Comm) (25 February 2022) paras 237-243. 15 [35] The second specific condition of the policy, under the heading ‘Claims’, provides as follows: ‘On the happening of any Defined Event in consequence of which a claim may be made under this section the Insured shall, in addition to complying with General Condition 1 – Reporting of Claims and General Condition 2 – Insurer’s Rights, with due diligence do and concur in doing and permit to be done all the things that may be reasonably practicable to minimise or check any interruption of or interference with the Business or to avoid or diminish the loss and in the event of a claim being made under this Section, shall at their own expense (subject to the provisions of General Extension 1 – Claims Preparation Costs) deliver to the Insurer in writing a statement setting forth particulars of their claim together with details of all other Insurance covering the loss or any part of it or consequential loss of any kind resulting therefrom. No claim under this Section shall be payable unless the terms of the Specific Condition have been complied with and in the event of non-compliance therewith in any respect, any payment on account of the claim already made shall be repaid to the Insurer forthwith.’ (Emphasis added.) [36] The respondents have advanced various reasons in an attempt to justify their failure to comply with those conditions, namely: (a) that even though timeous notice of 43 Air School’s first and second claims had been given, those claims had been rejected ‘in principle’ without any evidence that they had been investigated by AIG; (b) the rejection of those claims ‘evinced a clear intention on the part of [AIG], not to honour its obligations under the policy’; (c) the terms of the policy do not expressly require that notice of the claim be given before the institution of litigation; and (e) in instances where defendants have attempted to resist a claim on the basis that no notice or demand had preceded the issue of summons, it has been consistently held by the courts that the summons or application is in itself a demand,11 ie implying that the service of the application in this matter was compliance with the reporting obligations referred to above. [37] It is not clear why the high court did not deal with this issue of reporting and the implications thereof. Those conditions are clear concerning the obligations of an insured intending to claim under the policy. In the latter part of the specific condition, 11 Reliance was placed on the decisions, inter alia, in Standard Bank of South Africa v Hand 2012 (3) SA 319 (GSJ) para 22 and Mettle Development Finance One (Pty) Ltd v Calgro M3 Developments (Pty) Ltd (A5005/2014, 40945/2011) [2015] ZAGPJHC 161 (6 July 2015). 16 which is emphasised above, it is unequivocally stated that AIG would not be liable for payment under the policy unless and until that condition had been complied with. It is a ‘condition precedent’ to the liability of the insurer in the sense that a failure to comply with it suspends AIG’s liability under the policy.12 [38] In Russel Loveday NO v Collins Submarine Pipelines,13 this Court held as follows: ‘In Norris v Legal and General Assurance Society Ltd and Another 1962 (4) SA 743 (C), a case referred to earlier in this judgment, Watermeyer, J., discussed the approach of our Courts and the Courts in England to the problem of deciding whether a condition is a condition precedent or not. He observed (at p. 748) that the trend of the decisions in South Africa is to regard conditions in insurance policies relating to the giving of notice to the insurers as conditions precedent, but concluded, as mentioned earlier in this judgement, that in the ultimate result the problem is one of arriving at the intention of the parties from the terms of the contract considered as a whole. Condition C does not say explicitly, nor by clear implication from its terms, that non- compliance will be visited with the penalty of forfeiture. One would expect that, if an insurer intends to protect himself by incorporating a provision which will have that effect, he would do so in clear terms ….’ [39] The general and specific conditions in the policy and quoted earlier are explicit as to the requirements of the insurer and the duties of the insured. It contains clear and precise directions, and the specific condition spells out in unequivocal terms what the consequences would be if they are not complied with. It provides that in such circumstances the claim is not payable, and any payment made on a claim in respect of which there has been no compliance is to be returned to the insurer (AIG). [40] The fact that AIG in principle rejected the first two claims of 43 Air School does not mean that 43 Air School, in respect of its third claim, or the other insureds who wanted to claim under the policy, did not have to comply with the reporting conditions in respect of their claims. There is no allegation in the founding papers of the application brought by the respondents that AIG had repudiated the policy. The 12 12(1) Lawsa 2 ed para 377; Norris v Legal and General Assurance Society Ltd and Another 1962 (4) SA 743 (C) at 745 and Russell NO and Loveday NO v Collins Submarine Pipelines Africa (Pty) Ltd 1975 (1) SA 110 (A) at 148-149. 13 Russell NO and Loveday NO v Collins Submarine Pipelines Africa (Pty) Ltd 1975 (1) SA 110 (A) at 148. 17 rejection of a claim brought under the policy is not necessarily a repudiation of the policy itself. It is further a matter of common sense that notice of the claim ought to be given to an insurer before an insured resorts to an enforcement of the claim through litigation. The conditions require reporting ‘on the happening of the event’, this implies prompt reporting and does not allow for a reporting only after the insured has resorted to litigation to enforce the claim. And lastly, the reporting requirement is not the equivalent of a demand. Usually, a demand follows once all conditions precedent in a contract or transaction have been met. The reporting requirement, on the other hand, is a condition precedent for AIG’s liability in terms of the policy. The service of the application, whilst essential, cannot qualify as such. Another point to add is that when 43 Air School reported its first and second claims to AIG it did not report, or purport to report its third claim, or the claims of PTC and JOC as well. Is PTC an insured under the policy? [41] In its answering affidavit, AIG denies that Holdings and PTC were insured under the policy and refers to the fact that the insured are identified and described in the policy as follows: ‘National Airways Corporation (Pty) Ltd and 43 Air School (Pty) Ltd and subsidiary companies, managed, controlled, member companies, joint ventures sports, social and recreational clubs and societies and any other persons or entities for which they have the authority to ensure, jointly or severally, each for their own respective rights and interests’. AIG contends that on the facts alleged in the founding affidavit of the respondents, neither Holdings, nor PTC fall within that description of the ‘insured’ and that, according to Mr Shaun Musson, who deposed to the founding affidavit, and an organogram that is annexed to that affidavit, PTC is a subsidiary of Holdings. [42] AIG also refers to the fact that in the founding affidavit Mr Musson, who described himself, as a ‘director’ of each of the respondents, states, inter-alia, the following: that 50% of the shares in PTC are held by Holdings and the balance by a trust; that the reason NAC is referred to in the policy is because it was the holder, until 30 June 2019, of 100% of the shares in 43 Air School; that a management buyout occurred which resulted in Holdings acquiring 100% of the shareholding of 43 Air School; that despite Marsh being fully aware of this fact, when the policy was 18 eventually issued the old name of NAC remained on the policy even though their position, as holder of the shares in (inter alia) PTC, had been assumed by Holdings. [43] And AIG points out that although Mr Musson tried to create the impression that Marsh was to amend the policy to reflect the position after Holdings allegedly bought the NAC share in 43 Air School, there was never an attempt made to amend the policy to reflect Holdings as an insured. It is clear from the papers that even though AIG dealt with Marsh, and the latter with 43 Air School, concerning the renewal of the policy, there was no instruction to change the names of the insured on the policy. On the contrary, the ultimate instruction conveyed to AIG seems to have been to leave the names of the insured on the policy as they appeared all along. [44] It is not disputed that on 28 June 2019, Ms Mbilase of Marsh addressed an email to Ms Wide, a senior underwriter at AIG, in which she informed Ms Wide that NAC will be selling its interest in 43 Air School and that a split of the policies was envisaged if that occurred. Ms Mbilase wanted confirmation that AIG would keep NAC and 43 Air School covered pending the renewal of the policy. On 26 July 2019 Ms Mbilase again wrote to Ms Wide and to Mr Govindasami of AIG’s underwriting department stating the following: ‘We were trying to separate the policies now at renewal to avoid disruption when the deal finally goes through, NAC hasn’t actually disposed of their interest in 43 Air School yet. We would like to therefore renew the regional NAC policy inclusive of 43 Air School per previous terms received and then issue a mid-term cancellation once we have sorted out these issues. We have already had two extensions of cover (which we are now essentially treating as one extension) and a renewal of the policy as opposed to another extension will take some of this pressure off while we get sorted on the individual quotes.’ [45] On 31 July 2019 Ms Mbilase addressed a further email to Ms Wide and Mr Govindasami, attaching the policy slip for policy renewal for both NAC and 43 Air School. And on 10 September 2019 Ms Wide signed the placing slip on which the insured continued to be described as in the past. The ‘insured’ were still reflected as in the description of the term ‘insured’ in the policy, which is quoted earlier in this judgement. Significantly, NAC still appeared as an insured and no mention is made of Holdings. On 17 October 2019 the policy wording was sent by Marsh to Ms Wide for signature and she signed it on 30 October 2019. The ‘insured’ were still described 19 as before. No cancellation of variation was submitted in which Holdings was named or substituted as an insured, and that remained the status quo. [46] AIG’s averment that Holdings was not an insured under the policy was not challenged by the respondents in the replying affidavit. The case made out by the respondents in the founding affidavit was that NAC held 100% of the shares in 43 Air School until 30 June 2019, when Holdings is alleged to have acquired those shares. But that statement made by Mr Musson, as a deponent to that affidavit, is contradicted by the emails exchanged between Ms Mbilase of Marsh and Ms Wide of AIG, which confirm that the acquisition by Holdings had still not taken place by 31 July 2019. The policy itself, was eventually renewed at the end of October 2019 with NAC still appearing as an insured on the policy, and with no mention of Holdings. [47] The respondents did not, as they were obliged to, state exactly and unequivocally when Holdings acquired the shareholding of NAC in PTC or in 43 Air School. The motivation for that is not clear, but what appears from the papers is that such a change in shareholding did occur at some time. PTC became a subsidiary of Holdings, which on the respondent’s own admission, was not an insured under the policy. [48] The contention on behalf of the respondents, in support of their argument that PTC was an insured, namely, that PTC had been paid out under the policy in respect of a claim made in October 2019 in respect of an alleged loss suffered when items were stolen from a motor-vehicle after its locks had been jammed, is of no assistance to them. Because, at the time that happened PTC might still have been an insured as a subsidiary of NAC, or it might have been paid in error. The onus was clearly on the respondents, or more particularly, PTC, to disprove that fact in these proceedings. And it has not. Causation [49] A letter from AIG (presumably to Marsh) dated 1 July 2020, regarding notification of a possible claim which 43 Air School had sent to AIG on 6 May 2020, gives insight into AIG’s interpretation of the policy concerning the issue of causation and its liability. The letter states, inter alia, the following: 20 ‘1. We refer to the notification of a possible claim sent to us by the insured on 6 May 2020. 2. As you are aware, Renier Kruger Lloyd Warwick International South Africa (Pty) Ltd was appointed by us to investigate the insured’s claim. 3. We have considered the claim in its current form and the information provided. At this stage, we are of the view that the insured has not made out the claim within the ambit of the Policy. 4. The insured must prove loss as a result of an interruption of or interference with its business in consequence of an outbreak of COVID-19 within a 25 km radius of the premises insured. 5. On the information provided, the insured’s aviation School in Port Alfred was closed from 27 March 2020 when the national lockdown became effective and the insured’s loss has been calculated from 26 April 2020 which is stated in its claim as being the “trigger event date” and is the date upon which the first positive case of COVID-19 was confirmed in the Ndlambe district of Port Alfred. We understand that other than this isolated case there have been no other reports of confirmed cases in or around Port Alfred. 6. Your client’s loss which has been calculated from 26 April 2020, after the commencement of the National Lockdown, is stated as having been suffered as a result of “lockdown legislation in place”. 7. The policy does not insure business interruption and loss in consequence of Government Regulation or the National Lockdown. 8. The Financial Services Conduct Authority, in its communication dated 18 June 2020, accepts that the National Lockdown is not a trigger for a valid business interruption claim and that the interruption of the insured’s business must be proved to have been due to the occurrence of COVID-19 within the required radius. 9. We have yet to be provided with evidence to prove that the insurance business closed in consequence of the outbreak of COVID-19 within a 25 km radius of the aviation school. 10. On the information provided, the outbreak of the disease occurred after the insured’s business was closed and the loss appears to have been suffered in consequence of the National Lockdown which is not covered by the policy. 11. As currently stated, your client’s claim does not meet the requirements for cover under the infectious or contagious disease extension. 12. That being said, we are happy to consider any additional information provided. 13. The insurers rights under the policy and in law remain reserved.’ 21 [50] In response to that letter, 43 Air School requested AIG to reconsider its claims in light of the (then) ‘recent’ court decisions. Seemingly, reference was being made to the decisions of the Western Cape high court in Café Chameleon14 and Ma-Afrika Hotels (Pty) Ltd and Another v Santam Limited (Ma-Afrika),15 and possibly the decision of the Queen’s Bench Division (QB) in Financial Conduct Authority v Arch Insurance (UK) Ltd and others (FCA).16 [51] In Café Chameleon the Western Cape high court dealt with similar insurance cover, where a similar argument was advanced. There it held that the insurer was liable to indemnify the claimant for its loss from a stipulated date, arising from the interruption of its business due to the national lockdown brought about by Covid-19. Having rejected a similar argument as that of AIG in this matter, that court, essentially, held that it was fallacious to argue that the claimant’s loss was caused by the regulatory response to Covid-19 and not by the outbreak of Covid-19 within the agreed radius. Particularly, because Covid-19 was the very reason for the regulatory intervention. It also held that the government’s response was part of the insured peril and was covered by the policy in that matter. [52] In Ma-Afrika the Western Cape high court dealt with a similar argument as was raised in Café Chameleon and in this case. There, the insured also tried to avoid liability for business interruption, arguing that the loss was due to the interruption having been brought about by the national lockdown and not due to the local outbreak of the disease. Having analysed the policy and the developments in the law and having been persuaded, inter-alia, by the QB decision in the FCA matter, that court rejected the argument of the insurer and essentially held as follows: ‘We are in agreement with the conclusion in FCA that construing the policy in a composite was undoubtedly the proper starting point. Insurance is intended to serve as a social safety net to cover financially devastating losses and compensate injured parties. This is precisely the safety net required as a result of the unprecedented Covid-19 pandemic. The policy does not state that the infectious disease must be limited to a local outbreak only, or that the local authority response must be exclusively due to such outbreak only, and no other, or that the 14 Reported as Café Chameleon CC v Guardrisk Insurance Company Ltd [2020] ZAWCHC 86 (26 June 2020). The decision of this Court in that matter is referred to herein as Guardrisk. 15 Ma-Afrika Hotels (Pty) Ltd and Another v Santam Limited [2020] ZAWCHC 160; [2021] 1 All SA 195 (WCC). 16 Financial Conduct Authority v Arch Insurance (UK) Ltd and others [2020] EWHC 2448 (Comm). 22 policy does not respond with the disease and the response is broad and national. It therefore appears that notwithstanding the fact that the nature of the policy and the specific provisions in the extensions are essentially local in nature, it cannot be said that the nationwide or global events were not contemplated or insured. We are in agreement with the conclusion reached in FCA at para 104 that: “They must also have contemplated that the authorities might take action in relation to the outbreak of a notifiable disease as a whole, and not to particular parts of an outbreak and would be most likely to take action which had any regard to whether cases fell within or outside a line 25 miles away from any particular insured premises.’’ We therefore conclude that Covid-19 and government response to Covid-19 are an [inseparable] part of the same insured peril. The breakout of a notifiable disease, whether reported to a local or national authority always comes with the risk of a government response and make the government response part of the insured peril of notifiable diseases. We are satisfied that both factual and legal causation are established in respect of the trigger event referred to in the policy. We accordingly conclude that the national response to the Covid- 19 disease that has a local occurrence is sufficient to satisfy the policy. Had it not been for Covid-19 and the government’s response, the applicants’ business would not have been interrupted and they would not have suffered the loss. In our view the applicants’ losses are exactly what they had insured themselves against.’ [53] The high court in Ma-Afrika accordingly declared that the insurer was liable to indemnify the insured in terms of the business interruption section of the policy (in that matter) for such loss that the insured was able to prove to have suffered as a result of loss of revenue occasioned by the occurrence of a notifiable disease in the form of Covid-19, occurring within a radius of 40 km of the insured’s premises on or about the stipulated date. The insurer sought to appeal against the whole of that order but by the time the Ma-Afrika matter came on appeal before this Court17, the Guardrisk decision had been handed down by this Court on 20 December 2020. Seemingly, persuaded by that decision the insurer in Ma-Afrika did not proceed with its appeal against the whole order and confined its appeal to the high court’s order relating to the indemnity period18. 17 This Court’s decision is reported as Santam Limited v Ma-Afrika Hotels (Pty) Ltd & another [2021] ZASCA 141; [2022] 1 ALL SA 376 (SCA). 18 Ibid para 2. 23 [54] In Guardrisk this Court basically confirmed what had been held in that matter by the high court and what had been held by the high court in Ma-Afrika regarding the issue of the insured peril and causation. In Guardrisk the main findings by this Court were: that a notifiable disease usually requires a government response and this meant that the response was part of the insured peril,19 that nothing in the language of the policy in that case supported the interpretation favoured by the insured, namely, that the policy covers only a response to a localised outbreak and not to a countrywide one,20 and that the insured risk was Covid-19 and government’s response to it and that, but for the event – Covid-19 and the response – the business would not have been interrupted, making the outbreak within the stipulated radius the factual cause of the business interruption.21 [55] Surprisingly, in its letter of repudiation dated 23 March 2021 AIG, inter-alia, still maintained the following: ‘7. If one has regard to the judgments of our courts in the abovementioned cases, and that of the Supreme Court in the appeal of the FCA test case in the UK, an outbreak of Covid- 19 within the 25 km radius of the Insured’s premises must precede the restrictions imposed by the government. In response to the Covid 19 pandemic in order for the Insured to be covered for the effects of the restrictions. 8. The Insured is unable to establish an outbreak of Covid-19 within a 25 km radius of its premises prior to the commencement of the national lockdown. 9. In the circumstances, the Insured is not entitled to be indemnified under the Policy for loss in consequence of Covid-19 unless it can prove a causal connection between the outbreak of Covid-19 within the radius and its loss, outside of the national lockdown. In other words, the Insured would have to prove that it would have suffered the loss had the national lockdown not occurred. 10. The Insured’s claim is rejected, and AIG denies be liable to indemnify the Insured under the Policy.’ [56] The English authority referred to in that letter by AIG is the decision of the English Supreme Court in the FCA matter.22 The matter first came before the QB and then went on appeal to the Supreme Court where some of what had been out in 19 Guardrisk (above) para 19-20. 20 Ibid para 32. 21 Ibid para 45. 22 Reported as Financial Conduct Authority v Arch Insurance (UK) Ltd and others (Hiscox Action Group intervening) [2021] UKSC 1. 24 the court of first instance was overturned and some confirmed by the majority. In that matter the court dealt with the wording of the policies of several insurers, none of which were the same. In Guardrisk this Court referred to the decision of the QB and particularly to the findings relating to the position of one of the insured in that matter, namely, Argenta.23 As this Court cautioned in Guardrisk, those decisions must be referred to with caution.24 They were not only decided on a set of agreed facts concerning different policies with different wording but did not deal with wording that is the same as in this matter. [57] In any event, the point raised by AIG is the same, or remarkably similar, to a point raised by the insurer in Guardrisk. There the insurer argued that the policy did not cover ‘loss following the close of the premises as a result of a government order’. It also argued that there was no causal link between the defined event there (a Covid- 19 outbreak within a 50 km radius) and the interruption of the insured’s business, because the interruption was a consequence of the national lockdown and not the local occurrence of the disease.25 That submission was rejected by this Court. It held that what lied ‘at the heart of the interpretation question’ was whether the infectious disease clause in that matter covered the government’s response to Covid-1926. It further held that the parties there would have appreciated the fact that a notifiable disease would require a government response and that they must therefore be assumed to have understood and agreed that the ‘business interruption’ referred to in the infectious disease clause in that matter, might result from a public health response to the occurrence of the infectious disease.27 [58] This Court held in Guardrisk that it is precisely because certain notifiable diseases have the potential to spread that they may require government action nationally, or provincially, or locally to prevent the spread28. And further, that the government response in that case was integral to the insured peril, namely, the outbreak of infectious disease within the radius and that the government response may come before or after that localised outbreak. Thus, the government response 23 See Guardrisk (fn 1) paras 52-57. 24 Ibid para 58. 25 Ibid para 14. 26 Ibid para 17. 27 Ibid para 19. 28 Ibid para 18. 25 and the outbreak had to be regarded as ‘part and parcel’ of the insured peril. Also of significance, this Court accepted there that ‘because it is part of the insured peril, the government’s response is covered, not because it is caused by what was insured against; it is covered because it is what is insured against’29. Therefore, this court held in Guardrisk that the contention of the insurer there, that the policy in that matter did not indemnify business interruption due to closure following a government order, had to fail. [59] Having found that the government’s response to Covid-19 and that insured’s consequent loss are covered by the policy, this Court in Guardrisk expressed the view that that conclusion rendered the question of causation superfluous.30 But it, nevertheless, proceeded to consider the question of causation. Having found that the local occurrence of Covid-19 and the government’s national lockdown was the factual cause of the insured’s loss it went on to consider the question of legal causation. It concluded as follows regarding that issue: ‘Once we accept …that the government’s response through the imposition of the lockdown, was both a proximate cause, or as the high court found, sufficiently closely connected to the business interruption and consequent loss, the conclusion that legal causation was proved, follows inevitably.’31 [60] Turning to the facts of this case, this is not really a causation issue as AIG would have it, but an interpretation issue. If the extended event (or disease) clause is properly interpreted, there is no problem with causation. It seems fallacious to contend that the very disease that was responsible for the government’s response (ie the national lockdown), is not the cause of the business interruption which brings about the loss that the insured is seeking indemnity for. The government response was necessitated by the disease itself. These events or causes are integrated or ‘inextricably connected’. However, the insurer’s liability is only triggered when the disease breaks out within the agreed radius. It is only from that point on that the insured is covered for losses and additional expenses incurred because of the business interruption caused by the contemplated disease. The factual and legal, or 29 Ibid para 21. 30 Ibid para 34. 31 Ibid para 51. 26 proximate causation is established in respect of the trigger event referred to in the policy.32 [61] The national response to Covid-19 and the outbreak within the radius of 43 Air School’s business premises in Port Alfred was sufficient to satisfy the requirement in the policy. If it had not been for Covid-19 and the Government’s response, the business of 43 Air School would not have been interrupted and 43 Air School would not have suffered the loss. The losses of 43 Air School as per its first and second claims are exactly the kind of losses it intended to insure itself against under the policy. It has proved that the risk it was insured against has occurred and it has brought those claims ‘within the four corners of the promise made to [it].’33 Summation 43 Air School’s Claims [62] In light of the issues considered thus far, the third claim of 43 Air School must fail because it is based squarely on an incorrect assumption that the policy was a joint one. In any event, another reason why the third claim must fail is because there was no compliance with the reporting conditions under the policy in respect of that claim. [63] Counsel for AIG argued that the character of the first and second claims of 43 Air School had changed because since they were incorporated into the application, because of 43 Air School’s assumption that the policy was a joint one. And, secondly, and in any event, 43 Air School has not proved, in respect of those claims, that it was entitled to be indemnified under the policy, because it has not shown a causal connection between the outbreak of Covid-19 within the 25 km radius of its premises and its loss. [64] The first argument lacks merit because 43 Air School never abandoned its reliance on the fact that there was an outbreak of Covid-19 within 25 km of its Port Alfred business premises on 25 April 2020. Even though those claims are embodied in the application, they are fundamentally still based on that fact, although 43 Air 32 As contemplated in eg Napier v Collet 1995 (3) SA 140 (A) at 144. 33 Eagle Star Insurance Co Ltd v Willey 1956 (1) SA 330 (A) at 334. 27 School, relying on its erroneous view that the policy was joint, sought to bolster them by also relying on the fact that there was an outbreak of Covid-19 within 25 km of the Gqeberha premises on 21 March 2020. The second argument has no merit for the reasons stated above. PTC and JOC’s claims [65] PTC’s claim must fail because it has not proved that it was an insured under the policy, including for business interruption cover, and because it did not report the claim as required under the reporting conditions of the policy. The claim of JOC must also fail because its claim was also not reported as required in terms of the policy. Conclusion [66] AIG has been shown to be liable for the first and second claims of 43 Air School but has not been shown to be liable in respect of 43 Air School’s third claim and the claims of PTC and JOC. I am of the view that this does not justify a costs order in the appellant’s favour and that a more appropriate order would be for the parties to bear their own costs. [67] In the result, the following order is made: 1. The appeal in respect of the order of the high court insofar as it relates to the third claim of the second respondent and in respect of the claims of the third and fourth respondents succeeds. 2. The appeal in respect of the first and second claims of the second respondent is dismissed. 3. The parties are to bear their own costs of the appeal. 4. The order of the high court is amended to read as follows: ‘1. The respondent is liable to compensate the second applicant in respect of its two claims for business interruption submitted, respectively, on 19 May 2020 for the period 26 April 2020 to 30 April 2020, and on 9 June 2020 for the period 1 May 2020 to 31 May 2020. 2. The respondent is directed to engage the second applicant meaningfully for the purpose of quantifying the monetary value of the claims referred to in paragraph 1. 28 3. The application is otherwise dismissed, and each party is to bear its own costs.’ P COPPIN ACTING JUDGE OF APPEAL APPEARANCES For the Appellant: I P Green SC and R Ismail Instructed by: Webber Wentzel, Sandton Webbers, Bloemfontein. For the Respondent: K J Van Huyssteen Instructed by: Fluxmans Inc., Johannesburg Lovius Block Inc., Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 13 June 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 AIG South Africa Limited v 43 Air School Holdings (Pty) Ltd and Others (640/2023) [2024] ZASCA 97 (13 June 2024) Today the Supreme Court of Appeal (SCA) handed down judgment in an appeal against the decision of the Gauteng Division of the High Court, Johannesburg (the high court). The high court granted AIG South Africa Limited (AIG) leave to appeal to the SCA. The high court essentially found in favour of the respondents, declaring that AIG was liable to indemnify them for their losses and directing AIG to engage them meaningfully in respect of the quantification of those claims. The SCA upheld the appeal insofar as it relates to the third claim of the second respondent and the claims of the third and fourth respondents and dismissed the appeal in respect of the first and second claims of the second respondent. It, nevertheless, ordered the parties to bear their own costs. The matter involved AIG South Africa Limited (AIG) which allegedly provided business interruption insurance cover to 43 Air School Holdings (Pty) Ltd, 43 Air School (Pty) Ltd, PTC Aviation (Pty) Ltd, and Jet Orientation Centre (Pty) Ltd (JOC) (collectively referred to as ‘43 Air School Group’ and ‘the respondents’) under a policy that covered losses resulting from the interruption of business due to a notifiable disease occurring within 25 km of the Insured's premises. 43 Air School submitted two claims to AIG in May and June 2020 for business interruption losses allegedly caused by the COVID-19 outbreak within 25 km of its premises in Port Alfred, Eastern Cape. AIG repudiated those claims. In response 43 Air School, PTC and JOC brought an application in terms of which 43 Air School sought relief in respect of those claims and further sought to hold AIG liable for a third claim. This third claim was related to the period after the COVID-19 outbreak within 25 km of the business premises of 43 Air School's subsidiary, 43 Advanced, in Lanseria and within 25 km of the business premises of PTC and JOC in Gqeberha and assumed that the policy in question was a joint policy. PTC and JOC brought separate claims for loses they alleged they suffered because of the outbreak of COVID-19 within the agreed radius of their business premises. AIG disputed the validity of all the claims. It alleged that the initial claims of 43 Air school were bad in law because their character had changed since the respondents wrongly assumed that the policy was joint, and that 43 Air School did not prove that their losses were caused by the outbreak of COVID-19 within the agreed radius of its premises. AIG alleged that the third claim was based on the erroneous assumption that the policy was joint. AIG also denied liability on the basis that the respondents did not comply with their reporting obligations in terms of the policy in respect of 43 AIR School’s third claim and the claims of PTC and JOC. AIG further denied that PTC was an insured in terms of the policy. 2 The SCA found that the high court erred in its approach. It found that the policy at least in respect of the business interruption cover, was a composite, as opposed to a joint policy, meaning that even if there was one policy document for all the insured, effectively it consisted of a bundle of separate policies between AIG and the various insured. The SCA, relying, inter alia, on General Accident Fire and Life Assurance Corporation, Limited, and another v Midland Bank Limited and others, where it was found that in determining whether a policy is joint, or composite is a matter of its interpretation and of the nature of the interest(s) of the insured, found that the mere fact that there were several persons or entities insured under one policy does not make that policy one of joint insurance. Relying on Russel Loveday NO v Collins Submarine Pipelines, the SCA held that the policy's reporting clause was a condition precedent to AIG's liability. The SCA held that, the 43 Air School Group failed to comply with the reporting clause by not giving notice of its third claim before instituting litigation and that PTC and JOC similarly failed to comply in respect of their claims. The SCA further found that PTC was not an insured under the policy. The SCA provided clarity on the interpretation of business interruption insurance policies, emphasising the importance of complying with policy conditions and the distinction between composite and joint policies. The SCA findings highlighted the need for insureds to promptly report claims and for courts to interpret insurance contracts based on their specific wording and context. The SCA considered the question of causation in light of decisions of the high court and the SCA and concluded that 43 Air School in respect of its first two claims established the required link between its losses and the outbreak of COVID-19 within the agreed radius of its premises in Port Alfred. As a result, the SCA amended the high court's order and replaced it with an order declaring AIG liable for 43 Air School's first two claims for the periods of 26 April to 30 April 2020 and 1 May to 31 May 2020. Further, the SCA directed AIG to engage with 43 Air School to quantify the monetary value of those claims. The SCA dismissed the application in all other respects and ordered each party to bear its own costs. ~~~~ends~~~~

4294

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 1252/2022 In the matter between: COMMISSIONER FOR THE SOUTH APPELLANT AFRICAN REVENUE SERVICE and TUNICA TRADING 59 (PTY) LTD RESPONDENT Neutral citation: Commissioner for the South African Revenue Service v Tunica Trading 59 (Pty) Ltd (1252/2022) [2024] ZASCA 115 (24 July 2024) Coram: MOLEMELA P, MOCUMIE, SCHIPPERS and MEYER JJA and TLALETSI AJA Heard: 2 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The time and date for hand-down is deemed to be 11h00 on 24 July 2024. Summary: Administrative Law – review of Commissioner’s decision refusing refund of excise duty and fuel levy – Customs and Excise Act 91 of 1964 (the Act) – notice of legal proceedings under s 96 – whether response to notice a ‘decision’ within the meaning of the Promotion of Administrative Justice Act 3 of 2000 – s 75(1)(d) of the Act – whether licensed distributor of fuel satisfied requirements for refund – meaning of s 64F of the Act – that fuel be obtained from stocks of licensee of customs and excise manufacturing warehouse. 2 _________________________________________________________________ ORDER _________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Le Grange J, Cloete J and Kusevitsky J sitting as court of appeal): 1 The appeal is upheld with costs, including the costs of senior counsel. 2 The order of the court a quo is set aside and replaced with the following: ‘The application is dismissed with costs, including the costs of two counsel where so employed.’ _________________________________________________________________ JUDGMENT ________________________________________________________________ Schippers JA (Molemela P, Mocumie and Meyer JJA and Tlaletsi AJA concurring) [1] The appellant, the Commissioner of the South African Revenue Service (the Commissioner), appeals against a decision of a full court of the Western Cape Division of the High Court, Cape Town (the High Court), which reviewed and set aside two decisions by the South African Revenue Service (SARS) relating to applications by the respondent, Tunica Trading 59 (Pty) Ltd (Tunica), for the refund of excise duty and fuel levy under the Customs and Excise Act 91 of 1964 (the Act). The appeal is with the leave of this Court. The facts [2] Tunica is a licensed distributor of fuel (LDF) in terms of s 60 of the Act. It is a small-scale distributor which purchases fuel for supply to foreign-going ships. In 2014 Tunica purchased fuel (diesel) from Masana Petroleum Solutions (Pty) Ltd 3 (Masana), which supplies fuel to small-scale distributors. A letter by BP Southern Africa (Pty) Ltd (BP) dated 5 March 2015, states that it supplies fuel to Masana in terms of a supply agreement between BP and Masana; that BP is a 45% shareholder in Masana; and that BP grants Masana access to its ‘capabilities and resources’. It is common ground that BP is a licensee of a customs and excise manufacturing warehouse within the meaning of s 64F of the Act. [3] On 28 October 2014, 4 November 2014 and 11 November 2014 respectively, Tunica applied to SARS for a refund of excise the duty and fuel levy under the Act, in respect of three consignments of fuel which Tunica had bought from Masana (the refund applications). The fuel was obtained from BP’s depot in Montague Gardens, Cape Town, and sold to foreign-going ships, namely the Danah Explorer, the INS TEG in Simons Town and the INS TEG in Cape Town. [4] This appeal concerns only one refund application, namely Tun 068, in respect of fuel delivered on behalf of Tunica to the INS TEG in Simons Town. The INS TEG is an Indian naval vessel. Tunica’s remaining refund applications have not yet been decided by SARS. [5] On 1 April 2015 SARS rejected the refund application on the ground of non-compliance with s 64F(1)(b) of the Act, because Tunica did not acquire the fuel from the licensee of a customs and excise manufacturing warehouse (BP). Instead, the fuel was purchased from an intermediary, Masana, which allegedly had purchased it from a licensed manufacturing warehouse, BP. Tunica was referred to s 77A-H of the Act and informed of its right to appeal the decision refusing its refund application. [6] On 17 April 2015 Tunica appealed the decision of 1 April 2015 to an internal administrative appeal committee of SARS (the appeal committee). The grounds of appeal were these. SARS’ interpretation of the Act was flawed and it provided no 4 evidence to support that interpretation. Section 64F(1) does not require a LDF to acquire the fuel directly from the licensee of a customs and excise manufacturing warehouse. The ‘new interpretation’ by SARS was an arbitrary change in the application of the Act, which was administratively unfair and effectively rendered s 64F(1) nugatory. [7] On 28 September 2015 Tunica was advised that the appeal committee had disallowed the appeal. The reasons given were the following. The invoices for the fuel were in the name of Masana. The fuel was not sourced from the stocks of a licensed customs and excise manufacturing warehouse and could not be confirmed as a direct movement from such stocks. Tunica did not comply with s 64F(1)(b) of the Act read with rule 64F.06(d) of the Custom and Excise Act Rules (the Rules). [8] On 26 October 2015 Tunica requested reasons for the appeal committee’s decision, which it furnished on 4 January 2016. The committee confirmed the reasons for the decision in its letter of 28 September 2015 and added that Tunica ‘did not qualify for the schedule 6 refund item’. [9] On 3 February 2016 Tunica delivered to SARS, a notice of its intention to institute legal proceedings in terms of s 96(1) of the Act, for the refund of the excise duty and fuel levy (the s 96 notice). In its cause of action annexed to that notice, Tunica stated that on a proper construction of the Act and the rules, it was entitled to a refund, and that the decision by SARS was materially influenced by an error of law. It contended that obtaining fuel from the stocks of a licensee of a customs and excise manufacturing warehouse ‘must include cases where the fuel is purchased from an intermediary like Masana’. Tunica also alleged that SARS had committed various reviewable irregularities as envisaged in the Promotion of Administrative Justice Act 3 of 2000 (PAJA). 5 [10] On 3 February 2016 SARS informed Tunica that the s 96 notice had been handed to Ms Makhala Moloi, a senior manager in its litigation department and the main deponent to the answering papers. Subsequently, she informed Tunica that the documents it had submitted were insufficient. Tunica was requested to submit further documentation, given an opportunity to make an oral presentation and SARS proposed that Tunica not proceed with litigation until SARS provided a final response to the s 96 notice. [11] At a meeting at SARS’ offices in Pretoria on 25 August 2016, Tunica made an oral presentation and provided further documents. It was decided that SARS would provide Tunica with a spreadsheet indicating the documentation required, which it did. Tunica completed the spreadsheet and submitted it to SARS. [12] On 2 November 2016 SARS responded to the s 96 notice. SARS informed Tunica, inter alia, that the Montague warehouse is not a licensed manufacturer of oil as required under the Act; that Masana is not a licensed warehouse; that there was no purchase invoice between the oil major and Tunica;1 that the road transporter of the fuel had to be registered under the Act; and that there was no proof that the fuel had been delivered. SARS stated that unless Tunica could provide information and documents to refute SARS’ response, it was inclined to agree with the decision of the appeal committee. [13] On 2 December 2016 Tunica’s attorneys wrote to SARS, explaining their client’s position. SARS replied on 17 February 2017, reiterating its stance that Tunica did not qualify for a refund of the excise duty and fuel levy. [14] On 3 April 2017 Tunica sent another notice in terms of s 96 of the Act, informing SARS that legal proceedings would be instituted under the PAJA to 1 Oil majors are the main players in the South African oil industry, such as BP Southern Africa, Total Energies and Shell Southern Africa. 6 review and set aside the decision to disallow the refund. In its response dated 19 April 2017, SARS informed Tunica that it would have to impugn the decision of the appeal committee and not Ms Moloi’s response to the s 96 notice. SARS stated that Ms Moloi’s response was not administrative action within the meaning of the PAJA, and thus not reviewable. Litigation history The High Court [15] In June 2020 Tunica brought an application in the High Court in which it claimed inter alia the following relief: (a) An order in terms of s 9 of PAJA extending the time period for the launch of the application, to the extent necessary. (b) An order setting aside the decisions taken by SARS on 17 February 2017, alternatively on 28 September 2015, refusing Tunica’s application for a refund of the excise duty and fuel levy. (c) In the alternative to (b) above, an order in terms of s 172(1) of the Constitution, declaring the decisions invalid, and reviewing and setting them aside. (d) An order remitting the application for a refund of the excise duty and fuel levy to the Commissioner for a decision within 15 days of the date of the order. (e) In the alternative to (a), (b), (c) and (d) above: an order condoning Tunica’s non-compliance with the time limit of one year in s 47(9)(f) of the Act to the extent necessary; an order that the application be deemed to be an appeal in terms of s 47(9)(e) of the Act against the decisions taken on 17 February 2017, alternatively on 28 September 2015, on the grounds set out in the founding papers; and an order upholding the appeal. [16] The grounds for the review, alternatively the appeal, were these. The decision was materially influenced by an error of law as SARS’ interpretation of 7 s 64F was flawed and rendered the provision nugatory. SARS took into account irrelevant considerations and ignored relevant ones. The fact that the fuel was purchased from Masana was irrelevant; it was obtained from the stocks of the licensee of a customs and excise manufacturing warehouse. The decision was not authorised by an empowering provision, was arbitrary and capricious, and irrational and unreasonable. The actions of SARS were procedurally unfair in that SARS had changed its approach to refunds without warning. The decision was otherwise unlawful and unconstitutional. [17] The High Court (Desai J) dismissed the application with costs. Its main findings can be summarised as follows. Tunica was required to impugn the decision taken by the appeal committee on 28 September 2015. Ms Moloi’s response to the s 96 notice dated 17 February 2017 was not reviewable because it is not administrative action as defined in the PAJA, nor the exercise of public power, which is reviewable in terms of the principle of legality. [18] The High Court dealt with the matter as an appeal in terms of s 47(9)(e) of the Act, against the decision taken by the appeal committee on 28 September 2015. It stated that such appeal was an appeal in the wide sense which entailed a complete rehearing of the matter, with or without additional information; and that all the evidence necessary to decide the matter had been placed before it. [19] The High Court held that the system created by the Act is one of self-assessment, and it is the duty of the entity claiming a refund to ensure strict compliance with its provisions, by rendering correct returns and keeping the prescribed and other records to substantiate the correctness of the returns lodged and payment made. Tunica, the court said, had not submitted the specified documents containing the prescribed information. 8 [20] The High Court found that the fuel was not obtained from the licensee of a customs and excise manufacturing warehouse; it was bought from Masana. There was no evidence that the transporter who had collected the fuel from BP’s depot was a licensed remover of goods under the Act, nor evidence linking the fuel collected from the depot to that delivered to the vessel. It concluded that Tunica had not met the requirement that the fuel had been exported. Tunica was granted leave to appeal to a full court. The Full Court [21] The Full Court (Le Grange J, Cloete J and Kusevitsky J) upheld the appeal with costs. It set aside the High Court’s order and replaced it with an order declaring the Commissioner’s decisions taken on 17 February 2017 and 28 September 2015 invalid, and reviewed and set aside those decisions. The refund application was remitted to the Commissioner, who was directed to decide it within 30 days of the date of the order. [22] The Full Court held that the September 2015 decision was not a tariff determination as contemplated in s 47(9)(a)(i) of the Act. Rather, it was a decision on Tunica’s appeal lodged in terms of s 77B(1) of the Act, taken by the appeal committee and signed by its chairperson, as contemplated in s 77E(3). The Court also held that at no stage prior to the litigation did SARS inform Tunica that its appeal against the rejection of its application for a refund was being dealt with as an appeal under s 47(9)(e) of the Act. [23] The Full Court concluded that SARS’ response to the s 96 notice was a decision within the meaning of s 77F of the Act; and that it was the operative decision and therefore reviewable. It reasoned that SARS in its letter of 8 April 2016, had suggested that Tunica not proceed with litigation and invited Tunica to clarify certain issues before the Commissioner made a ‘final decision’. This, the Full Court said, ‘falls squarely within the provisions of s 77F the Customs Act’. 9 The Court stated that if the September 2015 decision was a final decision, ‘then the letter of 8 April 2016 would have served no purpose, as the Commissioner would have been functus officio and no further decision could have been taken by him’. It went on to say that Ms Moloi had signed the ‘decision’ on behalf of the Commissioner, which had legal consequences until set aside by a court. [24] The Full Court held that the Commissioner committed an error of law which vitiated the decision refusing the refund application. Tunica was entitled to a refund of customs duties and fuel levies, since s 64F(1) of the Act requires a LDF to obtain or acquire – not purchase – fuel from the stocks of a licensee of a customs and excise manufacturing warehouse. This, according to the Full Court, would include cases where fuel is purchased from an intermediary, but emanates from the stocks of the licensee of a customs and excise manufacturing warehouse. The Full Court stated that Tunica’s contention that SARS’ interpretation of s 64F(1) would for practical purposes render the provision nugatory, had merit. [25] The Full Court further held that SARS took into account irrelevant considerations, namely the fact that the fuel had been purchased from Masana. SARS ignored relevant considerations: BP’s controlling interest in Masana; the fuel was supplied from the stocks of BP; Tunica delivered the fuel directly from BP’s depot; and Tunica had complied with all regulatory requirements. Tunica’s complaint that the rejection of its application was not authorised by the empowering provision, and was arbitrary and irrational, the Full Court said, had merit. [26] The Full Court concluded that the High Court had erred in holding that the fuel had not been exported within the meaning of rule 64F.06 wholly and directly, either as cargo or in bunker. It stated that it was unlikely that fuel bought from a LDF and used by a foreign vessel ‘which must of necessity return to its registered port, could ever be treated as fuel used for home consumption’; and ‘includes the 10 situation where a foreign vessel consumes some of the fuel in South African waters’. [27] Finally, the Full Court held that SARS had furnished new reasons for the impugned decision, which were factually incorrect. These were that Tunica had not submitted the specified documents; that the fuel was not directly exported; that there was no evidence that the transporter was a licensed remover of goods under s 64D of the Act, which the Court said was inapplicable; and that there was no evidence linking the fuel collected from the depot to that delivered to the vessel. Submissions in this Court Submissions on behalf of SARS [28] Tunica’s internal appeal was dismissed on 28 September 2015. It delivered the s 96 notice of its intention to review that decision in terms of the PAJA. That notice, SARS submits, constitutes the first step in litigation and falls outside the category of internal administrative appeals, alternative dispute resolution and dispute settlement contained in Chapter XA of the Act. [29] SARS submits that its response to the s 96 notice dated 17 February 2017, is precisely that: it is not a decision taken in terms of s 77F of the Act. The response was the last step in a process of considering the s 96 notice. It does not constitute administrative action as envisaged in the PAJA. Moreover, there is no evidence to indicate that in issuing the response on 17 February 2017, SARS was acting in terms of s 77F of the Act. [30] SARS submits that the Act creates a system of self-assessment that functions similarly to the Income Tax Act 58 of 1962 and the Value Added Tax Act 89 of 1991. Therefore, an entity that engages in a commercial activity to which the Act applies must ensure that it complies with the Act’s provisions, in particular by 11 paying the correct duty or levy, and keeping the prescribed and other records to substantiate the correctness of returns lodged and payment made. [31] SARS further submits that strict compliance with the Act is necessary to enable the Commissioner to effectively administer and enforce its provisions, and that Tunica has not met the requirements for a refund of the excise duty or fuel levy as contemplated in s 75(1)(d). It provides for the payment of refunds ‘to the extent and in the circumstances stated in the item of Schedule No. 6 in which such goods are specified subject to compliance with the provisions of the said item’. The relevant item in this case is item 623.25 in Schedule 6, which requires that the fuel be obtained from stocks of the licensee of a customs and excise manufacturing warehouse, subject to compliance with Note 10. Tunica did not meet this requirement. In terms of Note 10, fuel so obtained must be wholly and directly exported by a LDF in order to be considered for a refund of duty. Tunica did not meet this requirement either. Tunica’s submissions [32] Tunica supports the Full Court’s conclusion that the operative decision that had to be challenged was the response to the s 96 notice on 17 February 2017, for the reasons stated in that Court’s judgment. Tunica contends that ‘the February 2017 decision was the final decision by the Commissioner in respect of the refund application, that it is administrative action, and that it is reviewable in terms of PAJA, alternatively section 172(1) of the Constitution’. [33] Tunica submits that the September 2015 decision fell to be reviewed and set aside on numerous grounds contained in the PAJA. Its main review ground was that the decision was materially influenced by an error of law, namely the incorrect interpretation of s 64F of the Act. 12 [34] Tunica further submits that for many years ‘SARS itself had interpreted the Act and rules in such a way that a refund would be made in these circumstances’, which suggests that SARS also understood the section in a way that makes business and commercial sense. Subsequently, so it is submitted, SARS ‘decided to interpret the section in a way which requires words to be read into it, and which renders the section nugatory’. [35] Tunica submits that SARS’ interpretation of s 64F is incorrect for the following reasons. The requirement that the fuel must be obtained (not purchased) from stocks of a licensee of a customs and excise manufacturing warehouse, must include cases where the fuel is purchased from an intermediary like Masana. If the legislature intended to refer to fuel purchased directly from the licensee of a customs and excise manufacturing warehouse, it would have said so. These licensees impose onerous conditions and high prices on the sale of fuel stocks directly to a LDF, and prefer to do so through authorised distributors like Masana. Consequently, a LDF like Tunica finds it difficult to purchase fuel directly from local oil manufacturers, which means that SARS’s interpretation ‘renders section 64F(1) nugatory for all practical purposes’. The issues [36] In this Court the parties accepted that the matter should be dealt with as a review under the PAJA, and not as an appeal against a tariff determination in terms of s 47(9)(e) of the Act. SARS conceded that an order extending the time period for the launch of the review application in terms of s 9 of the PAJA, was in the circumstances unnecessary. [37] There are three issues raised by this appeal: (a) The first is whether the response by SARS to the s 96 notice is a decision which is reviewable under the PAJA. 13 (b) The second issue, which is at the heart of the appeal, is the proper construction of s 64F of the Act. It provides inter alia that a LDF is entitled to a refund of duty in respect of fuel obtained at any place in the Republic, ‘from stocks of a licensee of a customs and excise manufacturing warehouse’. (c) The third issue is whether Tunica complied with the requirements of s 64F(1)(b) of the Act. Is the response to the s 96 notice reviewable? [38] Section 96(1) in relevant part provides: ‘96 Notice of action and period for bringing action (1)(a)(i) No process by which any legal proceedings are instituted against the State, the Minister, the Commissioner or an officer for anything done in pursuance of this Act may be served before the expiry of a period of one month after delivery of a notice in writing setting forth clearly and explicitly the cause of action, the name and place of abode of the person who is to institute such proceedings (in this section referred to as the “litigant”) and the name and address of his or her attorney or agent, if any. (ii) Such notice shall be in such form and shall be delivered in such manner and at such places as may be prescribed by rule. (iii) No such notice shall be valid unless it complies with the requirements prescribed in this section and such rules.’ [39] Recently in Commissioner SARS v Dragon Freight, this Court described the purpose of s 96(1) as follows: ‘The purpose of section 96(1) is self-evident: to allow SARS, the organ of state charged with the administration of the Act, to investigate or review the merits of the intended legal proceedings and decide what position to adopt in relation thereto. It may, for example, in an appropriate case decide to resolve the dispute before the institution of legal proceedings, so as to avoid unnecessary and costly litigation at public expense. SARS is a large and complex institution with extensive administrative responsibilities and high workloads. Its functions are not confined to the levying of customs and excise duties under the Act, but include the recovery of taxes under the Income Tax Act 58 of 1962 and the administration of the Value-Added Tax Act 89 of 1991. The section 96(1) notice enables SARS 14 to ensure that a matter is brought timeously to the attention of the appropriate official for investigation or review.’2 [40] It follows that the Commissioner may respond to a s 96(1) notice in one of three ways: (a) He or she may not respond at all. Since a litigant’s right to proceed with its cause of action is not dependent on the Commissioner’s response, it is entitled to proceed with the intended legal proceedings after the expiry of the one-month period. (b) The Commissioner may concede the relief sought in the intended legal proceedings or settle the matter on some other basis, thus rendering the institution of proceedings unnecessary. (c) The Commissioner may within the one-month period inform the litigant that he or she does not concede the relief sought in the intended proceedings. In that event the litigant would have to wait until the one-month period expires, unless the Commissioner agrees that litigation may be commenced immediately. [41] Although the Commissioner did not respond to the s 96 notice within one month, the response in (c) applies in this case. It is clear from the evidence, contrary to the finding of the Full Court, that SARS’ response to that notice in its letter of 8 April 2016 is not a decision made under s 77F of the Act. SARS’ response was thus not reviewable. [42] Section 77F must be read with s 77E. These provisions, in relevant parts, state: ‘77E Appointment and function of appeal committee 2 The Commissioner for the South African Revenue Service and Others v Dragon Freight (Pty) Ltd and Others [2022] ZASCA 84; [2022] 3 All SA 311 (SCA); 85 SATC 289 paras 33-34. 15 (1) The Commissioner may appoint a committee of officers or a committee of officers and other persons to consider and decide appeals or make recommendations in relation to such appeals to the Commissioner. (2) An appeal committee may- (a) consider and decide; or (b) make recommendations to the Commissioner on matters prescribed by rule. (3) Any decision signed by the chairperson of the appeal committee shall be regarded as a decision of the committee and to have been made by an officer. (4) The chairperson of the appeal committee must maintain a record of the proceedings prescribed by rule.’ ‘77F Decision of Commissioner and committee (1) The Commissioner may- (a) refer the matter back to the committee for further consideration; (b) reject or accept or accept and vary the recommendation of the committee; (c) confirm or amend the decision or withdraw it and make a new decision.’ [43] A notice in terms of s 96 plainly falls outside the appeal process contemplated in s 77F of the Act. Rather, it is a mandatory first step required by the Act before legal proceedings may be instituted against the Commissioner. It is therefore not surprising that the response to the s 96 notice does not constitute ‘administrative action’ as defined in the PAJA, namely: ‘any decision taken, or any failure to take a decision, by . . . an organ of state, when . . . exercising a public power or performing a public function in terms of any legislation . . . which adversely affects the rights of any person and which has a direct, external legal effect . . .’3 [44] Applied to the present case, Tunica sent the s 96 notice pursuant to the dismissal of its appeal by the appeal committee on 28 September 2015, after it had requested reasons for that decision. The s 96 notice unequivocally states that ‘[t]here are a number of grounds on which Tunica intends to challenge the approach 3 Section 1 of the PAJA; Grey’s Marine Hout Bay (Pty) Ltd and Others v Minister of Public Works and Others [2005] ZASCA 43; [2005] 3 All SA 33 (SCA); (2005) 6 SA 313 (SCA) para 23, affirmed in Viking Pony Africa Pumps (Pty) Ltd t/a Tricom Africa v Hydro-Tech Systems (Pty) Ltd and Another [2010] ZACC 21; 2011 (1) SA 327 (CC); 2011 (2) BCLR 207 (CC) para 37. 16 by SARS as constituting an error of law’ under the PAJA – a decision which directly affected its right to a refund of the customs duty and fuel levy. Consequently, there can be no suggestion that Tunica was seeking a decision by the Commissioner in terms of s 77F of the Act. [45] What is more, the letter by Ms Moloi dated 8 April 2016 makes it clear that it was not written in anticipation of a decision by the Commissioner under s 77F. The letter states the following: (a) It is written in response to the s 96 notice. (b) In considering the s 96 notice and supporting documentation, SARS inclines to the view that the documentation is insufficient to make ‘an informed decision’ (in response to the notice). Tunica is invited to clarify certain issues by furnishing the documents listed in the letter before a final decision is made. (c) If Tunica is of the opinion that an oral presentation would assist in explaining its compliance with the Act and finalising the matter, SARS would grant it such an opportunity. (d) Tunica should not proceed with litigation pending finalisation of the s 96 notice, and should it be necessary to file papers in the High Court, Tunica would be granted an extension of 30 days to do so. [46] That the Commissioner’s response to the s 96 notice is not administrative action and consequently not reviewable, is placed beyond question in Ms Moloi’s letter to Tunica’s attorneys dated 2 November 2016. It records SARS’ response to the s 96 notice and concludes as follows: ‘Based on the above mentioned, unless your client can provide information with documents to back up what we have highlighted herein, this office is inclined to agree with the decision of the IAA [Internal Appeal Committee]. 17 Such decision will stand and this office will consider your client’s Section 96 notice to have been duly dealt with and finalised.’4 [47] Tunica’s attorneys wrote to SARS on 2 December 2016 in which they again addressed the issues. They said that there was no basis for Ms Moloi to agree with the decision of the appeal committee; that they were awaiting SARS’ ‘final decision’; and that they reserved their client’s rights to proceed with legal action. [48] On 17 February 2017 Ms Moloi once more informed Tunica’s attorneys that their client did not qualify for a refund for the reasons stated in her letter of 2 November 2016. The attorneys were again advised that SARS agreed with the appeal committee’s decision.5 [49] For these reasons, the Full Court’s findings that ‘the decision . . . in February 2017 where the process was completed and a final decision had been made’; and ‘SARS cannot simply treat the decision taken by Ms Moloi as though it did not exist’, are unsustainable on the evidence. So too, its finding that ‘the 17 February 2017 decision is the operative decision which constitutes administrative action as defined in PAJA and is therefore reviewable’. The Full Court’s order on this aspect must therefore be set aside. Section 64F of the Act [50] Three preliminary points are required to be made at the outset. First, the fact that for many years SARS had interpreted the Act and rules in such a way as to grant an application for a refund of the kind claimed in this case – which the Full Court took into account – is irrelevant. This is because, as Harms JA said in KPMG, ‘interpretation is a matter of law and not of fact and, accordingly, is a matter for 4 Emphasis added. 5 The letter by Ms Moloi states: ‘Our office therefore, upholds the decision of the IAA and that of the branch office.’ 18 the court and not for witnesses’.6 Thus, if on a proper construction of s 64F Tunica is not entitled to a refund, that is the end of its case. [51] Further, in terms of the principle of legality, an aspect of the rule of law, a body exercising public power such as SARS, must act within the powers lawfully conferred on it.7 For this reason the doctrine of estoppel – that SARS has for many years granted applications for refunds of the kind in question – cannot be applied against it. To do so would be to confer on SARS a power that it does not have, and grant validity to an ultra vires act (an act beyond the powers of an administrator). In RPM Bricks this Court held that estoppel ‘cannot . . . be used in such a way as to give effect to what is not permitted or recognised by law’.8 [52] Second, given that interpretation is a matter of law, the fact that a small-scale distributor may encounter difficulty in purchasing fuel directly from the licensee of a customs and excise manufacturing warehouse, is likewise irrelevant to the construction of s 64F. The Full Court’s conclusion that there is merit in the argument that SARS’ interpretation would for practical purposes render s 64F nugatory, is therefore misplaced. [53] Third, in construing a taxing act, a court ‘will not presume in favour of any special privilege of exemption from taxation’. 9 On the contrary, a rebate of excise duty is a privilege and strict compliance with its conditions may be exacted from the claimant. As was held by a full court in BP v Secretary for Customs and Excise,10 approved by this Court in Toyota South Africa:11 6 KPMG Chartered Accountants SA v Securefin Ltd and Another [2009] ZASCA 7; 2009 (4) SA 399 (SCA); [2009] 2 All SA 523 (SCA) para 39. 7 Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others 1999 (1) SA 374 (CC) paras 56 and 58. 8 City of Tshwane Metropolitan Municipality v RPM Bricks (Pty) Ltd [2007] ZASCA 28; [2007] SCA 28 (RSA); 2008 (3) SA 1 (SCA) para 23. 9 Ernst v Commissioner for Inland Revenue 1954 (1) SA 318 (A) at 323E. 10 BP Southern Africa (Pty) Ltd and Others v Secretary for Customs and Excise and Another 1984 (3) SA 367 (C) at 376A-C. 11 Toyota South Africa Motors (Pty) Ltd v Commissioner, South African Revenue Service 2002 (4) SA 281 (SCA) para 45. 19 ‘[T]he rebate of excise duty is a privilege enjoyed by those who receive it. It has been stated that it is neither unjust nor inconvenient to exact a rigorous observance of the conditions as essential to the acquisition of the privilege conferred and that it is probable that this was the intention of the Legislature . . . Moreover, the provision is obviously designed to prevent abuse of the privilege and evasion of the conditions giving rise to such privilege and again this supports the view that a strict compliance with the requirements laid down is necessary.’ The statutory and regulatory provisions [54] The starting point is s 75(1) of the Act. It provides: ‘Subject to the provisions of this Act and to any conditions which the Commissioner may impose– . . . (d) in respect of any excisable goods or fuel levy goods manufactured in the Republic described in Schedule 6, . . . a refund of the excise duty, fuel levy or Road Accident Fund levy actually paid at the time of entry for home consumption shall be granted to the extent and in the circumstances stated in the item of Schedule 6 in which such goods are specified, subject to compliance with the provisions of the said item and any refund under this paragraph may be paid to the person who paid the duty or any person indicated in the notes to the said Schedule 6: Provided that any rebate, drawback or refund of Road Accident Fund levy as contemplated in paragraph (b), (c) or (d), shall only be granted as expressly provided in Schedule 4, 5 or 6 in respect of any item of such Schedule.’ [55] Section 64F reads inter alia as follows: ‘Licensing of distributors of fuels obtained from the licensee of a customs and excise manufacturing warehouse (1) For purposes of this Act, unless the context otherwise indicates– “licensed distributor” means any person who– (a) is licensed in accordance with the provisions of section 60 and this section; (b) obtains at any place in the Republic for delivery to a purchaser in any other country of the common customs area for consumption in such country or for export (including supply as ships’ or aircraft stores), fuel, which has been or is deemed to have been entered for payment of excise duty and fuel levy, from stocks of a licensee of a customs and excise manufacturing warehouse; and 20 (c) is entitled to a refund of duty in terms of any provision of Schedule 6 in respect of such fuel which has been duly delivered or exported as contemplated in paragraph (b). (2) . . . (3) (a) In addition to any other provision of this Act relating to refunds of duty, any refund of duty contemplated in this section shall be subject to compliance with the requirements specified in the item of Schedule 6 providing for such refund and any rule prescribing any requirement in respect of the movement of such fuel to any such country or for export.’12 [56] The item specified in Schedule 6 in terms of which Tunica applied for a refund of duty, is item 623.25. It provides: ‘Fuel liable to excise duty which, after entry or deemed entry for home consumption and payment of duty by a licensee of a customs and excise manufacturing warehouse contemplated in section 19A and its rules is obtained from stocks of such licensee and exported (including supply as stores for foreign-going ships), by a licensed distributor contemplated in section 64F, subject to compliance with Note 10 to this Section.’ [57] Note 10(b) in Part 1F of Schedule 6 (Note 10) reads: ‘(b) Requirements in respect of refunds: (i) . . . (ii) Any application for a refund of excise duty in terms of this item shall be subject to compliance with– (aa) section 64F and its rules; (bb) rule 19A4.04 mutatis mutandis and any other rule regulating the export of goods to which this item relates. (iii) (aa) Any load of fuel obtained from the licensee of a customs and excise manufacturing warehouse must be wholly and directly exported by the licensed distributor in order to be considered for a refund of duty. (bb) A refund shall only be payable on quantities actually exported.’ [58] The rules prescribing the movement of fuel envisaged in s 64F(3) are contained in rule 64F.06. One of the reasons for refusing Tunica’s application for a refund, was non-compliance with rule 64F.06. It provides: 12 Emphasis added. 21 ‘(a) The procedures and other requirements prescribed in rule 19A4.04 which regulate the removal of fuel levy goods to a BLNS country or when exported shall apply mutatis mutandis in respect of fuel so removed to any other country in the common customs area or so exported as contemplated in section 64F and these rules. (b) Unless the licensed distributor uses own transport, such fuel, if wholly or partly transported by road, must be carried by a licensed remover of goods in bond contemplated in section 64D. (c) The number and date of the invoice issued by the licensee of the customs and excise manufacturing warehouse from whom the licensed distributor obtained the goods for such removal or export must be reflected on the form SAD 500. (d) Any load of fuel obtained from the licensee of a customs and excise manufacturing warehouse must be wholly and directly removed for delivery to a BLNS country or exported, as the case may be, in order to be considered for a refund of duty.’ [59] The procedures and requirements prescribed in Rule 19A4.04 regulating the removal of fuel levy goods, are the following: ‘Procedures relating to goods removed from a customs and excise warehouse (a) (i) Any fuel levy goods removed for any purpose by the licensee of a customs and excise warehouse must be removed from stocks which have been entered or are deemed to have been entered for home consumption in accordance with the provisions of these rules, hereafter referred to as “duty paid stock”. (ii) Where fuel levy goods are removed for any purpose specified in these rules requiring compliance with a customs and excise procedure either in respect of the removal, movement or receipt thereof, such goods may only be so removed from a storage tank owned by or under the control of a licensee of a customs and excise manufacturing or special customs and excise storage warehouse. (iii) Only a licensee of such manufacturing warehouse or the special customs and excise storage warehouse contemplated in rule 19A4.01(b)(ii) or a licensed distributor as contemplated in section 64F may export fuel levy goods. (iv) Only a licensee of such manufacturing warehouse or a licensed distributor as contemplated in section 64F may remove fuel levy goods to any BLNS country. (v) When any fuel levy goods are transported by road for - (aa) export; (bb) removal to a BLNS country; 22 (cc) removal to another customs and excise manufacturing warehouse or to a special customs and excise storage warehouse; (dd) removal to a rail tanker, a ship or an aircraft for onward removal for export such removal shall only be by a licensed remover of goods in bond as contemplated in section 64D unless the goods are carried by the licensee or licensed distributor using own transport.’ [60] Finally, there is the reverse onus provision in s 102(5) of the Act: ‘If in any prosecution under this Act or in any dispute in which the State, the Minister or the Commissioner or any officer is a party, it is alleged by or on behalf of the State or the Minister or the Commissioner or such officer that any goods or plant have been or have not been imported, exported, manufactured in the Republic, removed or otherwise dealt with or in, it shall be presumed that such goods or plant have been or (as the case may be) have not been imported, exported, manufactured in the Republic, removed or otherwise dealt with or in, unless the contrary is proved.’ [61] In summary and for present purposes, Tunica was required to establish the following: (a) The fuel was manufactured in South Africa. (b) The fuel was entered for home consumption on payment of duty by the licensee of a customs and excise manufacturing warehouse (the licensee). (c) The fuel was obtained from the stocks of the licensee. (d) Any load of fuel obtained from the licensee was wholly and directly removed from the licensee’s stocks for export by Tunica. (e) The assessment by SARS that the fuel was not exported, removed, or otherwise dealt with or in (ie not obtained from the licensee), is wrong. SARS’ interpretation of s 64F(1)(b): an error of law? [62] It is a settled principle that when construing a statute, the inevitable point of departure is the language of the provision, understood in the context in which it is 23 used, and having regard to its purpose. This constitutes the unitary exercise of interpretation.13 [63] On its plain language, a LDF means a person who obtains fuel from the stocks of the licensee (s 64F(1)(b)). The word ‘stocks’ is not defined in the Act and must be given its ordinary meaning. It is defined inter alia as: ‘goods kept on the premises of a shop or warehouse’;14 ‘a supply of goods that is available for sale in a shop’;15 ‘the total amount of goods or the amount of a particular type of goods available in a shop’;16 or ‘the inventory of goods of a . . . manufacturer’.17 [64] These definitions indicate that to qualify for a refund, a LDF must acquire the fuel directly from the inventory of the licensee – not from an intermediary such as Masana. This is hardly surprising, since it is an express requirement of s 75(1)(d) of the Act that a refund of excise duty or fuel levy is granted in respect of excisable goods or fuel levy goods manufactured in the Republic. And in terms of ss 19(1) and (2), a customs and excise manufacturing warehouse is a warehouse (ie premises) specifically licensed for the manufacture of dutiable goods from imported or locally-produced materials. Simply put, the fuel must be obtained from stocks at the warehouse of the licensee to qualify for a refund of customs and excise duty. [65] The plain wording of s 64F(1)(b) is buttressed by the immediate context. Following from the conjunction ‘and’ in the latter provision, s 64F(1)(c) states that a LDF is a person who ‘is entitled to a refund of duty in terms of Schedule No. 6’. This is underscored by s 64F(3)(a) which provides that such refund is ‘subject to compliance with the requirements specified in the item of Schedule No. 6’ (rebate 13 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 18, affirmed in Airports Company South Africa v Big Five Duty Free (Pty) Limited and Others [2018] ZACC 33; 2019 (2) BCLR 165 (CC); 2019 (5) SA 1 (CC) para 29. 14 Investopedia (www.investopedia.com). 15 Oxfordlearnersdictionaries.com 16 Cambridge Dictionary (https://dictionary.cambridge.org). 17 Merriam-Webster Dictionary (https://www.merriam-webster.com). 24 item 623.25), and any rule prescribing requirements for the movement of such fuel for export. [66] Rebate item 623.25, in turn, confirms the requirement that the fuel is obtained from the licensee’s inventory, subject to compliance with Note 10. It is plain from Note 10 that any application for a refund of excise duty is subject to compliance with s 64F and its rules,18 and rule 19A4.04.19 Note 10 also states that any load of fuel obtained from the licensee must be wholly and directly exported by the LDF in order to be considered for a refund of duty,20 and that ‘[a] refund shall only be payable on quantities actually exported’.21 [67] The s 64F rules make it clear that a LDF may obtain fuel only from stocks of the licensee at the warehouse: (a) Rule 64F.01(a) defines, inter alia, ‘manufacturing warehouse’ as a ‘licensed customs and excise manufacturing warehouse’.22 In other words, a LDF may obtain fuel only from stocks at a licensed warehouse – not a depot. (b) Rule 64F.04(c) provides: ‘In addition to the requirements specified in rule 19A.04, the invoice issued by the licensee of the customs and excise manufacturing warehouse to the licensed distributor must reflect the rate of duty and amount of duty included in the price to the licensed distributor.’ This rule is consistent with the definition of ‘manufacturing warehouse’, and requires the LDF to purchase the fuel directly from the licensee to qualify for a refund of duty. Nothing could be clearer. (c) Likewise, rule 64F.04 states that any LDF who obtains any fuel from stocks of the licensee for any purpose contemplated in s 64F, must provide an invoice or dispatch delivery note which must include the licensed name, customs client number and physical address of the LDF who obtained the fuel; and ‘the licensed name and customs client number of the licensee of 18 Note 10.6(b)(ii)(aa). 19 Note 10.6(b)(ii)(bb). 20 Note 10.6(b)(iii)(aa). 21 Note 10.6(b)(iii)(bb). 22 Emphasis added. 25 such warehouse, as well as the physical address of the storage tank from which the fuel was obtained’. (d) This interpretation is reinforced by rule 64F.06(d) which requires any load of fuel obtained from the licensee to be wholly and directly removed (from the warehouse) for export, before a refund may even be considered.23 Rule 64F.06(d) does not envisage the interposition of an intermediary. [68] Rule 19A4.04, with which a LDF must comply to obtain a refund, provides that when fuel levy goods are removed for any purpose requiring compliance with a customs and excise procedure either in respect of the removal, movement or receipt thereof, such goods may only be so removed from a storage tank owned by or under the control of the licensee at a licensed warehouse. This again underscores the requirement that a LDF must obtain the fuel from stocks at the warehouse of the licensee. [69] There is a deliberate use of the phrase ‘subject to compliance with’ in s 64F(3)(a) and s 75(1) of the Act; rebate item 623.25; and Note 10. This means that a claimant for a refund of duty must satisfy the requirements of those provisions, failing which a refund may not be granted.24 [70] The plain language of s 64F(1)(b) and (3) of the Act, rebate item 623.25 and Note 10, places the meaning and effect of these provisions beyond doubt: fuel purchased from an intermediary simply cannot qualify for a refund of excise duty or fuel levy under s 75(1)(d). As this Court said in Capitec: ‘Interpretation begins with the text and its structure. They have a gravitational pull that is important. The proposition that context is everything is not a licence to contend for meanings 23 Emphasis added. 24 BP Southern Africa (Pty) Ltd and Others v Secretary for Customs and Excise and Another 1985 (1) SA 725 (A) at 734B-E; 735H-I and 737A. 26 unmoored in the text and its structure. Rather, context and purpose may be used to elucidate the text.’ 25 [71] The text and structure of the relevant provisions are entirely consistent with the purposes of the Act. These include the control of importation, export and manufacture of certain goods. Fuel, like alcohol and tobacco, is a product that is highly controlled under the Act. [72] The purpose of licensing storage and manufacturing warehouses is to enable the Commissioner to control the entry to, storage at, and removal of goods from, such warehouses. That is clear from s 19 of the Act. So, for example, s 19(3) of the Act authorises the Controller to cause any customs and excise warehouse to be locked with a state lock for such period as he or she deems fit, during which period no person may remove or break such lock or enter the premises without the Controller’s permission. Section 19(4)(a) provides that the Controller may at any time take stock of the goods in any customs and excise warehouse and, subject to s 20(5), duty must forthwith be paid on any deficiency. In terms of s 19(4)(b), if the stock is found to be greater than the quantity which should be in the warehouse, then, subject to s 75(18), the excess must be debited to stock and the duty thereon paid on entry for consumption. [73] Section 19A of the Act empowers the Commissioner to make rules in relation to customs and excise warehouses in which excisable or fuel levy goods are manufactured or stored. This includes the power to prescribe: ‘. . . any deferment of payment of duty, the conditions on which such deferment is granted and the period, or differentiated periods of deferment, in respect of any licensee or any class or kind of such goods;26 . . . the accounts to be kept and the accounts and other documents to be submitted with such payment;27 25 Capitec Bank Holdings Limited v Coral Lagoon Investments 194 (Pty) Limited [2021] ZASCA 99; 2022 (1) SA 100 (SCA) para 51. 26 Section 19A(1)(iii)(bb) of the Act. 27 Section 19A(1)(iii)(cc) of the Act. 27 . . . any procedures or requirements or documents relating to the entry and removal of goods from and to any such customs and excise warehouse or for export or for use under rebate of duty;’28 [74] Goods in respect of which duty is deferred must be physically held in a customs and excise warehouse. The licensee of the warehouse has control over goods held in it and must ensure that the goods are not released for home consumption, without customs duty and excise duty being paid. If such goods were so released and sold without duty being paid, SARS would not receive the duty that was otherwise payable, and a fraud would be committed on the fiscus. [75] These provisions illustrate that the Act and Rules relating to customs and excise warehouses confer extensive powers on SARS to control and supervise the activities conducted at such warehouses, and the movement of imported and excisable goods until any relevant duty has been paid.29 As Rogers J explained: ‘The reasons for this are not hard to discern. The duty payable on goods is determined with reference to their value, character and quantity. SARS may thus wish to examine the goods to see that they accord with what it has been told. Furthermore, once goods are beyond SARS’ reach it may prove difficult to recover the duty from the liable party. An important feature of SARS’ control is that goods may not be moved from a particular controlled environment until “due entry” has been made of the goods, even though the goods might only be moving from one controlled facility to another.’30 [76] What this shows, is that the purposes of the Act in securing goods and exercising physical control over goods stored in and removed to and from a customs and excise warehouse, would be subverted if those goods may be obtained from an intermediary. For these reasons, s 64F(1)(b), the Rules and the items of Schedule 6 require that fuel be obtained from a controlled environment. 28 Section 19A(1)(iii)(dd) of the Act. 29 Gaertner and Others v Minister of Finance and Others [2013] ZAWCHC 54; 2013 (6) BCLR 672 (WCC); 2013 (4) SA 87 (WCC); [2013] 3 All SA 159 (WCC) paras 20 and 99. 30 Gaertner fn 29 para 20. 28 [77] It follows that SARS’ interpretation of the Act is correct. The Full Court erred in holding that on a proper interpretation of s 64F(1)(b) of the Act, it includes the purchase of fuel from an intermediary; that the purchase of the fuel from Masana was an irrelevant consideration which SARS had taken into account; and that Tunica had complied with all regulatory requirements. Did Tunica comply with the requirements of s 64F(1)(b) of the Act? [78] Tunica did not begin to make out a case for a refund of the customs duty or fuel levy. On its own version, Tunica failed to establish that the fuel was obtained from the stocks of the licensee. Ms Gillian Grobbelaar, the deponent to the founding affidavit, states that Tunica purchased the fuel from Masana, ‘who at the time was (and to the best of my knowledge still is) the beneficiary of a preferential supply agreement with BP Southern Africa (“BPSA”) in terms of which Masana was entitled to sell fuel obtained from BPSA prior to the removal of such sold fuel from BPSA’s manufacturing warehouse.’31 [79] This is inadmissible hearsay.32 There is no evidence from BP or Masana to show that the fuel originates from the stocks of a licensee of a customs and manufacturing warehouse. The high watermark of Tunica’s case on this score is the letter from BP stating that it supplies fuel to Masana under a legal supply agreement; that it is a 45% shareholder in Masana; and that BP is able to fulfil Masana’s fuel supply requirements for its customers. [80] A consequence of its failure to adduce evidence of the origin of the fuel, is that Tunica has not established that the fuel was manufactured in South Africa as required by s 75(1) of the Act. On this basis too, its claim for a refund of duty had to fail. 31 Emphasis added. 32 Vulcan Rubber Works (Pty) Ltd v South African Railways and Harbours 1958 (3) SA 285 at 296F-G; S v Ndhlovu and Others 2002 (6) SA 305 (SCA) paras 13-14. 29 [81] Tunica also failed to comply with s 64F(1)(b) of the Act. It did not obtain the fuel from the licensee’s stocks, but from an intermediary, Masana. It is common ground that the fuel was acquired from a BP depot, which in turn obtained the fuel from Chevron. [82] Tunica has also not complied with s 64F(3)(a) of the Act, read with item 623.85 and Note 10. It did not obtain the fuel from a licensee of a customs and manufacturing warehouse, and therefore cannot produce the number and date of the invoice issued by such licensee, as required by rule 64F.06(c). In addition, the fuel was not wholly and directly exported as contemplated in rule 64F.06(d): it was moved from Chevron to a BP depot. [83] In the result, Tunica has not shown that SARS’ assessment that the fuel was not exported, removed or otherwise dealt with or in, is wrong. [84] The Full Court found that it was unlikely that fuel used by a foreign-owned and registered vessel which must necessarily return to its registered port, could ever be treated as fuel used for home consumption. This includes a situation in which a foreign vessel consumes some of the fuel in South African waters. By reason of the conclusions to which I have come, it is not necessary to deal with this finding. Conclusion [85] The appeal committee refused Tunica’s appeal essentially because the fuel had not been sourced from the stocks of a licensed customs and excise manufacturing warehouse, and was not a direct movement from the stocks of such licensee. In deciding that Tunica failed to comply with s 64F(1)(b) of the Act read with rule 64F.06(d) and Schedule 6 to the Act, SARS committed no reviewable irregularity. [86] It follows that the appeal must succeed. The following order is made: 30 1 The appeal is upheld with costs, including the costs of senior counsel. 2 The order of the court a quo is set aside and replaced with the following: ‘The application is dismissed with costs, including the costs of two counsel where so employed.’ __________________ A SCHIPPERS JUDGE OF APPEAL 31 Appearances: For appellant: J A Meyer SC Instructed by: MacRobert Attorneys, Pretoria Claude Reid Inc, Bloemfontein For respondents: J Butler SC (with A du Toit) Instructed by: De Klerk and Van Gend Attorneys, Cape Town McIntyre Van Der Post, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 24 July 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 Commissioner for the South African Revenue Service v Tunica Trading 59 (Pty) Ltd (Case no 1252/2022) [2024] ZASCA 115 (24 July 2024) Today the Supreme Court of Appeal (SCA) handed down judgment in an appeal by the Commissioner of the South African Revenue Service (the Commissioner), against an order of a full court of the Western Cape Division of the High Court, Cape Town (the Full Court), which reviewed and set aside the Commissioner’s decision refusing a claim by the respondent, Tunica Trading 59 (Pty) Ltd (Tunica), for the refund of excise duty and fuel levy. The SCA upheld the appeal with costs. Tunica is a licensed distributor of fuel (LDF) in terms of the Customs and Excise Act 91 of 1964 (the Act). It supplies fuel to foreign-going ships. In 2014 Tunica bought diesel from Masana Petroleum Solutions (Pty) Ltd (Masana), which sources fuel from BP Southern Africa (Pty) Ltd (BP), a licensee of a customs and excise manufacturing warehouse (a refinery). The fuel was obtained from BP’s depot in Montague Gardens, Cape Town, and delivered to an Indian naval vessel in Simon’s Town harbour. Tunica applied to the South African Revenue Service (SARS) for a refund of the excise duty and fuel levy. SARS rejected the refund application on the basis that Tunica did not acquire the fuel directly from BP, the licensee of a customs and excise manufacturing warehouse, as required by s 64F(1)(b) of the Act, but from an intermediary, Masana, which allegedly had obtained the fuel from BP. Tunica unsuccessfully appealed the decision to an internal administrative appeal committee of SARS. Tunica then applied to the Western Cape High Court (the High Court) for an order reviewing and setting aside the decision refusing its application for a refund of the customs duty and fuel levy, essentially on the ground that it was materially influenced by an error of law. Tunica argued that s 64F(1) does not require a LDF to acquire fuel directly from the licensee of a customs and excise manufacturing warehouse, and that obtaining fuel from an intermediary meets this requirement. 2 The High Court dismissed Tunica's application with costs. It held that the fuel was not obtained from the licensee of a Customs and Excise manufacturing warehouse, and that there was no evidence that the transporter who had collected it from BP’s depot was a licensed remover of goods under the Act. Tunica was granted leave to appeal to a full court. The Full Court upheld Tunica's appeal with costs. It held that s 64F(1) of the Act requires a LDF to obtain – not purchase – fuel from stocks of a licensee of a customs and excise manufacturing warehouse, and that the LDF could purchase the fuel from an intermediary. Consequently, the Full Court reviewed and set aside the High Court’s decision refusing Tunica’s application for a refund of the customs and excise duty and remitted the matter to the Commissioner for the decision to be taken afresh. The SCA set aside the Full Court’s order. It held that the High Court’s interpretation of s 64F(1)(b) of the Act is incorrect. The LDF must obtain the fuel directly from the licensee’s inventory at a customs and excise manufacturing warehouse to qualify for a refund of customs duty and fuel levy. The fuel may not be acquired from an intermediary. The clearest pointer to this is customs and excise rule 64.06(c), which requires the claimant for a refund to furnish to SARS the invoice issued by the licensee to the LDF, which must reflect the rate and amount of duty included in the price to the LDF. This interpretation is reinforced by rule 64F.06(d), which requires any load of fuel obtained from the licensee to be wholly and directly removed from a licensed customs and excise manufacturing warehouse, before a refund may even be considered. The interpretation is also consistent with the purpose of the Act – to control the importation, export and manufacture of certain goods. The purpose of licensing storage and manufacturing warehouses is to enable the Commissioner to control the entry to, storage at and removal of goods from such warehouses. For these reasons, the SCA upheld the appeal with costs. ~~~~ends~~~~

4300

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case No: 39/2023 In the matter between: THE SOUTH AFRICAN HUMAN RIGHTS COMMISSION APPELLANT and AGRO DATA CC FIRST RESPONDENT F G BOSHOFF SECOND RESPONDENT and AFRIFORUM NPC FIRST AMICUS CURIAE CENTRE FOR APPLIED LEGAL STUDIES SECOND AMICUS CURIAE THE COMMISSION FOR GENDER EQUALITY THIRD AMICUS CURIAE Neutral citation: South African Human Rights Commission v Agro Data CC & Another (Afriforum, Centre for Applied Legal Studies and Commission for Gender Equality intervening as Amici Curiae) (39/2023) [2024] ZASCA 121 (15 August 2024) Coram: MOCUMIE, MBATHA, MOTHLE and MABINDLA-BOQWANA JJA and TOLMAY AJA 2 Heard: 12 March 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 15 August 2024. Summary: Constitutional law – s 184(2)(b) of the Constitution – powers of the South African Human Rights Commission (the SAHRC) – whether s 184(2)(b) of the Constitution, read with s 13(3) of the South African Human Rights Commission Act 40 of 2013 empower the SAHRC to issue binding directives – whether the respondents ought to have complied with the directive of the SAHRC to restore the access to water for occupiers of their property – the SAHRC’s powers distinguishable from those of the Public Protector. 3 ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Mpumalanga Division of the High Court, Mbombela (Greyling-Coetzer AJ, sitting as a court of first instance): The appeal is dismissed with no order as to costs. ________________________________________________________________ JUDGMENT ________________________________________________________________ Mbatha JA (Mocumie, Mothle and Mabindla-Boqwana JJA and Tolmay AJA concurring): Introduction [1] The forebears of our Constitution found it in their wisdom to introduce institutions to strengthen our constitutional democracy. These institutions are listed in Chapter 9 of the Constitution (Chapter 9 institutions). The appellant, the South African Human Rights Commission (the SAHRC) is one of them. Each of these Chapter 9 institutions have been given functions and powers to achieve that constitutional object. In sharp focus in this appeal are the powers of the SAHRC, whether it can issue binding directives to those it finds to have violated human rights. The human right said to have been violated in this case, is access to water’. [2] ‘Water is life’s matter and matrix mother and medium. There is no life without water’.1 There is no better fitting description than this. The United Nations (the UN) recognises access to water and sanitation as human rights fundamental to everyone’s health, dignity and prosperity.2 It recognises that marginalised groups are often overlooked and, sometimes face discrimination as 1 Albert Szent-Gyorgyi, M.D (1937 Nobel Prize for Medicine, 1893-1986). 2 United Nation: Human Rights to Water and Sanitation accessed at https://www.unwater.org/water-facts/human-rights-water-and-sanitation. 4 they try to access the water and sanitation services they need. This, inevitably, has the consequent adverse impact on women, children, and previously disadvantaged people. [3] Access to safe drinking water and sanitation are internationally recognised human rights, derived from the right to an adequate standard of living under Article 11(1) of the International Covenant on Economics, Social and Cultural Rights.3 On 28 July 2010, the UN General Assembly adopted a historical resolution recognising ‘the right to safe and clean drinking water and sanitation as a human right that is essential for the full enjoyment of life and all human rights’.4 In 2015 it recognised that both the right to safe drinking water and the right to sanitation are closely related but distinct human rights.5 [4] The right to water and sanitation is a fundamental basic human right provided in the Bill of Rights in the Constitution of the Republic of South Africa, 1996 (the Constitution). Section 27(1)(b) of the Constitution provides that everyone has the right to have access to sufficient food and water. It is thus axiomatic that no one has a right to deprive any person of such a fundamental right. While not at the heart of this appeal for determination, it is important to express my view that any deprivation of clean water to people is appalling, dehumanising and impacts on their rights to dignity and life. Before I deal with the issues on appeal, I briefly set out the background. Background facts [5] On or about 29 May 2018, the SAHRC, received a complaint from Mr William Trinity Mosotho (Mr Mosotho), lodged on behalf of his elderly father, 3 Adopted on 16 December 1966 by the General Assembly resolution 2200A(XX1). Entry into force: 3 January 1976, in accordance with article 27. 4 Article 11(1) of the International Covenant on Economics, Social and Cultural Rights A/RES/64/292. 5 Op cit fn 2. 5 Mr Tubatsi Mosotho (Mr Mosotho Snr), and other occupiers of the farm. The complaint was that, in 2016, the second respondent, Mr Francois Gerhardus Boshoff (Mr Boshoff) unilaterally introduced restrictions to the occupiers’ use of water on the farm, which consequently deprived them of access to the borehole water on the farm. [6] The SAHRC’s preliminary investigation of the complaint disclosed a prima facie violation of the occupiers’ right to property enshrined in s 25(6) of the Constitution. Henceforth, it commenced an investigation in terms of ss 184(1) and 184(2)(a) and (b) of the Constitution, read with s 13(3) of the South African Human Rights Commission Act 40 of 2013 (the SAHRC Act). At the completion of the investigation, it compiled a report where it found that Agro Data CC and Mr Boshoff (the respondents) violated the occupiers’ rights to access to water, as contemplated by s 6(2)(e) of the Extension of Security of Tenure Act 62 of 1997 (the ESTA) and s 27(1)(b) of the Constitution. It also concluded that the right to dignity of the occupiers (s 10 of the Constitution) was infringed and needed to be protected. [7] On 13 July 2018, the SAHRC forwarded a letter to the respondents’ attorneys of record, detailing the complaint against them. The main complaint was that Mr Boshoff deprived the occupiers of their only source of water, the borehole. To substantiate this complaint, they alleged that he had drastically rationed their water supply and demanded a payment for it contrary to the practice under the former owner who granted them access to the water free of charge. And that he also demanded that they use the river water which was not fit for human consumption. [8] On 30 July 2018, the respondents’ attorneys responded denying the allegations and set out numerous counter-allegations against the occupiers. On 10 6 August 2018 and 25 September 2018 respectively, the SAHRC visited the farm for consultations and to conduct an inspection in loco. Eight months later on 29 March 2019 the SAHRC afforded the parties an opportunity to comment on its preliminary investigative reports. The respondent did not respond and made no comments on the reports. On 20 September 2019, about six months later, the final investigative report, which contained the SAHRC’s directives was served on all the parties. [9] The SAHRC’s findings were listed as follows: (a) that the respondents violated the occupiers’ right to dignity in terms of s 10 of the Constitution; (b) that Mr Boshoff unilaterally made restrictions and conditions on the occupiers’ existing right to a life-sustaining resource; (c) that Mr Boshoff exercised absolute power over the occupiers, treated them as an inconvenience, and stripped them of their dignity; and (d) that deprivation of a right to access water to the occupiers, amounted to a violation of s 6(2)(e) of ESTA read with s 27(1)(b) of the Constitution. [10] In line with its findings, the SAHRC, issued the following directives: ‘12.1.1 That the First and/or Second Respondents [to] restore the supply of borehole water to the Occupiers within 7 days of the report. 12.1.2 That, within 30 days of the report, the parties commence engagement in good faith on the management of water on the Farm, with the view to ensuring an equitable sharing of this scarce resource. 12.1.3 The Second Respondent to supply the Occupiers with all the relevant information within 14 days of this report, to enable them to engage meaningfully in relation to the issue of water management on the Farm. Such information should include all the scientific reports at the disposal of the Second Respondent relating to the levels of the underground water on the Farm, as well as the costs incurred by the Second Respondent in the supply of water to the Occupiers. 7 12.1.4 That in the event that the parties are not able to reach an amicable resolution on the issue of water management on the Farm, each party may approach a court of law for appropriate relief.’ [11] On 15 October 2019, the SAHRC upon visiting the farm, discovered that the directives had not been complied with in any respect. When it enquired from the respondents, their response confirmed non-compliance with the directives. The SAHRC also confirmed that the occupiers had not been given access to the borehole water. Mr Boshoff insisted that the occupiers could not access the borehole water without paying the amount he set for the purchase thereof. He also countered with various claims against the occupiers which he alleged the SAHRC did not even consider in the whole equation. On 23 September 2020, the SAHRC paid another visit to the farm to ascertain if there had been any attempt to comply with the directives. It came to its attention that the borehole water had not been restored to the occupiers to access the water, and none of the other directives had been complied with. The SAHRC was informed that the Municipality had installed a water tank. The occupiers alleged that this intervention was not sufficient to meet their needs, and those of their livestock, as it was not regularly replenished. [12] The respondents’ disregard of its directives prompted the SAHRC to launch an application to the Mpumalanga Division of the High Court, Mbombela (the high court), where it sought the following relief: ‘1. It is declared that the South African Human Rights Commission’s directives issued in terms of section 184(2)(b) of the Constitution are binding. 2. It is declared that the First and/or Second Respondents’ refusal and/or failure to comply with the Applicant's Directives in respect of the complaint under file reference number MP/1819/0179 is unlawful and constitutionally invalid. 3. That the First and/or Second Respondents must restore the supply of borehole water to the Occupiers of Portion 3 of the farm Doorhoek, 143 JT, Thaba Chweu ("Farm") at no cost to the Occupiers within 7 days of the judgment of this Court. 8 4. That, within 30 days of the judgment of this Court, the First and/or Second Respondents commence engagement with the Occupiers in good faith on the future management of water supply on the Farm. 5. That, within 14 days of the judgment of this Court, the First and/or Second Respondents supply to the Occupiers all relevant information to enable them to engage meaningfully in relation to the issue of water management on the Farm, which information shall include all the scientific reports at the disposal of the First and/or Second Respondents relating to the levels of the underground water on the Farm, as well as the costs incurred by the First and/or Second Respondents in the supply of water to the Occupiers. 6. That the First and/or Second Respondents pay the Applicant's costs. 7. That the Court grant the Applicant further and/or alternative relief.’ [13] The application served before Acting Judge Greyling-Coetzer, who dismissed the application for declaratory relief. She, however, ordered the respondents to make all relevant information available to the occupiers for the purpose of meaningful engagement in relation to the issue of water management, which information shall include all the scientific reports available and at the disposal of the respondents relating to the levels of the underground water on the farm, as well as the costs incurred by the respondents in supplying water to the occupiers. She further ordered the SAHRC to facilitate and/or mediate the aforementioned engagement. No order for costs was made. Disappointed with the outcome of the application for declaratory relief, the SAHRC sought leave to appeal to this Court from the high court, which was granted. [14] At this stage, I must point out that Afriforum NPC, a non-profit civil rights organisation, was admitted as the first amicus curiae. The Centre for Applied Legal Studies (CALS), an organisation promoting human rights in South Africa, was admitted as the second amicus curiae. The Commission for Gender Equality was admitted as the third amicus curiae. All three amici made written and oral submissions before this Court. The respondents did not file any papers nor were they represented at the hearing of the appeal. 9 Issues before this Court [15] The issue central to the appeal is whether the SAHRC may issue binding directives in terms of s 184(2)(b) of the Constitution read with s 13(3) of the SAHRC Act. Differently stated, can a respondent against whom the directives are issued by the SAHRC simply ignore them, without resorting to a court of law to review the SAHRC’s decision. The legal framework [16] The SAHRC is one of the six Chapter 9 institutions, which were established by the Constitution to strengthen constitutional democracy in the Republic of South Africa. In terms of s 181(2) of the Constitution, ‘[t]hese institutions are independent, and subject only to the Constitution and the law. They must be impartial and must exercise their powers and perform their functions without fear, favour or prejudice’. Sections 181(3), (4) and (5) provide as follows: ‘(3) Other organs of state, through legislative and other measures, must assist and protect these institutions to ensure the independence, impartiality, dignity and effectiveness of these institutions. (4) No person or organ of state may interfere with the functioning of these institutions. (5) These institutions are accountable to the National Assembly, and must report on their activities and the performance of their functions to the Assembly at least once a year.’ [17] The functions and powers of the SAHRC are set out in s 184 of the Constitution, which provides as follows: ‘(1) The South African Human Rights Commission must— (a) promote respect for human rights and a culture of human rights; (b) promote the protection, development and attainment of human rights; and (c) monitor and assess the observance of human rights in the Republic. (2) The South African Human Rights Commission has the powers, as regulated by national legislation, necessary to perform its functions, including the power— (a) to investigate and to report on the observance of human rights; (b) to take steps to secure appropriate redress where human rights have been violated; 10 (c) to carry out research; and (d) to educate. (3) Each year, the South African Human Rights Commission must require relevant organs of state to provide the Commission with information on the measures that they have taken towards the realisation of the rights in the Bill of Rights concerning housing, health care, food, water, social security, education and the environment. (4) The South African Human Rights Commission has the additional powers and functions prescribed by national legislation.’ [18] The South African Human Rights Commission Act 40 of 2013 (the SAHRC Act) provides for the composition, powers, functions and functioning of the SAHRC. It accords additional powers and functions to those conferred by the Constitution. The repealed Human Rights Commission Act 54 of 1994 (the Human Rights Commission Act), made provision for the powers and functions sourced from the Interim Constitution and for matters connected therewith. [19] Section 2 of the SAHRC Act sets out the objects of the SAHRC as follows: ‘(a) to promote respect for human rights and a culture of human rights; (b) to promote the protection, development and attainment of human rights; and (c) to monitor and assess the observance of human rights in the Republic.’ In addition, the powers of the SAHRC are set out in s 13 of the SAHRC Act. The powers in s 13 are in addition to any other powers and functions conferred on, or assigned to it by ss 184(1), (2) and (3) of the Constitution, the SAHRC Act itself, or any other law, in order for the SAHRC to achieve its objectives. [20] Section 13 sets out the competency of the SAHRC as follows: ‘(1) In addition to any other powers and functions conferred on or assigned to it by section 184(1), (2) and (3) of the Constitution, this Act or any other law and in order to achieve its objects– (a) the Commission is competent and is obliged to– (i) make recommendations to organs of state at all levels of government where it considers such action advisable for the adoption of progressive measures for the promotion of human 11 rights within the framework of the Constitution and the law, as well as appropriate measures for the further observance of such rights; (ii) undertake such studies for reporting on or relating to human rights as it considers advisable in the performance of its functions or to further the objects of the Commission; and (iii) request any organ of state to supply it with information on any legislative or executive measures adopted by it relating to human rights; and (b) the Commission– (i) must develop, conduct or manage information programmes and education programmes to foster public understanding and awareness of Chapter 2 of the Constitution, this Act and the role and activities of the Commission; (ii) must as far as is practicable maintain close liaison with institutions, bodies or authorities with similar objectives to the Commission in order to foster common policies and practices and to promote co-operation in relation to the handling of complaints in cases of overlapping jurisdiction or other appropriate instances; (iii) must liaise and interact with any organisation which actively promotes respect for human rights and other sectors of civil society to further the objects of the Commission; (iv) may consider such recommendations, suggestions and requests concerning the promotion of respect for human rights as it may receive from any source; (v) must review government policies relating to human rights and may make recommendations; (vi) must monitor the implementation of, and compliance with, international and regional conventions and treaties, international and regional covenants and international and regional charters relating to the objects of the Commission; (vii) must prepare and submit reports to the National Assembly pertaining to any such convention, treaty, covenant or charter relating to the objects of the Commission; and (viii) must carry out or cause to be carried out such studies concerning human rights as may be referred to it by the President, and the Commission must include in a report referred to in section 18(1) a report setting out the results of each study together with such recommendations in relation thereto as it considers appropriate. (2) (a) the Commission may recommend to Parliament or any other legislature the adoption of new legislation which will promote respect for human rights and a culture of human rights. (b) If the Commission is of the opinion that any proposed legislation might be contrary to Chapter 2 of the Constitution or to norms of international human rights law which form part of 12 South African law or to other relevant norms of international law, it must immediately report that fact to the relevant legislature. (3) the Commission is competent— (a) to investigate on its own initiative or on receipt of a complaint, any alleged violation of human rights, and if, after due investigation, the Commission is of the opinion that there is substance in any complaint made to it, it must, in so far as it is able to do so, assist the complainant and other persons adversely affected thereby, to secure redress, and where it is necessary for that purpose to do so, it may arrange for or provide financial assistance to enable proceedings to be taken to a competent court for the necessary relief or may direct a complainant to an appropriate forum; and (b) to bring proceedings in a competent court or tribunal in its own name, or on behalf of a person or a group or class of persons. (4) All organs of state must afford the Commission such assistance as may be reasonably required for effective exercising of its powers and performance of its functions.’ (Emphasis added.) The high court proceedings [21] Before the high court, the SAHRC sought a blanket declaratory order, to the effect that it issued binding directives in terms of s 184(2)(b) of the Constitution. In addition, it had sought that the respondents’ refusal and/or failure to comply with the directives be declared unlawful and unconstitutional. The SAHRC for this contention relied on its constitutional powers to take appropriate steps to redress the violation of human rights in terms of s 184(2)(b) of the Constitution. In that regard, it submitted that the respondents had a legal duty to comply with the directives and co-operate with the SAHRC in its efforts to redress human rights violations. It submitted that all this stemmed from the binding nature of the directives. [22] In its answering affidavit, the respondents countered the SAHRC’s assertions by stating that ‘they did not object’ that the SAHRC's directives were binding, as envisaged by s 184, but denied that failure to comply with them was 13 unlawful and unconstitutional. They also submitted that, although the SAHRC may take steps to secure redress where rights had been violated, it was not clothed with judicial power to issue directives that are automatically binding. [23] Broadly, the high court found that the SAHRC had failed to make out a case for a general declaratory order on the directives issued in terms of s 184(2)(b). It found that the SAHRC’s powers were distinguishable from those of the Public Protector (the PP), another Chapter 9 institution. It further held that the SAHRC ought to have assisted the occupiers by approaching the courts for relief, which may have included a spoliation order, declaration of rights or interlocutory relief. In addition, it found that the further directives issued by the SAHRC, in terms of s 184(2) of the Constitution could not be ignored without any consequences, because the section makes provision for engagement and exchange of information as steps towards securing appropriate redress. [24] On the powers and functions of the SAHRC, the high court held that, although the Chapter 9 institutions share common functions in monitoring government functions and promoting social justice, they were distinct from each other as they were different institutions. It acknowledged that the SAHRC had investigatory powers and certain administrative powers but held that it did not ‘govern’ like the three arms of government. Its monitoring role is different from the courts of law as it is not empowered to declare government actions to be unconstitutional or illegal, nor can it order the executive to act in a certain way. It held further that, although the SAHRC had a lot in common with the office of the PP, they are not identical as there is a constitutional hierarchy, discernible from the fact that the office of the PP is the first on the list of the Chapter 9 institutions. It reasoned that this suggests an elevated status of the office of the PP. In addition, it found that the elevated status of the PP’s office is also discernible from the appointment and removal of the PP, which requires a two 14 third’s majority of the National Assembly. Last, it held that the Constitution and the Public Protector Act 23 of 1994 (the PP Act), specifically give the PP remedial powers, unlike the SAHRC under the SAHRC Act. As a result, the SAHRC is not empowered to take ‘remedial action’ but is empowered ‘to take steps to secure appropriate redress’ only. South African Human Rights Commission’s submissions [25] Before this Court, the SAHRC argued that no legitimately exercised power can be ignored without consequences. It advanced the argument, that for the SAHRC to effectively fulfil its obligations in terms of s 181 of the Constitution, its ‘directives’ must be binding and cannot be ignored. If they were held not to be binding, the rights envisaged in the Constitution, such as the right to access water, like in this case, would be meaningless. It submitted that the deliberate failure to comply with the directives of the SAHRC, amounted to self-help, which is unlawful and unconstitutional. Furthermore, the resources of the SAHRC and the number of complaints it receives, would not make it possible for the SAHRC to approach a court of law in respect of each and every complaint that it dealt with. It further submitted that a holding that the ‘directives’ are not binding, would be tantamount to leaving the multitudes of poor people that it serves with no redress. Last, it submitted that in terms of ESTA, no new farm owner can unilaterally cut off water supply to the occupiers who previously had an agreement to access such supply with the previous owner. [26] In asserting that its directives are binding, the SAHRC specifically relies on s 184(2)(b) of the Constitution, which provides that the SAHRC ‘has the powers, as regulated by national legislation, necessary to perform its functions, including the power to take steps to secure appropriate redress where human rights have been violated’. I must point out that it was accepted by all the parties that the SAHRC had completed the investigation and made two reports, (the 15 preliminary and final reports), on its observance of abuse of basic human rights. This led to the issuing of directives by the SAHRC, which were not complied with by the respondents. The SAHRC contended that its submissions are to ensure that the legitimacy of the SAHRC as a Chapter 9 institution is maintained. By so doing, it would be able to rightfully exercise its powers over the people who are affected by its decisions. [27] The SAHRC further submitted that the powers of the SAHRC embodied in s 13(3) of the SAHRC Act, ought to be read through the prism of the Constitution. In support of this contention, it relied on the Constitutional Court judgment of Economic Freedom Fighters v Speaker of the National Assembly and Others; Democratic Alliance v Speaker of the National Assembly and Others (Economic Freedom Fighters),6 which rejected the argument that the powers of the PP must be primarily from the PP Act and that the remedial powers of the PP were not binding. The SAHRC emphasised that the SAHRC Act is also not the only source of the powers of the SAHRC. It must therefore follow that the SAHRC Act must be read with the powers conferred by s 184(2)(b) of the Constitution. [28] The SAHRC further advocated for the view that the wording of s 184(2)(b): ‘to take steps to secure appropriate redress where human rights have been violated’ was to be read with s 181 of the Constitution. It submitted that the wording of s 181 provides the context and purpose of the power in s 184(2)(b). Its argument was that s 181 provides that the SAHRC is independent, subject only to the Constitution and the law. And that it must act impartially and without fear, favour or prejudice in the exercise of its powers and functions. These attributes, so it was contended, apply to all the Chapter 9 institutions as confirmed in 6 Economic Freedom Fighters v Speaker of the National Assembly and Others; Democratic Alliance v Speaker of the National Assembly and Others [2016] ZACC 11; 2016 (5) BCLR 618 (CC); 2016 (3) SA 580 (CC) (Economic Freedom Fighters) para 68. 16 Economic Freedom Fighters.7 In that regard, if the Chapter 9 institutions’ role is to strengthen democracy, their findings cannot be ignored at a whim. [29] Furthermore, the SAHRC pointed out that in Economic Freedom Fighters the Constitutional Court stated that: ‘No decision grounded on the Constitution or law may be disregarded without recourse to a court of law. To do otherwise would “amount to a license to self-help”. Whether the Public Protector’s decisions amount to administrative action or not, the disregard for remedial action by those adversely affected by it, amounts to taking the law into their own hands and is illegal.’8 Similarly, so it advanced, its directives cannot be ignored merely because the respondent disagrees with them or is unable to fulfil them. That being the case, those that it found against had to approach a court of law to seek redress. [30] According to the SAHRC, the high court’s interpretation of the phrase ‘appropriate redress’ in s 184(2)(b) of the Constitution and its finding that it was only the PP that had direct powers to take remedial action, had the effect of reducing the safeguards enshrined in the Constitution. And such a finding impacted adversely on its powers. [31] Finally, the SAHRC submitted that the high court misdirected itself when it found that there is a constitutional hierarchy in the ranking of the Chapter 9 institutions. In addition, it argued that the high court misdirected itself by finding that the functions of the SAHRC should be overseen by the courts, as this does not appear from the Constitution. It asserted that such an interpretation limits the powers of the SAHRC provided for expressly in the Constitution. Same goes with the high court’s finding as regards the powers of the SAHRC to litigate, accorded in ss 184(2)(b) and 13(3) of the SAHRC Act. 7 Ibid para 49. 8 Ibid para 74. 17 The Centre for Applied Legal Studies’ submissions [32] CALS largely supported the argument advanced by the SAHRC. Its main contention, in support of the SAHRC’s appeal, was that the interpretation of s 184(2)(b) given by the high court fundamentally affected the mandate of the SAHRC as a Chapter 9 institution. Section 184(2)(b) should be interpreted to accord with international law, that is, in terms of s 233 read with s 39(1)(a) of the Constitution. International law guidelines, afford human rights institutions like the SAHRC the broadest possible mandate. Their powers are to be interpreted in a manner that promotes the fundamental right to access remedies, whilst still remaining true to the text. In addition, CALS submitted that s 184(2)(b) is capable of a textual interpretation that affords the SAHRC the power to make binding decisions. [33] In support of its argument CALS submitted that in the process of the interpretation of the SAHRC’s powers, the courts should adopt a reasonable interpretation, which is consistent with international law as found by the Constitutional Court in Law Society of South Africa and Others v President of the Republic of South Africa and Others.9 Relying on S v Okah,10 CALS submitted that even if an interpretation was textually reasonable, it still had to be in accordance with international law. CALS also referred to Sonke Gender Justice NPC v President of the Republic of South Africa and Others,11 where the Constitutional Court emphasised the importance of considering international law when interpreting the Bill of Rights, particularly its interpretative value in the context of the independence of oversight bodies such as the Judicial Inspectorate for Correctional Services. 9 Law Society of South Africa and Others v President of the Republic of South Africa and Others [2018] ZACC 51; 2019 (3) BCLR 329 (CC); 2019 (3) SA 30 (CC) para 5. 10 S v Okah [2018] ZACC 3; 2018 (4) BCLR 456 (CC); 2018 (1) SACR 492 (CC) para 38. 11 Sonke Gender Justice NPC v President of the Republic of South Africa and Others [2020] ZACC 26; 2021 (3) BCLR 269 (CC) para 70. 18 [34] It criticised the textual approach to interpretation adopted by the high court in interpreting s 13(3) of the SAHRC Act as flawed. In addition, it contended that the judgment of Afriforum v South African Human Rights Commission and Others (Afriforum),12 that Afriforum relied upon in the present matter, did not consider the provisions of s 184(2)(b) of the Constitution. In that regard, so it was submitted, had the high court considered the international approach to the powers of institutions such as the SAHRC, when interpreting s 184(2)(b), it would have come to a different conclusion. Counsel for CALS submitted that the wording in s 184(2)(b) ‘to take steps to secure appropriate redress’ must be given meaning which is in line with Article 2 of the Principles relating to the Status of National Institutions (The Paris Principles). [35] Article 2 of the Paris Principles provides that ‘[National Human Rights Institutions] shall be given as broad a mandate as possible, which shall be clearly set forth in a constitutional or legislative text, specifying its composition and its sphere of competence’. CALS sought to draw parallels with the Economic Freedom Fighters judgment, to substantiate its argument that the powers of the SAHRC are binding and therefore reviewable, as envisaged in terms of s 33 of the Constitution. The Commission for Gender Equality’s submissions [36] The Commission for Gender Equality’s submissions were essentially that the high court erred in its finding that there was a hierarchy among the Chapter 9 institutions. Afriforum’s submissions 12 Afriforum v South African Human Rights Commission and Others [2023] ZAGPJHC 807; 2023 (6) SA 188 (GJ). 19 [37] Afriforum has a different view to the SAHRC and the amici that support the appeal. It submitted that the SAHRC does not have the power to issue binding remedial directives. Neither the Constitution, nor the SAHRC Act accord it the power to do so. It argued that the SAHRC may merely ‘take steps to secure appropriate redress’. This clause in s 184(2)(b) makes the SAHRC’s powers distinguishable from those of the PP. In addition, Afriforum submitted that the SAHRC does not require the power to issue binding remedial directives in order to effectively discharge its constitutional mandate. This position is consistent with most human rights institutions internationally, which is that of a watchdog. [38] Afriforum further contended that the PP is empowered by the Constitution and the PP Act to ‘take appropriate remedial action.’ It accepted all the findings by the high court, save the one that relates to the ranking of the Chapter 9 institutions in the Constitution. Last, Afriforum urged this Court to consider the settled principles of interpretation set out in the jurisprudence of our courts in interpreting s 184(2) of the Constitution read with s 13(3) of the SAHRC Act.13 Evaluation [39] I will first deal with the interpretation of the provisions of s 184(2)(b) read with s 13(3) of the SAHRC Act, which is the essence of the submissions argued before us. In interpreting the provisions of s 184(2)(b), the SAHRC’s chief mandate must be considered, which is the promotion of the Bill of Rights, enshrined in Chapter 2 of the Constitution. It is crucial to consider the significant role of the SAHRC when interpreting the provisions of s 184(2)(b) of the Constitution read with s 13(3) of the SAHRC Act. 13 Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) para 25. 20 [40] In addition, I have to consider whether the SAHRC is endowed with the same powers as its sister institution, the PP, which is assigned remedial powers by the Constitution. On that score, I also recognise that the SAHRC’s powers are sourced from the Constitution, that is, to investigate and report on the observance of human rights. Another relevant factor for consideration is what was stated by the Constitutional Court in Fose v Minister of Safety and Security where it stated that: ‘. . . an appropriate remedy must mean an effective remedy, for without effective remedies for breach, the values underlying and the rights entrenched in the Constitution cannot properly be upheld or enhanced.’14 [41] Last, I need to determine if the high court’s interpretation was correct in finding that the constitutional powers of the SAHRC were only limited to taking steps to secure appropriate redress. And, whether the SAHRC is only empowered to provide cooperative control to facilitate engagement, using advice and persuasion to achieve its ends. [42] The principles of interpretation find application in this matter. These principles were settled in Natal Joint Municipal Pension Fund v Endumeni Municipality (Endumeni).15 Endumeni reiterated that the process of interpretation is a unitary and objective exercise that pays due regard to the text, context, and purpose of the document or instrument being interpreted.16 Equally trite, is the general principle of statutory interpretation that the words used in a statute should be understood in their normal grammatical sense, unless this would lead to an absurdity. The Constitutional Court, in Cool Ideas 1186 CC v Hubbard and Another,17 added to the general principles: First, that statutes should be 14 Fose v Minister of Safety and Security 1997 (3) SA 786 (CC) para 69. 15 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) (Endumeni). 16 Endumeni para 18. 17 Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869 (CC) para 28. 21 interpreted purposively. Second, the relevant statutory provision must be properly contextualised. Last, that all statutes must be construed consistently with the Constitution. [43] In interpreting the provisions of s 184, the aforementioned principles of interpretation find application. The provisions of s 184(2)(a) empower the SAHRC to investigate and report on the observance of human rights. This means that it is endowed, not only with the role of a watchdog, but also has the power to conduct research and education about human rights. The question which then arises is whether s 184(2)(b), read holistically, accords it the powers similar to those of the PP. [44] In considering the language of s 184(2)(b), I find that the provision is expressed in clear and direct language. The use of the words ‘to take steps to secure’ give an unambiguous direction to the SAHRC to secure assistance for the aggrieved person or persons. To obtain a legal remedy means that one must seek recourse through appropriate judicial channels. The language used in s 184(2)(b) is exclusive to the SAHRC only. It is different from the wording used in the Constitution in relation to the powers of the PP, which directs the PP ‘to take appropriate remedial action’. The remedial powers of the PP are clearly and directly outlined in the Constitution. The PP is expressly empowered to directly take appropriate remedial action.18 Conversely, the wording of s 184 (2)(b) only directs the SAHRC to take measures to secure redress. No reason has been advanced by the SAHRC, CALS or the Commission for Gender Equality why the drafters of the Constitution and the SAHRC Act did not use the exact wording or words similar to those used for the PP’s remedial powers for the SAHRC. 18 Section 182(1)(c) of the Constitution. 22 [45] The ineluctable conclusion must be that the drafters of the Constitution intended that the SAHRC would investigate and, if it is of the opinion that there is substance in any complaint made to it, take steps to secure redress. Section 184(2)(b) grants the SAHRC with additional authority to engage in litigation or pursue other suitable options. These powers are complimentary to its powers to investigate a complaint mero motu or at the instance of a complainant. [46] Notably, s 116(3) of the Interim Constitution was expressed in nearly identical language as s 184(2)(b) of the final Constitution. It provided that ‘in so far as it is able to do so, assist the complainant and other persons adversely affected thereby, secure redress’. It went further by creating a condition that ‘where necessary it may arrange for or provide financial assistance to enable proceedings to be taken to a competent court for the necessary relief or may direct a complainant to an appropriate forum’. The section clearly delineated the Commission’s obligation and stipulated the condition under which it was obligated to provide financial assistance. It can also not be implied that it conferred any remedial powers to the SAHRC. Though couched in a different form, the essence of the powers of the SAHRC, as expressed in the wording thereof, did not change in the final Constitution. The heading to s 116(3) of the Interim Constitution explicitly set out the competence of the SAHRC as ‘to investigate any alleged violation of any person adversely affected thereby to secure redress’. [47] I now consider the interpretation of the provisions of s 13(3) of the SAHRC Act. First, s 13(3)(a) provides the SAHRC with the powers to investigate claims of human rights abuses on its own initiative or upon receipt of a complaint. Second, in the event that it finds substance in any complaint it may proceed to ‘assist the complainant and other persons adversely affected thereby, to secure redress. . .’. Third, ‘where it is necessary for that purpose to do so, it may arrange 23 for or provide financial assistance to enable proceedings to be taken to a competent court for the necessary relief or may direct a complainant to an appropriate forum. . .’. These powers are further extended by s 14 which provides that the SAHRC can also resolve disputes through mediation, conciliation or negotiation. [48] Section 13(3)(a) requires the SAHRC to first conduct an investigation and, after due investigation, to form an opinion that there is substance in any complaint made to it. Thereafter, it must, in so far as it is able to do so, assist the complainant and other persons adversely affected thereby, to secure redress. This process requires a prima facie finding by the SAHRC, after the investigation has been concluded. The SAHRC is subsequently granted the authority to provide assistance to the affected persons. It could be through mediation, negotiation or litigation, by approaching a court of law or an appropriate tribunal. It will then be upon the court of law or tribunal to make a binding finding on the evidence presented by the SAHRC or the affected person to it. That is the only reasonable and logical interpretation that can be accorded to the provisions of the section. [49] The word ‘assist’ as used in the section, can be interpreted to mean that the SAHRC acts in a supportive or enabling role in assisting the adversely affected persons to seek redress. It does not itself make a violation order or exonerate a person from an allegation of a violation of human rights. Once it has established that there is substance to a violation complaint, it may assist the complainant to seek redress or bring the proceedings to a court in its own right. The SAHRC’s expertise in human rights and powers of investigation accorded to it by the SAHRC Act are effective in identifying and crystallising the issues upon which it may approach the court or the relevant tribunal. Section 13(3) also gives the SAHRC powers to engage with the parties through mediation or negotiation. This is reinforced by the wording of s 13(3)(a) which states, ‘where it is necessary for 24 that purpose to do so, it may arrange for or provide financial assistance to enable proceedings to be taken to a competent court for the necessary relief…’. This indicates that the necessary financial support will be organised and made available as required. The SAHRC has to exercise a discretion in determining which matters to take to court, either in its name or in the name of the affected person or persons. [50] The language used in s 13(3)(a) and (b) does not intimate that the drafters of the legislation intended that the SAHRC issue binding directives. It would be incongruous for the SAHRC to possess authority to implement a remedial action ‘on the substance of a complaint’ as it is not a finding per se or a decision on whether or not a violation of human rights has occurred, but an opinion. At the same time, I must emphasise that the SAHRC is not precluded from making recommendations following what it has established. [51] I find that it would be more appropriate to interpret the powers granted to the Commission in terms of s 13 in a conjunctive rather than a disjunctive manner. The provisions of s 13(3) should be read harmoniously with all the provisions of the SAHRC Act and the Constitution, including s 14 the SAHRC Act. Section 14 of the SAHRC Act which provides that the SAHRC may, by mediation, conciliation or negotiation endeavour to resolve any dispute or to rectify any act or omission, emanating from or constituting a violation of or threat to any human right, strongly suggests that the SAHRC has persuasive rather than coercive powers. [52] Contextually, I draw comparison of the provisions of s 13(3) of the SAHRC Act, with those of s 116(3) of the Interim Constitution. I point out that s 116(3) of the Interim Constitution had a similar provision, though couched differently, which provided that ‘if, after due investigation, the SAHRC is of the opinion that 25 there is substance in any complaint made to it, it shall, in so far as it is able to do so, assist the complainant and other persons adversely affected thereby to secure redress’. Though the content of this provision was not similarly retained in s 184 of the Constitution, it was retained in s 13(3) to preserve the status quo, albeit different wording was used. [53] Afriforum correctly pointed out that the repealed Human Rights Commission Act also made no provision for the SAHRC ‘to secure redress’ in the sense of directly providing redress. In fact, s 15(1) of the Human Rights Commission Act simply empowered the SAHRC, pursuant to an investigation, ‘to make known to any person any finding, point of view or recommendation in respect of a matter investigated by it’. This confirmed that the SAHRC’s role was only limited to giving advice or making a recommendation. However, I draw attention to the provisions of s 13(3)(b) of the SAHRC Act, which extended the powers of the SAHRC ‘to bring proceedings in a competent court or tribunal in its own name or on behalf of a person or a group or class of persons’. [54] I acknowledge that the Chapter 9 institutions are anchors of our constitutional democracy and that they are independent and must exercise their powers and perform their functions without fear, favour or prejudice. No person or organ of state may interfere with the exercise of their functions. The SAHRC is regulated by the Constitution and the SAHRC Act. The SAHRC was established in terms of s 184(1)(a) of the Constitution, with the mandate to promote, protect and monitor the realisation of human rights. In terms of s 184(1)(b), the SAHRC is obliged to promote the development and attainment of human rights. Section 184(1)(c) mandates the SAHRC to monitor and assess the observance of human rights in South Africa. Notwithstanding its mandate, its powers can only be sourced from the Constitution and the empowering legislation. 26 [55] Though the Chapter 9 institutions established in terms of s 181(1) share a common objective, the strengthening of constitutional democracy in the Republic of South Africa can happen in various ways. The PP’s mandate, as confirmed by the Constitutional Court in Economic Freedom Fighters, described the office of the PP as follows: ‘The Public Protector is thus one of the most invaluable constitutional gifts to our nation in the fight against corruption, unlawful enrichment, prejudice and impropriety in state affairs, and for the betterment of good governance. The tentacles of poverty run far, wide and deep in our nation. Litigation is prohibitively expensive and therefore not an easily exercisable constitutional option for an average citizen. For this reason, the fathers and mothers of our Constitution conceived of a way to give even to the poor and marginalised a voice, and teeth that would bite corruption and abuse excruciatingly. And that is the Public Protector. She is the embodiment of a biblical David, that the public is, who fights the most powerful and very well-resourced Goliath, that impropriety and corruption by government officials are. The Public Protector is one of the true crusaders and champions of anti-corruption and clean governance.’19 The Constitutional Court went on further and stated that: ‘[The Public Protector’s powers] are indeed very wide powers that leave no lever of government power above scrutiny, coincidental embarrassment’ and censure. This is a necessary service because state resources belong to the public, as does state power. The repositories of these resources and power are to use them on behalf and for the benefit of the public. When this is suspected or known not to be so, then the public deserves protection and that protection has been constitutionally entrusted to the Public Protector. This finds support in what this court said in the Certification case: “[M]embers of the public aggrieved by the conduct of government officials should be able to lodge complaints with the Public Protector, who will investigate them and take appropriate remedial action”.’20 [56] The aforementioned sentiments expressed by the Constitutional Court, in Economic Freedom Fighters judgment, resonate with the mandate in s 181 to Chapter 9 institutions to strengthen constitutional democracy. Economic 19 Economic Freedom Fighters fn 6 para 52. 20 Economic Freedom Fighters fn 6 para 53. 27 Freedom Fighters highlights the source and extent of the overarching powers granted to the PP by the Constitution. Conversely, the language of s 184 of the Constitution and s 13 of the SAHRC Act, does not give remedial powers to the SAHRC. It can only ‘take steps to secure redress’ any violation of human rights. Instructively, the wording of s 184(2)(b) does not say that the SAHRC must provide appropriate redress, it states that it has to ‘take steps to secure’ appropriate redress. [57] In reply to the arguments presented before us, counsel for the SAHRC submitted that the SAHRC is a quasi-judicial body. For this proposition, it relied on s 15 of the SAHRC Act, which regulates its processes from the commencement of the investigation in terms of s 13(3). Section 15 empowers the SAHRC to administer oaths or affirmations and question individuals under oath during investigations. Furthermore, it provides that any person appearing before it should be competent and compellable to answer all the questions connected with the matter under investigation and the production of documents or articles in his or her possession. [58] Section 15 provides the SAHRC with investigatory powers for purposes of exercising the s 13 powers. Section 15(3) of the SAHRC Act further accords protection to a witness who may incriminate himself or herself, by making such evidence inadmissible in subsequent criminal proceedings. Section 15(4) accords persons appearing before the SAHRC the right to be assisted by a legal representative and the audi alteram partem rule applies when it conducts its investigations. In order to carry out its investigations, s 16 grants the SAHRC the power to enter and search premises, as well as attach and remove articles. These powers do not confer to the SAHRC the status of a quasi-judicial body. They were merely enacted to facilitate the taking of evidence. The powers of the SAHRC are similar to those of a commission of enquiry, which also does not 28 have binding powers. In that regard I find that s 13(3) does not clothe the SAHRC with adjudicative powers. Had it been the intention of the drafters of the SAHRC Act to imbue it with adjudicative powers, it would have done so through a provision in the legislation. [59] I am fully aware of the resource limitations that the SAHRC faces. The lack of financial resources does not constitute a valid justifiable reason to clothe it with binding remedial powers. This is not the end of the road for the SAHRC as it can approach law enforcement organs, such as the South African Police Services (SAPS), the Equality Court, and other organs of state for assistance. If the state organs fail to render assistance, the SAHRC can approach the courts of law for assistance. This right is acquired from the provision of s 181(3) of the Constitution which provides that other organs of state, through legislative and other measures, must assist and protect these institutions to ensure the independence, impartiality, dignity and effectiveness of these institutions. [60] We were referred to Afriforum where the court correctly held that the SAHRC does not have the power to make binding decisions on the basis of the provisions of s 13(3) of the SAHRC Act. It further held that s 13(3) only empowers the SAHRC, pursuant to an investigation, to form an ‘opinion that there is substance in any complaint’ and not to make any definitive finding in that regard.21 And that, if the SAHRC needs to enforce its directives, it has to approach a court of law, competent tribunal, or proceed with mediation or negotiations. The criticism of Afriforum by CALS that it did not deal with the interpretation of s 184(2)(b) is misplaced because the high court interpreted the provisions of s 13(3) of the SAHRC Act which gives effect to the provisions of s 184 of the Constitution. 21 Afriforum fn 13 paras 16-20. 29 [61] The SAHRC in support of its argument also relied on this Court’s decision in South African Broadcasting Corporation Soc Ltd and Others v Democratic Alliance and Others where it was held that ‘[o]ur constitutional compact demands that remedial action taken by [Chapter 9 Institutions] should not be ignored…’.22 First, I point out that, that was said in the context of the powers of the PP. In that judgment this Court did not specifically deal with the powers of the SAHRC. Last, the powers in s 13 of the SAHRC Act directly originate from ss 184(1), (2) and (3) of the Constitution. [62] The SAHRC has a responsibility to raise awareness about human rights through education and research. It has an extensive reach in terms of monitoring the observance of human rights by organs of state and private persons. It serves as a guardian and protector of our democracy. The primary objective is to establish a society that acknowledges and upholds human rights. [63] The SAHRC’s recommendations need to be accorded respect as an institution created to strengthen our constitutional democracy. This is aptly emphasised in s 18(4) of the SAHRC Act as follows: ‘If the Commission makes any finding or recommendation in respect of a matter investigated by it known to the head of the organisation or institution or the executive authority of any national or provincial department concerned, the head of the organisation or institution or the executive authority of any national or provincial department concerned must within 60 days after becoming aware of such finding or recommendation respond in writing to the Commission, indicating whether his or her organisation, institution or department intends taking any steps to give effect to such finding or recommendation, if any such steps are required.’ This means that the SAHRC should not be rendered the proverbial toothless dog. Its recommendations should be given serious consideration and be implemented. 22 South African Broadcasting Corporation Soc Ltd and Others v Democratic Alliance and Others [2015] ZASCA 156; [2015] 4 All SA 719 (SCA); 2016 (2) SA 522 (SCA) para 53. 30 [64] Having considered the provisions of the Constitution and the SAHRC Act, I cannot find a valid basis to hold that the SAHRC is empowered to issue binding directives. On the facts of this matter, the SAHRC was at liberty to assist the occupiers to or directly approach a court of law, or an appropriate tribunal or resolve the dispute through negotiation and mediation. [65] Economic Freedom Fighters, relied upon by the SAHRC, has to be considered against the backdrop that it specifically addressed the powers of the PP. I would like to underscore that albeit with specific reference to the PP, the Constitutional Court in Economic Freedom Fighters, described the purpose of Chapter 9 institutions as follows: ‘Like other chapter Nine institutions, the office of the Public Protector was created to “strengthen constitutional democracy in the Republic”. To achieve this crucial objective, it is required to be independent and subject only to the Constitution and the law. It is demanded of it, as is the case with other sister institutions, to be impartial and to exercise the powers and functions vested in it without fear, favour or prejudice. I hasten to say that this would not ordinarily be required of an institution whose powers or decisions are by constitutional design always supposed to be ineffectual. Whether it is impartial or not would be irrelevant if the implementation of the decisions it takes is at the mercy of those against whom they are made. It is also doubtful whether the fairly handsome budget, offices and staff all over the country and the time and energy expended on investigations, findings and remedial actions taken, would ever make any sense if the Public Protector’s powers, or decisions were meant to be inconsequential. The constitutional safeguards in section 181 would also be meaningless if institutions purportedly established to strengthen our constitutional democracy lacked even the remotest possibility to do so.’23 [66] The SAHRC serves as a means to access justice, as well as to promote and protect human rights. In this regard it can also be regarded as an invaluable constitutional gift to our nation.24 The SAHRC serves as a facilitator in aiding the aggrieved parties rather than an enforcer of the decision. This reasoning is 23 Economic Freedom Fighters fn 6 para 49. 24 Economic Freedom Fighters fn 6 para 52. 31 underpinned by the wording of s 18(3) of the SAHRC Act which empowers the SAHRC ‘to make known to any person, the head of the organisation or institution, or the executive authority of any national or provincial department, any findings, point of view or recommendation in respect of a matter investigated by it. It is interesting to note that the wording in s 18(3) of the SAHRC is identical to that used in s 15(4) of the SAHRC Act. [67] The aforesaid reasoning is further supported by the wording of s 18(4) of the SAHRC Act. This provision indicates that the party who has been made ‘aware of the finding’, should indicate whether it intends to take any steps to give effect to the finding or recommendation by the SAHRC. In the event that the party elects not to give effect to the recommendation, it has to give notice to the SAHRC. This gives the SAHRC the opportunity to act in terms of s184(2)(b) ‘to take steps to secure appropriate redress’, where human rights have been violated. The drafters of the provisions of 18(4) of the SAHRC Act, in my view, did not provide that the party against whom the finding is made, with the option to elect whether his or her organisation or institution intends to implement the finding or recommendation, as submitted by Afriforum. My interpretation of the provision is that, if the organisation is dissatisfied with the result, it should communicate its concerns to the SAHRC. [68] The reasoning by the high court that the hierarchy of the Chapter 9 institutions differentiates their powers cannot be sustained, as the various Chapter 9 institutions have different powers and functions. The Auditor-General is also appointed in more or less the same way as the PP. All these institutions support democracy, irrespective of how they are appointed or removed from office. The ultimate consideration is the power awarded to each Chapter 9 institution. The fact that the PP is listed first in Chapter 9 institutions of the Constitution is of no significance. It does not elevate the PP above the rest of the 32 institutions. The high court incorrectly attached undue significance to the listing of the Chapter 9 institutions. [69] I have also considered CALS’ submissions that this Court should interpret s 184(2)(b) in a manner that is reasonably consistent with international law as provided in s 233 of the Constitution.25 Section 233 requires the courts, when interpreting any legislation to prefer any reasonable interpretation that aligns with international law. In S v Makwanyane and Another, on the constitutional injunction requiring the application of international law, Mokgoro J stated that: ‘[The Constitution] seems to acknowledge the paucity of home-grown judicial precedent upholding human rights, which is not surprising considering the repressive nature of the past legal order. It requires courts to proceed to public international law and foreign case law for guidance in constitutional interpretation, thereby promoting the ideal and intentionally accepted values in the cultivation of a human rights jurisprudence for South Africa.’26 [70] I find that the interpretation which I accord to s 184(2)(b) of the Constitution and s 13(3) of the SAHRC Act, attaches a reasonable meaning to the text, which is also in line with international norms and standards. I therefore find the argument advanced by CALS not sustainable. [71] CALS correctly submitted that internationally, there are no treaties or conventions which explicitly advocate for the establishment of national human rights institutions with binding powers. Their terms are in the form of soft law, which carries persuasive value as interpretative tools to the interpretation of s 184(2)(b). This includes amongst other things, the Paris Principles, which constitute soft law. The Paris Principles in Article 2 require that such institutions be given as broad a mandate as possible, clearly set forth in constitutional or 25 Section 233 of the Constitution provides: ‘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. 26 S v Makwanyane and Another 1995 (3) SA 391 (CC) para 304. 33 legislative texts that specify the institutions’ composition and sphere of competence. In this case, the text of s 184(2)(b) and s 13 expressly specify the sphere of competence of the SAHRC. I cannot infer any implied conferral of binding powers in the Constitution and the SAHRC Act. As broad as they are, they do not give remedial powers to the SAHRC. [72] I do not find the additional textual interpretation provided by CALS to be helpful. It relied on the judgment in Jawara v The Gambia,27 on the interpretation of s 184(2)(b), which would align with Articles 7 and 26 of the African Charter on Human and People’s Rights.28 Those articles are supportive of human rights institutions in providing effective remedies through investigations, where human rights have been violated. Sometimes they issue binding directives that require the complainants to redress human rights violation. Conclusion [73] In conclusion, although Chapter 9 institutions were established to bolster our constitutional democracy, it does not necessarily imply that they all possess binding remedial powers. They fulfil distinct mandates and have effective ways of fulfilling their purpose, as provided by the Constitution. Accordingly, I find that the SAHRC has no powers to make binding directives. It must therefore follow that the high court's order must be confirmed. [74] In the result, the following order is made: Order The appeal is dismissed with no order as to costs. 27 Sir Dawda K Jawara v The Gambia (2000) (communication 147/95 and 149/96) AHRLR 107 (ACHPR 2000). 28 Adopted 1 June 1981. Date of Entry 21 October 1986. 34 Y T MBATHA JUDGE OF APPEAL 35 Appearances: For the appellant: B D Lekokotla and L Phasha Instructed by: South African Human Rights Commission, Bloemfontein For first amicus curiae: M J Engelbrecht SC and A Molver Instructed by: AfriForum NPC, Hurter Spies Inc, Pretoria Hendre Conradie Inc, Bloemfontein For second amicus curiae: J Bhima Instructed by: Centre for Applied Legal Studies Webbers Attorneys, Bloemfontein For third amicus curiae: B Dhladhla Instructed by: Edward Nathan Sonnenberg/ Commission for Gender Equality 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: 15 August 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 South African Human Rights Commission v Agro Data CC & Another (Afriforum, Centre for Applied Legal Studies and Commission for Gender Equality intervening as Amici Curiae) (39/2023) [2024] ZASCA 121 (15 August 2024) Today the Supreme Court of Appeal (SCA) handed down judgment wherein it dismissed an appeal with no order as to costs, against an order of the Mpumalanga Division of the High Court, Mbombela (the high court). Around May 2018, the South African Human Rights Commission (SAHRC) received a complaint from Mr. William Trinity Mosotho on behalf of his elderly father, Mr. Tubatsi Mosotho, and other occupiers of a farm in Doorhoek, Mpumalanga (the farm). The complainant alleged that in 2016, Mr. Francois Gerhardus Boshoff (Mr. Boshoff) unilaterally introduced restrictions on the occupiers' use of borehole water on the farm, depriving them of access to the water source. The SAHRC investigated the complaint and found that Agro Data CC and Mr Boshoff (the respondents) had violated the occupiers' rights to access water in terms of s 6(2)(e) of the Extension of Security of Tenure Act 62 of 1997 (ESTA) and s 27(1)(b) of the Constitution. The SAHRC also concluded that the occupiers' right to dignity under s 10 of the Constitution had been infringed. In September 2019, the SAHRC issued directives to the respondents, ordering them to inter alia, restore the supply of borehole water to the occupiers, commence engagement with the occupiers on the management of water on the farm, and provide the occupiers with relevant information, including scientific reports and costs related to the water supply. When the respondents failed to comply with the directives, the SAHRC launched an application in the Mpumalanga Division of the High Court (the high court), seeking declaratory relief. In September 2020, the high court dismissed the SAHRC's application for declaratory relief but ordered the respondents to make relevant information available to the occupiers for the purpose of meaningful engagement on water management. The high court also ordered the SAHRC to facilitate the engagement. Dissatisfied with the outcome, the SAHRC sought leave to appeal this Court from the high court, which was granted. The main issue on appeal was whether the SAHRC has the power to issue binding directives under s 184(2)(b) of the Constitution, read with s 13(3) of the South African Human Rights Commission Act 40 of 2013 (SAHRC Act). The SCA dismissed the SAHRC's appeal, concluding that the SAHRC's directives are not binding and that the respondents can only be compelled to comply with the directives through a court order. The Court held that the SAHRC's powers are distinguishable from those of the Public Protector, which were found to be binding in the case of Economic Freedom Fighters v Speaker of the National Assembly and Others. 2 The SCA emphasised that the SAHRC is an independent Chapter 9 institution subject only to the Constitution and the law, and that its directives are not self-executing. The Court further held that while the SAHRC has the power to investigate and report on human rights violations, it must approach a court to secure appropriate redress where rights have been violated. As a result, the SCA dismissed the SAHRC's appeal with no order as to costs. ~~~~ends~~~~

4263

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 709/2022 In the matter between: VUSI MABENA Appellant and THE STATE Respondent Neutral citation: Mabena v The State (Case no 709/22) [2024] ZASCA 89 (7 June 2024) Coram: MEYER, WEINER and KGOELE JJA Heard: This appeal was, by consent between the parties, disposed of without an oral hearing in terms of s 19(a) of the Superior Courts Act 10 of 2013. Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email; publication on the Supreme Court of Appeal website and released to SAFLII. The time and date for hand-down is deemed to be 11h00 on 7 June 2024. Summary: Criminal Law – Sentencing – Convictions of robbery with aggravating circumstances and attempted murder – whether sentence for each conviction should have been ordered to run concurrently. 2 ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Chesiwe AJ, with Carelse J concurring, sitting as court of appeal): 1. The late filing of the record is condoned and the appeal is reinstated. 2. The appeal against sentence succeeds. 3. Paragraph 1 of the order of the high court is set aside and replaced with the following: ‘1.1 The appeal of the first appellant against conviction is dismissed. 1.2 The appeal of the first appellant against sentence succeeds. 1.3 The order of the Regional Court for the Regional Division of Gauteng, Johannesburg on 31 July 2014, in relation to the sentence imposed upon accused no 1 is set aside and replaced with the following: (a) Accused no 1 is sentenced to 15 years’ imprisonment pursuant to his conviction of robbery with aggravating circumstances (count no 1); (b) Accused no 1 is sentenced to 5 years’ imprisonment pursuant to his conviction of attempted murder (count no 3); (c) The sentence of 5 years’ imprisonment is to run concurrently with the sentence of 15 years’ imprisonment.’ JUDGMENT Meyer JA (Weiner and Kgoele JJA concurring): [1] In the morning on 5 March 2010, at the Blairgowrie Shopping Centre, two armed robbers entered the Nashua Mobile shop and, wielding their firearms, robbed the owner of a Sony Ericson cellphone, a laptop computer, airtime vouchers, cash, a gold chain and a wallet that he had in his possession. When they fled the shop, they were chased by two ADT security guards at whom each robber fired one gunshot. The ADT security guards overwhelmed them and recovered all the items they had stolen except the cellphone. They held the robbers until police officers arrived who arrested them. 3 The two robbers were identified as the appellant, Mr Vusi Mabena, and his co-accused, Mr Mpumelelo Ncube. [2] On 30 July 2014, the appellant and his co-accused were convicted by the Regional Court, Johannesburg, per Regional Magistrate Mr Louw (the trial court), of robbery with aggravating circumstances and attempted murder. A minimum sentence of 15 years’ imprisonment in the case of a first offender and 20 years’ imprisonment in the case of a second offender for the crime of robbery with aggravating circumstances should, in terms of s 51(2)(a) of the Criminal Law Amendment Act 105 of 1997,1 be imposed by the court, unless the court finds that substantial and compelling circumstances exist.2 [3] The next day the trial court sentenced the appellant to 15 years’ imprisonment and his co-accused to 25 years’ imprisonment pursuant to their convictions of robbery with aggravating circumstances, and each to five years’ imprisonment pursuant to their convictions of attempted murder. The trial court ordered the sentence of 5 years’ imprisonment to run concurrently with the sentence of 25 years’ imprisonment only in respect of the appellant’s co-accused. The trial court granted the appellant and his co-accused leave to appeal their convictions and sentences to the full bench of the Gauteng Division of the High Court, Johannesburg (the high court). [4] On 30 June 2017, the high court (Chesiwe AJ with Carelse J concurring) dismissed the appeals of the appellant and his co-accused against their convictions and sentences. The high court appears to have misinterpreted the sentence imposed by the trial court. It correctly held the trial court sentenced the appellant to 15 years’ 1 Section 51(2)(a) of the Criminal Law Amendment Act 105 of 1997 provides: ‘(2) Notwithstanding any other law but subject to subsections (3) and (6), a regional court or a High Court shall sentence a person who has been convicted of an offence referred to in- (a) Part II of Schedule 2, in the case of- (i) a first offender, to imprisonment for a period not less than 15 years; (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.’ 2 Section 51(3)(a) of the Criminal Law Amendment Act 105 of 1997 provides: ‘(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.’ 4 imprisonment pursuant to his conviction of robbery with aggravating circumstances, and to five years’ imprisonment pursuant to his conviction of attempted murder. It incorrectly found that the trial court had ordered the appellant’s sentence of five years’ imprisonment to run concurrently with his sentence of 15 years’ imprisonment and that ‘[t]he effective sentence in respect of the first appellant [the appellant in this Court] was 15 years’ imprisonment’. [5] The high court held that the trial court duly considered the triad factors3 in sentencing the appellant: the appellant’s person, the crimes committed by him, and the interests of society. Due consideration was also given to the mitigating and aggravating factors present. The high court held that that there was no reason to interfere with the sentences imposed upon the appellant: the trial court exercised its sentencing discretion judicially and there was not a disparity between the sentences imposed and the ones that ought to have been imposed.4 The present appeal against sentence is with leave of this Court. [6] It is clear that the trial court did not order the sentences to run concurrently and the high court erred in making the finding that the trial court had so ordered. Clarity accordingly becomes necessary. Two weighty factors that compel the conclusion that the trial court should have ordered the sentence of five years’ imprisonment for attempted murder and the sentence of 15 years’ imprisonment for robbery with aggravating circumstances to run concurrently, are these: First, the attempted murder was committed immediately after the robbery while the appellant and his co-accused were trying to flee from the scene of the robbery. The two crimes committed by the appellant are thus closely related in terms of time and locality. Second, the appellant spent four years and four months in prison pending the finalisation of the criminal trial. The trial court failed to give proper consideration to the cumulative effect of the two sentences, which failure amounts to a misdirection.5 [7] In the result, the following order is made: 3 In S v Zinn 1969 (2) SA 537 (A) at 540G, it was held that in imposing a sentence which is considered suitable in the circumstances, the court must take into consideration the triad, consisting of the crime, the offender and the interests of society. 4 S v Malgas [2001] ZASCA 30; [2001] 3 All SA 220 (A); 2001 (1) SACR 469 (SCA) para 12. 5 S v Kruger [2011] ZASCA 219; 2012 (1) SACR 369 (SCA) paras 9 and 11. 5 1. The late filing of the record is condoned and the appeal is reinstated. 2. The appeal against sentence succeeds. 3. Paragraph 1 of the order of the high court is set aside and replaced with the following: ‘1.1 The appeal of the first appellant against conviction is dismissed. 1.2 The appeal of the first appellant against sentence succeeds. 1.3 The order of the Regional Court for the Regional Division of Gauteng, Johannesburg on 31 July 2014, in relation to the sentence imposed upon accused no 1 is set aside and replaced with the following: (a) Accused no 1 is sentenced to 15 years’ imprisonment pursuant to his conviction of robbery with aggravating circumstances (count no 1); (b) Accused no 1 is sentenced to 5 years’ imprisonment pursuant to his conviction of attempted murder (count no 3); (c) The sentence of 5 years’ imprisonment is to run concurrently with the sentence of 15 years’ imprisonment.’ ________________________ P MEYER JUDGE OF APPEAL 6 Heads prepared by: For appellant: M P Milubi Instructed by: Legal Aid South Africa, Johannesburg Local Office. Legal Aid South Africa, Bloemfontein Local Office.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 7 June 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 Mabena v The State (Case no 709/2022) [2024] ZASCA 89 (7 June 2024) Today the Supreme Court of Appeal (SCA) upheld an appeal against the decision of the Gauteng Division of the High Court, Johannesburg (the high court), which dismissed an appeal against the sentence imposed by the Regional Court, Johannesburg (the trial court), of the appellant, Mr Vusi Mabena. The appellant (accused 1 in the trial court) together with his co-accused, Mr Mpumelelo Ncube (accused 2 in the trial court), was charged with robbery with aggravating circumstances and attempted murder read with s 52(2)(a) of the Criminal Law Amendment Act 105 of 1997 (minimum sentence legislation). The property involved was a Sony Ericson cellphone, laptop computer, airtime vouchers, cash, a gold chain and a wallet, of which all items were recovered except the cellphone. They were both convicted on both counts by the trial court. In respect of the appellant, pursuant to his conviction of robbery with aggravating circumstances was sentenced to 15 years’ imprisonment as a first time offender and to five years’ imprisonment in respect of attempted murder, in accordance with the minimum sentence legislation. In His co-accused, as a second offender in respect of his conviction of robbery with aggravating circumstances was sentenced to 20 years’ imprisonment and for his conviction of attempted murder to 5 years’ imprisonment, which sentences were ordered to run concurrently. The trial court granted the appellant and his co-accused leave to appeal to the full bench of the high court. The high court dismissed the appeals of the appellant and his co-accused against their convictions and sentences. The SCA granted the appellant leave to appeal against his sentence only. The SCA held that the high court regrettably misinterpreted the sentence imposed by the trial court by incorrectly finding that the trial court ordered the appellant’s sentence of five years’ imprisonment to run concurrently with his sentence of 15 years’ imprisonment and that his effective sentence was therefore 15 years’ imprisonment. The SCA held further the fact that the attempted murder was committed immediately after the robbery while the appellant and his co-accused were attempting to flee the scene, were closely related in time and locality in addition to the fact that the appellant spent four years and four months in prison pending the finalisation criminal trial, were weighty factors which should have compelled the trial court to order that the sentences run concurrently. Accordingly, the SCA held that the appeal against sentence succeeded. Further, the sentence imposed by the trial court was set aside and replaced with an order that the sentences of 15 years’ in respect of the conviction of robbery with aggravating circumstances and five years’ in respect of the conviction of attempted murder, were to run concurrently. ~~~~ends~~~~

4180

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case No: 1062/2022 In the matter between: QUEEN SIBONGILE WINNIFRED ZULU APPELLANT and QUEEN BUHLE MATHE FIRST RESPONDENT EXECUTOR OF THE ESTATE OF LATE QUEEN SHIYIWE MANTFOMBI DLAMINI SECOND RESPONDENT QUEEN THANDEKILE JANE NDLOVU THIRD RESPONDENT QUEEN NOMPUMELELO MCHIZA FOURTH RESPONDENT QUEEN ZOLA ZELUSIWE MAFU FIFTH RESPONDENT PRINCESS THEMBI NDLOVU SIXTH RESPONDENT PRINCE MBONISI ZULU SEVENTH RESPONDENT PRINCE THULANI ZULU EIGHTH RESPONDENT PRINCESS LINDI ZULU NINETH RESPONDENT PRINCE VULINDLELA ZULU TENTH RESPONDENT PRINCE MXOLISI ZULU ELEVENTH RESPONDENT PRINCE MATHUBA ZULU TWELFTH RESPONDENT QUEEN MAVIS ZUNGU THIRTEENTH RESPONDENT OTHER PERSONS WHO MAY BE MEMBERS OF UMNDENI WESILO FOURTEENTH RESPONDENT MEMBERS OF THE ROYAL FAMILY FIFTEENTH RESPONDENT 2 SIPHO JEROME NGWENYA SIXTEENTH RESPONDENT PREMIER OF KWAZULU-NATAL SEVENTEENTH RESPONDENT PRESIDENT OF THE REPUBLIC OF SOUTH AFRICA EIGHTEENTHRESPONDENT THE MASTER OF THE HIGH COURT NINETEENTH RESPONDENT SANLAM TRUST (PTY) LIMITED TWENTIETH RESPONDENT Neutral citation: Queen Sibongile Winnifred Zulu v Queen Buhle Mathe and Others (1062/2022) [2024] ZASCA 22 (08 March 2024) Coram: MAKGOKA and MBATHA JJA, and MUSI AJA Heard: 13 November 2023 Delivered: 08 March 2024 Summary: Family law – administration of deceased estate – Marriage Act 25 of 1961 – whether consequences of civil marriage precluded husband from concluding further marriages with other persons. Declaratory relief – refusal by high court – whether desirable to interfere with high court’s discretion. 3 ORDER On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Madondo AJP, sitting as court of first instance): The appeal is dismissed with costs, including the costs of two counsel where so employed. JUDGMENT Mbatha JA and Musi AJA (Makgoka JA concurring): [1] The aftermath of the death of King Goodwill Zwelithini kaBhekuzulu Zulu (the late Isilo)1 was unfortunately marred by litigation between members of the Zulu Royal Family. This appeal is a sequel to one of the legal disputes. [2] Queen (Indlovukazi)2 Sibongile Winnifred Zulu (the appellant Queen) appeals against the judgment and order of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court). The appellant Queen had sought a declaratory order stating that she was married to the late Isilo in terms of civil law, in community of property and profit and loss and that the late Isilo was precluded from entering into customary marriages with other persons while the marriage between them subsisted. The high court dismissed the application. The appellant Queen now appeals with the leave of this Court. 1 Isilo is a Zulu word for king. The Zulu kings are respectfully known as Isilo Samabandla Onke. 2 Indlovukazi is a Zulu word for the Queen of the Zulu nation. 4 [3] The background is briefly this. The appellant Queen and the late Isilo entered into a marriage in community of property and profit and loss on 27 December 1969, in accordance with s 22 of the Black Administration Act 38 of 1927 read with the Marriage Act 25 of 1961 (the Marriage Act). The marriage still subsisted at the time of the Isilo’s death. [4] During the subsistence of the civil marriage, the late Isilo entered into customary marriages with the second respondent, the late Queen Shiyiwe Mantfombi Dlamini (the late Queen), and the first, third, fourth and fifth respondent Queens. The late Queen passed on shortly after the late Isilo, and her estate is represented in these proceedings by its appointed executor. The sixth to fifteenth respondents are members of the Zulu Royal Family. Their citations related only to the interdictory relief of the declaration, endorsement, proclamation and appointment of the late Queen or any of the other respondent Queens as Ibambabukhosi (Regent) or successor to the throne as Isilo samaZulu, pending the final relief sought in the application. No relief was sought against them in this application. [5] The sixteenth respondent, Mr Jerome Ngwenya, is the former Chairperson of the Ingonyama Trust, and was cited on the basis that he was assigned specific duties in terms of the provisions of the Last Will and Testament (Will) of the late Isilo. The seventeenth and eighteenth respondents, namely, the Premier of KwaZulu-Natal (the Premier) and the President of the Republic of South Africa, respectively, were cited for purposes of interdicting and restraining them from enforcing any decisions and taking any steps following the decisions taken by the sixth to twelfth respondents. Further ancillary relief was sought against the Premier, which relief is not germane to the subject matter of this appeal. [6] The nineteenth respondent, the Master of the High Court, KwaZulu-Natal was cited in her capacity as the person who oversees the winding up of deceased estates in 5 the province. The twentieth respondent, Sanlam Trust (Pty) Limited, was cited in its capacity as the executors and administrators of the estate nominated in the last will and testament of the late Isilo. The application by the appellant Queen was opposed only by the first to the fifth respondents (the respondent Queens). [7] In his Will (the validity of which is the subject of another dispute), the late Isilo prefaced the devolution of his estate by making an introductory statement. He stated that the notion of marriage in community of property and profit and loss was foreign to the Zulu people, regardless of their social and economic standing. He went on to say that no Zulu king had ever got married to one wife by civil rights, in community of property, because of the very nature of the Zulu laws and culture. He stated that a traditional marriage denotes a marriage according to custom. He acknowledged that he was no exception to this, and as a result, he was married to six Queens during his lifetime. [8] Although the nature and proprietary consequences of the marriage between the late Isilo and the appellant Queen were initially disputed, all the respondents Queens before the high court admitted the validity of the marriage and that it was in community of property, and consequently, with profit and loss. However, the respondent Queens disputed that the subsistence of the civil marriage between the appellant Queen and the late Isilo precluded the late Isilo from validly entering into customary marriages with them. [9] The issue in the appeal is whether the high court exercised its discretion properly in dismissing the application. The appellant Queen argued that the concession by the Queen respondents that the late Isilo and the appellant Queen were married in community of property was sufficient reason for the high court to issue a declaratory order. The appellant Queen further contended that the civil marriage between her and the late Isilo precluded him from entering into further valid marriages 6 with other persons whether by civil or customary law. As a result, a declaratory order to that effect should have been granted in her favour. [10] The respondent Queens contended that the dispute relating to the validity of the marriage between the appellant Queen and the late Isilo fell away immediately prior to the hearing. This rendered the issue moot. Consequently, there is no dispute as to the nature, status and propriety consequences of the marriage between the late Isilo and the appellant Queen. No practical effect would be achieved by the determination of the questions posed in this matter. There is no dispute that the appellant Queen’s marriage was in community of property and of profit and loss. On the question of whether the late Isilo was precluded from marrying any other person during the subsistence of his marriage with the appellant Queen, the respondent Queens opposed that relief too. They submitted that the relief is legally incompetent, as the appellant Queen had not sought an order declaring the late Isilo’s customary marriages to them invalid. They submitted that the said customary marriages remain extant as they are deemed to be valid in terms of s 2 of the Recognition of Customary Marriages Act 120 of 1998 (the Recognition Act).3 [11] In Lueven Metals v Commissioner for SARS,4 this Court, with regard to declaratory orders, succinctly recognised that: ‘Section 21(1)(c) of the Superior Courts Act 10 of 2013 provides a statutory basis for the grant of declaratory orders without removing the common law jurisdiction to do so. It is a discretionary remedy. The question whether or not relief should be granted under the section has to be examined 3 Section 2 of this Act reads as follows: ‘Recognition of customary marriages. — (1) A marriage which is a valid marriage at customary law and existing at the commencement of this Act is for all purposes recognised as a marriage. (2) A customary marriage entered into after the commencement of this Act, which complies with the requirements of this Act, is for all purposes recognised as a marriage. (3) If a person is a spouse in more than one customary marriage, all valid customary marriages entered into before the commencement of this Act are for all purposes recognised as marriages. (4) If a person is a spouse in more than one customary marriage, all such marriages entered into after the commencement of this Act, which comply with the provisions of this Act, are for all purposes recognised as marriages.’ 4 Lueven Metals (Pty) Ltd v Commissioner for the South African Revenue Service [2023] ZASCA 144 para 12. 7 in two stages, in the first place, the jurisdictional facts have to be established. When this has been done, the court must decide whether the case is a proper one for the exercise of its discretion. Thus, even if the jurisdictional requirements are met, an applicant does not have an entitlement to an order. It is for such applicant to show that the circumstances justify the grant of an order.’ [12] The jurisdictional facts that have to be established are whether the applicant has an interest in an existing, future or contingent right or obligation.5 If the court is so satisfied that such interest exists, it is required to consider whether the order for a declaratory relief should be granted. The court considers whether an applicant in seeking such an order has a standing in terms of s 38 of the Constitution. In addition, the doctrine of ripeness is at issue, as consideration is given to whether prejudice has already resulted or is inevitable, irrespective of whether the action is complete or not. The doctrine of ripeness may also require an enquiry as to whether alternative remedies have been exhausted. This is termed a premature action. As aforesaid, s 21(1)(c) of the Superior Courts Act 10 of 2013 enjoins the high court ‘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’. In addition, a court will not grant a declaratory order on moot or academic issues, as this would conflict with the doctrine of effectiveness. [13] When deciding whether it is appropriate to grant declaratory relief in a particular case, the court exercises a wide or loose discretion. It does not follow that the court must exercise its discretion in favour of an applicant that has established the jurisdictional facts. The discretion is exercised in the light of all relevant considerations. In Cordiant v Daimler-Chrysler (Cordiant),6 this Court emphasised that it does not mean that, once the party has satisfied the requirement of an existing, 5 Cordiant Trading CC v Daimler-Chrysler Financial Services (Pty) Limited [2005] ZASCA 50; [2006] 1 All SA 103 (SCA); 2005 (6) SA 205 (SCA) para 18. 6 Ibid para 16 8 future, or contingent right or obligation, that is the end of the enquiry. The court must still decide whether it should refuse or grant the order, and whether it is a proper one for the exercise of that court’s discretion. This does not mean that the court is obliged to grant the declaratory order, but it must consider whether it should grant or refuse the order sought. The test whether a court of appeal is entitled to interfere with the exercise of a wide discretion is now settled. It is that, in the absence of misdirection or irregularity, a court of appeal would ordinarily not be entitled to substitute its discretion for that of a lower Court.7 [14] It is trite that, despite the jurisdictional factors being proved, the Court may exercise its discretion against an applicant if the declaratory relief would be abstract, academic or hypothetical. The court may also refuse to grant a declaratory order if it would not present a tangible advantage to an applicant. Additionally, the court may refuse to grant a declaratory order when the subject matter of the order sought had been definitively determined by a court or the legislature. [15] In Knox D’Arcy v Jameson,8 it was pointed out that a court has a wide discretion at which ‘seems to mean no more than that the Court is entitled to have regard to a number of disparate and incommensurate features in coming to a decision’. In Media Workers Association of South Africa v Press Corporation of South Africa Ltd,9 this Court said the following about a wide discretion: ‘It does not involve a choice between permissible alternatives. In respect of such a judgment a Court of appeal may, in principle, well come to a different conclusion from that reached by the Court a quo on the merits of the matter.’ 7 See Trencon Construction (Pty) Limited v Industrial Development Corporation of South Africa Limited and Another ZACC 22; 2015 (5) SA 245 (CC); 2015 (10) BCLR 1199 (CC) para 88. 8 Knox D’Arcy Ltd and Others v Jameson and Others [1996] ZASCA 58; [1996] 3 All SA 669 (A); 1996 (4) SA 348 (A) at 361H-I. 9 Media Workers Association of South Africa and Others v Press Corporation of South Africa Ltd [1992] ZASCA 149; [1992] 2 All SA 453 (A); 1992 (4) SA 791 (A) at 800F. 9 [16] A declaratory order is a flexible remedy that need not be accompanied by consequential relief.10 However, in Adbro Investment Co. Ltd v Minister of the Interior,11 it was found that: ‘. . . a proper case for a purely declaratory order is not made out if the result is merely a decision on a matter which is really of academic interest to the applicant. …some tangible and justifiable advantage in relation to the applicant’s position with reference to an existing future or contingent legal right or obligation must appear to flow from the grant of the declaratory order sought.’ Furthermore, in J T Publishing (Pty) Ltd v Minister of Safety and Security (J T Publishing), 12 the Constitutional Court said: ‘I interpose that enquiry because a declaratory order is a discretionary remedy, in the sense that the claim lodged by an interested party for such order does not in itself oblige the Court handling the matter to respond to the question which it poses, even when that looks like being capable of a ready answer. A corollary is the judicial policy governing the discretion thus vested in the Courts, a well-established and uniformly observed policy that directs them not to exercise it in favour of deciding points that are merely abstract, academic or hypothetical ones.’ [17] The high court found that there was incontrovertible evidence that the late Isilo and the appellant Queen were married in community of property and profit and loss. Additionally, it found that the late Isilo conceded, in an affidavit deposed to before making his Will that he and the appellant Queen were married in community of property. It therefore found that no practical effect would be achieved by declaring that the late Isilo was married to the appellant Queen in community of property and of profit and loss. Accordingly, the high court dismissed the application with costs. [18] The appellant Queen submitted that the high court erred in finding that, before it could grant declaratory relief, there must be a live dispute between the parties about the marriage and it consequences. In amplification, the appellant Queen argued that 10 Rail Commuters Action Group v Transnet LTD t/a Metrorail [2004] ZACC 20; 2005 (2) SA 359 (CC); 2005 (4) BCLR 301 (CC) para 107. 11 Adbro Investment Co. Ltd v Minister of the Interior and Others 1961 (3) SA 283 (T) at 285C-D. 12 JT Publishing (Pty) Ltd v Minister of Safety and Security [1996] ZACC 23; 1996 (12) BCLR 1599; 1997 (3) SA 514 (CC) para 15. 10 the high court overlooked the fact that the absence of an existing or concrete dispute was no longer a prerequisite for the granting of a declaratory order. On the question whether there should be a live dispute between the parties for the court to grant a declaratory order, the high court did not regard a live dispute between the parties as a prerequisite but as one of the factors, together with others, that it should consider for the exercise of its discretion. It clearly stated that if there was a dispute between the parties, it must be alleged as one of the factors which the court will take into account in considering whether to exercise its discretion in the favour of the applicant. This approach cannot be faulted.13 [19] The appellant Queen submitted that the high court erred in finding that before granting a declaratory order, it was necessary for her to show that she had a right that was actually infringed. We agree. The actual infringement of a right is not a jurisdictional fact that must be established to trigger the exercise of the discretion to grant or refuse declaratory relief. The threshold is much lower than an actual infringement of a right. As explained in Cordiant: 14 ‘[O]nce 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.’ [20] A misdirection occurred in relation to the first leg of the enquiry: the jurisdictional fact. This is not fatal to the second leg, which is the actual exercise of the discretion. The question still remains whether the high court exercised its discretion properly. The misdirection did not impact negatively or taint the exercise of the discretion. In Reinecke v Incorporated General Insurance Ltd,15 this Court accepted 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 13 Ex Parte Nell 1963 (1) SA 754 (A) at 760A-C. 14 Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd [2005] ZASCA 50; [2006] 1 All SA 103 (SCA); 2005 (6) SA 205 (SCA) para 17. 15 Reinecke v Incorporated General Insurance Ltd 1974 (2) SA 84 (A) at 99C-E. 11 exercise of a judicial discretion’. This Court should then examine the merits and ‘[b]ring a judicial discretion to bear upon the question whether or not the case is a proper one for the granting of a declaratory order’.16 [21] There is no challenge to the validity of the respondent Queens’ marriages to the late Isilo. The appellant Queen stated that she did not want to cause friction or ructions, nor deny the late Isilo’s children their birthright in the Zulu Royal Family. Her case was that the customary marriages between the late Isilo are only recognised to the extent of the Recognition Act. [22] We reiterate what the respondent Queens stated in their composite answering affidavit: ‘I note that the applicant Queen does not seek any order declaring the King’s customary marriages as invalid. The implications of this is that the customary marriages remain valid, as they are deemed to be valid by the Recognition of Customary Marriages Act, in s 2 and have legal consequences.’ [23] The appellant Queen did not dispute this in reply. She however, unsuccessfully attempted to amend her relief, at the high court, to include the challenge to the validity of the aforesaid marriages. This was not her pleaded case. Had she changed her mind she should have timeously amended her papers. This, in fact, had the effect of seeking relief not sought in the founding papers. [24] Taking cognizance of the aforementioned averments, the high court correctly found that the failure to challenge the validity of the marriages was consciously made by the appellant Queen. As a result, she could not, at the last minute, raise something not in her papers. 16 Association for Voluntary Sterilization of South Africa v Standard Trust Limited and Others [2023] ZASCA 87 para 11. 12 [25] The winding up of the estate and the distribution thereof was no longer a live issue before the high court with the unfortunate passing away of the late Queen. The high court correctly found that the appellant Queen should not have sought interdictory relief as she had not established a clear right that was infringed and needed protection, nor had she sought the declaration of invalidity of the other customary marriages to the late Isilo. There was also no contention that those marriages were not legally concluded in terms of the Recognition Act. [26] Furthermore, the winding up of the late Isilo’s estate has not even yet commenced. There was no suggestion that the executor of the estate would distribute the estate in any manner prejudicial to her. In any event, the estate would be wound up under the supervision of the Master of the High Court. The process of winding up of an estate also has safeguards in terms of the Administration of Estates Act 66 of 1965 for the protection of persons who have claims against any deceased estate. Should this not be adhered to, the appellant Queen is not without remedy. [27] It is common ground that the late Isilo was married to the appellant Queen in community of property and profit and loss. The proprietary consequences of the marriage were also admitted. The law on the subject matter is clear. The high court correctly did not deem it necessary and equitable to grant a declaratory order under such circumstances. It is for this reason that it concluded that no practical effect would be achieved by a determination that the late Isilo was married to the appellant Queen as she claimed. The ‘purpose envisaged’ by the appellant Queen had been achieved. The dependants and beneficiaries of the late Isilo’s estate, by virtue of the concession and overwhelming proof, know exactly what their rights are in relation to the late Isilo’s estate. There was nothing to determine or clarify by way of a declaratory order. In essence, the appellant Queen wants a declaratory order that is merely abstract, academic or hypothetical. 13 [28] The appellant Queen’s main ground of complaint was that the late Isilo, having concluded a civil marriage with her, was precluded in terms of the Marriage Act, from marrying any other person during the subsistence of that marriage. But if this is so, and we make no finding in this regard, it is a consequence of the marriage regime between the late Isilo and the appellant Queen. The effect of a civil marriage on customary marriages flows by operation of law. It is not something a court needs to give a declaratory order on. Policy considerations, as mentioned in J T Publishing above, militate against courts giving advisory opinions to litigants. The appellant Queen has not demonstrated any tangible and justifiable advantage in relation to her position, with reference to an existing future or contingent legal right or obligation, which would flow from the grant of the declaratory order sought. [29] In all the circumstances, despite the misdirection we pointed out earlier, the high court properly exercised its discretion by refusing to grant the declaratory relief. The appeal ought to be dismissed and there is no reason why costs should not follow the result. All the opposing parties, except the first respondent, employed at least two counsel. We are of the view that the employment of two counsel was warranted, given the issues in dispute. The costs order should reflect this. [30] Accordingly, the following order is made: The appeal is dismissed with costs, including the costs of two counsel where so employed. _____________________ YT MBATHA JUDGE OF APPEAL 14 _______________________ C MUSI ACTING JUDGE OF APPEAL 15 Appearances: For the appellant: J Pammenter SC with N Xulu Instructed by: BM Thusini Inc., Vryheid Peyper & Botha Attorneys, Bloemfontein For second respondent: TG Madonsela SC with T Palmer Instructed by: Strauss Daly Inc., Durban Bezuidenhouts Inc, Bloemfontein For third, fourth, fifth, thirteenth and sixteenth respondents: I L Topping SC Instructed by: Ngcamu Inc., Pietermaritzburg 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: 08 March 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 Queen Sibongile Winnifred Zulu v Queen Buhle Mathe and Others (1062/2022) [2024] ZASCA 22 (08 March 2024) Today the Supreme Court of Appeal (SCA) dismissed an appeal with costs, including the costs of two counsel where so employed. The appeal emanated from the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court) where that court dismissed an application, by the appellant, Queen Sibongile Winnifred Zulu (the appellant Queen), wherein she sought a declaratory order stating that she was married to the late King Goodwill Zwelithini kaBhekuzulu Zulu (the late Isilo) in terms of civil law, in community of property and profit and loss; and that the late Isilo was precluded from entering into customary marriages with other persons while the marriage between them subsisted. This application by the appellant Queen was opposed only by the first to the fifth respondents (the respondent Queens). The appellant Queen and the late Isilo entered into a marriage in community of property and profit and loss on 27 December 1969, in accordance with s 22 of the Black Administration Act 38 of 1927 read with the Marriage Act 25 of 1961 (the Marriage Act). The marriage still subsisted at the time of the King’s death. During the subsistence of the civil marriage, the late Isilo entered into customary marriages with the second respondent, the late Queen Shiyiwe Mantfombi Dlamini (the late Queen), and the first, third, fourth and fifth respondent Queens. The late Queen passed on shortly after the late Isilo, and her estate is represented in these proceedings by its appointed executor. In his last will and testament (the validity of which is the subject of another dispute), the late Isilo prefaced the devolution of his estate by making an introductory statement, stating that the notion of marriage in community of property and profit and loss was foreign to the Zulu people, regardless of their social-economic standing. He went on to say that no Zulu king had ever got married to one wife by civil rights, in community of property, because of the very nature of the Zulu laws and culture, adding that a traditional marriage denoted a marriage according to custom. He acknowledged that he was no exception to this, and as a result, he was married to six Queens during his lifetime. Although the nature and proprietary consequences of the marriage between the late Isilo and the appellant Queen were initially disputed, all the respondent Queens before the high court admitted the validity of the marriage and that it was in community of property, and consequently, with profit and loss. However, the respondent Queens denied that the existence of the civil marriage between the appellant Queen and the late Isilo precluded the late Isilo from validly entering into customary marriages with them. The high court found that since the nature, status and proprietary consequences of the marriage 2 are settled as a matter of law, it did not deem it necessary and equitable to grant a declaratory order relating to the marriage. On the issue of whether the late Isilo was precluded from entering into customary marriages with other Queens during the subsistence of his marriage with the appellant Queen, the high court found that such a declaratory order would have no practical effect in the absence of any consequential relief sought. The issue before the SCA was whether the high court exercised its discretion properly in dismissing the appellant Queen’s application. In coming to a conclusion, the SCA reasoned that the high court correctly found that there was incontrovertible evidence that the late Isilo and the appellant Queen were married in community of property and profit and loss which explains why it therefore found that no practical effect would be achieved by declaring that the late Isilo was married to the appellant Queen in community of property and of profit and loss. The SCA further held that the high court correctly found that the failure to challenge the validity of the marriages was consciously made by the appellant Queen and as a result, she could not, at the last minute, raise something not in her papers, adding that the high court correctly found that the appellant Queen should not have sought interdictory relief as she had not established a clear right that was infringed and needed protection, nor had she sought the declaration of invalidity of the other customary marriages to the late Isilo. The SCA further stated that the high court correctly found that the prayer for an order that the late Isilo was precluded from marrying other persons while his marriage with the appellant Queen subsisted, was brought in anticipation of the then impending installation of the late Queen as the Ibambabukhosi (Regent) and that, since there was common ground that the late Isilo was married to the appellant Queen in community of property and profit and loss with the parties both admitting the proprietary consequences of the marriage, there was nothing to determine or clarify by way of a declaratory order. What the appellant Queen sought was a declaratory order that was merely abstract, academic or hypothetical. Holding the view that the winding up of the estate was no longer a live issue in the proceedings, the SCA reasoned that the appellant Queen’s apprehension about the administration of the late Isilo’s will by Sanlam Trust, who are the nominated executors, was unfounded as the estate would be wound up under the supervision of the Master of the High Court and that the process of winding up of an estate also has safeguards in terms of the Administration of Estates Act 66 of 1965 for the protection of persons who have claims against the deceased estate. Additionally, the SCA held that the appellant Queen had not shown that she will gain a tangible advantage in view of any uncertainty as the only case that she made out was the uncertainty that the late Queen’s ascension to the throne would have created. In the result, the SCA concluded that the high court properly exercised its discretion by refusing to grant the declaratory relief and consequently dismissed the appeal with costs, including the costs of two counsel where so employed. --------oOo--------

4221

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 130/2022 In the matter between: NKOMO XOLANI BATISTA 1ST APPELLANT MAVHUNDUSE EMMANUEL J 2ND APPELLANT THEBE MAXWELL 3RD APPELLANT NYATHI NOBLE 4TH APPELLANT and THE STATE RESPONDENT Neutral citation: Nkomo and Others v The State (Case no 130/2022) [2024] ZASCA 61 (26 April 2024) Coram: MBATHA, MABINDLA-BOQWANA, MATOJANE and WEINER JJA and SEEGOBIN AJA Heard: 22 February 2024 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 the 26th day of April 2024. Summary: Criminal law and procedure – distinction between recognition and identification of a suspect. Factors applicable. 2 ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Meyer J, Van der Linde J (concurring) and Wright J (dissenting) sitting as court of appeal): The appeal is dismissed ________________________________________________________________ JUDGMENT ________________________________________________________________ Matojane JA (Mbatha, Mabindla-Boqwana and Weiner JJA and Seegobin AJA concurring): [1] This appeal is against the judgment of the full court of Gauteng Division of the High Court (Pretoria). The majority of the full court, with Meyer J and Van der Linde J concurring, dismissed the appeal and upheld the guilty verdicts of the appellants, whilst Wright J dissented. The appeal is with the leave of this court. [2] The appellants and four others were convicted in the Gauteng Division of the High Court sitting in Palmridge (trial court) by Mophosho AJ on 29 April 2014. The convictions were for murder, robbery with aggravating circumstances and malicious damage to property. The trial court found that the appellants and their erstwhile co-accused acted in furtherance of a common purpose in committing the crimes. [3] Accordingly, on 3 May 2013, the trial court handed down the sentences for each accused and each charge. For the charge of murder, each received a life sentence. Additionally, they were each given fifteen-year prison terms for robbery with aggravating circumstances and a three-year term for malicious damage to property. The three-year sentence was to be served simultaneously with the 3 fifteen-year sentence. The trial court granted the appellants leave to appeal to the full court on both conviction and sentence. [4] On 19 September 2017, the majority of the full court acquitted the other four appellants and confirmed the convictions of the present appellants. Their conviction for robbery with aggravating circumstances was altered to a competent verdict of theft [5] In the trial court, the state led the evidence of two eyewitnesses, Mr Godknows Nkosiyazi Motloung and Mr Memory Skhumbuzo Phiri. All the appellants testified in their defence. It is common cause that Mr Motloung, Mr Phiri and all the appellants are undocumented immigrants from Zimbabwe. At the time of their arrest, they were all involved in illegal gold mining activities at an abandoned mine in Matholeville near the Durban Deep shooting range in Roodepoort. [6] Mr Motloung, the complainant in the counts involving robbery and malicious damage to property and also a witness to the murder charge, testified about an incident that occurred around 16h00 on 21 June 2012. He was waiting next to his pickup truck near the shooting range to get money for petrol from his friend Sunny. He noticed his other friend, Mr Solomzi Livingston Jafta (the deceased), being chased by a group of about nine men throwing stones at him. As the group advanced towards him, the deceased tried unsuccessfully to get into his truck, and he ran towards the shooting range instead. [7] According to his testimony, the first appellant, Mr Xolani Batista Nkomo, pursued the deceased into the shooting range area. At the same time, he was armed with a stone in one hand and what he referred to as a ‘reinforce’ in the other. The first appellant, Emmanuel J Mavhunduse, also had stones in his hands and took part in the attack. Mr Motloung also observed the third appellant, Mr Thebe 4 Maxwell, striking the deceased with a reinforcing rod while the deceased lay on the ground. He also saw the fourth appellant, Mr Noble Nyathi, stabbing the deceased with a panga knife during the assault. Crucially, the witness, Mr Motloung, recognised the attackers as individuals he had been well-acquainted with for a considerable period before this incident, as they were all involved in illegal mining activities in the area. [8] As the deceased was chased past him, he asked the first appellant what was happening but received no response. Frightened by what he witnessed, Mr Motloung ran away and observed the attack on the deceased from a clear, treeless area about 15-20 metres away. He saw the appellants attacking the deceased with stones and an assortment of weapons. The deceased was left seated against a fence, appearing to be dead. The group then returned to his truck, from which he had fled and damaged it with stones and an axe. They removed the battery, radio, and other items from the truck. [9] The second state witness, Mr Phiri, testified that on 21 June 2012, between 14h30 pm and 16h00 pm, he was with the deceased and Mr Motloung. He saw a group of about twenty people carrying stones, axes and metal bars. The appellants were amongst the mob. The mob chased the deceased, pursuing him behind Mr Motloung's car and then to the shooting range. According to him, some group members remained behind and hit the car. Mr Phiri could see some of the group assaulting the deceased at the shooting range. He knew the appellants well, as they were fellow illegal gold miners from Zimbabwe. [10] Mr Phiri testified further that he witnessed the group splitting near Mr Motloung’s pickup truck, with some of them pursuing the deceased onto the shooting range and the rest remaining at the truck. He had an unobstructed view of the attack both near the pickup truck and at the shooting range. After the assault, the mob left the scene, and the deceased was found lying on the ground. Mr Phiri 5 and his friends were worried the attackers might return, so they vacated the area, returning about 30 minutes later. Mr Phiri did not provide details about the events after they returned. [11] Each of the appellants testified that they knew Mr Motloung and Mr Phiri. They categorically denied any involvement in or presence during the attack nor being involved in the damage to property, theft, and criminal incident that took place at the shooting range. Their defence was a bare denial of participation in or being in the proximity of the scene of the crimes they were accused of. [12] The trial court found all the appellants, including their erstwhile co-accused, guilty on three mentioned charges, concluding that they acted in furtherance of common purpose in committing the crimes. The court accepted the testimony of Mr Motloung, who implicated all the appellants, and the testimony of Mr Phiri, who specifically identified the appellants as being involved. While it found some inconsistencies with the evidence provided by Mr Motloung and Mr Phiri, the trial court was satisfied with Mr Motloung's testimony and found it to be sufficient to convict all the appellants of acting jointly to commit the crimes. [13] The full court questioned the reliability of part of Mr Motloung's testimony due to inconsistencies between his initial statements to the police and his later testimony during the trial. Initially, he had only implicated the four appellants in the attack on the deceased. However, in a later statement, he also accused four other appellants without satisfactorily explaining this change. As a result, the full court acquitted the other appellants, whom Mr Motloung did not name in his initial statement to the police. The appeals of the present appellants were dismissed, save for their convictions for robbery, which were overturned and replaced with a competent conviction for theft. Their sentences on this charge were reduced to one year, to be served concurrently with their three-year sentence for malicious damage to property. 6 [14] In a dissenting judgment, Wright J stated that he would have granted the appeals with respect to all eight appellants on all three counts. He expressed concern about Mr Motloung's inability to name all the attackers in his initial statements to the police. Wright J stated that this inconsistency significantly weakened the reliability of Mr Motloung's identification of all the appellants, not just those he failed to name initially. He noted further that the missing pages and conflicting descriptions on the identification parade forms raised questions about the identification's reliability. [15] It is undisputed that criminal acts took place. The sole point of contention is whether the appellants were positively identified as the individuals responsible for committing those acts. The fundamental principle of our law that cannot be overstated is the presumption of innocence for the accused until proven guilty beyond reasonable doubt. If there remains any reasonable doubt about the accused's guilt after considering the evidence, the accused must be acquitted.1 Reasonable doubt is based on reason, logic, and a common sense evaluation of the evidence presented, not on prejudices or emotions. In my view, what is needed is a degree of certainty that falls between absolute certainty and probable guilt. [16] Conflicting evidence did emerge in the state’s case but not on the issue of the identity of the appellants as perpetrators. Mr Phiri contradicted Mr Motloung on how the events unfolded. He also contradicted the evidence he gave to the police and his oral evidence in court. The full court found his evidence to be unreliable and stated that the trial court should not have relied on his evidence. [17] Mr Motloung is a single witness regarding the identification of the appellants. The potential risks of mistaken identification require a thorough assessment of the reliability and credibility of such evidence before placing 1 S v Van Der Meyden 1991 (1) SACR 447. S v Jackson 1998 (1) SACR 470 at 476 E-F 7 significant weight on it. Factors that impact the reliability of the identification evidence are, amongst others, the lighting, visibility, mobility of the scene, proximity of the witness and their opportunity for observation and, importantly, in this case, Mr Motloung’s prior familiarity with the appellants.2 [18] Mr Motloung knew the appellants for a long time. The crucial factor was not merely identifying them but recognising these individuals.3 In my view, the recognition of a known individual by an eyewitness is a more reliable form of identification evidence compared to the identification of an unfamiliar person due to the witness's prior acquaintance with the recognized individual [19] The murder of the deceased occurred in broad daylight, providing clear visibility. Mr Motloung had an unobstructed view of the group chasing the deceased. He was in close physical proximity to the group, especially when they ran towards his pickup truck and passed by him. He even spoke with the first appellant as the mob passed by him. He had sufficient time and an advantageous position to observe the events and individuals involved clearly. In these circumstances, there is no room for mistaken identity. I find his evidence of the identification of the appellants to be clear and satisfactory in all material respects.4 [20] Mr Motloung's recognition of the appellants coincided with admissions made by the appellants themselves under Section 220 of the Criminal Procedure Act 51 of 1977. These admissions, submitted as evidence and included in the record, confirmed the accuracy of the identification parade record, the photographs taken of them during the parade, and their admission that Mr Phiri 2 (see S v Mthetwa 1972 (3) SA 766 (A), at p 768A-C) and to that of a single witness (S v Sauls and Others 1981 (3) SA 172 (A), at pp 179G – 180G), especially a single witness with regard to identification (see S v Miggell 2007 (1) SACR 675 (C) at 678d-f), 3 See R v Dladla and others 1962 (1) SA 307 (A) at 310C; S v Kolea 2013 (1) SACR 409 (SCA), para 21.) 4 Section 208 of the Criminal Procedure Act provides that an accused may be convicted of any offence on the single evidence of a competent witness. See R v Mokoena 1956 (3) SA 81 (A); S v Webber 1971 (3) SA 754 (A) at 758G; S v Sauls and Others 1981 (3) SA 172 (A) at 179G-180G; S v Stevens [2005] 1 All SA 1 (SCA) at 5 and S v Gentle 2005 (1) SACR 420 (SCA) para 17. 8 identified them during the parade. Although Mr Phiri's evidence is not relied upon, the appellants' admissions regarding Mr Phiri pointing them out corroborated and aligned with Mr Motloung's identification of them based on his personal recognition. While the fourth appellant was not in the line-up at the identification parade on 20 August 2012, Mr Motloung recognised him as being amongst the group that chased and attacked the deceased. [21] The missing pages and conflicting descriptions on the identification parade forms forming the basis of Wright J's findings were never an issue before the trial and the full courts. They cannot be raised for the first time on appeal. [22] For all these reasons, the full court cannot be faulted for accepting as credible and reliable the evidence of Mr Motloung about identifying the appellants as perpetrators. I am satisfied on the totality of the evidence that even if there were contradictions in Mr Motloung's evidence, it related to the appellant's whose convictions were set aside. [23] As to the sentence, it was submitted on behalf of the appellants that in imposing a minimum sentence of life imprisonment on the appellants, the trial court failed to apply its mind and inform itself whether there were substantial and compelling circumstances present to deviate from the minimum sentence prescribed. In S v Pillay,5 this Court had this to say: '...merely because a relevant factor has not been mentioned in the judgment on sentence, it does not necessarily mean that it has been overlooked, for "no judgment can ever be perfect and all-embracing"... Moreover, the value to attach to each factor taken into account is also for the trial Court to assess.' [24] Determining the appropriate sentence in a criminal case is pre-eminently a matter for the trial court's discretion. In this role, the trial court has a broad 5 S v Pillay 1977 (4) SA 531 (A) 9 discretion to (a) decide which factors should be considered in determining the extent of punishment and (b) assign relative importance or value to each factor taken into account when making that determination.6 The trial court considered that the appellants were first offenders, and their ages ranged from 22 to 38 years. It further found that the murder was committed in the execution of a common purpose and was executed with brazen and callous brutality in broad daylight, which it found to be an aggravating factor. [25] I am satisfied that the court exercised its sentencing discretion judicially and that all the relevant factors and circumstances were duly considered and taken into account in finding that there were no compelling and substantial circumstances that warranted the imposition of a lesser sentence. [26] In the result I make the following order: The appeal is dismissed. _________________________ K E MATOJANE JUDGE OF APPEAL 6 S v Kibido 1992 (2) SACR 214 (SCA) at 216G-J, S v Pillay 1977 (4) SA 531 (A) at 535 A - B 10 APPEARANCES: For the appellants: J M Mojuto Instructed by: Legal Aid South Africa, Johannesburg Legal Aid South Africa, Bloemfontein For the respondent: R Barnard Instructed by: The Director of Public Prosecutions, Johannesburg The Director of Public Prosecutions, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY: JUDGEMENT DELIVERED IN THE SUPREME COURT OF APPEAL FROM: The Registrar, Supreme Court of Appeal DATE: 26 April 2024 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 Nkomo and Others v The State (Case no 130/2022) [2024] ZASCA 61 (26 April 2024) Today, the Supreme Court of Appeal, per Matojane JA (Mbatha, Mabindla-Boqwana, Weiner JJA and Seegobin AJA) has dismissed an appeal of several undocumented immigrants from Zimbabwe who were convicted of murder, robbery, and malicious damage to property stemming from an incident near an abandoned mine where appellants were involved in illegal mining activities. The convictions were originally secured in the Gauteng High Court based largely on eyewitness testimony and the appellants' own admissions. While one judge on the full bench dissented, citing concerns over the reliability of the identification evidence, the majority upheld the murder and malicious damage convictions. The robbery conviction was reduced to theft. However, the life sentences for murder were affirmed by the majority, who cited the gravity of the offenses and lack of substantial mitigating factors. Despite the dissenting opinion, the Supreme Court has now upheld the core convictions and sentences from the original trial verdict. *****END*****

4283

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 330/2023 In the matter between: PHOENIX SALT INDUSTRIES (PTY) LTD APPELLANT and THE LUBAVITCH FOUNDATION OF SOUTHERN AFRICA RESPONDENT Neutral citation: Phoenix Salt Industries (Pty) Ltd v The Lubavitch Foundation of Southern Africa (330/2023) [2024] ZASCA 107 (03 July 2024) Coram: MOCUMIE ADP and MATOJANE and MOLEFE JJA and SEEGOBIN and MBHELE AJJA Heard: 06 March 2024 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 03 July 2024 2 Summary: Loan agreement – variation clause – waiver – whether variation clause precludes waiver – waiver is not variation – interpretation of a loan agreement– surrounding circumstances and evidence demonstrates a waiver. 3 ORDER On appeal from: Gauteng Division of the High Court, Johannesburg (Swanepoel J, sitting as court of first instance): The appeal is dismissed with costs, including the costs of two counsel, where so employed. JUDGMENT Mbhele AJA (Mocumie ADP and Matojane and Molefe JJA and Seegobin AJA concurring): [1] This is an appeal against the judgment and order of the Gauteng Division of the High Court, Johannesburg (the high court), dismissing the application for payment of monies paid to Phoenix Salt by the respondent in terms of a loan agreement between the parties. The appeal is with leave of the high court. [2] The appellant, Phoenix Salt Industries (Pty) Ltd (Phoenix Salt), unsuccessfully sought payment of the sum of R2 886 005.20 plus interest and costs from the respondent, the Lubavitch Foundation of South Africa (Lubavitch). The claim has its genesis in a written loan agreement entered into between Phoenix Salt and Lubavitch on 12 August 1994. Golden Hands Property Holdings (Pty) Ltd (Golden Hands), a company owned by the Krok family, was, at the time, controlled and represented by Messrs Abraham Krok and Solomon Krok (the Krok Brothers). Golden Hands, signed as a surety and co-principal debtor in solidum with Lubavitch for its obligations in terms of the agreement. Mr Abraham Krok passed away on 20 January 2013. 4 [3] Lubavitch is a voluntary organisation aimed at enriching the lives of South Africans of Jewish extraction with a special focus on promoting and protecting their social and economic interests. To that end, it runs a property management school for Jewish scholars on the property that is sought to be attached and declared specially executable by Phoenix Salt. Around 1994, Lubavitch experienced financial difficulties and struggled to service its mortgage loan with Nedbank. It faced foreclosure by Nedbank, which had funded it to acquire the Orchards and Klipfontein properties. [4] The Krok Brothers redeemed the situation by taking over the Nedbank loan through Phoenix Salt, a shelf company which they controlled. Phoenix Salt and Lubavitch entered into a loan agreement in which Phoenix Salt would settle the Nedbank indebtedness of R5.2 million. On 29 August 1994, Phoenix Salt took cession of Nedbank’s claims and rights in and to the mortgage bonds in consideration for R5 000 000 plus interest calculated from 1 April 1994 until the date of payment. The agreement provided that the loan would be repayable 24 months after Phoenix Salt had demanded repayment of the outstanding balance. In the same agreement, Golden Hands bound itself as a surety and co-principal debtor to Lubavitch for the due and punctual performance of Lubavitch’s obligations arising from the loan agreement. [5] The essential terms of the loan agreement were that the loan by Phoenix Salt was advanced to Lubavitch on the basis that Lubavitch sold to Golden Hands stands 141, 142, 143 and 260 of Orchards property at exactly the same price as the loan amount of R5.2 million. This resulted in Lubavitch and Golden Hands entering into a separate written agreement (the sale agreement) in terms of which Lubavitch sold the aforementioned immovable properties to Golden Hands at a purchase price of R5.2 million. The purchase price was, in terms of the written sale agreement, at least, payable on transfer. [6] Golden Hands intended to erect cluster houses on the four properties. In terms of the loan agreement Golden Hands ceded its right to receive the proceeds from the sale of the cluster houses to Phoenix Salt, in order to reduce Lubavitch’s indebtedness. Golden Hands never paid Lubavitch the purchase price for the properties. 5 [7] Central to the determination of the core issue, lies clause 9 of the loan agreement, which inter alia, contains the following terms: ‘9.1 This agreement, together with the annexure thereto, constitutes the sole record of the agreement between the parties in regard to the subject matter thereof. 9.2 Neither party shall be bound by any representation, express or implied term, warranty, promise or the like not recorded herein or reduced to writing and signed by the parties or their representatives. 9.3 No addition to, variation or agreed cancellation of this agreement or the annexure thereto shall be of any force and effect unless in writing and signed by or on behalf of the parties. 9.4 No indulgence which either party may grant to the other shall constitute a waiver of any of the rights of the former.’ The above sub clauses require the attention of this Court to come to its conclusion. [8] On 25 July 2017, almost two decades and a half from the date of the loan, Phoenix Salt demanded repayment of the balance of the loan, making the debt due and payable on or before 26 July 2019. It contended that the agreement was a straightforward loan agreement. Phoenix Salt finds support for this assertion from its financial statements for the period 1995 to 2003 which reflected the transaction as a loan between Phoenix Salt and Lubavitch. In addition to the entries in the financial statements there were loan certificates from the auditors of Phoenix Salt for the period covering 1995 to 1998. [9] Lubavitch, represented by Rabbi Menachem Lipskar (Rabbi Lipskar), who together with Mr Solomon Krok, are the only persons with personal and direct knowledge of the events which unfolded in August 1994, proffered a completely different account. Rabbi Lipskar narrates that the Krok Brothers undertook to assist Lubavitch in settling the debt in its entirety. They therefore devised a scheme through which they would advance the funds to Lubavitch through Phoenix Salt, of which they were directors together with Mr Arthur Aaron, to enable Lubavitch to settle the Nedbank debt. [10] According to Rabbi Lipskar, the scheme included a deal through which Golden Hands would utilise the profits from the sale of the cluster development at Orchards 6 property to settle Lubavitch’s debt to Phoenix Salt. At that stage Mr Joseph Rabin was the sole director and shareholder in Golden Hands which was, during that period controlled and represented by the Krok Brothers during negotiations and at the time of signature of the agreement. Golden Hands paid R2 429 440 to Phoenix Salt from the proceeds of the sale in part-payment of Lubavitch’s debt. Rabbi Lipskar says that he had assurance from the Krok Brothers, on numerous occasions that Lubavitch would never be required to settle the debt, as the proceeds from the cluster development would be used for that purpose. Mr Solomon Krok confirms this version in a confirmatory affidavit to Lubavitch’s answering affidavit. Lubavitch’s version is that Phoenix Salt waived its right to call up the loan and to enforce the strict terms of the agreement. [11] In November 2003,the Krok Brothers resigned as directors of Phoenix Salt and were replaced by Messrs Martin and Maxim Krok. During the tenure of the Krok Brothers no attempt was made to enforce the agreement. There is no indication that the loans were reflected or accounted for anywhere between 2003 and 2014, when correspondence was sent to Lubavitch on behalf of Phoenix Salt enquiring about the loans nor were there any loan certificates issued by Phoenix Salt’s auditors to reflect the loan balance thereafter. There is no explanation for this gap in accounting. [12] Lubavitch’s version cannot be gainsaid. First, because its witnesses are the only ones who have first-hand and personal knowledge of the circumstances surrounding the agreement. Second, because Golden Hands has not paid the money it owes Lubavitch for the four properties in full and that it stood surety for Lubavitch’s debt to Phoenix Salt. And, third, it later paid R2 429 440 out of the proceeds of sales of Klipfontein and Orchards properties to Phoenix Salt as part payment of Lubavitch’s debt. This supports the version that the parties to the loan agreement in dispute, envisaged that Golden Hands would repay the loan, as it bound itself as surety and co-principal debtor to Phoenix Salt. [13] While Lubavitch submits that the Krok Brothers, acting on behalf of Phoenix Salt, exercised a waiver to enforce its right of recovery against Lubavitch, Phoenix Salt contends that the available evidence does not establish a waiver and that it is ousted 7 by the non-variation clauses of the agreement. The relevant non-variation clauses are 9.2 and 9.3 which stipulate: ‘9.2 Neither party shall be bound by any representation, express or implied term, warranty, promise or the like not recorded herein or reduced to writing and signed by the parties or their representatives. 9.3 No addition to, variation or agreed cancellation of this agreement or the annexure thereto shall be of any force or effect unless in writing and signed by or on behalf of the parties.’ [14] The Plascon-Evans1 rule finds application in this case. The rule requires that the matter be decided on the respondent’s version together with the admitted facts in the appellant’s founding affidavit which provide the factual basis for the determination unless the dispute is not real or genuine and the version of the respondent is untenable and farfetched. Lubavitch’s version is neither untenable nor farfetched. Thus, I am unable to reject the version proffered by Lubavitch and consequently, its version should stand. [15] The issue, therefore, in this appeal is whether Phoenix Salt through the Krok Brothers waived its right to claim the remaining loan amount from Lubavitch, if so, whether such a waiver is competent in the face of the non-variation clause. A waiver denotes a voluntary abandonment of a known existing right, benefit or privilege which if it were not for such waiver the party would have enjoyed it. It should be a deliberate abandonment either expressly or by conduct plainly inconsistent with an intention to enforce such right.2 The principle that a person may denounce any right or privilege available to him provided such a waiver is not prohibited by law or does not offend public policy, is well established in our law.3 The existence of a waiver can be traced 1 Plascon Evans Paints Ltd v van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A), as re-affirmed in Commercial Stevedoring Agricultural and Allied Workers’ Union and Others v Oak Valley Estates (Pty) Ltd and Another [2022] ZACC 7; [2022] 6 BLLR 487 (CC); 2022 (7) BCLR 787 (CC); 2022 (5) SA 18 (CC). 2 R H Christie Çhristie’s The Law of Contract in South Africa 8 ed (2022) at 532. See also: Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration 1977 (4) SA 310 (T) at 323-324. 3 SA Eagle Insurance Co Ltd v Bavuma 1985 (3) SA 42 (A) 49G-H; Ritch and Bhyat v Union Government (Minister of Justice) 1912 AD 719 at 734-735 where the court held: ‘The maxim of the Civil Law (C.2, 3, 29), that every man is able to renounce a right conferred by law for his own benefit was fully recognised by the law of Holland. But it was subject to certain exceptions, of which one was that no one could renounce a right contrary to law, or a right introduced not only for his own benefit but in the interests of the public as well. (Grot., 3, 24, 6; n. 16; Schorer, n. 423; Schrassert, 1, c. 1, n. 3, etc.). And the English law on this point is precisely to the same effect.’ 8 from the conduct of the parties. Whether there was a waiver or not is a matter of evidence. [16] This Court in SA Sentrale Ko-op Graanmaatskappy Bpk v Shifren en Andere4 (Shifren) laid down a principle governing the non-variation clauses in agreements. In terms of this principle, once parties to a written agreement agree that an agreement cannot be altered unless certain conditions are met, no amendment will be valid unless the prescribed condition has been met. The principle was reaffirmed in Brisley v Drotsky,5 where this Court held that the purpose of non-variation clause was to curtail disputes and protect both parties to the contract. The Shifren principle did not create a ‘strait jacket’, which impact, courts should attempt to soften as a few cases demonstrated. The principle in its simplest interpretation, simply reinforced the rights of individuals to freely contract and be held to contracts they freely concluded. Importantly, for purposes of this appeal, Shifren did not determine whether the non-variation clause precludes a waiver. [17] Do the facts as set out by Lubavitch support a waiver and were the Krok Brothers precluded by the non-variation clauses to waive their rights? The non-variation clauses in the loan agreement expressly refer to additions, variations, and cancellations of the agreement – but not waivers. Clause 9.2 precludes reliance on external terms and representations, while clause 9.3 requires written signature for alterations to the agreement itself. Neither of the clauses address unilateral waiver of contractual rights. The non-variation clauses in this agreement did not prevent the Krok brothers, acting for Phoenix Salt, from orally waiving the right to claim repayment from Lubavitch. The waiver is not a variation of the loan terms requiring it to be in writing and signed by the parties, but rather an abandonment of Phoenix Salt's unilateral right to enforce repayment. [18] As this Court in Impala Distributors v Taunus Chemical Manufacturing6 recognized, a party can validly waive a right orally if it is a right which exclusively 4 SA Sentrale Ko-op Graanmaatskappy Bpk v Shifren en Andere 1964 4 All SA 520 (A); 1964 (4) SA 760 (A) at 765. 5 Brisley v Drotsky 2002 (4) SA 1 (SCA). 6 Impala Distributors v Taunus Chemical Manufacturing 1975 (3) SA 273 (T). 9 belongs to that party under the contract. The non-variation clauses do not override this principle, as they are silent on waiver. The court remarked as follows: ‘When a contract stipulates that its dissolution can only take place in writing, such a restriction can be revoked by verbal agreement of will. When the contract contains a further provision that no provision of the contract can be amended other than in writing, this entrenches the restriction against revocation and oral dissolution is no longer possible. Waiver can validly be made verbally, but only by a party in respect of a right that belongs exclusively to himself by virtue of the contract. An already arising right of action from breach of contract can also be waived orally.’7 [19] Phoenix Salt contends that an assurance by the Krok brothers that the loan would be repaid by Golden Hands rather than Lubavitch amounts to a variation or addition to the agreement which is precluded by the plain language of the non-variation clauses. It submits further, that the alleged assurances by the Krok Brothers that Phoenix Salt would not enforce its rights of recovery against Lubavitch falls short of another requirement of a unilateral waiver – that the right must have been conferred for the exclusive benefit of the waiving party. Phoenix Salt argues that, there was a third party to the loan, Golden Hands which, as a cedent, surety and co-principal debtor had a material interest in the Lubavitch’s repayment of the loan. Golden Hands was however not called upon to make payment as a surety. [20] Phoenix Salt loses sight of the purpose and context in which the loan agreement was entered into. That is that, Golden Hands was represented by the Krok Brothers when the loan agreement was signed. It entered into an agreement of sale with Lubavitch to purchase the Orchard Properties for the same amount of the loan advanced by Phoenix Salt to Lubavitch. It ceded its rights to receive proceeds from the sale of cluster houses to be developed on the Orchard properties to Phoenix Salt 7 Ibid at 278A-B. ‘Wanneer 'n kontrak bepaal dat ontbinding daarvan alleen skriftelik kan geskied, kan so 'n beperking by mondelinge wilsooreenstemming herroep word. Wanneer die kontrak 'n verdere bepaling bevat dat geen bepaling van die kontrak gewysig kan word anders as op skrif nie, verskans dit die beperking teen herroeping en is mondelinge ontbinding nie meer moontlik nie. Afstanddoening kan geldiglik mondeling geskied, maar alleen deur 'n party ten opsigte van 'n reg wat uitsluitend aan homself toekom uit hoofde van die kontrak. Van 'n reeds ontstane vorderingsreg uit kontrakbreuk kan ook mondeling afstand gedoen word.’ 10 and authorised Phoenix Salt to apply the same to reduce Lubavitch’s indebtedness to it. The purchase price was not paid on the date of transfer of the properties to Golden Hands as stipulated in the contract. Lubavitch did not call for payment of the outstanding amount from Golden Hands. Golden Hands has, up to date, not paid the purchase price in full. Golden Hands stands to benefit from the waiver in that the abandonment of the right to claim the outstanding purchase price from Lubavitch would result in the extinction of the Golden Hands’ obligation to pay the outstanding purchase price and the cession would fall away. [21] Furthermore, the relationship between the contracting parties is of great significance in this matter. Phoenix Salt, through the Krok Brothers, was at all times Lubavitch’s benefactor. Rabbi Lipskar and Mr Solomon Krok made it very clear that the Krok Brothers had always intended to pay Lubavitch’s debt in full. They facilitated this through a scheme that they understood as contracting parties, and when the time was right, the Krok Brothers exercised their right to abandon their claim. This is evident from the absence of accounting records after 2003, when the loan was still extant. It is further supported by the non-payment of the outstanding amount on the sale of the Orchards Properties by Golden Hands. Of interest is that Golden Hands did not intervene in these proceedings, although it is an interested party. [22] Phoenix Salt’s contention that the non-variation clauses preclude the pleaded oral waiver by the Krok brothers conflates the distinct legal concepts of variation and waiver. Each of the two doctrines in the law of contract exists to fulfil different purposes. A waiver is an abandonment or relinquishment of a right or privilege in a contract which is expressed through an explicit statement or conduct that indicates a voluntary decision to give up that right or privilege, without modifying the contract's terms. On the other hand, a variation involves making changes to the terms of a contract, either through mutual agreement between the parties or through unilateral action by one party with the consent of the other. A party exercising a waiver chooses to walk away from a privilege that might have been derived from the contract while the 11 contract remains extant. Whereas, a variation alters or amends the terms of a contract. In HNR Properties CC v Standard Bank of SA (Ltd),8 this Court remarked as follows: ‘No doubt in particular circumstances a waiver of rights under a contract containing a non-variation clause may not involve a violation of the Shifren principle, eg where it amounts to a pactum de non petendo or an indulgence in relation to previous imperfect performance…’ [23] A waiver is the renunciation of a right, and when the intention to renounce is expressly communicated to the affected party, such person is entitled to act upon it. When the renunciation is evidenced by conduct inconsistent with the enforcement of the right or clearly showing the intention to surrender that right, the intention can be acted upon and the right perishes.9 [24] Some hundred and fourteen years ago, the court in Mutual Life and Citizens Assurance Co of New York v Ingle concluded that it is difficult to find the intention of contracting parties exclusively in the written words of a contract. This trite principle has been accepted over the years as the correct exposition of the law. The judgment (cited with approval in numerous cases and authorities), still remains correct. Recently and expanding on the principle, this Court in Natal Joint Municipal Pension Fund v Endumeni Municipality10 pronounced that ‘proper interpretation of a contract requires the whole contract to be read, and grammatical meaning to be attached to the words used in consideration of the surrounding circumstances only known to the parties. This is the law prevailing on interpretation of contracts, agreements and even legislations. [25] In University of Johannesburg v Auckland Park Theological Seminary and Another11 the Constitutional Court remarked as follows on the use of extrinsic evidence in the interpretation process: ‘Let me clarify that what I say here does not mean that extrinsic evidence is always admissible. It is true that a court’s recourse to extrinsic evidence is not limitless because “interpretation is a matter of law and not of fact and, accordingly, interpretation is a matter for the court and not 8 HNR Properties CC and Another v Standard Bank of SA Ltd [2003] ZASCA 135; [2004] 1 All SA 486 (SCA); 2004 (4) SA 471 (SCA) para 20. 9 Mutual Life and Citizens Assurance Co of New York v Ingle 1910 TS 540 at 550. 10 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 18. 11 University of Johannesburg v Auckland Park Theological Seminary and Another [2021] ZACC 13; 2021 (8) BCLR 807 (CC); 2021 (6) SA 1 (CC) paras 68-69. (University of Johannesburg) 12 for witnesses”. It is also true that “to the extent that evidence may be admissible to contextualise the document (since ‘context is everything’) to establish its factual matrix or purpose or for purposes of identification, one must use it as conservatively as possible”. I must, however, make it clear that this does not detract from the injunction on courts to consider evidence of context and purpose. Where, in a given case, reasonable people may disagree on the admissibility of the contextual evidence in question, the unitary approach to contractual interpretation enjoins a court to err on the side of admitting the evidence. What the preceding discussion clearly shows is that, to the extent that the Supreme Court of Appeal in the current matter purported to revert to a position where contextual evidence may only be adduced when a contract or its terms are ambiguous, it erred. Context must be considered when interpreting any contractual provision and it must be considered from the outset as part of the unitary exercise of interpretation.’ [26] What the Constitutional Court confirmed thus, is that the process of interpretation should not be divorced from the circumstances surrounding the contract. The relationship between the contracting parties and their conduct during the subsistence of a contract have a significant relevance in the process of interpretation. While surrounding circumstances should not be elevated over words of the contract, consideration of such evidence helps the decision maker to acquire an enhanced insight into the intention and the purpose of the contract. [27] What the uncontroverted evidence clearly shows is that the Krok Brothers conducted themselves in a way that demonstrates that they waived their right to enforce the terms of the loan agreement against Lubavitch.12 The high court’s finding that Phoenix Salt waived its right to call up the loan and to enforce payment is correct. In the circumstances the appeal ought to fail. In so far as the costs are concerned, there is no reason to depart from the general rule that costs should follow the result. [28] In the result, the following order is made. 12 Trans-Natal Steenkoolkorporasie Bpk v Lombaard en ‘n Ander 1988 (3) SA 625 (A) at 640; See also Palmer v Poulter 1983 (4) SA 11 (T) at 20D. It was held: 'If the appellant with full knowledge of the facts, so conducted herself that a reasonable person would conclude that she had waived her accrued right to cancel the agreement or affirmed the agreement, a mental reservation to the contrary will not avail her.' 13 The appeal is dismissed with costs, including the costs of two counsel, where so employed. N M MBHELE ACTING JUDGE OF APPEAL 14 Appearances For the appellant: R Pearse SC and N Badat Instructed by: Cliffe Decker Hofmeyr Inc., Johannesburg Webbers Attorneys, Bloemfontein. For the respondent: S Symon SC and J L Kaplan Instructed by: Ian Levitt Attorneys, Johannesburg Honey Attorneys Inc., Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 28 June 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 Phoenix Salt Industries (Pty) Ltd v The Lubavitch Foundation of Southern Africa (330/2023) [2024] ZASCA 107 (3 July 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing, with costs including the costs of two counsel, an appeal against the decision of the Gauteng Division of the High Court, Johannesburg. Around 1994, the respondent, Lubavitch Foundation of South Africa (Lubavitch) experienced financial difficulties and struggled to service its mortgage loan with Nedbank. It faced foreclosure by Nedbank, which had funded it to acquire the Orchards and Klipfontein properties. The appellant, Phoenix Salt Industries (Pty) Ltd (Phoenix Salt), through its owners Abraham Krok and Solomon Krok (the Krok brothers), redeemed the situation by taking over the Nedbank loan. Phoenix Salt and Lubavitch then entered into a loan agreement in which Phoenix Salt would settle the Nedbank indebtedness of R5.2 million. On 29 August 1994, Phoenix Salt took cession of Nedbank’s claims and rights in and to the mortgage bonds in consideration for R5 000 000 (five million) plus interest calculated from 1 April 1994 until the date of payment. The agreement provided that the loan would be repayable 24 months after Phoenix Salt had demanded repayment of the outstanding balance. In the same agreement, Golden Hands bound itself as a surety and co-principal debtor to Lubavitch for the due and punctual performance of Lubavitch’s obligations arising from the loan agreement. The Krok Brothers resigned as directors of Phoenix Salt in November 2003 and were replaced by Martin and Maxim Krok. During the tenure of the senior Krok Brothers no attempt was made to enforce the agreement. On 25 July 2017, 23 years from the date of the loan, Phoenix Salt under new directorship, demanded repayment of the balance of the loan, making the debt due and payable on or before 26 July 2019. It contended that the agreement was a straightforward loan agreement. Phoenix Salt found support for that assertion from its financial statements for the period 1995 to 2003 which reflected the transaction as a loan between Phoenix Salt and Lubavitch. In addition to the entries in the financial statements there were loan certificates from the auditors of Phoenix Salt for the period covering 1995 to 1998. That, according to Phoenix Salt, was an indication that the transaction was a straightforward pure loan agreement payable in terms of that agreement. Lubavitch, represented by Rabbi Menachem Lipskar (Rabbi Lipskar) proffered a completely different account. Rabbi Lipskar narrated that the Krok Brothers wished to assist Lubavitch in settling the debt in its entirety. They therefore devised a scheme through which they would advance the funds to Lubavitch through Phoenix Salt, of which they were directors together with Mr Arthur Aaron, to enable Lubavitch to settle the Nedbank debt. According to Rabbi Lipskar, the scheme included a deal through which Golden Hands would utilise the profits from the sale of the cluster development at Orchards property to settle Lubavitch’s debt to Phoenix Salt. Golden Hands paid R2 429 440.00 to Phoenix Salt from the proceeds of the sale in part-payment of Lubavitch’s debt. Rabbi Lipskar says that he had assurance from the Krok Brothers, on numerous occasions that Lubavitch would never be required to settle the debt, as the proceeds from the cluster development would be used for that purpose. Mr Solomon Krok confirmed this version in a confirmatory affidavit to Lubavitch’s answering affidavit. Lubavitch’s version was that the appellant waived its right to call up the 2 loan and to enforce the strict terms of the agreement. While Lubavitch submitted that the Krok Brothers, acting on behalf of Phoenix Salt, exercised a waiver to enforce its right of recovery against Lubavitch, which was not ousted by the non-variation clauses in the agreement, Phoenix Salt contended that the available evidence did not establish waiver and that it was not permitted by clauses 9.2 and 9.3 of the loan agreement. To enforce the agreement, Phoenix Salt instituted an application in the Gauteng Division of the High Court, Johannesburg (the high court) to claim payment of the sum of R2 886 005.20 plus interest and costs from Lubavitch. The high court, dismissed the application and found that Phoenix Salt had waivered their rights to enforce payment. Aggrieved by the high court’s findings, Phoenix Salt appealed, with leave of the high court to this Court. Before this Court, the issue was whether Phoenix Salt through the Krok Brothers waived its right to claim the remaining loan amount from Lubavitch, if so, whether such a waiver was competent in the face of the non-variation clause. In its findings, the SCA held that the process of interpretation should not be divorced from the circumstances surrounding the contract. The relationship between the contracting parties and their conduct during the subsistence of a contract have a significant relevance in the process of interpretation. It further held that while surrounding circumstances should not be elevated over words of the contract, consideration of such evidence helps the decision maker to acquire an enhanced insight into the intention and the purpose of the contract. The SCA also held that the words and actions of the Krok Brothers and Rabbi Lipskar, as contracting parties, before the signing and during the subsistence of the contract demonstrated that there was no intention on the Krok Brothers as the seniors of the Krok family to demand payment of the loan directly from Lubavitch. They conducted themselves in a way that clearly showed that they abandoned their right to enforce the terms of the contract against Lubavitch. According to the SCA, the high court’s finding that Phoenix Salt waived its right to call up the loan and to enforce payment was correct. Thus, in the circumstances the appeal was dismissed. ~~~~ends~~~~

4177

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not reportable Case No: 394/2022 In the matter between: ALICE MARY PARRY APPLICANT and ROSALENE SYBIL DUNN-BLATCH FIRST RESPONDENT ITRISA NPC SECOND RESPONDENT TRADSA (PTY) LTD THIRD RESPONDENT Neutral Citation: Parry v Dunn-Blatch and Others (394/2022) [2024] ZASCA 19 (28 February 2024) Coram: MOLEMELA P, SALDULKER, MAKGOKA and HUGHES JJA and MALI AJA Heard: 6 September 2023 Delivered: 28 February 2024 Summary: Company law – section 163 of the Companies Act 71 of 2008 – whether the applicant established any act or omission having a result that is oppressive or unfairly prejudicial to, or that unfairly disregards her interests. 2 _____________________________________________________________________ ORDER _____________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Opperman and Mdalana-Mayisela JJ and Meersingh AJ sitting as a court of appeal): The application for special leave to appeal is dismissed with costs. _____________________________________________________________________ JUDGMENT _____________________________________________________________________ Molemela P (Saldulker, Makgoka and Hughes JJA and Mali AJA concurring): Introduction [1] This litigation emanates from an acrimonious relationship between two directors and shareholders of a small private company. The applicant, who is a shareholder and director of that company, alleges that the first respondent, as a director and co-shareholder in the same company, has exercised her powers as a director in such a manner as to oppress, unfairly prejudice or disregard her interests unfairly. Salient factual matrix [2] In 1996, the applicant, Ms Alice Mary Parry (Parry), and the first respondent, Ms Rosalene Sybil Dunn-Blatch (Dunn-Blatch), who were friends at that stage, set up and registered two companies: a private company known as TRADSA (Pty) Ltd (TRADSA) and a non-profit company known as International Trade Institute of South Africa (ITRISA). The latter was set up for purposes of offering distance learning programmes, training courses, workshops and project-based consultancy in the field of international trade. Parry and Dunn-Blatch were directors in ITRISA and directors with equal shareholding in TRADSA. It is common cause that TRADSA was the vehicle through which Parry and Dunn-Blatch were to hold their intellectual property rights as co-authors of the educational course materials (literary works) to be used by ITRISA. It is common cause that, pursuant to the registration of these companies, Parry and Dunn-Blatch assisted in the management of ITRISA and were thus in its employ and received salaries, and that a 3 portion of their salaries was meant to compensate them for the intellectual property which they owned through TRADSA. Thus, ITRISA did not compensate TRADSA directly for utilizing its intellectual property. [3] On 31 May 2012, Parry resigned as a director of ITRISA in order to pursue other interests but remained as a director and co-shareholder of TRADSA. Correspondence exchanged between Parry and Dunn-Blatch leading to Parry’s resignation reveals that there was a discussion pertaining to the conclusion of an agreement that would regulate the relationship between ITRISA and TRADSA and the former’s usage of the latter’s intellectual property. Although the tenor of further correspondence reveals a deterioration in their relationship, on 10 June 2015, Parry and Dunn-Blatch deposed to an affidavit in terms of s 26(12)(a) of the Copyright Act 98 of 1978 (the license agreement) with a view to formalising the relationship between ITRISA and TRADSA in respect of the use of the intellectual property. When concluding this agreement, they acted in their personal capacities and as the sole co-directors of TRADSA. [4] In terms of the licence agreement, Parry and Dunn-Blatch: (a) agreed that they were the joint authors of the copyright works (clause 4.1); (b) confirmed and assigned their ownership of the copyright in the copyright works to TRADSA and simultaneously confirmed the existence of the exclusive licence that ITRISA had to use the copyright works (clause 4.2);1 (c) confirmed that, since 2009, all the course material used by ITRISA had borne a notice reflecting TRADSA as the copyright owner of the copyright works pursuant to the intention, at all relevant times, that the ownership of the copyright in the copyright works was to vest in TRADSA and that TRADSA, in turn, would license to ITRISA, the right to use its course materials (clause 5.6); (d) such course material was ‘periodically lodged with the Department of Education Accreditation Authority and in more 1 Clause 4.2 reads: ‘confirm, pursuant to the provisions of Section 22(3) of the Copyright Act 98 of 1978, and hereby reduce to writing the assignment by each of us of the copyright in the works referred to in 4.1 above to Tradsa, with effect from the date on which we respectively created them; and likewise confirm further the exclusive licence granted by Tradsa to ITRISA to use such works for purposes of the distance learning and other training programmes ITRISA has offered since 1996, and to enable ITRISA to obtain accreditation of such learning programmes by the relevant regulatory authorities.’ 4 recent years with the Council for Higher Education, and in the case of the aforesaid more Advanced Qualification with the Financial Advisory and Intermediary Services Act (FIAS) arm of the Financial Services Board and can be confirmed on the websites of these regulatory bodies’ (clause 5.7); (e) assignment of all copyrights in the copyright works to TRADSA, from the date each item of work was created and to the extent that a retrospective assignment may not be competent then with effect from the date of the licence agreement (clause 6); and (f) confirmed the exclusive licence granted by TRADSA to ITRISA to use the copyright works (clause 7). [5] Due to Parry’s insistence on TRADSA’s entitlement to receive compensation from ITRISA for the utilisation of TRADSA’s intellectual property, a dispute arose which prompted Parry to approach the Gauteng Division of the High Court, Johannesburg (the high court) for relief. The relief2 sought by Parry was premised on s 163 of the 2 In the high court, the following relief was sought: ‘(1) That the following inferred terms of the licence agreement between [TRADSA] and [ITRISA] be deleted: (a) that [ITRISA] does not need to account to [TRADSA] for the use of the intellectual property; (b) that no consideration is payable to [TRADSA] for the use of the intellectual property; and (c) that compensation for the use of the intellectual property would be payable to [TRADSA] if [ITRISA] were disposed of to a third party and this third party would continue to use the intellectual property. (2) That the following terms are included in the licence agreement between [TRADSA] and [ITRISA]: (a) that [ITRISA] accounts to [TRADSA] for all use of the intellectual property, including all revenue derived from the use of the intellectual property whether directly or indirectly; (b) that compensation is payable by [ITRISA] to [TRADSA] for the use of the intellectual property by [ITRISA] from a date of not less than 3 years from the date of this application and for all future use of the intellectual property as follows: (i) 15% of gross revenue accruing to [ITRISA] from the use of the intellectual property in [ITRISA’s]:  Distance learning programme;  Training courses and workshops; and  Project-based consultancy. (ii) 80% of gross revenue accruing to [ITRISA] from the use of the intellectual property in:  Sub-licence agreements with third parties, which generate royalty payments or other revenue to [ITRISA];  Manuals, examination papers and other materials, which are sold to or via third parties in hard copy or electronic format, and do not form part of the sub-licence agreement. (3) That a record system is established to ascertain the gross revenues as categories in (2)(b), and that the revenue amounts are verified by an independent auditor; (4) That if [ITRISA] is disposed of to a third party, the licence agreement for the continued use of the intellectual property will be renegotiated between [ITRISA] [TRADSA] and the third party; (5) That [ITRISA] obtains [TRADSA’s] prior written consent before sub-licensing the intellectual property to any third parties or selling manuals, examination papers and other materials which allow the use of the intellectual property by any third party; (6) That [Ms Parry] and [Ms Dunn-Blatch] as equal shareholders in [TRADSA], enter into an agreement regarding the payment of dividends from revenue received from the compensation paid by [ITRISA]; 5 Companies Act 71 of 2008 (the Companies Act).3 In her affidavit, Parry asserted that Dunn-Blatch had, in her running of the business affairs of ITRISA, engaged in oppressive or unfairly prejudicial acts that disregarded the interests of TRADSA insofar as TRADSA was being deprived of compensation due to it by ITRISA for the latter’s use of TRADSA’s intellectual property. Dunn-Blatch, ITRISA and TRADSA (jointly referred to as ‘the (7) That [TRADSA] is compensated for use of the intellectual property by [ITRISA] from a date of not less than three years preceding the date of this application on the same terms as set out in paragraph (2) above; (8) That [Ms Dunn-Blatch] and [ITRISA] bear the costs of this application if opposed. . .’ 3 Section 163 of the Companies Act 71 of 2008 (the Companies Act), under the heading ‘Relief from oppressive or prejudicial conduct or from abuse of separate juristic personality of company’, provides as follows: (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; (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. (4) . . . . . .’ 6 respondents’) were cited as the first, second and third respondents, respectively. Only the first and second respondents opposed the application. Dunn-Blatch deposed to the answering affidavit in her personal capacity and also as the duly authorised representative of the second respondent. It bears mentioning at this stage that s 163 of the Companies Act, in essence, provides that a shareholder or a director of a company may apply to court for any form of relief if any act or omission of the company or a person related to the company has had a result that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, the applicant. [6] Parry asserted that, on a plain reading of the licence agreement, there is no mention of it being royalty-free. It is this fact that she sought be varied in one of the prayers in her notice of motion. Relying on e-mail correspondence exchanged between herself and Dunn-Blatch between 2012 and 2013, Parry stated that a royalty-free licence agreement was never contemplated by the parties. She averred that the licence agreement was nothing more than an assignment of copyright pursuant to s 26(12)(a) or s 22(3) of the Copyright Act 98 of 1978 (the Copyright Act) and was not intended to regulate royalties. She emphasised that the fact that the licence agreement was silent on royalties did not mean that she and Dunn-Blatch had waived TRADSA’s right to royalties. She averred that TRADSA had never granted ITRISA consent to update or modify its course materials and therefore, any adaptations over which ITRISA claimed to have ownership were unauthorised. [7] In her opposition of Parry’s application, Dunn-Blatch contended that the jurisdictional requirements of s 163 had not been met which, according to her, rendered the relief sought in the Notice of Motion ‘incompetent’. She raised five points in limine in this regard. First, that since Parry had freely and voluntarily concluded the licence agreement three years after she resigned as a director of ITRISA, the court should not, in the face of material disputes of facts, conclude a new agreement for the parties under the guise of s 163. Second, that any claim Parry might have had, had long prescribed because, on Parry’s own version, she had known of the alleged claim from 2012 but had only launched the application six years later. Third, that ‘insofar as there is any harm, it is 7 harm inflicted on [TRADSA] and not on Parry’. She asserted that insofar as any claim might exist, such claim vested in TRADSA and not Parry. She contended that Parry, as a shareholder and director of TRADSA, did not have the necessary locus standi to apply for the relief that she sought. Fourth, that the copyright that Parry relied on was no longer in the same form and substance as it was in 2015 when the licence agreement was concluded. She averred that the course material used by ITRISA had been substantially updated and modified by ITRISA’s employees and were thus adapted into new substantive copyright works in respect of which the copyright became vested in ITRISA. Fifth, that the relief sought by Parry impermissibly required the court to impose new contractual terms on ITRISA and TRADSA. [8] Dunn-Blatch also contended that ITRISA’s financial standing was such that the operations of the company would have to be terminated if it were to pay any royalties to TRADSA. She contended that ITRISA was fulfilling an important education purpose for the community, and if it was forced to pay royalty fees to TRADSA, that would result in its demise, and its object as a non-profit company would therefore be defeated. [9] The high court concluded that the impugned conduct of Dunn-Blatch, ITRISA, and TRADSA ‘was manifestly oppressive and unfairly prejudicial and unfairly disregards the interests of Parry as a director and shareholder’ of TRADSA. It held that Parry had established a case entitling her to the relief envisaged in s 163(2). It granted the relief she had sought but referred the question of the royalty rate to be paid by ITRISA to TRADSA, to trial. The respondents were aggrieved by that decision and were granted leave by this Court to appeal to the full court. [10] During oral arguments in the full court, it was contended on behalf of ITRISA that since ITRISA was a non-profit company, Parry, as its incorporator, was prohibited, by virtue of the provisions of item 1(3) of Schedule 1 of the Companies Act, from receiving a dividend from TRADSA in circumstances where the origin of the dividend is derived from a payment made by ITRISA to TRADSA. It was submitted that even though there are certain exceptions to item 1(3), Parry did not satisfy any one of them. 8 [11] It was contended on behalf of Parry that the payment of compensation for the use of TRADSA’s literary works would fall within the exceptions stipulated in sub-item 1(3) because first, it would be in accordance with the provisions of a bona fide licence agreement and would therefore be in fulfilment of a legal obligation. Second, because the licensed rights to the intellectual property were utilised by ITRISA for purposes of advancing its stated object, a royalty expense did not equate to payment of income or the transfer of assets of the non-profit company but rather was an expense to be accounted for before income. It was therefore submitted that this point in limine fell to be dismissed as Parry had properly brought her claim to vary the terms of the licence agreement to give effect to the true intentions of the parties within the prescripts of s 163 of the Companies Act. [12] The full court found that the high court had effectively concluded a new licence agreement for the parties by including new terms therein. It held that the licence agreement was an exclusive licence agreement between TRADSA and ITRISA and was evidently royalty-free. It further found that Parry had failed to establish oppressive or unfairly prejudicial conduct contemplated in s 163(1). It held that, insofar as any cause of action might exist, such cause of action would vest in TRADSA and not in Parry. [13] Furthermore, the full court stated that the fact that Dunn-Blatch was a director and shareholder of TRADSA, did not overcome the difficulty that the proper applicant in a claim based on a wrong allegedly done to TRADSA, was prima facie TRADSA itself. The full court said: ‘Section 163 of the Companies Act should not be interpreted so as to unjustifiably circumvent the Foss v Harbottle doctrine and its purpose. This doctrine provides that the proper plaintiff in an action in respect of a wrong alleged to be done to a company is, prima facie, the company. . . . Thus, we conclude that insofar as a cause of action might exist (which we do not find), it vests in TRADSA and not in Parry and is not premised on section 163. We conclude that the Court a quo ought to have dismissed the application by virtue of Parry’s lack of locus standi.’4 4 Paragraph 38 and 40 of the full court’s judgment. 9 [14] Aggrieved by the decision of the full court, Parry applied to this Court for special leave to appeal against the judgment and order of the full court. Its application was referred for oral argument as envisaged in s 17(2)(d) of the Superior Courts Act 10 of 2013 (Superior Courts Act), and the parties were cautioned to be prepared, if called upon to do so, to argue the merits of the application. Issues [15] Before us, the same arguments raised in the full court were reiterated on behalf of Parry and the respondents. It was further submitted on behalf of Parry that the full court had failed to consider that the licence agreement was no more than an assignment of copyright pursuant to s 22(3) of the Copyright Act and thus did not regulate the issue of royalties. It was argued that TRADSA had never given up its right to royalties and was therefore entitled to royalties from ITRISA, thus justifying an order varying the terms of the licence agreement. It was argued that these were special circumstances that warranted the granting of special leave to appeal. [16] This being an application for special leave to appeal this Court has to determine whether, in addition to reasonable prospects of success, there are special circumstances that merit a further appeal. If that is answered in the affirmative, the principal issue is whether Parry had made out a case entitling her to relief in terms of s 163 of the Companies Act. Ancillary to that issue was whether the ownership of the copyright works still vested in TRADSA despite the adaptations and modifications made to the course material over the years. Special leave to appeal [17] As mentioned, Parry’s application for special leave to appeal is before us because it was referred for oral argument as envisaged in s 17(2)(d) of the Superior Courts Act. It is well-established 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 this Court. It is also settled law that the 10 existence of reasonable prospects of success is a necessary but insufficient precondition for the granting of special leave.5 Something more, by way of special circumstances, is needed. These 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.6 The determination as to whether special circumstances exist to grant special leave, is intertwined with the merits of the application such that it is not feasible to consider it discreetly. Ownership of the copyright in terms of the licence agreement [18] It is clear from the provisions of clause 4.2 of the licence agreement that the intellectual property in respect of which ITRISA was granted an exclusive licence, vests in TRADSA. Assignment of ownership of copyrights can only be effected in terms of s 22(3) of the Copyright Act. In terms of this provision, assignment of copyright ownership must be in writing and signed by or on behalf of the assignor; thus, the consent of the owner is required.7 That being the case, updates to the course material cannot, by virtue of the adaptation of the material alone, assign ownership of the intellectual property to another entity. Considering the strictures of the Copyright Act regarding the assignment of copyrights, Dunn-Blatch’s contention that the course material vested in ITRISA because the latter had, over the years, substantially updated such material, cannot pass muster. I, therefore, cannot agree with the full court’s conclusion that the adaptations made to TRADSA’s course material had the effect of vesting the copyright in ITRISA or jointly, in TRADSA and ITRISA. In my view, there were no undisputed primary facts that supported this finding. On the contrary, Parry asserted that the allegation that the intellectual property vested in ITRISA was inconsistent with the licence agreement. This was because the licence agreement expressly stated that since 2009, ‘all’ the course 5 Cook v Morrison and Another [2019] ZASCA 8 (SCA); [2019] 3 All SA 673 (SCA). 6 Westinghouse Brake and 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. 7 Section 22(3) of the Copyright Act 98 of 1978 provides as follows: ‘No assignment of copyright and no exclusive licence to do an act which is subject to copyright shall have effect unless it is in writing signed by or on behalf of the assignor, the licenser or, in the case of an exclusive sublicence, the exclusive sublicenser, as the case may be.’ 11 material issued by ITRISA had acknowledged TRADSA’s copyright. Parry asserted that the ‘amendments to the intellectual property was not extensive as Dunn-Blatch would have this court believe’. The nature of the s 163 remedy [19] Section 163(1) of the Companies Act provides: ‘(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 unfairly disregards the interests of the applicant.’ [20] Case law on the meaning of the phrase ‘unfairly prejudicial’ in the context of s 252 of the Companies Act of 1973 (the 1973 Act) and the terms ‘oppressive’ in s 111bis of the Companies Act of 1926 (1926 Act) largely continues to apply to the s 163 remedy because of similarities in wording. However, s 163 now includes the unfair disregard of an applicant’s interests and is therefore widely couched than its predecessors. In terms of s 5(2) of the Companies Act, a South African court may take cognisance of foreign law in interpreting s 163.8 It must also be borne in mind that the South African oppression remedy was originally based on the equivalent provisions in English law.9 English decisions are accordingly relevant to the interpretation of s 163. 8 Section 5(2) of the Companies Act provides that: ‘5. General interpretation of Act (1) . . . (2) To the extent appropriate, a court interpreting or applying this Act may consider foreign company law. (3) . . ’ 9 The s 163 remedy also closely resembles s 241 of the Canada Business Corporations Act, RSC 1985 c. C-44 thus, resort may be had to Canadian case law relating to that provision. 12 [21] It is clear from its text that through s 163 (also known as ‘the oppression remedy’), a shareholder or director of a company is specifically accorded the right, and therefore has locus standi, to challenge oppressive or prejudicial or disregardful conduct, whether by that company or of a ‘related person’.10 The s 163 remedy may be granted if a shareholder or director of a company or of a related person is oppressive or unfairly prejudicial to the applicant or unfairly disregards his or her interests. An act of omission of a director may amount to an act or omission of the company where it is done in breach of a fiduciary duty of a company.11 [22] In circumstances where the applicant complains under s 163(1)(a) of an act or omission of a company or related person, the focus is on the result of the act or omission. 10 In terms of s 2 of the Companies Act, a related person is ‘2. Related and inter-related persons, and control (1) For all purposes of this Act- (a) an individual is related to another individual if they- (i) are married, or live together in a relationship similar to a marriage; or (ii) are separated by no more than two degrees of natural or adopted consanguinity or affinity; (b) an individual is related to a juristic person if the individual directly or indirectly controls the juristic person, as determined in accordance with subsection (2); and (c) a juristic person is related to another juristic person if- (i) either of them directly or indirectly controls the other, or the business of the other, as determined in accordance with subsection (2); (ii) either is a subsidiary of the other; or (iii) a person directly or indirectly controls each of them, or the business of each of them, as determined in accordance with subsection (2). (2) For the purpose of subsection (1), a person controls a juristic person, or its business, if- (a) in the case of a juristic person that is a company- (i) that juristic person is a subsidiary of that first person, as determined in accordance with section 3(1)(a); or (ii) that first person together with any related or inter-related person, is- (aa) directly or indirectly able to exercise or control the exercise of a majority of the voting rights associated with securities of that company, whether pursuant to a shareholder agreement or otherwise; or (bb) has the right to appoint or elect, or control the appointment or election of, directors of that company who control a majority of the votes at a meeting of the board; (b) in the case of a juristic person that is a close corporation, that first person owns the majority of the members’ interest, or controls directly, or has the right to control, the majority of members’ votes in the close corporation; (c) in the case of a juristic person that is a trust, that first person has the ability to control the majority of the votes of the trustees or to appoint the majority of the trustees, or to appoint or change the majority of the beneficiaries of the trust; or (d) that first person has the ability to materially influence the policy of the juristic person in a manner comparable to a person who, in ordinary commercial practice, would be able to exercise an element of control referred to in paragraph (a), (b) or (c). . .’ 11 F H I Cassim et al Contemporary Company Law 3 ed (2023 reprint) (Contemporary Company Law) at 1028; Stewarts (Brixton) Ltd [1985] BCLC 4 at 8; Civils 2000 Holdings (Pty) Ltd v Black Empowerment Partner Civils 2000 (Pty) Ltd [2011] ZAWCHC 6; [2011] 3 All SA 215 (WCC). 13 In terms of sub-sec 1(b), the right to challenge the impugned conduct is accorded if oppression or unfair prejudice or unfair disregard for the applicant’s interests has occurred as a result of the manner in which the business of the company (or a related person) has been carried out. The term ‘business of the company’ is undefined in the Companies Act. It is significant that, in Scottish Co-operative v Meyer and Another (Scottish Co-operative),12 the English court, addressing itself to the phrase ‘oppression in the conduct of the business’ as envisaged in s 210 of that country’s Companies Act of 1948 (which is a provision equivalent to s 163 of our Companies Act), remarked that ‘oppression under section 210 may take various forms. It suggests, to my mind, . . . a lack of probity and fair dealing in the affairs of a company to the prejudice of some portion of its members’. [23] In Livanos v Swartzberg and Others (Livanos),13 the court deciding an application premised on s 111bis of the 1926 Companies Act, found that in secretly forming another company which competed with the business of their company, the respondent shareholder and director was guilty of conducting the affairs of the company in a manner which was unfair and thus oppressive to the applicant shareholder and director. Given the text of the provision, the business of the company may be conducted oppressively through omission, where, for example, the directors do nothing to defend its interests when it ought to take some action.14 In terms of sub-sec 1(c), the right to challenge the impugned conduct is granted if the powers of a director or prescribed officer of a company, or a related person are being exercised oppressively or unfairly prejudicial to, or in unfair disregard of the interests of the aggrieved applicant. Cassim et al opine that this ground will be particularly useful where the relevant exercise of power by a director or prescribed officer amounts to neither 12 Scottish Co-operative v Meyer and Another 1958 (3) A.E.R. 66 (Scottish Co-operative) at 71; Benjamin v Elysium Investments and Another 1960 (3) SA 467 (E) at 476; Livanos v Swartzberg and Others 1962 (4) SA 395 (Livanos) at 398; Grancy Property Ltd v Manala and Others [2013] ZASCA 57; [2013] 3 All SA 111 (SCA); 2015 (3) SA 313 (SCA) (Grancy) para 22; Strategic Partners Group (Pty) Ltd and Others v The Liquidators of Ilima Group (Pty) Ltd (in liquidation) and Others [2023] ZASCA 27; [2023] 2 All SA 658 (SCA) para 26. 13 Livanos at 399; see also Scottish Co-operative at 71. 14 Scottish Co-operative at 367. 14 the ‘conduct of the business of the company’ nor an ‘act or omission of the company or a related person’.15 [24] In each of the three scenarios pertaining to sub-sec 1(a),(b) or (c) as described above, the shareholder must show that he or she has been adversely affected by the impugned conduct complained of. Thus, to succeed in obtaining relief in terms of s 163, the applicant must prove to the court that the relevant conduct complained of was oppressive, or unfairly prejudicial or unfairly disregards the applicant’s interests. Reverting to the facts of this case, Parry therefore had to establish that: (a) any act or omission of TRADSA or ‘a related person’ has had a result that is oppressive or unfairly prejudicial to or that unfairly disregards her interests as the applicant; or (b) the business of TRADSA or a related person, is being or has been carried on or in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards her interests; or (c) the powers of Dunn-Blatch, as a director of TRADSA are being or have been exercised oppressively, unfairly prejudicially or in a manner that disregards her interests. Did Parry have locus standi to invoke the s 163 remedy? [25] As mentioned before, Dunn-Blatch claimed that Parry did not have locus standi to invoke the s 163 remedy. It was contended on the respondents’ behalf that where the conduct complained of by the shareholder results in a loss in respect of which the company has a claim of its own, then that shareholder cannot rely on his or her reflective loss unless he or she is able to allege and prove that the loss he or she suffered is not a loss in respect of which the company also has a claim. Thus, the proper applicant in respect of a claim alleging that a wrong was done to TRADSA, was TRADSA itself and not Parry, so it was contended. It was argued that the fact that the relief sought was a payment to TRADSA and not Parry also illustrated that the wrong was done to TRADSA and not to Parry. For the reasons set out in the succeeding paragraphs, I disagree with this contention. 15 Contemporary Company Law at 1030. 15 [26] It is evident that Parry premised her application on s 163(1) in general terms and did not pigeon-hole it by categorizing the impugned act or omission under item (a), (b) or (c) of sub-sec 1. In my view, in order to succeed, she must show that the conduct of the nature envisaged in (a), (b) or (c) is not only oppressive or prejudicial or disregardful of her interests, but also that this occurred unfairly.16 The court is, in terms of s 163(2), granted a wide discretion to craft an order to appropriately address or cure any oppressive, unfairly prejudicial or unlawfully disregardful act or omission suffered by an applicant at the hands of a respondent.17 In my view, the very fact that a court may, in terms of s 163(2)(h), and not in the setting of a derivative action envisaged in s 165 of the Companies Act, grant an aggrieved shareholder an order varying or setting aside a transaction or an agreement to which the company is a party and compensate the company or any other party to the transaction or agreement shows the fallacy of Dunn-Blatch’s contention that only TRADSA could be the proper applicant in the matter. [27] It is clear from the papers that Parry considered ITRISA’s use of TRADSA’s copyright (through Dunn-Blatch) without compensation as oppressive conduct. She pointed out that Dunn-Blatch was unfairly benefitting from that arrangement, because ITRISA was paying her remuneration from income derived through the usage of TRADSA’s intellectual property. She described Dunn-Blatch’s entitlement to receive remuneration as ‘an inequitable situation’ which was prejudicial to her. She asserted that under the circumstances, it was only fair that the licence agreement be varied to include a clause entitling TRADSA to receive compensation for ITRISA’s usage of TRADSA’s works. She averred that by refusing to agree to vary the agreement, Dunn-Blatch was unfairly disregarding her interests as a co-shareholder, which was unfairly prejudicial to her. She asserted various measures in which the impugned conduct could be remedied in order to achieve a fair result, which included the variation of the licence agreement to so as to include a compensation-payment clause. 16 Grancy para 32. 17 Off-Beat Holiday Club and Another v Sanbonani Holiday Spa Share Block Ltd and Others [2017] ZACC 15; 2017 (7) BCLR 916 (CC); 2017 (5) SA 9 (CC) para 28. 16 [28] Delport in his work Henochsberg on the Companies Act18 postulates that acting without the knowledge and concurrence of the director in apparent conflict with the duties of that director, is oppressive and, under the circumstances also prejudicial to shareholders. Notably, Parry brought the application in a dual capacity as both a shareholder and a director of TRADSA. Similarly, she cited Dunn-Blatch in a dual capacity as a shareholder and director of TRADSA. Notably, Parry asserted that Dunn-Blatch owed a duty to TRADSA, and Dunn-Blatch’s failure to act in TRADSA’s interests had resulted in its business being carried out in a manner that was prejudicial to her. [p251 para 15.] In my view, the breach of fiduciary duty that Parry deprecated falls under oppressive and prejudicial conduct envisaged by Delport above. It also falls within the range of oppressive and prejudicial conduct referred to in Scottish Cooperative and Livanos judgments in the preceding paragraphs. [29] The oblique argument that Parry had no locus standi because none of the respondents fall within the definition of ‘a related person’ in relation to TRADSA, is a red herring and has no merit. The respondents plainly fail to take into account the effect of the conjunction ‘or’ before the phrase ‘a related person’ in s 163(1), and that an applicant can locate the impugned conduct in s 163(a), (b) or (c) against the categories of persons mentioned in that sub-section, or a related person. The reference to Dunn-Blatch is clearly not on the basis of her being a related person. [30] It is clear that on its proper reading, s 163 does not preclude Parry from launching an application based on s 163(1), because she has made various allegations which describe conduct falling squarely within the purview of that provision. Parry would therefore be entitled to an order in terms of s 163(2) if she succeeded in establishing that the refusal of Dunn-Blatch, qua director, to vary the licence agreement amounts to conduct envisaged in s 163(a) or (b) or (c) and that such impugned conduct had an adverse effect on her interests.19 18 P Delport Henochsberg on the Companies Act 71 of 2008 Vol 2 Issue 30 (2023) at 574(24) – 574(25). 19 In passing, it can be note that the interpretation of ‘interests of members’ under the oppression remedy granted in terms of the English Companies Act of 2006 encompasses not only interests derived from membership, although they must be reasonably connected to such. See Gamlestaden Fastigheter AB v Baltic Partnership Ltd v Baltic Partners Ltd [2007] UKPC 26, [2007] Bus LR 1521. 17 [31] In particular, s 163(1)(c) stipulates that an aggrieved shareholder may invoke the s 163 remedy if ‘the powers of a director or prescribed officer of the company, or a person related to the company’ have been exercised oppressively or unfairly prejudicially or in unfair disregard of the aggrieved shareholder’s interests. I specifically refer to this subsection because it is clear from various averments made by Parry that she berates Dunn-Blatch’s conduct, not only on the basis that she is a director of ITRISA, but also on the basis that she, as a director of TRADSA, owes fiduciary duties to TRADSA. She complains that Dunn-Blatch puts ITRISA’s interests above those of TRADSA for her own personal benefit, thereby disregarding her (Parry’s) interests. (Emphasis added.) This could not be clearer than in the following extracts from her papers. In the founding affidavit, Parry said: ‘[Dunn-Blatch] was aware that upon my resignation as a director I would no longer derive a benefit from [ITRISA’s] use of the intellectual property and despite my numerous attempts to reach an agreement which would rectify the prevailing situation, she refused in the capacity as a director and shareholder of [TRADSA], and through the medium of [ITRISA], to vary the inferred terms and as a result, unfairly disregards the interests of TRADSA and thus, my interests. … I thus submit that as a result of [Dunn-Blatch’s] conduct in refusing to vary the inferred terms, [TRADSA’s] interests and my interests in [TRADSA] are being disregarded and as a result I am being prejudiced. [Dunn-Blatch] is using her position as director and shareholder of TRADSA to benefit [ITRISA].’ In her replying affidavit, Parry inter alia stated the following: ‘As a shareholder of [TRADSA] I derive no benefit from the use of the intellectual property by [ITRISA]. Dunn-Blatch, however, is able to receive a salary through the use of the intellectual property and therefore derives a benefit from such use. Therefore, due to the prevailing circumstances, Dunn-Blatch is in a beneficial position and is able to extract a maximum benefit from the use of the intellectual property without paying for such use, and as a consequence, this has resulted in an inequitable situation between the shareholders of [TRADSA] and is causing prejudice to me.’ (Emphasis added.) 18 [32] In contending that Parry lacked locus standi to invoke s 163 remedy in the high court, reliance was purportedly placed on the applicability of the Foss v Harbottle20 rule. The essence of that doctrine is that any loss suffered by the company must be recovered by the company itself and not by any of its shareholders. As mentioned in Grancy Property Ltd v Manala and Others (Grancy),21 a substantial body of case law on the import of s 252 of the 1973 Act shows, in material respects, that provision (ie s 252) is the previous equivalent of s 163 of the Companies Act.22 In Standard Bank of South Africa Ltd v Neugarten and Others,23 (which was approved in Neugarten and Others v Standard Bank of South Africa Ltd),24 the court pronounced itself in relation to s 226 of the 1973 Companies Act. It said that the purpose of that provision was ‘to prevent directors or managers of a company acting in their own interests and against the interests of the shareholders by burdening the company with obligations which are not for its benefit but are for the benefit of another company and/or for the benefit of its directors and/or managers’. The remedy under s 163 is aimed at achieving the balancing of the interests of all shareholders and directors. [33] In Grancy,25 relying on a dictum in Lord Denning’s judgment in Scottish Co-operative,26 and having concluded that s 163 was the equivalent of s 226 of the 1973 Companies Act, this Court held that s 163 must be construed in a manner that will advance the remedy it provides rather than to limit it. Such an approach is consonant with the objectives of s 7 of the Companies Act, which include balancing the rights and obligations of shareholders and directors within the company and encouraging the efficient and responsible management of companies. Denying the remedy granted by 20 Foss v Harbottle (1843) 67 ER 189; (1843) 2 Hare 461. This case was the genesis of the rule against claims for reflective loss and is referred to in subsequent cases, such as Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] 1 Ch 204; [1982] 1 All ER 354 (HL), in terms of which the principle was refined, exceptions were developed and the rule was also relaxed as against the development of the law in general. See Hlumisa Investment Holdings (RF) Ltd and Another v Kirkinis and Others [2020] ZASCA 83; [2020] 3 All SA 650 (SCA); 2020 (5) SA 419 (SCA) (Hlumisa) fn 30. 21 Grancy Property Ltd v Manala [2013] ZASCA 57; [2013] 3 All SA 111 (SCA); 2015 (3) SA 313 (SCA) (Grancy). 22 Ibid para 22. 23 Standard Bank of South Africa Ltd v Neugarten and Others 1988 (1) SA 652 (W) at 658F-G. 24 Neugarten and Others v Standard Bank of South Africa Ltd 1989 (1) SA 797 (A) at 802A-C. 25 Grancy para 26. 26 Scottish Co-operative. 19 legislation to an aggrieved shareholder would obviously have a chilling effect on the Companies Act’s efforts to balance the rights and obligations of all stakeholders. Insofar as it would negate the objects of that Act, it would be wrong in law. [33] As stated before, Dunn-Blatch relied on the rule in Foss v Harbottle27 for her contention that Parry did not have locus standi to invoke the remedy set out in s 163 of the Companies Act and submitted that such a cause of action can only be pursued by TRADSA. This contention is at odds with the available body of jurisprudence which attests that a shareholder’s remedy for oppressive conduct is nothing new. It was first introduced in our company law with the promulgation of an amendment28 of the Companies Act 46 of 1926 in 1952, which introduced s 111bis. [34] Reliance on the Foss v Harbottle rule is misplaced, in my view. This Court has comprehensively explained the applicability of this rule in Hlumisa Investment Holdings (RF) Ltd and Another v Kirkinis and Others (Hlumisa).29 It will therefore serve no purpose to attempt to rehearse or restate that principle in this judgment. Suffice it to mention, however, that Hlumisa concerned a claim by shareholders of a company against its directors and auditors for damages allegedly suffered as a result of the diminution in the value of the shareholders’ shares. This Court concluded that the shareholders’ claim was essentially for reflective loss,30 (in other words reflective only of the losses suffered by the company and therefore recoverable by the company itself) and held that the company, rather than the shareholders, were the proper plaintiffs in respect of a claim against the directors. It is of significance that, in that judgment, this Court acknowledged that there are exceptions to the Foss v Harbottle principle. It also observed that ‘[i]n the present case there is no hint by the appellants of a derivative claim and no assertion of oppression by the majority of shareholders. . .’.31 (Emphasis added.) The Hlumisa judgment is clearly distinguishable. 27 Hlumisa para 34. 28 See s 90 of the Companies Amendment Act of 1926. 29 Hlumisa para 34. 30 Ibid para 38. 31 Ibid. 20 [35] As mentioned before, this Court has already cautioned that s 163 must be interpreted in a manner that advances rather than limits the remedy.32 I see no reason why the Foss v Harbottle rule, which has been relaxed over the years, should serve as a bar to the invocation of the s 163 remedy. This is especially so because the remedy is available even in instances where the interests of the applicant, and not necessarily his/her rights, have been affected. Interests are wider than rights and include equitable considerations.33 Under the circumstances, denying an applicant the right to invoke the remedy on the grounds of a lack of locus standi in circumstances like the present would defeat the very purpose for which the remedy has been granted. It is worth noting that, in instances where the applications were dismissed on account of the applicant having failed to establish the oppressive conduct, the courts did not consider such a failure to have a bearing on locus standi. In Gent and Another v Du Plessis,34 the remedy was denied to a shareholder not because of a lack of locus standi in terms of s 163, but on the basis that the shareholder had ‘failed to show that the majority shareholder’s conduct towards him was oppressive or unfairly prejudicial or that his interests had been unfairly disregarded’. It seems to me that respondents conflate the failure of Parry to prove her case with absence of locus standi. [36] If the cause of action vested only in TRADSA, as was held by the full court, this would result in an absurd result that TRADSA would never be able to launch such an application because of the deadlock between Parry and Dunn-Blatch both as equal shareholders and co-directors. I am of the view that a restrictive approach would thwart the stated purpose of the Companies Act, namely balancing the interests of shareholders and directors and encourage the efficient and responsible management of companies as contemplated in s 7 thereof. It follows that the finding of the full court on the aspect of locus standi is erroneous and therefore cannot stand. However, for reasons that will presently become clear, this finding has no bearing on the overall outcome of this 32 Grancy para 26. 33 Contemporary Company Law at 1024. 34 Gent and Another v Du Plessis [2020] ZASCA 184 para 10, 17-20. 21 application, for an appeal lies against the substantive order made by a court and not the reasons for judgment. I consider next whether Parry has established the oppressive or unfair or prejudicial act or omission on the part of any of the respondents. Has Parry, on undisputed facts, established the impugned conduct complained of? [37] When considering an application premised on s 163, a court must satisfy itself about (a) the existence of the impugned conduct by way of a positive act or omission; and (b) that the relevant conduct was either oppressive, or unfairly prejudicial or unfairly disregards the interests of the applicant. In this matter, each shareholder holds 50% of the shares. It is notable that the predecessors of s 163 granted the oppression remedy as a mechanism for the protection of minority shareholders. However, in Benjamin v Elysium Investments (Pty) Ltd and Another,35 the court granted relief to a shareholder who shared voting control equally with another shareholder. In my view, nothing precludes this Court from coming to the assistance of an aggrieved shareholder under similar circumstances. [38] I noted that several applications were adjudicated by the courts even in instances where the shareholders had equal shareholding, as is the case in this matter.36 The fact that Parry is not a minority shareholder is of no moment, in my view, because the remedy in terms of s 163(1) is available to directors and shareholders alike. A businesslike approach to the s 163 remedy demands that the remedy be available to all companies, including quasi-partnership37 ones. If any provision of the Companies Act or a document in terms of that Act read in its context, can be reasonably construed to have more than one meaning, it must prefer the meaning that best promotes the spirit and purpose as set 35 Benjamin v Elysium Investments (Pty) Ltd and Another 1960 (3) SA 467 (E); see also Livanos op cit fn 9. 36 See Livanos ibid, where the court found, on the basis of undisputed facts, that the applicant had showed oppressive conduct on the part of the respondent. 37 According to Contemporary Company Law at 1025: ‘A quasi-partnership company (or owner-managed company) usually involves a small private company that is formed on the basis of an agreement, an understanding or an intention that the shareholders will generally all be directors and participate in the management of the company, for instance, because the return on investment is to take the form of directors remuneration rather than dividends on shares’. 22 out in s 7 of the Companies Act and will best improve the realisation and enjoyment of rights established by that Act. [39] A plethora of authorities have shown that, for applicants to be entitled to relief pursuant to an application predicated on s 163, they must point out the nature of the impugned conduct and establish that the conduct in question is oppressive or unfairly prejudicial or unfairly disregards his, her or its interests. It is not the motive for the conduct complained of that the court must look at but the conduct itself.38 This Court in Louw and Others v Nel,39 stated as follows in relation to the remedy set out in the provisions of s 252 of the 1973 Act, the predecessor of s 163: ‘The combined effect of subsections (1) and (3) is to empower the court to make such order as it thinks fit for the giving of relief, if it is satisfied that the affairs of the company are being conducted in a manner that is unfairly prejudicial to the interests of a dissident minority. The conduct of the minority may thus become material in at least the following two obvious ways. First, it may render the conduct of the majority, even though prejudicial to the minority, not unfair. Second, even though the conduct of the majority may be both prejudicial and unfair, the conduct of the minority may nevertheless affect the relief that a court thinks fit to grant under ss 3. An applicant for relief under s 252 cannot content himself or herself with a number of vague and rather general allegations, but must establish the following: that the particular act or omission has been committed, or that the affairs of the company are being conducted in the manner alleged, and that such act or omission or conduct of the company's affairs is unfairly prejudicial, unjust or inequitable to him or some part of the members of the company; the nature of the relief that must be granted to bring to an end the matters complained of; and that it is just and equitable that such relief be granted. Thus, the court's jurisdiction to make an order does not arise until the specified statutory criteria have been satisfied.’ It is therefore important for the applicant to adduce clear evidence in order to merit the granting of the relief foreshadowed in s 163. 38 See, for example, Livanos at 399H; Garden Province Investment v Aleph (Pty) Ltd 1979 (2) SA 525 (D) at 531; Grancy para 27. 39 Louw and Others v Nel [2010] ZASCA 161; 2011 (2) SA 172 (SCA); [2011] 2 All SA 495 (SCA) para 23. 23 [40] In her replying affidavit, Parry complained that Dunn-Blatch was receiving a benefit in the form of a salary facilitated through the use of intellectual property belonging to TRADSA while she received no benefit at all, hence her invocation of the s 163 remedy for the licence agreement to be varied to include a clause entitling TRADSA to receive compensation for the course material used by ITRISA. Unfortunately for Parry, the licence agreement is silent on the issue of payment of any compensation for the copyright-protected material owned by TRADSA. [41] Furthermore, there is a dispute of fact as to whether the parties had always intended that compensation be payable for the utilisation of the literary works owned by TRADSA. Parry annexed e-mail correspondence to her founding affidavit to bolster her assertion that it had always been their common intention, with Dunn-Blatch, for TRADSA to charge a royalty fee for the latter’s use of its (TRADSA’s) course material. Unfortunately, the emails Parry considers helpful in providing context to the common intention to include the payment of compensation for ITRISA’s use of TRADSA’s intellectual property do not unequivocally convey that common intention. At best, the correspondence reveals a vacillation on this aspect. For instance, in one of the e-mails authored in January 2012, Dunn-Blatch stated that ‘when ITRISA is on a more sustainable footing, it will pay a licensing fee for the use of the materials to TRADSA’. In response to that e-mail, Parry seemed to agree. [42] In her answering affidavit, Dunn-Blatch denied the existence of a common intention for the granting of a royalty-free intention. She stated: ‘We agreed that the license would be a royalty free license for the simple reason that [ITRISA] does not generate sufficient funds that would enable it to pay a royalty fee. . . . Use of the course material by [ITRISA] has always been on the basis of a royalty free licence, in circumstances where it is evident from Annexure RB1 hereto . . . it is common cause that ITRISA has never been profitable and as presently capitalized is unlikely in the future to be [so].’ [43] Dunn-Blatch attached an email authored by Parry to her answering affidavit, dated 25 February 2012. This e-mail, inter alia, raised a concern regarding the revenue which 24 TRADSA expected to receive from royalties and the resultant cost implications. Two draft agreements were attached to that e-mail. In the first draft agreement, ITRISA is referred to as the assignor and copyright owner and one of the clauses provides that TRADSA will pay ITRISA an amount of R75 000.00 as consideration for assignment of the rights, title and interest in the work. In the second draft, TRADSA is referred to as the licensor and copyright owner, and a clause stipulates that TRADSA, as licensor, would waive ITRISA’s obligation to pay royalties until such time as it was in a financial position to do so. None of these draft agreements were signed. In her replying affidavit, Parry admitted that the draft agreements were attached to her email but disavowed any discussion of the contents thereof. [44] Parry asserted that both herself and Dunn-Blatch had always intended to receive royalties for the utilisation of their intellectual property but had never implemented this. Notably, in her replying affidavit she acknowledged that ‘I agreed that the licence agreement would be a royalty-free agreement while I was still employed at [ITRISA]. Since then, I have attempted to vary this inferred term as it has resulted in undue prejudice to me’. Unfortunately for her, the e-mails exchanged do not provide any clarity on the compensation issue. They were in any event exchanged two and a half years before the signing of the licence agreement. They attest to the increasing mistrust between Parry and Dunn-Blatch and a general deterioration of their relationship, followed by an impasse. At one instance, Dunn-Blatch sent an e-mail stating: ‘Your stance of late has made me realise that it would be extremely risky- while I am at the helm of ITRISA, to activate TRADSA. You could sell your share to some other entity with no interest in ITRISA and that could seriously jeopardise our operation.’ [45] The e-mail exchange provides no clarity on whether or not there was a common intention for a royalty fee to be payable. Therefore, it is of no assistance in providing any context relating to the utilisation of the exclusive license granted to ITRISA or the material known to those who drafted the licence agreement. What is evident is that the acrimony stretched beyond the date of signature of the licence agreement. 25 [46] It bears mentioning that it is always open to the parties to an agreement to change the contractual terms as they wish, if they are so inclined. Where there is a refusal by one party to do so, a court, considering an application to vary the terms of the agreement, must always tread carefully so as to ensure that it does not end up making a contract for the parties other than the one they in fact made. It is axiomatic that varying the terms of the licence agreement in the manner suggested by Parry automatically imposes certain financial obligations on ITRISA. This is a step that can only be taken if there is clear evidence justifying it. [47] On both Parry and Dunn-Blatch’s versions, the conclusion of the licence agreement was triggered by a possible sale of the business of ITRISA to a third party. It is odd that Parry would, for three years from her resignation in 2012, complain about the non-payment of compensation for intellectual property and yet omit to see to the inclusion of this critical royalties’ clause in the licence agreement; she signed the licence agreement without any objection. [48] In her founding affidavit, Parry admitted that she and Dunn-Blatch harboured ‘an intention that [TRADSA] would be able to negotiate compensation payable to it if the business of [ITRISA was] sold to a third party’. It must be accepted that, insofar as she chose to sign the licence agreement in its current form, she acquiesced to the non-inclusion of a royalties clause. It is telling that in her founding affidavit, she conceded that it can be inferred from the agreement that no consideration is payable to TRADSA for the use of its literary works. Parry cannot now contend for the varying of the agreement that she voluntarily signed on the basis that it is oppressive or unfairly prejudicial or unfairly disregarded her interests. In this regard, the following dictum in Irvin and Johnson Ltd v Oelofse Fisheries Ltd; Oelofse v Irvin and Johnson and Another40 is apposite: ‘But it is idle to contend that the conduct complained of amounted to oppression. Oppression is something done against a person’s will and in his despite. It is not something done with his 40 Irvin and Johnson Ltd v Oelofse Fisheries Ltd; Oelofse v Irvin and Johnson and Another 1954 (1) SA 231 (E) at 243A-B. 26 acquiescence or consent, and still less something done with his co-operation. He chose voluntarily to risk the position in which he finds himself.’ [49] It is evident from the discussion in the preceding paragraphs that the court’s jurisdiction to grant the relief envisaged in s 163 only arises once all specified criteria set out in that provision have been satisfied. I have already alluded to the existence of factual disputes on material issues. Such disputes are incapable of resolution on the papers and could only have been decided after oral evidence had laid bare all the circumstances under which the alleged oppression, unfair prejudice and unfair disregard of interests are based. In my view, these disputes were foreseeable, given the acrimonious e-mail exchange both before and after the conclusion of the licence agreement in 2015. These factual disputes pose an insurmountable hurdle for the granting of an order on the papers. [50] The upshot is that Parry had failed to establish that the business of TRADSA is being or was carried on, or conducted in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregarded her interests, or, that any act or omission of TRADSA, has had a result that is oppressive or unfairly prejudicial, or disregards her interest, or that Dunn-Blatch exercised her powers as a director of TRADSA in a manner that unfairly disregards her interests as is required by s 163(1) of the Companies Act. Put differently, Parry had not established that the impugned conduct falls within that envisaged in s 163(1)(a), (b), or (c). The full court, accordingly, correctly upheld the appeal. [51] Given this finding, the granting of relief envisaged in s 163(2) of the Companies Act does not arise. It is therefore unnecessary to deal with the argument regarding the prescription point, the appropriateness of the order varying the terms of the licence agreement or whether the payment of royalties would flout the provisions of item 1(3) of Schedule 1 of the Companies Act. It follows that there is no reason for this Court to tamper with the full court’s order which replaced the order of the high court with an order dismissing the appeal with costs. In my opinion, apart from the fact that there are no prospects of success, there are no special circumstances that warrant the hearing of a 27 further appeal. Therefore, the application for special leave to appeal must fail. As regards costs, there is no reason to deviate from the general rule that costs follow the result. [52] In the result, the following order is granted: The application for special leave to appeal is dismissed with costs. ________________________ M B MOLEMELA JUDGE OF APPEAL 28 Appearances: For applicant: R Willis (with B Jackson) Instructed by: Rademeyer Attorneys, Johannesburg Honey Attorneys, Bloemfontein For first and second respondents: P M Cirone Instructed by: Kisch IP, Johannesburg Phatshoane Henney Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 28 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 Alice Mary Parry v Rosalene Sybil Dunn-Blatch and Others (394/2022) [2024] ZASCA 19 ( 28 February 2024) Today the Supreme Court of Appeal (SCA) dismissed an application for special leave to appeal with costs. The application emanated from the full court of the Gauteng Division of the High Court, Johannesburg (the full court) and was launched by the applicant, Ms Alice Mary Parry (Parry). The first respondent, Ms Rosalene Sybil Dunn-Blatch (Dunn-Blatch) and Parry were friends and, in 1996, they set up and registered two companies, a private company (the third respondent) known as TRADSA (Pty) Ltd (TRADSA) and a non-profit company (the second respondent) known as International Trade Institute of South Africa (ITRISA), which was set up for purposes of offering distance learning programmes, training courses, workshops and project-based consultancy in the field of international trade. Both Parry and Dunn-Blatch were directors in ITRISA and directors with equal shareholding in TRADSA. TRADSA was the vehicle with which Parry and Dunn-Blatch were to hold their intellectual property rights as co-authors of the educational course materials (literary works) to be used by ITRISA. Pursuant to the registration of these companies, both Parry and Dunn-Blatch assisted in the management of ITRISA and were thus in its employ and received salaries. A portion of their salaries was meant to compensate them for the intellectual property which they owned through TRADSA. On 31 May 2012, Parry resigned as a director of ITRISA in order to pursue other interests but remained as a director and co-shareholder of TRADSA. On 10 June 2015, Parry and Dunn-Blatch deposed to an affidavit in terms of s 26(12)(a) of the Copyright Act 98 of 1978 (the license agreement) with a view of formalising the relationship between ITRISA and TRADSA in respect of the use of the intellectual property. When concluding this agreement, they acted in their personal capacities and as the sole co-directors of TRADSA. Due to Parry’s insistence on TRADSA’s entitlement to receive compensation from ITRISA for the utilization of TRADSA’s intellectual property, a dispute arose which prompted Parry to approach the Gauteng Division of the High Court, Johannesburg (the high court) for relief which was premised on s 163 of the Companies Act 71 of 2008 (the Companies Act). In her affidavit, Parry asserted that Dunn-Blatch had, in her running of the business affairs of ITRISA, engaged in oppressive or unfairly prejudicial acts that disregarded the interests of TRADSA insofar as TRADSA was being deprived of compensation due to it by ITRISA for the latter’s use of TRADSA’s intellectual property. In opposition of Parry’s application, Dunn-Blatch raised several grounds of opposition, the essence of which was that the jurisdictional requirements of s 163 had not been met. 2 In the high court, Parry was granted relief in terms of ss 163(1)(a), 163(1)(b) of the Companies Act and, in terms of s 163(2)(h), that court varied the terms of the licence agreement. The high court, however, referred the question of the royalty rate that is to be paid by ITRISA to TRADSA, to trial. The respondents were aggrieved by that decision and sought leave to appeal. The full court criticised the high court for having effectively concluded a new licence agreement for the parties by including new terms therein. It held that the licence agreement was an exclusive licence agreement between TRADSA and ITRISA and was evidently royalty free. It held that, insofar as any cause of action might exist, such cause of action would vest in TRADSA and not in Parry. The full court stated that the fact that Dunn-Blatch was a director and shareholder of TRADSA, did not overcome the fact that the proper applicant in the claim in respect of a wrong alleged to be done to TRADSA, was prima facie TRADSA itself. The principal issue before the SCA, tied to whether there are special circumstances that merit a further appeal and whether Parry has any reasonable prospects of success, was whether Parry made out a case, on the facts she presented in her founding affidavit, entitling her to relief in terms of s 163 of the Companies Act. The SCA, in reaching a conclusion, reasoned that the conclusion of the licence agreement, on both the parties’ versions, was triggered by a possible sale of the business of ITRISA to a third party, stating that it was now odd that Parry would, for three years from her resignation in 2012, complain about the non-payment of compensation for intellectual property and yet omit to see to the inclusion of this critical royalties’ clause in the licence agreement that she signed without any objection. The SCA continued to point out that it must be accepted that, insofar as Parry chose to sign the licence agreement in its current form, she acquiesced in the non-inclusion of a royalties’ clause and that it was telling that in her founding affidavit, she concedes that it can be inferred from the agreement that no consideration is payable to TRADSA for the use of its literary works. In the circumstances, Parry could not contend for the varying of the agreement that she voluntarily signed on the basis that it was oppressive or unfairly prejudicial or unfairly disregards her interests. Holding that the court’s jurisdiction to grant the relief envisaged in s 163 only arises once all specified criteria set out in s 163(1) of the Companies Act have been satisfied, the SCA held that Parry had not established that the impugned conduct falls within that envisaged in s 163(1)(a), (b), or (c) and that the full court correctly upheld the appeal. In the result, the SCA held that the application for special leave to appeal did not present any exceptional circumstances that warranted the hearing of a further appeal and therefore, had no prospects of success. --------oOo--------

4215

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 285/2023 In the matter between: HEIDI JOUBERT APPELLANT and PIERRE JOUBERT RESPONDENT Neutral citation: Heidi Joubert v Pierre Joubert (285/2023) [2024] ZASCA 55 (19 April 2024) Coram: NICHOLLS, HUGHES, MEYER and KGOELE JJA and MBHELE AJA Heard: 8 March 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and released to SAFLII. The date and time for hand-down is deemed to be 11h00 on the 19th day of April 2024. Summary: Divorce – spousal maintenance – order compelling furnishing of further particulars not appealable. 2 ORDER On appeal from: Free State Division of the High Court, Bloemfontein (Loubser J and Mpama AJ, sitting as a court of appeal): 1 The appeal is upheld with costs. 2 The order of the high court is set aside and replaced by the following: ‘The appeal is struck off the roll with costs.’ JUDGMENT Kgoele JA (Nicholls, Hughes and Meyer JJA and Mbhele AJA concurring) Introduction [1] The appellant, a social worker by profession, and the respondent, an attorney, were married to each other out of community of property with the inclusion of the accrual system on 4 November 2000. The appeal is a sequel of a counterclaim that was instituted by the appellant in defending the divorce proceedings that were initiated by the respondent against her in the regional court for the Regional Division of the Free State held at Bloemfontein (the regional court). The appeal is against the order handed down by the Free State Division of the High Court (the high court), which on appeal to it by the respondent, set aside the regional court’s order compelling the delivery of further particulars requested by the appellant for trial. The appeal is with special leave granted by this Court. 3 Factual background [2] The divorce proceedings launched by the respondent are still pending in the regional court. It appears from the pleadings that the parties are ad idem that the marriage relationship between them has broken down irretrievably. Both parties delivered notices in terms of section 7 of the Matrimonial Property Act 88 of 1984 (the section 7 notice) and were duly replied thereto. [3] On 25 June 2021, the appellant delivered a notice requesting further particulars for the purposes of trial. The paragraphs in her request for further particulars which are relevant to this appeal read as follows: ‘“5. Particulars in respect of any company, corporation, firm, business, venture or syndicate of whatsoever description (“the entity”) in which the Plaintiff holds any interest, whether direct or indirect (through his interest in any trust or any other entity). Plaintiff is requested to provide full particulars regarding any income or benefit received by him from such entity in each tax year for the past three financial years, including: 5.1 dividends/profit distributions accrued or received by him; 5.2 trustee’s remuneration accrued or received by him; 5.3 salary and/or commission accrued or received by him; 5.4 director’s fee accrued and/or received by him; 5.5 bonuses received or accrued to him; 5.6 drawings made on loan account by Plaintiff; 5.7 interests accrued on credit loan accounts; 5.8 loans advanced to Plaintiff; 5.9 telephone, traveling and entertainment allowances paid by the entity on Plaintiff’s behalf or allowance received by Plaintiff in cash or in kind; 5.10 credit card payments made by the entity on Plaintiff’s behalf or use of a corporate credit card; 5.11 medical aid and pension fund contributions paid on Plaintiff’s behalf; 4 5.12 contributions paid by entity to short-term insurance premiums and premiums in respect of investment and life policies in respect of Plaintiff’s life. 6. Plaintiff is requested to furnish full and precise particulars of: 6.1 His gross and net income (after payment of tax) for each month during the past three financial years to date and the sources thereof; 6.2 His anticipated gross and net income for the next twelve months (from whatsoever source) and the sources thereof.”’ [4] The respondent delivered his reply thereto. His response to the particulars requested by the appellant in paragraphs 5 and 6 above was to the effect that the particulars therein sought were not necessary for the purposes of trial and irrelevant to the disputes between the parties. Dissatisfied with the reply, the appellant delivered a notice to compel in terms of rule 16(4) of the Magistrates’ court rules. In the application to compel, the appellant contended through an affidavit deposed to by her attorney of record that ‘the answer is inadequate in that the respondent cannot refuse to make a full financial disclosure in respect of his existing and prospective means, his earnings capacity, financial needs and obligations including his standard of living having regard to the pleadings, in particular the defendant’s (appellant), counterclaim for spousal maintenance’. [5] On 22 March 2022, the regional court ordered the respondent to answer to the paragraphs so requested in the appellant’s request to compel. Aggrieved by this order, the respondent appealed to the high court. The high court set aside the order to compel and relying on the decision of Rall v Rall1 (Rall) held that a party cannot be required to give particulars in relation to a bare denial and that the regional court 1 Rall v Rall (2369/09) [2010] ZAFSHC 165 (9 December 2010). 5 was bound to follow the precedent in Rall in this regard. On petition, this Court granted the appellant special leave against the judgment of the high court. The issues [6] The first issue to be dealt with is whether the regional court’s order, ordering the respondent to provide further particulars, is appealable. Only if it is found to be appealable does the second issue arise, namely, whether the decision of the high court to follow the judgment in Rall was justified. Therein it was held that parties in matrimonial actions are not entitled to elicit further particulars to prepare for trial from the other party in circumstances where the latter has pleaded a bare denial. Appealability of the regional court’s order [7] The appellant’s counsel submitted that the high court should not have entertained the appeal by the respondent because it was an appeal against an interlocutory proceeding, and as such the order of the regional court was not final in nature. He argued that even though the appealability issue was not raised before it, the high court was entitled to raise this point of law mero motu. The high court, like this Court, the argument continued, was entitled and obliged to consider whether it has or had the necessary jurisdiction to entertain the appeal. [8] In his brief answer, the respondent’s counsel citing a plethora of judgments submitted that the interests of justice enjoined the high court to hear the appeal because the regional court failed to observe a foundational value of the Constitution by not adhering to the doctrine of precedent (following the decision of Rall). This is the only reason proffered by the respondent as a basis that the order of the regional court was appealable. This, in my view, presupposes that the respondent accepts that, 6 but for this reason, the regional court’s order compelling discovery is purely interlocutory. [9] It is trite that an application for a request for further particulars is purely interlocutory. In advancing ‘the interests of justice’ in this appeal as a basis for the high court proceeding with the merits of this matter, the respondent’s counsel overlooked this Court’s recent decision in TWK v Hoogveld Boerderybeleggings2 (TWK). In TWK, this Court interrogated the notion thoroughly after carefully analysing several decisions of this Court which had been willing to part from the Zweni v Minister of Law and Order3 (Zweni) judgment and said the following: ‘Even if this is so as a matter of principle, as the defendant’s counsel reminded us, a number of decisions of this Court have been willing, with different degrees of separation, to part from Zweni, or subsume Zweni under the capacious remit of interests of justice. I do not here essay a general account of appealability. I do affirm, though, that the doctrine of finality must figure as the central principle of consideration when deciding whether a matter is appealable to this Court. Different types of matters arising from the high court may (I put it no higher normatively) warrant some measure of appreciation that goes beyond Zweni or may require an exception to its precepts. Any deviation should be clearly defined and justified to provide ascertainable standards consistent with the rule of law. Recent decisions of this Court that may have been tempted into the general orbit of the interests of justice should now be approached with the gravitational pull of Zweni.’4 [10] In the same judgment, this Court warned against courts other than the Constitutional Court in adopting the standard of the interest of justice as the foundational basis upon which they decide whether the matter is appealable or not. It remarked:5 2 TWK Agricultural Holdings (Pty) v Hoogveld Boerderybeleggings (Pty) Ltd and Others [2023] ZASCA 63; 2023 (5) SA 163 (SCA). 3 Zweni v Minister of Law and Order of the Republic of South Africa [1992] ZASCA 197; [1993] 1 All SA 365 (A). 4 TWK fn 2 above para 30. 5 Ibid para 25 7 ‘I recognise that there is thought to be a compelling basis to render this Court’s approach to appealability consistent with that of the Constitutional Court. And hence to recognise the interests of justice as the ultimate criterion by reference to which appealability is decided. I consider this to be a misreading of the Constitution. Section 167 of the Constitution constituted the Constitutional Court as the highest court. Section 167(3) sets out matters that the Constitutional Court may, and is thus competent, to decide. …the Constitutional Court grants leave to appeal on the grounds that the matter raises an arguable point of law of general public importance which ought to be considered by that Court. The Constitution thereby states a principle of appealability in respect of the Constitutional Court. The Constitution does so also to allow a person to bring a matter directly to the Constitutional Court or by way of direct appeal (s 167(6) of the Constitution). National legislation or the rules of the Constitutional Court must allow a person to do so in the interests of justice and with the leave of Constitutional Court. … To adopt the interests of justice as the foundational basis upon which this Court decides whether to entertain an appeal would put in place a regime that is both unpredictable and open-ended. It would encourage litigants to persuade the high courts to grant leave, when they still have work to do, failing which, to invite this Court to hear an appeal under the guidance of a standard of commanding imprecision. That would diminish certainty and enhance dysfunction. It would also compromise the freedom with which the Constitutional Court selects the matters it hears from this Court.’ 6 [11] This Court was affirming what Jafta J said in the City of Tshwane Metropolitan Municipality v Afriforum and Another7 when he remarked: ‘The interests of justice and this standard alone applies to adjudication of applications for leave to this Court. This is so because that standard is prescribed by the Constitution. Section 167(6) of the Constitution provides: “National legislation or rules of the Constitutional Court must allow a person, when it is in the interests of justice and with leave of the Constitutional Court– 6 TWK fn 2 para 27. 7 City of Tshwane Metropolitan Municipality v Afriforum and Another [2016] ZACC 19; 2016 (9) BCLR 1133 (CC); 2016 (6) SA 279 (CC) para 179. 8 (a) to bring a matter directly to the Constitutional Court; or (b) to appeal directly to the Constitutional Court from any other court.”’ [12] The decision in TWK, therefore, circumscribed the approach this Court and other courts, other than the Constitutional Court, can adopt on the issue of the appealability of orders. It concluded that whilst different types of matters may warrant some measure of appreciation that goes beyond Zweni, ‘…the doctrine of finality must figure as the central principle of consideration when deciding whether a matter is appealable to this Court’.8 Importantly, this matter does not concern an interim interdict where exceptional circumstances might dictate its appealability.9 [13] The next question is whether this Court, despite the fact that the high court did not entertain the issue of the appealability of the order of the regional court, is entitled to entertain this issue. This question stems from the respondent’s submission that the appealability issue is new and cannot be raised without following the Rules of this Court. First, this Court has the power vested in it by section 168(3) of the Constitution to decide whether the matter was an appeal against a decision and thus appealable or not. It also has jurisdiction to determine whether the lower court’s ruling in the proposed appeal is a ‘decision’ within the meaning of section 16(1)(a) of the Superior Courts Act 10 of 2013. In Minister of Safety and Security v Hamilton10 it was further clarified that this Court is not bound by the lower court’s 8 TWK Agricultural Holdings (Pty) v Hoogveld Boerderybeleggings (Pty) Ltd and Others [2023] ZASCA 63; 2023 (5) SA 163 (SCA) para 30. 9 Old Mutual Limited and Others v Moyo and Another [2020] ZAGPJHC 1; [2020] 4 BLLR 401 (GJ); [2020] 2 All SA 261 (GJ); (2020) 41 ILJ 1085 (GJ) paras 96-104. 10 Minister of Safety and Security and Another v Hamilton [2001] ZASCA 27; 2001 (3) SA 50 (SCA). 9 assessment and is entitled to reach its own conclusion on the question. Further, the Constitutional Court in United Democratic Movement v Lebashe Investment11 held: ‘…The Supreme Court of Appeal was not only entitled but obliged to determine whether the matter was an appeal against a “decision” and thus an appeal within its jurisdiction ….’ [14] It is clear from the abovementioned authorities that this Court is entitled to adjudicate on the issue of the appealability of the order of the regional court irrespective of whether the high court dealt with it or not. [15] As far as the other argument that was advanced by the respondent's counsel to the effect that the high court entertained the merits because the regional court failed to observe precedent is concerned, I am constrained by the conclusion that I reached below to only state that whether Rall is, in fact, good precedent, is itself questionable. Even though it is trite law that precedent is a foundational value of the rule of law, relying on the notion of the ‘interests of justice’ to advance this argument cannot in my view, salvage the respondent’s case either. First, the issue of appealability was not raised and dealt with by either party or the court during the proceedings before the high court. Secondly, the ‘interest of justice’ is a fact-based inquiry that cannot be imputed to the judgment of the high court or any court. [16] The upshot of the above is that the regional court’s order to compel the respondent to discover is purely interlocutory in nature. It has no final effect, is not a definitive proceeding, and does not have the effect of disposing of at least a substantial portion of the relief claimed in the pending divorce action between the parties. Neither does it affect the rights of the parties whatsoever. The parties are 11 United Democratic Movement and Another v Lebashe Investment Group (Pty) Ltd and Others [2022] ZACC 34; 2022 (12) BCLR 1521 (CC); 2023 (1) SA 353 (CC) para 40. 10 still entitled to prosecute their case and are still at liberty to direct the court to any evidence and to advance any argument that they wish. The high court was obliged to entertain the issue, even if it was not raised, as to whether the matter before it was an appeal against a ‘decision’ and thus an appeal within its jurisdiction mero motu. Its failure to do so amounts to a misdirection which is fatal to the appeal before this Court. This is so because, the high court should not have proceeded with the merits as the regional court’s order was not appealable. It should have struck the matter off the roll. [17] The order of the high court on the merits cannot therefore stand. Thus, the following order is made: 1 The appeal is upheld with costs. 2 The order of the high court is set aside and replaced by the following: ‘The appeal is struck off the roll with costs.’ _______________________ A M KGOELE JUDGE OF APPEAL 11 Appearances For appellant: H F Marx Instructed by: DDKK Attorneys Inc., Polokwane c/o Honey Attorneys Bloemfontein For respondent: N Snellenberg SC Instructed by: Symington & De Kok Attorneys Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 19 April 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 Heidi Joubert v Pierre Joubert (285/2023) [2024] ZASCA 55 (19 April 2024) Today the Supreme Court of Appeal (SCA) handed down judgment upholding with costs, an appeal against the decision of the Free State Division of the High Court, Bloemfontein (the high court). The appellant and the respondent were married to each other out of community of property with the inclusion of the accrual system on 4 November 2000. The respondent launched divorce proceedings in the regional court for the Regional Division of the Free State held at Bloemfontein (the regional court). In addition to defending the matter, the appellant instituted a counterclaim against the respondent for spousal maintenance. The appellant, furthermore, delivered a notice requesting further particulars requesting the respondent to make, amongst others, full financial disclosure of his earning capacity. The respondent refused to furnish the same, contending that they are irrelevant for the purposes of trial. Dissatisfied with this reply, the appellant applied for the respondent to be compelled to comply. On 22 March 2022 the regional court ordered the respondent to answer to the paragraphs so requested in the appellant’s request to compel. The respondent appealed this order. The appeal was heard by the high court which set aside the order to compel. The high court relied on the decision of Rall v Rall, a full court decision of that court, which held that a party could not be required to give particulars in relation to a bare denial. The appellant then petitioned this Court for special leave to appeal against the judgment of the high court and it was granted. The first issue in this matter was whether the regional court’s order, ordering the respondent to provide further particulars, was appealable. The second issue was whether this Court is empowered to entertain the appealability of the order of the regional court despite the fact that it was not raised and entertained by the high court. As far as the third issue is concerned, namely, whether the decision of the high court to follow the judgment in Rall v Rall was justified, the SCA indicated that this issue could only arise if it is found that the order of the regional court was not appealable. The SCA held that the regional court’s order compelling discovery was purely interlocutory in nature and had no final effect. The SCA affirmed the decision in TWK v Hoogveld Boerderybellegings wherein this Court warned against courts other than the Constitutional Court in adopting the standard of the interest of justice as a foundational basis upon which they decide whether the matter was appealable or not. The SCA held further that, the high court was obliged to raise the issue of appealability mero motu. It should have struck the appeal before it from the roll as the order of the regional court was not appealable. Consequently, the SCA did not pronounce on the merits of the matter. As a result, the SCA upheld the appeal with costs. The order of the high court was set aside. ~~~~ends~~~~

4230

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 283/2023 In the matter between: MV ‘NEW ENDEAVOR’ FIRST APPELLANT ELLY MARITIME SA SECOND APPELLANT PORTO EMPORIOS SHIPPING INC. THIRD APPELLANT and INDIAN OIL CORPORATION LIMITED RESPONDENT Neutral citation: MV ‘New Endeavor’ and Others v Indian Oil Corporation Limited (283/2023) [2024] ZASCA 67 (03May 2024) Coram: MOLEMELA P and MBATHA, MEYER and WEINER JJA and SEEGOBIN AJA Heard: 15 February 2024 Delivered: 03 May 2024. Summary: Admiralty law – arrest of an associated ship in terms of ss 3(6) and (7) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act) – arrest for security in terms of s 5(3) of the Act – reconsideration in terms of rule 6(12)(c) of the Uniform Rules of Court – onus of establishing an association in a security arrest discharged – source of control established where the respondent asserted alternative sources of power. 2 ORDER On appeal from: KwaZulu-Natal Division of the High Court, Durban (Sibiya J, sitting as a court of first instance): The appeal is dismissed with costs, such costs to include the costs consequent upon the employment of two counsel. JUDGMENT Mbatha JA and Seegobin AJA (Molemela P and Meyer and Weiner JJA concurring): Introduction [1] This is an appeal against the judgment and order of the KwaZulu-Natal Division of the High Court, Durban per Sibiya J (the high court) (exercising its Admiralty Jurisdiction), dated 15 December 2022. The high court dismissed, with costs, an application for reconsideration brought in terms of rule 6(12)(c) of the Uniform Rules of Court of an order of arrest made on 30 May 2022. The order of arrest was in respect of the first appellant, the MV ‘New Endeavor’ (New Endeavor),1 as an associated ship of the MT ‘New Diamond’ (New Diamond),2 that was arrested for security in terms of s 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act). Background [2] On 5 August 2020, the respondent, Indian Oil Corporation Limited (Indian Oil), concluded a voyage charterparty with the third appellant, Porto Emporios 1 Also referred to as the ‘associated ship’. 2 Also referred to as the ‘ship concerned’. 3 Shipping Inc. (Porto), for the carriage of 277 564 metric tonnes of crude oil (the cargo) on Porto’s ship, the New Diamond, to India. [3] En route from Kuwait to India, the New Diamond caught fire and, subsequently, salvage services were rendered, a general average was declared, and the voyage was abandoned. As a result, Indian Oil transhipped its cargo to two other vessels for onward carriage to India. Part of the cargo was lost, and, Indian Oil incurred losses in the amount of approximately USD 70 000 000. Consequently, Indian Oil is seeking payment from Porto in the sum of USD 73 047 429,33 plus Indian Rupees (INR) 701 361 274,99, together with interest and costs, being damages suffered by it, as a result of Porto’s breaches of its obligations, under the bill of lading and charterparty, alternatively as a result of Porto’s negligence or breach of its obligations to Indian Oil in bailment. Indian Oil is pursuing a claim for damages against Porto by way of arbitration proceedings in India. [4] Indian Oil’s claim has been partially secured by Porto through its P & I Club (Protection and Indemnity) pursuant to a flag arrest of the New Diamond in Panama. In addition, security was provided, pursuant to the arrest on 19 September 2021, at Richards Bay, KwaZulu-Natal, of the MV ‘New Elly’ (New Elly). The New Elly is owned by the second appellant, Elly Maritime SA (Elly Maritime), which has its registered office in Monrovia, Liberia, and is registered as a foreign company in Greece. [5] An urgent application for reconsideration of the order of arrest of the New Elly was heard by the high court (per Bedderson J), and dismissed with costs. An appeal against the judgment and order of Bedderson J is currently pending before a full court of the KwaZulu-Natal Division of the High Court, Durban. 4 [6] On 30 May 2022, Indian Oil brought an urgent ex parte application before the high court for additional security for the arrest of the New Endeavor as an associated ship of the New Diamond in terms of s 3(6) read with s 3(7) of the Act. The application served before Mathenjwa AJ who granted an order in favour of Indian Oil. An application by New Endeavor for reconsideration of the above order in terms of rule 6(12)(c) of the Uniform Rules and for its release was dismissed with costs by Sibiya J on 15 December 2022. The present appeal serves before us with leave of the high court. Issue for determination [7] The single issue that falls to be determined in this appeal is whether Indian Oil discharged the onus of establishing, on a balance of probabilities, the alleged association between the respective ship owning companies of the New Endeavor and the New Diamond, in circumstances where, rather than alleging a single source of control, Indian Oil asserted alternative sources of control. There was no dispute that Indian Oil had established the other requirements for an arrest in terms of s 5(3)3 of the Act, namely, a prima facie case and a genuine and reasonable need for security. 3 The relevant parts of s 5(3) of the Act provides as follows: ‘. . . (3)(a) A court may in the exercise of its admiralty jurisdiction order the arrest of any property for the purpose of providing security for a claim which is or may be the subject of an arbitration or any proceedings contemplated, pending or proceeding, either in the Republic or elsewhere, and whether or not it is subject to the law of the Republic, if the person seeking the arrest has a claim enforceable by an action in personam against the owner of the property concerned or an action in rem against such property or which would be so enforceable but for any such arbitration on proceedings. (aA) Any property so arrested or any security for, or the proceeds of, any such property shall be held as security for any such or pending the outcome of any such arbitration or proceedings. (b) Unless the court orders otherwise any property so arrested shall be deemed to be property arrested in an action in terms of this Act.’ 5 Onus [8] Contrary to the findings made by the high court in paragraphs 64 and 375 of its judgment with regard to the issue of onus, it is well established that Indian Oil bore the onus of proving the alleged association on a balance of probabilities. This was endorsed by this Court in the decisions of Cargo Laden and Lately Laden on board the MV Thalassini Avgi v MV Dimitris,6 Bocimar NV v Kotor Overseas Shipping Ltd,7 and MV Silver Star: Owners of Silver Star v Hilane Ltd (Silver Star).8 [9] Equally trite, is that security arrests in terms of s 5(3) can be brought by the arrest of an associated ship to the ship concerned. The arrest of an associated ship is not an easy task. In the textbook titled The Associated Ship & South African Admiralty Jurisdiction (The Associated Ship), the author, M J D Wallis, expressed himself on this issue as follows: ‘The task of proving the association is complicated by the relative inaccessibility of the key information required to demonstrate the identity of the person or persons who control the two ship-owning companies . . . In the circumstances an applicant for arrest is confronted with the heavy burden of proving a disputed matter on a balance of probabilities on the papers when it has no direct access to the relevant information and may well be confronted with the withholding of information, disingenuousness and downright dishonesty.’9 4 In para 6, the high court said the following: ‘The onus to show the association in an application for arrest is on the applicant. However, once the arrest has been authorised the association is taken as established, and the onus is on the respondents to show that the ship arrested and the vessel concerned have not been shown to be associated ships.’ 5 In para 37, it said the following: ‘The applicable standard of proof is the civil standard of the preponderance of probabilities, and not proof beyond a reasonable doubt. The annexures relied on by the applicant demonstrate, on a balance of probabilities, that the first respondent and the vessel are associated ships as contemplated in section 3(6) read with section 3(7) of the Admiralty Act. Having concluded that a prima facie case of association was correctly found to be established, this is sufficient for the refusal of the reconsideration application, without more.’ 6 Cargo Laden and Lately Laden on board the MV Thalassini Avgi v MV ‘Dimitris’ [1989] ZASCA 76; [1989] 2 All SA 436 (A)1989 (3) SA 820 (A) at 833B-D. 7 Bocimar NV v Kotor Oversea Shipping Ltd [1994] ZASCA 5; [1994] 2 All SA 245 (A); 1994 (2) SA 563 (AD) at 583 E-F. 8 MV Silver Star: Owners of MV Silver Star Owners of the Silver Star v Hilane Ltd [2014] ZASCA 194; [2015] 1 All SA 410 (SCA); 2015 (2) SA 331 (SCA) (Silver Star) para 39. 9 M J D Wallis The Associated Ship & South African Admiralty Jurisdiction (2010) (The Associated Ship) at 292. This was subsequently quoted, with approval, by Ponnan JA at para 39 of Silver Star. 6 Proving an ‘association’ [10] It is not in dispute that Indian Oil proved that it had a maritime claim against the New Endeavor in terms of ss 1(1)(g), (h), (j), (k), (t) and the all-embracing s 1(1)(ee) of the Act. The question that requires determination, is whether the relevant vessels are associated with each other, and, who is the controlling force behind the companies that own the vessels. It is important that we highlight the relevant provisions of the Act that set out the requirements for association. Section 3(6) of the Act provides as follows: ‘An action in rem other than an action in respect of a maritime claim referred to in paragraph (d) of the definition of “maritime claim” may be brought by the arrest of an associated ship instead of the ship in respect of which the maritime claim arose.’ [11] Section 3(7)(a) recognises three scenarios where the ship is considered to be an associated ship: ‘(7)(a) For the purposes of subsection (6) an associated ship means a ship, other than the ship in respect of which the maritime claim arose- (i) owned, at the time when the action is commenced, by the person who was the owner of the ship concerned at the time when the maritime claim arose; or (ii) owned, at the time when the action is commenced, by a person who controlled the company which owned the ship concerned when the maritime claim arose; or (iii) owned, at the time when the action is commenced, by a company which is controlled by a person who owned the ship concerned, or controlled the company which owned the ship concerned, when the maritime claim arose. (b) For the purposes of paragraph (a)– (i) ships shall be deemed to be owned by the same persons if the majority in number of, or of voting rights in respect of, or the greater part, in value, of, the shares in the ships are owned by the same persons; (ii) a person shall be deemed to control a company if he has power, directly or indirectly, to control the company; (iii) a company includes any other juristic person and anybody of persons, irrespective of whether or not any interest therein consists of shares. 7 (c) If at any time a ship was the subject of a charter-party the charterer or sub-charterer, 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 the sub-charterer, and not the owner, is alleged to be liable.’ [12] In Silver Star,10 this Court set out the purpose of the Act and the circumstances in which ships are said to be associated: ‘The purpose of the Act is to make the loss fall where it belongs by reason of ownership, and in the case of a company, ownership or control of the shares (Berg at 712A). And, as Marais JA pointed out (albeit in a minority judgment) in MV Heavy Metal: Belfry Marine Ltd v Palm Base Maritime SDN BHD 1999 (3) SA 1083 (SCA) (Heavy Metal) para 4: “The way in which this was done was, first, by describing in s 3(7)(a)(i), (ii) and (iii) the circumstances in which ships were to be regarded as associated and, secondly, by enacting certain deeming provisions in s 3(7)(b)(i), (ii) and (iii) which are obviously designed not only to defeat defensive stratagems which ship owners might deliberately deploy to ward off potential arrests of associated ships by disguising their ownership or their control of such ships, but also to allow it to be shown even in a case where no such motive existed where power of control really lay.” Those sections require that in relation to both the ship concerned and the associated ship, a “person” must be identified who “controls” (or controlled) the companies in question. The level of control required is that the person must control the overall destiny of the company (The Kadirga 5 (No 1) JA Chapman & Co Ltd v Kadirga Denizcilik ve Ticaret AS SCOSA C12 (N) at C14E).’ [13] The judgment of this Court in MV Heavy Metal: Belfry Marine Ltd v Palm Base Maritime SDN BHD Belfry Marine Ltd v Palm Base SDN BHD (Heavy Metal),11 dealt with the interpretation of the provisions of s 3(7)(a), (b) and (c) of the Act. This Court carefully analysed the provisions in s 3(7)(a)(i), (ii) and (iii) with regard to the circumstances in which ships were to be regarded as associated and the deeming provisions in s 3(7)(b)(i), (ii) and (iii) which were designed to defeat 10 Silver Star para 40. 11 MV Heavy Metal: Belfry Marine Ltd v Palm Base Maritime SDN BHD [1999] ZASCA 44; [1999] 3 All SA 337; 1999 (3) SA 1083 (SCA) (Heavy Metal). 8 defensive strategies deliberately employed by ship owners to ward off potential arrests of associated ships by disguising their ownership or control of such ships. [14] In Heavy Metal, this Court, in considering the aforementioned provisions of the Act, had regard to the language used, the purpose of the provision, its context and the objects of the Act as a whole. It held that the object of the associated ship provisions was to enable the associated ship to be arrested in respect of the maritime claims and the purpose was to afford the claimant with an alternative defendant to enforce its claim. It went on to say that the subsection distinguishes between ‘direct’ and ‘indirect’ control. Direct control can be exercised by a person wielding power behind the scenes ‘de facto’ or by a person who was in ‘de jure’ control of the company. This Court recognised this as ‘[the] extension of de jure power to de facto power [which] is in line with the objective of the section: to prevent the true “owner” presenting a false picture to the outside world, from concealing assets from attachment and execution by creditors’.12 The Court concluded that the same approach should be adopted in the deeming provisions of the Act, ie s 3(7)(c), 3(10)(a)(i) and (ii) and (b), and 3(11)(b) of the Act. [15] The question of control is a legal and a factual one. In line with this, the judgment in Heavy Metal stated as follows: ‘The subsection [3(7)(b)(ii)] elaborates upon and refines the concept of control by that person. Control is expressed in terms of power. If the person concerned has power, directly or indirectly, to control the company he/she shall be deemed (“geag . . . word”) to control the company. “Power” is not circumscribed in the Act. It can be the power to manage the operations of the company or it can be the power to determine its direction and fate. Where these two functions happen to vest in different hands, it is the latter which, in my view, the Legislature had in mind when referring to “power” and hence to “control”.’13 12 Ibid para 10. 13 Ibid para 8. 9 [16] According to The Associated Ship, the process of comparison that follows upon this identification is intended to be a simple one. He adds: ‘The maritime claimant identifies the party who controls the company that owned the ship concerned and identifies the party who controls the company that owns the associated ship that it seeks to arrest. The result of those exercises is then compared. If they correspond, in the sense that the same person or persons control both companies, then the requisite association is established. If they are not the same then the association is not established.’14 Difficulties in establishing control arise where the company, which owns the ship, may be a shelf company or is owned by a nominee who may be just an agent for a principal. This is also the case where the shareholding is held at 50/50. As a result, control cannot be attributed to a 50% shareholder.15 The shareholders also lose control when the company gets deregistered or is placed in liquidation. [17] Control is never easy to prove. The Act allows for admission of hearsay evidence in terms of s 6(3) in order to prove control, hence the reliance on hearsay evidence from Lloyds list of records, investigative reports and newspaper reports in this matter. Section 6(3) which provides for the admissibility of hearsay evidence provides as follows: ‘A court may in the exercise of its admiralty jurisdiction receive as evidence statements which would otherwise be inadmissible as being in the nature of hearsay evidence, subject to such direction and conditions as the court thinks fit’. The Associated Ship points out that: ‘In its original form section 3(7)(a)(ii) referred to ownership or control of the shares of a company and not to control of the company itself.’16 In support of this, The Associated Ship, refers to a judgment in East Cross Sea Transport Inc v Elgin Brown & Hamer (Pty) Ltd,17 where the court held that the fact that two owning companies had a common director, did not mean that the vessels 14 The Associated Ship at 187. 15 MV La Pampelouis Dreffus Amateurs SNC v Tor Shipping [2006] ZAKZHC 3; [2006] 3 All SA 464 (D); 2006 (3) SA 441 (D) para 54-55. 16 The Associated Ship at 121. 17 East Cross Sea Transport Inc v Elgin Brown & Hamer (Pty) Ltd 1992 (1) SA 102 (D) at 107E-F. 10 were associated in terms of the Act. This was aptly confirmed in the Heavy Metal judgment, where this Court held that the only interpretation to be attributed to s 3(7)(b)(ii) is that a person shall be deemed to control a company if he has power directly or indirectly to control the company. [18] Control over a company can be exercised even without a majority shareholding. The learned author, G Hofmeyr, in his textbook titled Admiralty Jurisdiction Law and Practice in South Africa,18 states that ‘control is not defined in the Act. It could denote only power to determine the direction and fate of the company’. He refers to the Heavy Metal judgment where the court succinctly stated that: ‘In my view, therefore, direct power refers to de jure authority over the company by the person who, according to the register of the company is entitled to control its destiny; and indirect power to the de facto position of the person who commands or exerts authority over the person who is recognised to possess de jure power (i.e. the beneficial “owner” as opposed to the legal “owner”). This extension of de jure power to de facto power is in line with the objective of the section: to prevent the true “owner”, by presenting a false picture to the outside world, from concealing his assets from attachment and execution by his creditors.’19 The reconsideration application [19] One of the arguments raised before us on behalf of Indian Oil was that an adverse inference should be drawn against the appellants for their failure to file an answering affidavit in the reconsideration application in order to counter the allegations made by Indian Oil concerning the issue of association. Counsel for the appellants, however, argued that there was no need for the appellants to file any affidavits as they were entitled to argue, on the basis of the application papers alone, that no case had been made out for any relief. 18 G Hofmeyr Admiralty Jurisdiction Law and Practice in South Africa 2 ed (2012) (Admiralty Jurisdiction Law and Practice) at 141-142. 19 Heavy Metal para 10. 11 [20] A similar debate ensued between the parties in Afgri Grain Marketing (Pty) Ltd v Trustees for the time being of Copenship Bulkers A/S (in liquidation) and Others.20 In addressing this issue this Court said the following: ‘Rule 6(12)(c) does not prescribe how an application for reconsideration is to be pursued. The absence of prescription was intentional and the procedure will vary depending upon the basis on which the party applying for reconsideration seeks relief against the order granted ex parte and in its absence. A party wishing to have the order set aside, on the ground that the papers did not make a case for that relief, may deliver a notice to this effect and set the matter down, for argument and reconsideration, on those papers. It may do the same if it merely wishes certain provisions in the order to be amended, or qualified, or supplemented. The matter is then argued on the original papers. It is not open to the original applicant, save possibly in the most exceptional circumstances, or where the need to do this has been foreshadowed in the original founding affidavit, to bolster its original application by filing a supplementary founding affidavit. The party seeking reconsideration is not confined to this route. It may file an answering affidavit, either traversing the entire case against it, or restricted to certain issues relevant to the reconsideration. In many instances such an affidavit will be desirable. Even if an affidavit is filed, however, it does not preclude the party seeking reconsideration arguing at the outset, on the basis of the application papers alone, that the applicant has not made out a case for relief. That is a well-established entitlement in application proceedings and there is no reason why it should not be adopted in reconsideration applications. If an affidavit is filed in support of the application for reconsideration then the party that obtained the order is entitled to deliver a reply thereto, subject to the usual limitations applicable to replying affidavits. When that is done, and the party seeking reconsideration does not argue a preliminary point at the outset that the founding affidavit did not make out a case for relief, the case must be argued on all the factual material before the judge dealing with the reconsideration proceedings. That material may be significantly more extensive and the nature of the issues may have changed as a result of the execution of the original ex parte order.’ 20 Afgri Grain Marketing (Pty) Ltd v Trustees of Copenship Bulkers A/S (in liquidation) [2019] ZASCA 67; [2019] 3 All SA 321 (SCA); 2024 (1) SA 373 (SCA) paras 12-16. 12 The proper approach to this appeal is, therefore, to have regard to the factual material that was placed before the high court for the purposes of reconsidering the order originally granted by Mashile J.’(Emphasis added. )(Footnotes omitted.) [21] Before considering the nature of the evidence presented by Indian Oil, it is necessary to point out that proceedings in admiralty should be given a generous interpretation consistent with its manifest purpose of assisting maritime claimants to enforce maritime claims. This point was made in NYK Isabel, MV: Northern Endeavour Shipping Pte Ltd v Owners of the MV NYK Isabel:21 ‘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.’ The evidence [22] The evidence relied on by Indian Oil was based on information obtained from documents, emails and other correspondence provided to it by Mr Mark Lloyd (Mr Lloyd), a partner at Kennedys Law Firm in London. Mr Lloyd acts on behalf of Indian Oil on instructions from WE Cox Pty Ltd, a recovery and loss adjusting company, which was, in turn, instructed directly by the insurers of Indian Oil. Information was also obtained from Francisco Carrera-Pitti, an attorney admitted in 1976 in Panama and practising as Carrera-Pitti Attorneys and from Captain Rajiv 21 NYK Isabel, MV: Northern Endeavour Shipping Pte Ltd v Owners of the MV NYK Isabel [2016] ZASCA 89; [2016] 3 All SA 418 (SCA); 2017 (1) SA 25 (SCA) para 45. 13 Thakar, a casualty and complex claims director at WE Cox Claims Group (Europe) Ltd. [23] Reliance was also placed on a report compiled by Gray Page (the Gray Page report) that was commissioned by Indian Oil. Gray Page is a specialist consulting group that investigates, inter alia, the ownership and control of vessels. On instructions from Indian Oil, Gray Page carried out an investigation into the ownership and control of the New Diamond as well as the ownership and control of several other ships potentially associated with her, including the New Endeavor. The Gray Page report, together with certain relevant annexures, was attached to the founding affidavit. Reliance was also placed on two newspaper articles, namely the 2013 TradeWind’s article and the 2014 Espresso article.22 The contents of these articles will be dealt with here below. [24] Ms Barnwell stated as follows: ‘89. As set out in detail below, the applicant respectfully submits that the first respondent is an associated ship to the vessel on the basis that there is the same single repository of control in respect of the vessel as the “ship concerned” and the: First Respondent at the times stipulated in the Act on the following basis: 89.1 At the time the maritime claim arose, the vessel was owned by the Third Respondent; 89.2 At the time when the maritime claim arose, the Third Respondent was owned or controlled by New Shipping Limited which was in turn owned or controlled by Adam Polemis on his own, alternatively Adam Polemis together with his children; 89.3 At the time of this application, the First Respondent is owned by the Second Respondent; and 89.4 At the time of this application, the Second Respondent is owned or controlled by New Shipping Limited which is in turn owned and controlled by Adam Polemis on his own, alternatively Adam Polemis together with his children.’ 22 Shipping publications. 14 [25] Placing reliance on the information contained in the Gray Page report, the following allegations were made: ‘91. In March 2013, the vessel was purchased by Porto Emporios Shipping Inc. of Liberia, the Third Respondent and named the mt Diamond Warrior. 92. At that time, her technical managers and commercial operators were reflected as being Polembros Shipping Limited (PSL) of 57A Poseidonos Avenue, Moschato, 183 44, Athens, Greece. 93. PSL is a family-owned ship management company that has been operating in London since 1974. The company was established by Greek brothers Spyros and Adam (Avamantios) Polemis in the 1970s and over the next 20 years Polembros grew to become one of the ten largest Greek shipping groups. These facts were reported in the TradeWinds daily shipping newspaper on 1 June 2014 and 23 May 2014. 94. In 2014, new reports reflected that after 40 years of partnership running PSL, Spyros and his younger brother, Adam, intended splitting their shipping interests. The reports reflected that the decision was driven partly by their intention to accommodate the two brothers’ children and grandchildren who will one day succeed them and who would play a role in the future management of the business. Spyros and his children would keep the name of PSL, which Spyros would run together with his son, Leonidas. 95. Adam and his two children, Leonidas and Alina would transfer their ships from PSL to New Shipping Limited (NSL) which is another family interest company founded in 2005. NSL is a company with limited liability established in accordance with the laws of Greece, which carries on business at 57A Poseidonos Avenue, Moshcato, Athens, Greece. According to Gray Page’s local repositories in Greece, familiar with the Polemis family, Adam uses NSL to manage his shipping interests for the benefit of his two children Leonidas and Alina. 96. Copies of the aforesaid news articles are attached, marked “O” and “P” respectively. Pertinently, these news articles report that: 2013 Article (annexure O) - TradeWinds 96.1 “Polembros is taking advantage of attractive prices for secondhand assets and demolition sales in a continuing rejig of its fleet [”]; 96.2 “This week the company was again reported to have bought the 300,000 dwt tanker Ikomasan (built 2000), this time for US$27.3m”; 96.3 PSL is referred to as “the Greek owner”; 15 96.4 “The owner has also moved onto dry bulk buying and selling” (details of the purchase of various bulkers are given); 96.5 PSL has scrapped two bulkers that year, on favourable terms; 96.6 “This year the company will start taking delivery of a series of 205,000 dwt bulker new buildings”. 2014 Article (annexure P): 96.7 The brothers are going to “divide their property” and separate their fleet; 96.8 Spyros will continue “to run” PSL together with his son; 96.9 Adam and his children will “pass their respective ships . . .” to NSL, another “family interest company”; 96.10 PSL has bought several ships since the beginning of the year (2014) “some of which – as it seems – are destined for the New Shipping fleet”; 96.11 Adam informed shipping circles that his part of the fleet to be held under NSL will number about 23 ships.’ [26] Ms Barnwell further stated: ‘97. It is evident from these news articles that PSL and NSL are not mere ship-management companies but are used as vehicles to control the companies which own the ships in the fleets managed by them. As reported by Gray Page, each ship is registered in the name of a separate ship-owning company. These companies are effectively single-purpose vehicles (“SPVs”) whose sole function is to own a ship. It is evident that PSL and NSL exercise control over the SPVs, not only in the sense of day-to-day management but the control of their ultimate fate and destiny. It is reported that: 97.1 PSL and NSL make strategic decisions to expand and contract their fleets from time to time by purchasing, selling and scrapping vessels. 97.2 Control of PSL and its fleet initially vested in both brothers, who in 2014 made the strategic decision to separate the fleet into two branches, which they implemented by moving the management of certain vessels across to NSL. 97.3 In this way the Polemis family beneficially owns and controls the fleet of ships which it has acquired over the years. 97.4 Although the Polemis family owns the ships through the vehicles of separate companies, it controls those companies through PSL (Spyros and family) and NSL (Adam and family).’ 16 [27] Ms Barnwell concludes that the ships which ‘the Applicant alleges are associated ships for the purposes of this application, (viz the Vessel and the First Respondent) are both ships within the NSL stable’. The following allegations are also made by Ms Barnwell: ‘100. In May 2014, the vessel’s name was changed to mt New Diamond but it remained in the ownership of the Third Respondent. 101. The Third Respondent is a Liberian company, with its registered address at 80 Broad Street, Monrovia. This is the registered address for the hundreds of ship-owning companies registered in Liberia. Liberian law is such that the applicant is unable to obtain details of the company’s shareholding and corporate officers. However, the bill of sale for the purchase of the mt Diamond Warrior, (subsequently renamed mt New Diamond) reflects that the attorney in fact acting for the purchaser was Eftstratios Gogis. He is a person known to be connected to the Polemis family and acts as a director of the family’s hotels and tourism business in Greece, Hydra Hotels Hellas SA, which has the same registered address as PSL and NSL – as reflected in the attached extract from the Kompass database for this company marked “Q”. 102. Gogis is reflected as the secretary of the Third Respondent, according to the articles of amendment of that company, which also reflects the President as being Antonis Stellas. 103. NSL is a Liberian-registered entity which carries on business in Greece and is accordingly registered under Law 89/1967 as a foreign company operating in Greece. As reflected above, NSL’s registered address in Greece is the same as for PSL. 104. On 24 February 2011, NSL filed a Certificate of Election and Encumbrance in Greece which reflects Evangelos Stathopoulos as President/treasurer and Pandelis Pangalos as Vice-President and secretary. 105. Pangalos remains the general manager of NSL in Greece and was formerly a director of PSL in London until 2017. 106. On 30 November 2018, NSL filed a further document amending the company’s Articles of Incorporation. This is the same date as a similar filing for the Third Respondent. The amendment reflected that the new corporate officers of NSL were Stellas as President and Gogis as secretary. Stellas is the operations manager for NSL, as recorded in the attached LinkedIn profile marked “R”. 107. The Ministry of Merchant Shipping reflects that Gogis has been the legal representative of NSL in Greece since 1 April 2014. Prior to this, Pangalos held the position. NSL’s Board of 17 Directors as recorded in the Law 89 Register in Greece, is comprised of Georgios Vakirtzis (as Chairman/director) and Gogis (as secretary/director). 108. The Third Respondent was placed under the management of NSL on 7 May 2014 and the person signing the letter of assignment of behalf of the Third Respondent was Gogis. 109. The management of the Third Respondent by NSL ceased on 31 December 2020, after the applicant’s claim arose, and around the time that the Vessel was scrapped. 110. NSL is reflected as being the managers of 19 tankers and 15 bulk carriers each owned by separate single purpose ship-owning companies. Of these ships, 14 are registered in Panama, 2 in the Marshall Islands and 19 in Liberia. 111. In preparation for the arrest of the mv New Elly, Gray Page originally carried out investigations into seven of the companies registered in Panama being the owners of the mt Karo, mv New Amorgos, New Andros, New Dynasty, New Naxos, Paros, Trident Hope and New Hydra. The investigation did not include the mv New Endeavor because, at that stage, she did not seem to be trading to South Africa. 112. In every case, the Liberian Companies Register reflects the President of each owning company as Stellas and the Secretary as Gogis.’ [28] Under the heading ‘Information Relating to the First Respondent’, Ms Barnwell states that ‘[t]he Second Respondent is the registered owner of the First Respondent. This is reflected in the attached Lloyd’s List Intelligence report marked “S1”.’ This report, which bears the heading ‘Vessel Report’ (Your Vessel Report for ‘New Endeavor’), is significant as it reflects Adam Polemis (Adam) as the beneficial owner of the New Endeavor, with its registered owner being Elly Maritime SA and its technical manager and commercial operator being NSL. [29] With regard to information pertaining to the second appellant, Elly Maritime, Ms Barnwell avers that it is the registered owner of the New Endeavor. On 25 May 2022, Gray Page was instructed by Indian Oil to conduct an investigation into the New Endeavor and Elly Maritime and to consider whether the New Endeavor was an associated ship of the third appellant, Porto. 18 [30] According to the further investigations conducted by Gray Page, the New Endeavor is currently registered with the Panama Flag administration and was first registered in Panama on 19 May 2011. A bill of sale evidences proof of the transfer of ownership of the New Endeavor to Elly Maritime on 18 May 2011. The first preferred mortgage deed for the New Endeavor was dated 2 June 2011 and one, Effie P Paraskevopoulou, was a signatory thereto on behalf of Elly Maritime. This deed was cancelled on 24 October 2019 and, at the time of preparing the founding affidavit, there were no further mortgages registered with the Panama Administration for the New Endeavor. [31] The Gray Page report further states that the Articles of Amendment of the Elly Maritime filed in Liberia in November 2018 reflect that Stellas is the President and Gogi is the secretary of Elly Maritime. This is the same position as with the other Liberian companies that own the vessels managed by NSL in the NSL fleet. Ms Barnwell drew the high court’s attention to the fact that many of the vessels in the NSL fleet, including the New Endeavor and the vessel owned by Porto, bear the prefix ‘new’, being the same as the prefix in NSL. In addition, all these vessels bear the same logo on their funnel. We point out that flags of convenience are very common in shipping business empires. Panama and Liberia are the most common owners of ships though they do not own any fleets of ship.23 Flags of convenience are used for various purposes, including lower taxes, avoiding strict regulations and avoiding legal action as nominee directors are used in registering the ship in these countries.24 [32] Ms Barnwell asserts that: ‘On the basis of the information set out above, it is respectfully submitted that the applicant has established, on a totality of the evidence, that it is more probable than not that the first respondent 23 The Associated Ship at 41-42. 24 Ibid at 42-43. 19 is an associated ship to the vessel, as contemplated by sections 3(6) and 3(7) of the Act. More particularly, it has established on a balance of probabilities that the companies that owned the vessels at the relevant times are ultimately owned or controlled by the same person or persons being NSL, which is in turn controlled by Adam Polemis on his own, alternatively Adam Polemis together with his children.’ [33] The founding affidavit concludes with the following: ‘128. The Gray Page report and the founding affidavit both state that the ship-owning companies in question are controlled by Adam Polemis through the vehicle of NSL and that Adam has brought his children into the business, who will one day succeed him as owner. Whether and to what extent Adam Polemis is assisted by his children is irrelevant to the inquiry. The identical repository and manner of control applies to each ship-owning company. This factual conclusion satisfies the test for association. 129. In any event, it is submitted that it is not necessary to determine who controls NSL. Once it is found that each ship-owning company is controlled by NSL, this establishes common control and there is no need to go further and establish who in turn controls NSL. 130. Even if the way in which the NSL fleet was controlled was one out of three different alternatives, provided each ship-owning company was controlled in the same way, this would suffice. There is no question of any of the ship-owning companies in the NSL fleet being subject to control by a different “person” to the others. Control is the same for both at the stipulated times.’ Appellants’ submissions [34] The appellants contended that, on a sensible construction of the founding affidavit, what is alleged is that Adam, on his own, or, separately with his children, control the respective ship owning companies. It was accordingly submitted that, the attempt in the founding affidavit to assert that NSL owned or controlled the respective ship owning companies, is misguided. This is so, because Indian Oil asserts that NSL ‘is in turn controlled by Adam on his own, alternatively Adam together with his children’. The significance of this is that NSL itself is an object of control. 20 [35] It was emphasized that Indian Oil’s case on association must be confined to the control exercised by Adam ‘on his own’ alternatively, ‘together with his children’. It was submitted that the use of the word ‘alternatively’ serves to introduce another option of control in circumstances where the alternatives postulated are inconsistent: it is either one or the other, they cannot co-exist as repositories of control or power. The conclusion by the high court that ‘Adam controls NSL and that he exercises such control personally’ simply ignores, so it was submitted, the fact that such control is stated to be in the alternative. This implies, at the very least, that it is either Adam on his own, or Adam, together with his children, who exercise actual control. In other words, both cannot exercise control independently. It was thus contended that, by alleging alternative powers of control, Indian Oil failed to prove a single locus of control and, therefore, failed to establish the association asserted on a balance of probabilities. Respondent’s submissions [36] Indian Oil contended that the appellants’ argument was based on certain mischaracterisations and illogicality. It listed three respects in which the appellants had mischaracterised its case. The first was that Indian Oil had never deviated from its central allegation, namely, that there was at all material times a single source of control. It merely said that the identity of the single source was one or the other. This was mainly because the appellants had refused to disclose who was in control. The second, was that, when Indian Oil had alleged that NSL was in turn controlled by Adam, either by himself or together with his children, the appellants took the view that Indian Oil’s case on association, therefore rested on two mutually destructive alternatives. According, to Indian Oil, however, there was no question of who the two different repositories of control of each ship owning company were. Control of both companies was exercised through a single source of control, namely, NSL. The third mischaracterisation was to the effect that there was nothing in the founding 21 papers to demonstrate the degree to which Adam controls his children. Indian Oil’s answer to this was that the founding affidavit makes it clear that it is Adam who controls and who ‘has brought his children into the business, and who one day will succeed him as owner. . .whether and to what extent Adam is assisted by his children is irrelevant to the inquiry.’ [37] In concluding that an association had been established by Indian Oil, the high court relied on the evidence contained in the founding affidavit. That evidence, so it held, proved, on a balance of probabilities, that Adam was the central figure of control of NSL and that, at the time the claim arose, the New Endeavor and the New Diamond were associated ships, both owned by NSL. It mattered not whether Adam exercised such control either by himself as head of the family or together with his children. The high court further held that, whilst no adverse inference could be imputed to the appellants, their failure to file an answering affidavit was not without consequences. As we attempt to show hereunder the findings by the high court are unassailable. Analysis and findings [38] The Associated Ship points out that, whilst ownership was recognised as a basis for association, the broader concept of control provides the principal focus of the associated ship jurisdiction in practice. Dealing with a single controlling interest under the heading of ‘the statutory provisions’ he says the following: ‘Sections 3(7)(a)(ii) and (iii) contain three references to the control of a company in similar but not identical terms. Thus both subsections refer to a “person who controlled the company which owned the ship concerned” and sub-section (iii) refers, in relation to the associated ship, to “a company which is controlled by a person.”. . . They do convey, on the face of it quite unequivocally, that in applying these provisions the search is for a single locus of control . . . All that the sections require is that in relation to both the ship concerned and the associated ship a “person” must be identified who “controls” or “controlled” the companies in question. The process 22 of comparison that follows upon this identification is intended to be a simple one. The maritime claimant identified the party who control the company that owned the ship concerned and identifies the party who controls the company that owns the associated ship it seeks to arrest. The result of these exercise is then compared. If they correspond, in the sense that the same person or persons control both companies, then the requisite association is established. If they are not the same then the association is not established. The proper conclusion from the language of section 3(7)(a) is that the legislature was of the view that for each company it would be possible to identify a single person or persons who controlled that company at the statutorily relevant time.’25 [39] It is important to have regard to what is said by The Associated Ship in a footnote emanating from the above extract. The footnote reads as follows: ‘This should not be understood as saying that it is essential to the proof of association that a specific natural person or persons must be identified as controlling the two companies. It will suffice if the chain of control in both instances leads back to a common source of control, even if the applicant is unable to identify that source. The source may itself be corporate. What is important is that it is common to both ship-owning companies.’26 (Our emphasis.) [40] The Associated Ship goes on to state that: ‘Lastly and at its most general control may refer to actual or ultimate control of the company’s activities, however exercised, and irrespective of the controller’s economic stake in the company. This control is distinct from managerial control in that it has within itself the power to control the manager and direct what they do. It consists in a general oversight of the activities of the company and hence the vessel and the power to continue or alter or discontinue its activities, to lay up the vessel or to sell it. It is the ability to control and direct that is significant here not the actual day to day activities of the person in whom that power vests.’27 [41] In Heavy Metal,28 Smalberger JA said that ‘[t]he principal purpose of the Act is to assist the party applying for arrest rather than the party opposing it’. The 25 The Associated Ship at 186-187. 26 Ibid fn 4 at 187. 27 Ibid at 188. 28 Heavy Metal para 13. 23 Appellate Division (as it then was), in Euromarine International of Mauren v The Ship Berg and others,29 accepted the explanation by the draftsman of the Act that: ‘. . . the purpose of the Act was to make the loss fall where it belonged by reason of ownership, and in the case of a company, ownership or control of shares.’ [42] In concluding on the concept of control, we quote from The Associated Ship once more, where Wallis stated as follows with regards to the proper meaning of control:30 ‘It is submitted that the following are features of the concept of control that emerge from a correct analysis of the statutory provisions governing associated ship arrests. Firstly, what must be sought is a single repository of control. Secondly, and flowing from the first, it is actual control that must be identified. Thirdly, the subject matter of control must be the direction and policy of the ship-owning company, not necessarily its day to day management. In other words, what is sought is the directing mind and will behind the company. Fourthly, it matters not whether control is exercised directly or indirectly. What is important is that the actual repository of the power to control the company must be identified. Fifthly, the court is not in general concerned with the niceties of the corporate law of the jurisdiction where the company is incorporated. The fact that for the purposes of the domestic law of the company recognition is only given in regard to its affairs to a person’s status as registered shareholder will not matter if in fact the person concerned acts on the directions of a third party who is by some legal means entitled to give those directions.’ [43] Indian Oil’s case from the outset was that the person who exercised ownership and control in the requisite sense of the New Endeavor and the New Diamond at the time the claims arose, was Adam and that he did so through the mechanism of NSL. The factual evidence contained in the Gray Page report dated 15 September 2021 as well as the 2013 TradeWinds and the 2014 Espresso articles all point to Adam being the central controlling figure. 29 Euromarine International of Mauren v The Ship Berg and Others [1986] ZASCA 4; [1986] 2 All SA 169 (A); 1986 (2) SA 700 (A) at 712A-B. 30 The Associated Ship at 222. 24 [44] The Gray Page report and the further evidence set out in the founding affidavit establish conclusively that the ship owning companies in question are controlled by Adam through the vehicle of NSL. The high court correctly found that the extent to which Adam is assisted by his children is irrelevant to the inquiry. The identical repository and manner of control applies to each ship-owning company. This factual conclusion, in the absence of any evidence to the contrary from the appellants, satisfies the test for association. This Court, in Wright v Wright and Another,31 stated that ‘[l]itigants are required to seriously engage with the factual allegation they seek to challenge and to furnish not only an answer but also countervailing evidence, particularly where the facts are within their personal knowledge’. The appellants failed to do so in the present instance. [45] As the Gray Page report details, Polembros Shipping Limited (PSL) is a large shipping company that was established in the 1970’s by Greek brothers Spyros and Adam. In 2014, Spyros and Adam decided to split the shipping interest between them in order to facilitate the succession of their children. It was decided that Spyros would run PSL together with his son whilst Adam would transfer his fleet of ships from PSL to NSL. Adam currently uses NSL to manage and control his shipping interests for himself and for the benefit of his two children Leonidas and Alina. It is evident from the evidence adduced by Indian Oil, in the founding affidavit, that PSL and NSL continue to make the strategic decisions to purchase, sell and scrap vessels in their fleets.32 [46] In the 2013 TradeWinds article, PSL (prior to the split) is referred to as a ‘Greek owner’. Details are provided in the article of PSL’s recent purchases of five different vessels (one of which is the Ikomasan which later became the New 31 Wright v Wright and Another [2014] ZASCA 126; 2015 (1) SA 262 (SCA) para 15; see also Wightman t/a JW Construction v Headfour (Pty) Ltd & Another [2008] ZASCA 6; 2008 (3) SA 371 (SCA) para 13. 32 This is also confirmed by the Gray Page investigative report especially para 12 thereof. 25 Diamond). PSL is reported to have ordered another ten new build bulkers from two different shipyards. PSL is also said to be buying and selling dry bulk vessels as well as tankers. PSL is reported to have scrapped two Capesized vessels in that year. [47] In the 2014 Espresso article, the following is reported. Brothers Spyros and Adam are dividing their property and separating their fleet. Adam and his children will pass their ships and others assets to NSL which is described as ‘another family interest company’. Adam has informed shipping circles that NSL will own about 23 ships. [48] It seems that family control is sufficient to establish association, and this kind of control is prevalent in Greek shipping. The Associated Ship explains family control as follows: ‘. . . the operation of the fleet as a single entity managed by a single manager (often itself a family company) indicates that there is sufficient measure of common control for the vessel in the fleet to be associated ships. This may be especially the case where certain key members of the family are in effect responsible for all decision in regard to the conduct of the business of the fleet . . . it matters not in that situation whether one says that the key members of the family directly control the ship owning companies or that the family as a collective entity controls the entire group of companies.’33 [49] The high court was referred to the above passage in the reconsideration application. The high court no doubt relied on the passage when it found that ultimate control of both ship-owning companies at the relevant times vested in Adam and that it made no difference as to whether Adam exercised this alone (as the ultimate controller) or acted together with his children. 33 The Associated Ship at 223-224. 26 [50] The single repository of common control of the two ship-owning companies at the material times is also evident from the following facts. Elly Maritime (second appellant) and Porto (third appellant) have the same President (Antonis Stellas) and Secretary (Efstratios Gogis). Stellas and Gogis are also the President and secretary of NSL. Gogis is also the legal representative of NSL in Greece. Stellas is NSL’s operations manager. Gogis further signed important documents on behalf of Porto, including the bill of sale for the purchase of the New Diamond and the letter of assignment to place her under NSL’s management. Gogis is also the director of the Polemis family’s hotel business in Greece, Hydra Hotels Hellas SA. This commonality of officers is no coincidence – the Polemis family controls its shipping empire through the two management companies with the brothers Spyros and Adam being ultimately in control. Concluding remarks [51] For all the reasons mentioned above, we are satisfied that Indian Oil had discharged the onus resting on it on a balance of probabilities. The high court’s findings on the issue of association were correct. In pleading the issue of control in the alternative as it did, Indian Oil was perhaps being cautious. This is understandable. It was up to the appellants to controvert the evidence by placing credible evidence before the court. They failed to do so. This was sufficient to tip the balance in favour of Indian Oil. As The Associated Ship explains: ‘There is always some evidence available to a claimant and as long as it can produce enough to constitute at least a prima facie case of association that will suffice to force the owners of the two vessels to produce in response some direct evidence that they are not in truth associated . . . In the absence of countervailing evidence from the owners of the shares in the ship-owning companies that will usually suffice to discharge the onus of proof on the claimant even in the face of a bare denial of the fact of association. This flows from the well-established principle that less evidence 27 will be required to establish a prima facie case where the matter is peculiarly within the knowledge of the opposite party.’34 [52] As a result, the following order is made: The appeal is dismissed with costs, such costs to include the costs consequent upon the employment of two counsel. __________________________ Y T MBATHA JUDGE OF APPEAL __________________________ R SEEGOBIN ACTING JUDGE OF APPEAL 34 The Associated Ship at 129-130. 28 Appearances For the appellants M Fitzgerald SC Instructed by: Bowman Gilfillan Inc, Cape Town Webbers Attorneys, Bloemfontein For the respondent: G D Harpur SC with L M Mills Instructed by: Norton Rose Fulbright South Africa Inc, Durban Lovius Block Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 03 May 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 MV New Endeavor and Others v Indian Oil Corporation Limited (283/2023) [2024] ZASCA 67 (03 May 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing with costs, including those of two counsel, an appeal against the decision of the KwaZulu-Natal Division of the High Court, Durban (sitting as Admiralty court). The facts were as follows: On 5 August 2020, the respondent, Indian Oil Corporation Limited (Indian Oil), concluded a voyage charterparty with the third appellant, Porto Emporios Shipping Inc., (Porto), for the carriage of 277 564 metric tonnes of crude oil (the cargo) on Porto’s Ship, the New Diamond to India. En route from Kuwait to India the New Diamond caught fire, salvage services were rendered, a general average was declared and the voyage was abandoned. As a result, Indian Oil transhipped its cargo to two other vessels for onward carriage to India. Part of the cargo was lost and Indian Oil incurred losses in the amount of approximately USD 70 000 000. Consequently, Indian Oil is seeking payment from Porto in the sum of USD 73 047 429,33 plus Indian Rupees (INR) 701 361 274,99 together with interest and costs, being damages suffered by it, as a result of Porto’s breaches of its obligations, under the bill of lading and charterparty, alternatively as a result of Porto’s negligence or breach of its obligations to Indian Oil in bailment. Indian Oil is pursuing a claim for damages against Porto by way of arbitration proceedings in India. On 30 May 2022, Indian Oil brought an urgent ex parte application before the high court for additional security for the arrest of the New Endeavor as an associated ship of the New Diamond in terms of s 3(6) read with s 3(7) of the Act. The application served before Mathenjwa AJ who granted an order in favour of Indian Oil. An application by New Endeavor for reconsideration of the above order in terms of rule 6(12)(c) of the Uniform Rules and for its release was dismissed with costs by Sibiya J on 15 December 2022. The present appeal serves before us with leave of the high court. The single issue that fell to be determined in this appeal was whether Indian Oil discharged the onus of establishing, on a balance of probabilities, the alleged association between the respective ship owning companies of the New Endeavor and the New Diamond, the ship concerned, in circumstances where, rather than alleging a single source of control, Indian Oil asserted alternative sources of control. The Appellants contended that by alleging alternative powers of control, Indian Oil failed to prove a single locus of control and therefore failed to establish the association asserted on a balance of probabilities. They further submitted that Adam (founder and owner of Polembros Shipping Limited, a family-owned ship management company) on his own or, separately, Adam and his children, controlled the respective ship owning companies. Therefore, Indian Oil’s assertion that NSL owned or controlled the respective ship owning companies, was misguided. Indian Oil on the other hand contended that the appellants’ argument was based on certain mischaracterisations, namely that: (a) Indian Oil had never deviated from its central allegation that there was at all material times a single source of control. It merely said that the identity of the single source was one or the other. This was mainly because the 2 appellants had refused to disclose who was in control. (b) when Indian Oil had alleged that NSL was in turn controlled by Adam, either by himself or together with his children, the appellants took the view that Indian Oil’s case on association therefore rested on two mutually destructive alternatives. According to Indian Oil, however, there was no question of who the two different repositories of control of each ship owning company were. Control of both companies was exercised through a single source of control, namely, NSL and (c) that there was nothing in the founding papers to demonstrate the degree to which Adam controlled his children. Indian Oil’s answer to this was that the founding affidavit made it clear that it was Adam who controlled and who had brought his children into the business, and who one day would succeed him as owner . . . whether and to what extent Adam was assisted by his children was irrelevant to the inquiry. In its findings, the SCA held that regarding the issue of onus, it was well established that Indian Oil bore the onus of proving the alleged association on a balance of probabilities. Equally trite, held the SCA, was that security arrests in terms of s 5(3) could be brought by the arrest of an associated ship to the ship concerned. Therefore, according to the SCA, the important question for determination was whether the relevant vessels were associated with each other and who was the controlling force behind the companies that own the vessels. In response to that question, the SCA agreed with the high court and held that an association had been established by Indian Oil. It further held that on the evidence contained in the founding affidavit proof on a balance of probabilities showed that Adam was the central figure of control of NSL and that at the time the claim arose, the New Endeavor and the New Diamond were associated ships, both owned by NSL. It mattered not whether Adam exercised such control either by himself as head of the family or together with his children. The SCA also held that whilst ownership was recognised as a basis for association, the broader concept of control provided the principal focus of the associated ship jurisdiction in practice. The SCA further concurred with the high court and held that the extent to which Adam was assisted by his children was irrelevant to the inquiry. The identical repository and manner of control applied to each ship-owning company. This factual conclusion, in the absence of any evidence to the contrary from the appellants, satisfied the test for association. Thus in conclusion, the SCA held that it was satisfied that Indian Oil had discharged the onus resting on it on a balance of probabilities. The high court’s findings on the issue of association were no doubt correct. In pleading the issue of control in the alternative as it did, Indian Oil was perhaps being cautious. This, according to the SCA was understandable. It was up to the appellants to controvert the evidence by placing credible evidence before the Court. They failed to do so. This was sufficient to tip the balance in favour of Indian Oil. In the result the appeal failed and it was accordingly dismissed with costs, such costs included those consequent upon the employment of two counsel. ~~~~ends~~~~

4220

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 053/2023 In the matter between: VENATOR AFRICA (PTY) LTD APPELLANT and LLOYD MASON WATTS FIRST RESPONDENT MARTIN BEKKER SECOND RESPONDENT Neutral citation: Venator Africa (Pty) Ltd v Watts and Another (053/2023) [2024] ZASCA 60 (24 April 2024) Coram: MOTHLE, MABINDLA-BOQWANA and MOLEFE JJA and BAARTMAN and KEIGHTLEY AJJA Heard: 4 March 2024 Delivered: 24 April 2024 Summary: Company law – exception – s 218(2) read with s 22(1) of the Companies Act 61 of 2008 – allegation that company carried on its business recklessly – action proceedings by a creditor against directors of company. 2 ORDER On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg (Bezuidenhout AJ, sitting as court of first instance): 1 The appeal is dismissed with costs including the costs of two counsel, where so employed. 2 The order of the high court is confirmed save for paragraph 3 of the order which is substituted as follows: ‘3. The plaintiff is granted leave, if so advised, to file amended particulars of claim within 10 days of the date of this order.’ JUDGMENT Mabindla-Boqwana JA (Mothle and Molefe JJA and Baartman and Keightley AJJA concurring): Introduction [1] This appeal, which arises from an exception upheld by the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court), concerns the interpretation of s 218(2) of the Companies Act 71 of 2008 (the Act), which provides for civil liability against any person who contravenes the provisions of the Act, read with s 22(1), prohibiting reckless trading by a company. These must be viewed alongside provisions dealing with fiduciary duties of directors (s 76(3)), 3 consequential liability (s 77(2)) and the longstanding principle that a company has a legal personality separate from its directors and shareholders. [2] The high court considered and upheld an exception to the particulars of claim, wherein the question whether a creditor could claim against the directors of a company personally, in terms of s 218(2) read with s 22(1) of the Act, was raised. Section 214(1)(c) of the Act, which provides for criminal offences and an alternative common law claim of fraud against the directors, were tangentially also raised before it. The appeal is with the leave of the high court. Background facts [3] The appellant is Venator Africa (Pty) Ltd. It instituted action in the high court against the respondents, Lloyd Mason Watts and Martin Bekker. The respondents were the directors of a company known as Siyazi Logistics and Trading (Pty) Ltd (Siyazi), which conducted business as a clearing and forwarding agent. Siyazi had a contractual relationship with the appellant. In the action, Mr Bekker was cited as the first defendant and Mr Watts as a second defendant, respectively. Mr Bekker however does not participate in this appeal. I shall henceforth refer to the appellant as ‘the plaintiff’ and the respondents as ‘the first and second defendants’, respectively, as in the action. [4] It was alleged in the particulars of claim: ‘7. As regards the relationship between Plaintiff and Siyazi: 7.1 the Plaintiff contracted with Siyazi for the performance of clearing and forwarding duties by Siyazi on behalf of the Plaintiff; 7.2 the said agreement commenced during or around 2016 and was orally agreed between the duly authorised representatives of Siyazi and the Plaintiff at Durban; 4 7.3 the material terms of that agreement were: 7.3.1 from time to time and at the request of the Plaintiff, Siyazi would perform clearing services in respect of the importation of goods by the Plaintiff into the Republic; 7.3.2 in the performance of those services, Siyazi would issue disbursement accounts to the Plaintiff which represented the amounts due by Plaintiff to the South African Revenue Services (“SARS”); 7.3.3 the Plaintiff would pay the amounts reflected on the disbursement accounts to Siyazi; and 7.3.4 Siyazi would pay the amounts received against the disbursement account to the respective party entitled to payment (i.e. SARS). 8. During the period 2018 and early 2019, Siyazi delivered disbursement accounts to the Plaintiff in respect of SARS in the total sum of R66,395,006.27. 9. The Plaintiff paid the full amount of R66,395,006.27 to Siyazi. 10. The disbursement accounts constituted a representation by Siyazi to Plaintiff that the amounts reflected thereon were due by Plaintiff to SARS. 11. Siyazi caused only an amount of R31,353,697.27 to be paid to SARS on behalf of the Plaintiff. 12. The difference between the amount paid by Plaintiff to Siyazi against the disbursements accounts and the amount paid by Siyazi to SARS is R34,612,576.19. 13. Consequent upon that short payment, SARS has raised assessments as follows: 13.1 VAT due- R34,630.202.00; 13.2 penalties- R2,143,774.00; and 13.3 interest- R4,633,244.00. 14. The total damages suffered by the Plaintiff in consequence of the short payment by Siyazi to SARS is therefore R41,407,220.00. 15. The short payment occurred as a result of fraud and/or theft by Siyazi’s employees and/or the Defendants. 16. Section 22(1) of the Companies Act 2008 provides: “A company must not carry on its business recklessly, with gross negligence, with intent to defraud any person or for any fraudulent purpose.” 5 17. The conduct of Siyazi was reckless, alternatively grossly negligent, further alternatively the business of Siyazi was conducted with the intention to defraud the Plaintiff or further alternatively for a fraudulent purpose. 18. Section 218(2) of the Companies Act provides: “Any person who contravenes any provision of this Act is liable to any other person for any loss or damage suffered by that person as a result of that contravention”. 19. As directors of Siyazi, the First and Second Defendants were: 19.1 the guiding minds behind the fraud; alternatively 19.2 reckless; further alternatively 19.3 grossly negligent; in controlling the activities of Siyazi. 20. The recklessness or gross negligence manifested in: 20.1 A failure to maintain proper records and books of account; 20.2 A failure to maintain controls in respect of compilation of disbursement accounts; 20.3 A failure to reconcile disbursement accounts and accurately to report them to Applicant; and/or 20.4 A failure to impose controls such that moneys paid against disbursement accounts were paid over to the third parties entitled to same. 21. But for the First and Second Defendants’ fraud, alternatively recklessness, further alternatively, gross negligence, the Plaintiff would not have been obliged to pay to SARS the amount of R41,407,220.00. 22. In the premises, the First and Second Defendants are jointly and severally liable in terms of Section 218(2) read with Section 22(1) of the Companies Act, 2008 for the amount of R41,407,220.00.’ (Emphasis added.) [5] The first defendant delivered a plea to the particulars of claim. The second defendant, however, filed two exceptions. Only the first is relevant. In its terms: ‘4. Section 22(1) does not regulate what directors, such as the defendants, must do or not do. (There is no allegation in the particulars of claim that section 22 regulates directors’ conduct). 5. Section 22 imposes duties upon the company and not its directors. 6 6. Section 218(2) finds application where a person breaches a provision of the Act. 7. There is no allegation in the particulars of claim that the defendants breached a provision of the Act. 8. The allegations in paragraph 19 (read with paragraphs 20 and 21) mirror the jurisdictional requirements of section 22(1), with reference to fraud, recklessness and gross negligence. However, section 22(1) does not impose obligations on, and cannot apply to, the defendants as directors. 9. The obligations and duties of directors are set out in section 76 of the Act and the available remedies for breaches in section 77. The plaintiff does not locate a claim in those sections. In substance, the plaintiff seems to contend for a contravention of the obligations of a director articulated in section 76(3) of the Companies Act. But any claim under that section is confined to section 77(2) (and section 218(2) cannot be invoked – where a statute expressly and specifically creates liability for a breach of a section, then a general section in the same statute cannot be invoked to establish a co-ordinate liability). Section 77(3)(b) specifically deals with the liability of directors in respect of section 22. It effectively provides that a director who is a party to the carrying on of the business of the company contrary to section 22 is liable for any loss, damages or costs sustained by the company. 10. The particulars of claim accordingly do not: 10.1 aver a breach by the defendants of an obligation imposed on them by the Act in order to bring them and the alleged loss said to be caused by them within the purview of section 218(2); 10.2 sustain a cause of action.’ [6] The second defendant further contended that, to the extent the claim was predicated on fraud, the allegations in the particulars of claim were insufficient to sustain a case. It is not necessary to detail the second exception as the high court only dealt with the first. 7 In the high court [7] In upholding the first exception, the high court went through a line of cases dealing with the interpretation of s 218(2) read with s 22 and, in some instances, s 214(1)(c) of the Act. The plaintiff’s case was based on the decision of Rabinowitz v Van Graan and Others1 (Rabinowitz) and related judgments. The court in Rabinowitz held: ‘[A] person who is guilty of an offence in terms of the Act, must . . . be found to have “contravened” a provision of the Act. If, therefore, a director is guilty of the offence created by section 214, such director must therefore be found to have contravened a provision of the Act for the purposes of s 218(2).’2 It further held, ‘a third party can hold a director personally liable in terms of the Act for acquiescing in or knowing about conduct that falls within the ambit of s 22(1) thereof.’3 [8] The court in Rabinowitz found it hard to believe that the legislature could, despite the criminal liability contemplated by the Act in terms of s 214(1)(c), the delinquency provided for in s 162(5)(c)(iv)(bb) and the liability created in s 77(3) against the directors, preclude a director from knowingly being a party in s 22 of the Act. It took this view bearing in mind s 66(1) of the Act which brought the company affairs under the direction of the board.4 Rabinowitz’s reasoning was followed in several cases.5 It is not necessary to discuss these cases as the thrust is largely the same. 1 Rabinowitz v Van Graan and Others [2013] ZAGPJHC 151; 2013 (5) SA 315 (GSJ). See also Chemfit Fine Chemicals (Pty) Ltd v Maake 2017 JDR 1473 (LP); Maake and Others v Chemfit Finechemical (Pty) Ltd [2018] ZALMPPHC 71; Blue Farm Fashion Limited v Rapitrade 6 (Pty) Ltd and Others [2016] JOL 35613 (WCC); Meatworld Factory CC v ET Trading House (Pty) Ltd 2019 JDR 1351 (GJ). 2 Ibid para 17. 3 Ibid para 22. 4 Ibid para 21. 5 Cases listed in fn 1. 8 [9] The high court disagreed with Rabinowitz and the cases that followed it. It observed the following: ‘One can sense the frustration some judges might feel when it is clear that a director was up to no good and a creditor ended up suffering damages or a huge financial loss. The fact however remains that the Companies Act does not make express provision for such liability. It could never have been the intention of the legislator to provide for liability in a manner that would involve a convoluted manner of interpreting various sections, and then to arrive at a conclusion that is still open to doubt, based on how certain sections are interpreted.’6 [10] The court embraced the approach adopted in De Bruyn v Steinhoff International Holdings N.V. and Others7 (Steinhoff) which held that: ‘Section 218(2) should not be interpreted in a literal way. Rather, the provision recognizes that liability for loss or damage may arise from contraventions of the Companies Act. And so the statute confers a right of action. But what that right consists of, who enjoys the right, and against whom the right may be exercised are all issues to be resolved by reference to the substantive provisions of the Companies Act.’8 [11] The high court also referred to the judgment of this Court in Hlumisa Investment Holdings (RF) Ltd and Another v Kirkinis and Others9 (Hlumisa) where, with reference to ss 77(2)(b) and 77(3)(b) of the Act, the Court held: ‘These provisions of the Companies Act make it clear that the legislature decided where liability should lie for conduct by directors in contravention of certain sections of the Act and who could recover the resultant loss. It is also clear that the legislature was astute to preserve certain common law principles. It makes for a harmonious blend.’10 6 Venator Africa (Pty) Limited v Bekker and Another [2022] ZAKZPHC 50; [2022] 4 All SA 600 (KZP) (High Court judgment) para 86. 7 De Bruyn v Steinhoff International Holdings N.V. and Others [2020] ZAGPJHC 145; 2022 (1) SA 442 (GJ). 8 Ibid para 191. 9 Hlumisa Investment Holdings (RF) Ltd and Another v Kirkinis and Others [2020] ZASCA 83; [2020] 3 All SA 650 (SCA); 2020 (5) SA 419 (SCA). 10 Ibid para 50. 9 [12] The high court concluded that: ‘. . .the so-called lacuna created by the legislature in not providing expressly for the liability of directors to other persons, such as creditors, for loss or damage suffered, is a clear indication that it was not its intention to do so, thereby continuing to recognise what has been referred to as a foundation of company law.’11 [13] It consequentially upheld the second defendant’s exception, set aside the particulars of claim, and granted leave to the plaintiff, if so advised, to file amended particulars of claim within 10 days from the date of the granting of its order. In this Court [14] The plaintiff contends that the high court did not conduct a discrete interpretative analysis of s 218(2). Rather, it opined on the correctness of the judgments it identified and appeared to have adopted a prominent focus on s 22 rather than s 218(2). [15] It further submits that it was unlikely to have been the purpose of the Act to have intended to exclude liability for fraudulent or reckless trading by directors [to creditors of the company]; this claim was permitted by common law, and it would require clear language in the Act to preclude it. Neither the language of s 218, nor the surrounding matrix of legislation suggest that revocation. [16] Counsel for the plaintiff further submitted that the Court should prefer an interpretation that promotes access to justice than one that denies any remedy. Thus, it should be slow to accept the interpretation offered by the excipient. 11 High Court judgment fn 6 above para 88. 10 [17] Secondly, he argued that the Court is not dealing with the breach of a fiduciary duty which is owed to the company, but with a breach of a statutory duty. For purposes of a creditor’s claim, the phrase ‘any person who contravenes the Act’ in s 218(2) must be read to mean the director who is behind the company that contravened s 22(1). [18] According to the plaintiff, neither Hlumisa nor Steinhoff stand in the way of this interpretation as these cases had to do with claims of shareholders against the directors of the company, rather than with the claims of creditors; shareholders’ claims against directors are not permitted. In this instance, however, where the allegation is that the company was used by the directors to perpetrate a fraud on a creditor, the company neither suffers a loss nor is it likely to seek to recover from the directors. [19] As to s 214(1)(c), which creates a criminal offence, this was not specifically pleaded. However, it was argued that sufficient facts have been pleaded which, if proved, would render the second defendant guilty of an offence. The plaintiff contends that the interpretation followed in Rabinowitz should be adopted in this regard. Lastly, it contends that a common law claim of fraud or theft can be inferred from the facts. The test on exception [20] It is trite that it is for an excipient to show that on every reasonable interpretation of the facts, the pleading is excipiable. On interpretation, ‘the question is not whether the meaning contended for by the [plaintiff] is necessarily the correct 11 one, but whether it is a reasonably possible one’.12 The excipient must satisfy the court that the conclusion of law set out in the particulars of claim is unsustainable on every interpretation that can be put on those facts. It is important to note that ‘the facts are what must be accepted as correct; not the conclusions of law’.13 What is before us is a question of law. Either s 218(2), read with s 22(1), permits what is contended for by the plaintiff, or it does not. Legislative scheme [21] It is important to recap the relevant principles underpinning the Act before undertaking the interpretive exercise. Section 1 of the Act defines a company as a juristic person incorporated in terms of the Act. Sections 19(1)(a) and (b), dealing with the legal status of companies provide that a company is a juristic person and that it has all the legal powers and capacity of an individual subject to certain exceptions. Section 19(2) expressly states that: ‘A person is not, solely by reason of being an incorporator, shareholder or director of a company, liable for any liabilities or obligations of the company, except to the extent that this Act or the company’s Memorandum of Incorporation provides otherwise.’ [22] The situation is different where a company is a personal liability company. In that case, the directors and past directors are jointly and severally liable, together with the company, for any debts and liabilities of the company (s 19(3)). This exception serves to highlight the importance of the director’s default immunity. [23] In the case of unconscionable abuse of the juristic personality of the company as a separate entity, s 20(9) provides that the court may declare the company not to 12 Fairlands Ltd v Inter-Continental Motors Ltd 1972 (2) 270 (A) at 275G-H. 13 Hlumisa fn 9 above para 22. 12 be a juristic person in respect of any right, obligation or liability of the company and make any further order it considers appropriate. It has been stated that this provision does not disregard the company as a separate entity. It also does not do away with the requirements for piercing the corporate veil. It ‘broadens the bases upon which the courts in this country… have hitherto been prepared to grant relief that entails disregarding corporate personality. Section 20(9), therefore does not replace the common law, it supplements the common law.’14 [24] These provisions emphasise the long-standing legal principles that the company’s legal persona cannot be ignored at the choosing of a party. As this Court said in Hlumisa, the separate personality is ‘no mere technicality. It is foundational to company law.’15 A party cannot simply disregard the ‘corporate veil’; it must be permitted by law to do so. Against these principles as the backdrop, I turn to the interpretation of s 218(2) read with s 22(1). Interpretation of the relevant provisions [25] The plaintiff’s case is based on a statutory duty. Interpretation of statutes ‘is an objective unitary process where consideration must be given to the language used in the light of ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. The inevitable point of departure is the language used in the provision under consideration.’16 14 Ex Parte Gore and Others N N O (Gore) 2013 (3) SA 382 (WC); [2013] 2 All SA 437 (WCC) (Gore) para 31, cited with approval by this Court in Butcher Shop and Grill CC v Trustees for the time being of the Bymyam Trust [2023] ZASCA 57; [2023] 3 All SA 40 (SCA); 2023 (5) SA 68 (SCA) para 40. 15 Hlumisa fn 9 above para 42 referring to this Court’s judgment in Itzikowitz v Absa Bank Ltd [2016] ZASCA 43; 2016 (4) SA 432 (SCA). 16 Commissioner for the South African Revenue Service v United Manganese of Kalahari (Pty) Ltd [2020] ZASCA 16 para 8. 13 [26] Section 218 (2) says: ‘Any person who contravenes any provision of this Act is liable to any other person for any loss or damage suffered by that person as a result of that contravention.’ (Emphasis added.) This section creates a right to recovery if there has been a breach of a provision of the Act. ‘When a wrongdoer “contravenes” the Act and causes loss to a person, the wrongdoer is liable to that person…the word “contravenes” in s 218(2) includes a breach or an infringement of any provision of the Act, “which is by nature prescriptive or which in some way regulates conduct”.’17 [27] This section does not itself create liability. It imposes liability in the event of a contravention of some other provision of the Act. As was held in Steinhoff:18 ‘[T]he statute confers a right of action. But what that right consists of, who enjoys the right, and against whom the right may be exercised are all issues to be resolved by reference to the substantive provisions of the Companies Act. Such an interpretation answers another difficulty that the literal interpretation of s 218(2) does not. As Hlumisa19 observed, can s 218(2) be understood to impose liability without the regulating concepts of fault, foreseeability and remoteness; and an undifferentiated conception of permissible plaintiffs. Such an understanding would require an interpretation of s 218(2) that gives rise to wholesale liability at the instance of all persons who sustained loss or damage as a result of the contravention. That is to place a burden of liability and hence risk upon directors so great that it is hard to imagine who would accept office on these terms. And if that is what the legislature intended it would be expected to have made the imposition of so great a burden clear. The better interpretation is that the legislature intended that the specific requirements of any liability are to be found in the substantive provisions of the Companies Act. Section 218(2) has a different function. It determines the question posed in Steenkamp:20 contraventions do permit a right of 17 Hlumisa fn 9 above para 45. 18 Steinhoff fn 7 above paras 191 and 192. 19 Hlumisa Investment Holdings RF Ltd and Another v Kirkinis and Others [2018] ZAGPPHC 676; 2019 (4) SA 569 (GP). This is the judgment that was later confirmed by this Court on appeal in Hlumisa fn 9 above. 20 Steenkamp v Provincial Tender Board of the Eastern Cape [2005] ZASCA 120; [2006] 1 All SA 478 (SCA); 2006 (3) SA 151 (SCA) paras 21 and 22. 14 action. Whether there is a right of action, who enjoys the right, and on what basis of all matters regulated by the substantive provision of the Companies Act.’ [28] The plaintiff relies on s 22(1) as the provision that it asserts has been contravened and triggers the operation of s 218(2). Section 22(1) stipulates: ‘A company must not carry on its business recklessly, with gross negligence, with intent to defraud any person or for any fraudulent purpose.’ This section plainly imposes a duty on the company, and not its directors, to refrain from carrying on its business recklessly, among other things. To construe s 22(1) as being capable of infringement by the directors is to read into the section a prohibition that is not there. [29] Sections 22(2) and 22(3) create remedies for the Commission21 when reckless trading is suspected. These provisions as well, are directed at the company. The section that deals expressly with directors’ liability is s 77(3)(b), which states: ‘(3) A director of a company is liable for any loss, damages or costs sustained by the company as a direct or indirect consequence of the director having— … (b) acquiesced in the carrying on of the company’s business despite knowing that it was being conducted in a manner prohibited by section 22(1)’ (Emphasis added.) 21 The sections stipulate: ‘(2) If the Commission has reasonable grounds to believe that a company is engaging in conduct prohibited by subsection (1), or is unable to pay its debts as they become due and payable in the normal course of business, the Commission may issue a notice to the company to show cause why the company should be permitted to continue carrying on its business, or to trade, as the case may be. (3) If a company to whom a notice has been issued in terms of subsection (2) fails within 20 business days to satisfy the Commission that it is not engaging in conduct prohibited by subsection (1), or that it is able to pay its debts as they become due and payable in the normal course of business, the Commission may issue a compliance notice to the company requiring it to cease carrying on its business or trading, as the case may be.’ 15 [30] In Gihwala and Others v Grancy Property Ltd and Others22 this Court, referring to s 77(3), held that: ‘That section . . . does not involve a declaration by the court, but creates a statutory claim in favour of the company against a director, imposing liability on the latter for any loss, damages or costs incurred by the company in certain circumstances, including whether the director acquiesces in the company engaging in reckless trading. It is not a provision that can be invoked to secure payment to a creditor or shareholder in respect of their claim against the company or a director.’ (Emphasis added.) [31] Section 76(3) imposes duties upon the directors to, inter alia, act in good faith and in the best interests of the company. These are common law principles which have now been entrenched in the Act.23 These duties are owed to the company. In the event of a wrong done to the company in terms of any of the provisions of the section, the company can sue to recover damages. ‘The company would be the proper plaintiff. It is no coincidence, then, that s 77(2)(a) provides that a director of a company may be held liable for breaches of fiduciary duties resulting in any loss or damage sustained by the company.’24 Section 77(2)(b) similarly provides that a director of a company may be held liable in accordance with the principles of the common law relating to delict for any loss, damages or costs sustained by the company as a consequence of any breach by the director of the duty contemplated in s 76(3)(b); any provision of the Act, not otherwise mentioned in the section; or any provision of the company’s Memorandum of Incorporation. 22 Gihwala and Others v Grancy Property Ltd and Others [2016] ZASCA 35; [2016] 2 All SA 649 (SCA); 2017 (2) SA 337 (SCA) para 120. 23 P Delport Henochsberg on the Companies Act 71 of 2008 at 298(12M)-298(12N). 24 Hlumisa fn 9 above para 48. 16 [32] As stated in Hlumisa, these provisions make it clear that ‘the legislature decided where liability should lie for conduct by directors in contravention of certain sections of the Act and who could recover the resultant loss. It is also clear that the legislature was astute to preserve certain common law principles. It makes a harmonious blend.’25 Further, the Act abounds with provisions for recovery of loss resulting from misconduct on the part of directors. There must clearly be a link between the contravention and the loss allegedly suffered.26 [33] The plaintiff has been unable to identify a provision that has been contravened by the directors in order to invoke s 218(2). As the court in Steinhoff observes: ‘The statutory scheme of liability under the Companies Act does not attach a singular consequence for a contravention of the Act. Rather, the Companies Act attaches a regime of liability for particular contraventions. I have already observed that this is so in respect of the contravention of s 76 and s 22. This is a systemic feature of the Companies Act. A breach of duty may exact compliance by the Commission (s22(3)); a breach may be an offence (s32(5)); and a breach may give rise to liability to make good a loss as a consequence of the breach (s77). Certain breaches are visited with more than one permissible consequence. Thus, s 22 permits the Commission to issue a compliance notice. In addition, a director may be held liable to the company for reckless trading (s22(1) read with s 77(3)(b)). The more general point of interpretation is that the legislature has been careful to stipulate what form of liability, civil, criminal, or regulatory, may result from different contraventions. There is no coherent reading of the Companies Act that would subordinate this specification of differentiated liability for the recognition under s 218(2) of general liability of all persons who contravene the Companies Act in favour of all who suffer loss as a result thereof.’27 25 Hlumisa fn 9 above para 50. 26 Hlumisa fn 9 above para 51. 27 Steinhoff fn 7 above paras 213 and 214. 17 [34] In the circumstances, Rabinowitz and other high court cases were wrongly decided. It is irrelevant that Hlumisa and Steinhoff concerned claims brought by shareholders against directors. While those facts are important to note, the relevant principles in those decisions as well as Gihwala are instructive for present purposes. [35] For these reasons, the high court cannot be faulted for upholding the first exception. The appeal must, accordingly, fail. Counsel for the second defendant requested that the order allowing the amendment, be substituted to provide for a new operative date. I agree. [36] In the result, the following order is made: 1 The appeal is dismissed with costs including the costs of two counsel, where so employed. 2 The order of the high court is confirmed save for paragraph 3 of the order which is substituted as follows: ‘3. The plaintiff is granted leave, if so advised, to file amended particulars of claim within 10 days of the date of this order.’ __________________________ N P MABINDLA-BOQWANA JUDGE OF APPEAL 18 Appearances For the appellant: F Snyckers SC Instructed by: Shepstone & Wylie Attorneys, Durban Symington De Kok Attorneys, Bloemfontein For the first respondent: A Annandale SC with J Miranda Instructed by: Grant and Swanepoel Attorneys, Pietermaritzburg Kramer Wiehmann 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 April 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 Venator Africa (Pty) Ltd v Watts and Another (053/2023) [2024] ZASCA 60 (24 April 2024) Today the Supreme Court of Appeal (SCA) dismissed with costs, including the costs of two counsel where so employed, an appeal against the decision of the KwaZulu-Natal Division of the High Court, Pietermaritzburg (the high court). The appeal, which arose from an exception upheld by the high court, concerned the interpretation of s 218(2) of the Companies Act 71 of 2008 (the Act), which provides for civil liability against any person who contravenes the provisions of the Act, read with s 22(1) prohibiting reckless trading by a company. These were viewed alongside provisions dealing with fiduciary duties of directors (s 76(3)), consequential liability (s 77(2)) and the longstanding principle that a company has a legal personality separate from its directors and shareholders. The appellant, Venator Africa (Pty) Ltd, instituted action in the high court against the respondents, Lloyd Mason Watts and Martin Bekker. The respondents were the directors of a company known as Siyazi Logistics and Trading (Pty) Ltd (Siyazi), which conducted business as a clearing and forwarding agent. Siyazi had a contractual relationship with the appellant. Mr Bekker was cited as the first defendant and Mr Watts as the second defendant in the action. Mr Bekker did not participate in the appeal. Parties are referred to as plaintiff and first and second defendants as in the action. In the particulars of claim, the plaintiff alleged that it had contracted with Siyazi to issue disbursement accounts to it. The plaintiff would then pay the amounts reflected on the disbursement accounts to Siyazi. Siyazi would then pay SARS the amounts received. During the periods of 2018 and 2019, the plaintiff paid total amounts of some R66 million to Siyazi. However, Siyazi did not make the full payment to SARS. SARS raised assessments, which resulted in the appellant suffering damages. The plaintiff relied on s 218(2) read with s 22(1) of the Act to claim against the directors of Siyazi. The second defendant filed an exception to the particulars of claim, alleging that s 22(1) does not impose duties on the directors, but the company, and that s 218(2) would only find application where a person breaches a provision of the Act. In upholding the exception, the high court went through a line of cases dealing with the interpretation of s 218(2) read with s 22 and, in some instances, s 214(1)(c) (which provides for criminal liability) of the Act. It referred to Rabinowitz v Van Graan and Others [2013] ZAGPJHC 151; 2013 (5) SA 315 (GSJ) (Rabinowitz) and related judgments, which said that ‘a third party can hold a director personally liable in terms of the Act for acquiescing in or knowing about conduct that falls within the ambit of s 22(1) thereof’. 2 The high court disagreed with Rabinowitz and the cases that followed it. It observed that it could never have been the intention of the legislator to provide for liability in a manner that would involve a convoluted manner of interpreting various sections, and then to arrive at a conclusion that is still open to doubt, based on how certain sections are interpreted. The high court embraced the approach adopted in De Bruyn v Steinhoff International Holdings N.V. and Others [2020] ZAGPJHC 145; 2022 (1) SA 442 (GJ) (Steinhoff), which held that ‘[s]ection 218(2) should not be interpreted in a literal way. Rather, the provision recognizes that liability for loss or damage may arise from contraventions of the Companies Act. And so the statute confers a right of action. But what that right consists of, who enjoys the right, and against whom the right may be exercised are all issues to be resolved by reference to the substantive provisions of the Companies Act.’ The high court also referred to the judgment of this Court in Hlumisa Investment Holdings (RF) Ltd and Another v Kirkinis and Others [2020] ZASCA 83; [2020] 3 All SA 650 (SCA); 2020 (5) SA 419 (SCA) (Hlumisa) which held: ‘[t]hese provisions of the Companies Act make it clear that the legislature decided where liability should lie for conduct by directors in contravention of certain sections of the Act and who could recover the resultant loss. It is also clear that the legislature was astute to preserve certain common law principles. It makes for a harmonious blend.’ The high court, consequentially, upheld the second defendant’s exception, set aside the particulars of claim, and granted leave to the plaintiff, if so advised, to file amended particulars of claim within 10 days from the date of the granting of its order. The SCA held that s 218(2) does not itself create liability. It imposes liability in the event of a contravention of some other provision of the Act. The SCA also stated that s 22(1) plainly imposes a duty on the company, and not its directors, to refrain from carrying on its business recklessly, among other things. To construe s 22(1) as being capable of infringement by the directors is to read into the section a prohibition that is not there. It further observed that s 76(3) imposes duties upon the directors to, inter alia, act in good faith and in the best interests of the company. These are common law principles which have now been entrenched in the Act. These duties are owed to the company. In the event of a wrong done to the company in terms of any of the provisions of the section, the company can sue to recover damages. In addition, the SCA held that s 77(2)(b) similarly provides that a director of a company may be held liable in accordance with the principles of the common law relating to delict for any loss, damages or costs sustained by the company as a consequence of any breach by the director of the duty contemplated in s 76(3)(b); any provision of the Act, not otherwise mentioned in the section; or any provision of the company’s Memorandum of Incorporation. The plaintiff was unable to identify a provision that had been contravened by the directors in order to invoke s 218(2). In the circumstances, the SCA concluded that Rabinowitz and other high court cases were wrongly decided. It was irrelevant that Hlumisa and Steinhoff concerned claims brought by shareholders against directors. For these reasons, the SCA found that it could not fault the high court in upholding the exception. ~~~~ends~~~~

4315

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 494/2023 In the matter between: MARIA LUISA PALMA CODEVILLA APPELLANT and PAULA JANE KENNEDY-SMITH NO FIRST RESPONDENT DINGLEY MARSHALL INCORPORATED SECOND RESPONDENT CARL FREDERICH WESSEL THIRD RESPONDENT SIMONE DANIELLE BORCHERDING FOURTH RESPONDENT Neutral citation: Maria Luisa Palma Codevilla v Paula Jane Kennedy-Smith NO and Others (494/2023) [2024] ZASCA 136 (10 October 2024) Coram: SCHIPPERS, WEINER and KGOELE JJA and BAARTMAN and TOLMAY AJJA Heard: 16 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email; publication on the Supreme Court of Appeal website and released to SAFLII. The time and date for hand-down is deemed to be 10 October at 11h00. 2 Summary: Agreement of sale of immovable property – lapsing of suspensive condition – whether revival of agreement thereafter is competent. 3 ________________________________________________________________ ORDER ________________________________________________________________ On appeal from: Western Cape Division of the High Court, Cape Town (Allie, Wille and Lekhuleni JJ sitting as court of appeal): 1 The appeal is upheld with costs. Such costs shall include the costs of only one counsel. 2 The order of the full court of the Western Cape Division of the High Court, Cape Town, is set aside and replaced with the following order: ‘1. The appeal succeeds with costs. 2. The order of the court a quo dated 4 March 2022, is set aside and replaced with the following order: 2.1 It is declared that: (a) the Offer to Purchase Erf 150003, Kenilworth Upper, Cape Town, located at 8 Selwyn Road, Kenilworth, Western Cape (the property), concluded on 4 February 2020 between the first respondent as seller, and the third and fourth respondents as purchasers (the Offer to Purchase); and (b) the Addendum to Agreement of Sale, concluded between the seller and the purchasers on 20 February 2020, purportedly to extend the suspensive condition in clause 7.2 of the Offer to Purchase, after the expiry date for the fulfilment of that condition, are invalid and unenforceable. 3. The first and second respondents shall pay to the applicant the sum of R1 950 000, which she paid to them on behalf of the third and fourth respondents in respect of the purchase price of the property, together with the interest on that amount to which the applicant is entitled. 4 4. The first and second respondents shall pay the costs of the application, jointly and severally, the one paying the other to be absolved.’ ________________________________________________________________ JUDGMENT ________________________________________________________________ Weiner JA (Tolmay AJA concurring): [1] The issue in this appeal is whether an agreement for the purchase and sale of an immovable property, can be revived, subsequent to the lapse of a suspensive condition contained therein. The issue arose under the following circumstances. [2] On 4 February 2020, the third and fourth respondents (the purchasers), the son-in-law and daughter of the appellant, made an offer to purchase a residential property situated at Erf 150003, 8 Selwyn Road, Kenilworth Upper, in the City of Cape Town, Cape Division, Province of the Western Cape (the property) from the first respondent (the seller), the executrix of the estates of her late parents. The second respondent is a firm of attorneys who acted on behalf of the seller and were also appointed as the conveyancer for the transfer of the property (DM Inc). [3] The Offer to Purchase (OTP)1 was accepted by the seller on 4 February 2020. The purchase price of the property was R5 150 000 and a deposit of R200 000 was required by 10 February 2020. In terms of clause 7 of the OTP, the sale was subject to the approval, in writing, by a financial institution, on its usual terms and conditions, of a mortgage bond in an amount R4 950 000 against security of the property. Clause 7.2 provided that: ‘Confirmation of approval in writing is to be given by no later than 14/02/2020 whereupon this suspensive condition shall be deemed to have been fulfilled, failing which the aforesaid date shall be extended for a further thirty (30) days with the written consent of the Seller….’ 1 The OTP was also referred to as the agreement by the parties. 5 [4] The deposit was timeously paid on 10 February 2020. On 11 February 2020, prior to the date set out in paragraph 7.2 of the OTP, the seller and the purchasers entered into an Addendum to the OTP in terms of which it was agreed that the date provided in clause 7.2, for the approval of the mortgage loan, would be extended until 19 February 2020 (the first addendum). This addendum also reflected the parties’ agreement that all other terms and conditions of the OTP remained in full force and effect. [5] As the purchasers were having problems in obtaining finance, the appellant agreed that she would provide them with the funds necessary to enable them to acquire the property. As the appellant needed time to obtain the funds, she requested the third respondent to address a letter to DM Inc stating that time was needed to have the funds released. DM Inc advised that the seller required a bank guarantee, alternatively, the funds had to be paid into DM Inc’s trust account by 19 February 2020. Despite valiant attempts to get the guarantee and/or the funds provided on time, they were not provided by midnight on 19 February 2020. It is common cause that the OTP, as amended by the first addendum, accordingly lapsed. [6] On 20 February 2020, the appellant requested a further extension to provide the funds. The seller agreed that a second addendum to the OTP could be concluded (the second addendum). DM Inc advised that the ‘sale would have to be revived by means of a formal, written addendum’. That was the basis of the conclusion of the second addendum, which was signed on 20 February 2020. In terms thereof, inter alia, the provisions in respect of the bond approval was amended and the provision of the bank guarantee for the cash portion of the purchase price, had to be provided by 09h00 on 25 February 2020. [7] The second addendum provided as follows: 6 ‘WHEREAS the Seller and the Purchaser entered into the OTP dated 4 February 2020, for the purchase of Erf 150003 Kenilworth. Transfer is Intended to take place on or about 30 April 2020. AND WHEREAS in terms of clause 7 of the OTP, the purchaser must have bond approval in writing in the sum of R4 950 000.00 (Four Million Nine Hundred and Fifty Thousand Rand) by close of business on 14 February 2020, which date was extended in writing by the seller to close of business, 19 February 2020. AND WHEREAS the Purchaser has requested the above to be amended to: 1. Bond approval in writing from a by a financial institution in the sum of R1 500 000.00 (One Million Five Hundred Thousand Rand) over the property being purchased, being erf 15003(sic); 2. Bond approval in writing from a financial institution in the sum of R1 500 000.00 (One Million Five Hundred Thousand Rand) over erf 95812, namely 112 Bultenkant Street, Gardens, being property that the purchasers currently own, to be registered simultaneously with this transfer and a bank guarantee to be issued on request by Dingley Marshall Inc for the full sum of the bond; and 3. A bank guarantee for the cash portion of the purchase price, being R1 950 000.00 (One Million Nine Hundred and Fifty Thousand Rand) to be issued and supplied to Dingley Marshall Inc by 9am on Tuesday, 25 February 2020. NOW THEREFORE the Seller and the Purchasers have agreed to the above, failing which the OTP and the Addendum will expire and be of no further force or effect. Aside from the above amendments to the OTP, the Seller and Purchaser confirm and agree that all other terms and conditions of the Agreement are to remain the same.’ [8] The requisite bond approvals were obtained. The appellant, instead of providing a bank guarantee, made payment of the sum of R1 950 000 into DM Inc’s trust account on 21 February 2020. The seller was requested to ‘desist from marketing the property as all the suspensive conditions of sale have been fulfilled’. Problems arose in May 2020, when the purchasers, facing financial problems as a result of the COVID-19 pandemic, found themselves unable to meet their financial obligations and thus sought to cancel the agreement. They 7 requested Standard Bank, which had approved the mortgage loan, to withdraw such approval. [9] The appellant, having taken cession of the purchasers’ claim, sought to recover the amount she had paid to the seller. She sought legal advice. The advice was that there was no valid agreement, as it had lapsed on failure of the suspensive condition, contained in the first addendum on 19 February 2020; and that it was not revived by the second addendum. She thus demanded repayment of the amount of R1 950 000. The seller did not accept that the OTP had lapsed and elected to uphold the contract and demand specific performance of its terms. DM Inc, acting on behalf of the seller, was of the view that the second addendum ‘records their joint intention in crystal clear terms; the sale of the property was to proceed, save that amended financing arrangements were stipulated with express reference to paragraph 7 of the OTP’. It was contended by the seller that the suspensive conditions in the second addendum had been fulfilled, as instead of providing a bank guarantee for the balance, the purchasers had timeously provided even better security for the balance: R1 950 000 by way of cash transfer, and the bond approvals had been received on 24 February 2020. [10] On 24 June 2020, DM Inc demanded that the purchasers remedy their breach of the agreement. The breach relied upon was the purchasers’ conduct in procuring the withdrawal of the Standard Bank bond and their intention not to proceed with the sale. On 8 July 2020, DM Inc, acting on behalf of the seller, purported to cancel the OTP as amended, on the basis that the purchasers had failed and/or refused to remedy the breach of the agreement as demanded. [11] On 31 July 2020, the appellant applied to the high court for the following relief: 1. ‘Declaring that: 8 1.1 The Offer to Purchase which was concluded on or about 4 February 2020 between the First Respondent as seller, and the Third and Fourth Respondents as purchasers, in respect of Erf 150003 Kenilworth Upper, Cape Town (“the Offer to Purchase”) was subject to a suspensive condition, namely the written approval of a mortgage loan (“the Suspensive Condition”) – which had to be fulfilled by 14 February 2020; 1.2 The time for the fulfilment of the Suspensive Condition was validly extended to 19 February 2020 by the Addendum to the Offer to Purchase dated 11 February 2020; 1.3 The mortgage loan contemplated by the Suspensive Condition was not provided by 19 February 2020 with the result that the Offer to Purchase failed; 1.4 The Addendum to Agreement of Sale which was concluded on 20 February 2020 did not revive the Offer to Purchase and the purported extension of the period of time for the fulfilment of the Offer to Purchase was invalid; 1.5 The Offer to Purchase is null and void ab initio and the Applicant is entitled to the repayment of the monies which she paid to the First and Second Respondents in furtherance of the transaction contemplated by the Offer to Purchase. 2. Directing the First and/or Second Respondents to: 2.1 Repay to the Applicant the amount of R1,950,000.00 which she had paid to them on behalf of the Third and Fourth Respondents in respect of the purchase price of the Property; 2.2 Pay to the Applicant any and all interest which has accrued on the said R1,950,000.00. 3. Directing the First Respondent and any other person who opposes this application to pay costs jointly and severally, the one paying the others to be absolved, on a scale as between attorney and client. . .’ [12] The issue before the high court was whether the further agreement revived or reinstated the OTP which had lapsed on 19 February 2020 as a result of the suspensive condition not being fulfilled. This involved a decision on: (a) whether the parties had intended to conclude a fresh agreement when they signed the second addendum; 9 (b) whether the second addendum complied with the Alienation of the Land Act 68 of 1981 (the Act); (c) whether the second addendum could be read as incorporating all the terms of the OTP, including the purchase price; and (d) whether a valid contract could arise if all the terms of the OTP were incorporated. [13] The high court found that the parties had intended to revive the agreement and that the second addendum had that effect. It held that the second addendum amounted to a ‘fresh agreement’ incorporating the terms of the OTP, as amended by the first addendum. Leave to appeal was granted to a full court of the high court (the full court), which dismissed the appeal on 24 January 2023. [14] The full court’s dismissal of the appeal was based on different grounds to those relied upon by the high court, in upholding the agreement. The full court found that a new agreement was not concluded, but that in terms of clause 7.2, the offer was validly extended for the 30-day period contained in the clause. The first extension was in terms of the first addendum. The second addendum was concluded within the 30-day period and amounted to a further extension of the date for the fulfilment of the suspensive condition. The agreement was thus valid. This point was not part of the seller’s case neither in the high court, nor the full court. It appears that the full court raised the issue of the 30-day extension mero motu (of its own accord) and the seller now relies upon it for the first time in this Court.2 This course of action is not permitted.3 Special leave to appeal was granted by this Court. 2 The first and second respondents did not pursue this aspect with enthusiasm, accepting that such course of action would be contrary to legal principles established in the cases referred to hereunder. 3 Fischer and Another v Ramahlele and Others [2014] ZASCA 88; 2014 (4) SA 614 (SCA); [2014] 3 All SA 395 para 13, in which it was held: ‘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 10 [15] The seller contends that it is clear from the correspondence exchanged on 19 February 2020, that the parties knew that the suspensive condition would lapse that day. This is why the appellant desperately tried to procure the funds or a guarantee before midnight. Although the appellant stated in her affidavits that she was unaware that the sale had lapsed, it seems clear that she was aware of that fact. She was perhaps not fully aware of the consequences thereof. It is trite that, upon the failure of a suspensive condition, the contract lapses and is of no force or effect.4 What happens thereafter is the issue with which this Court is concerned. [16] It is common cause that the appellant requested an extension for the payment of the outstanding amount on 20 February 2020. This led to the signing of the second addendum, which the seller contends demonstrated both parties’ intention to revive the OTP. Although the document refers to an amendment to clause 7.2, the seller submits that the second addendum had the effect of either reviving the OTP; alternatively, it amounted to a new agreement which complied with the formalities of the Act, by incorporating and ‘reviving’ the terms of the OTP. The submission was that the second addendum clearly shows that the parties intended to continue with the sale; it contains an amended date for the suspensive condition to be fulfilled; and with the incorporation of the OTP, and by reference thereto, it complies with the formalities of the Act.5 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 “it is impermissible for a party to rely on a constitutional complaint that was not pleaded”.’ This dictum was confirmed by the Constitutional Court on several occasions. See South African Police Service v Solidarity Obo Barnard [2014] ZACC 23; 2014 (6) SA 123 (CC); [2014] 11 BLLR 1025 (CC); 2014 (10) BCLR 1195 (CC); (2014) 35 ILJ 2981 (CC) paras 210, 220 and 233. See also Molusi and Others v Voges NO and Others [2016] ZACC 6; 2016 (3) SA 370 (CC); 2016 (7) BCLR 839 (CC) para 28. 4 Fairoaks Investment Holdings (Pty) Ltd and Another v Oliver and Others [2008] ZASCA 41; [2008] 3 All SA 365 (SCA); 2008 (4) SA 302 (SCA) (Fairoaks); Pangbourne Properties Ltd v Basinview Properties (Pty) Ltd [2011] ZASCA 20 (Pangbourne); see also Command Protection Services (Gauteng) (Pty) Ltd t/a Maxi Security v SA Post Office Ltd [2012] ZASCA 160; [2013] 1 All SA 266 (SCA); 2013 (2) SA 133 (SCA) (Command Protection Services) para 21. 5 Section 2(1) of the Alienation of Land Act 68 of 1981 requires the whole contract of sale – its material terms – to be reduced to writing signed by or on behalf of the parties. The material terms include the description of the parties to the sale agreement, the purchase price, and the description of the property being transferred. See Tamryn 11 [17] The appellant contends that the second addendum did not revive the OTP, nor was it a fresh agreement. After the OTP lapsed on 19 February 2020, there was no longer any agreement to revive. She points to the wording of the second addendum that ‘all other terms and conditions of the Agreement are to remain the same’ and submits that that the word ‘Agreement’ refers to the second addendum itself, as opposed to the OTP. The seller, on the other hand, submits that the intention of the parties to continue with the sale is clear from the wording of the second addendum. [18] The interpretation contended for by the appellant on the meaning of the ‘Agreement’, would, in my view lead to an absurd result, and it would not reflect the actual intention of the parties.6 In interpreting the second addendum, it is apposite to have regard to the oft-cited case of Natal Joint Municipal Pension Fund v Endumeni Municipality (Endumeni), where Wallis JA stated the following: ‘The trial judge said that the general rule is that the words used in a statute are to be given their ordinary grammatical meaning unless they lead to absurdity. He referred to authorities that stress the importance of context in the process of interpretation and concluded that: “A court must interpret the words in issue according to their ordinary meaning in the context of the regulations as a whole, as well as background material, which reveals the purpose of the Regulation, in order to arrive at the true intention of the draftsman of the rules.” . . . . . .where the context makes it plain that adhering to the meaning suggested by apparently plain language would lead to glaring absurdity, the court will ascribe a meaning to the language that avoids the absurdity. This is said to involve a departure from the plain meaning of the words used. More accurately it is either a restriction or extension of the language used by the adoption of a narrow or broad meaning of the words, the selection of a less immediately apparent Manor v Stand 1192 Johannesburg (785/2015) [2016] ZASCA 147 (30 September 2016); see also Cooper N O and Another v Curro Heights Properties (Pty) Ltd [2023] ZASCA 66; 2023 (5) SA 402 (SCA). 6 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) (Endumeni); see also AmaBhungane Centre for Investigative Journalism NPC v President of the Republic of South Africa [2022] ZACC 31; 2023 (2) SA 1 (CC); 2023 (5) BCLR 499 (CC) para 36. 12 meaning or sometimes the correction of an apparent error in the language in order to avoid the identified absurdity.’7 (Footnotes omitted.) [19] Relying on Endumeni, the interpretation suggested by the appellant would clearly lead to an absurdity. The Court is thus obliged to ascribe a meaning to the language that avoids the absurdity. It becomes clear, in such circumstance that the word ‘Agreement’ in the addendum can only be a reference to the OTP. This interpretation would also be in line with establishing the true intention of the parties. [20] The appellant relies upon various authorities where the failure of a suspensive condition led to the contract lapsing and not being revived by a subsequent agreement or addendum. In Pangbourne Properties Ltd v Basinview Properties (Pty) Ltd,8 the suspensive condition provided for the approval by Pangbourne’s board of directors by a certain date. The condition was not fulfilled and the contract lapsed. Thereafter, the parties concluded an addendum, which dealt with an ancillary, non-material term of the contract – that the management of the project would be conducted by a different entity to that contained in the original contract. The high court found that although the agreement had lapsed, it had been ‘revived’ in the addendum. It held that this was the implication of a written addendum to the agreement concluded after the date for fulfilment of a suspensive condition had occurred. This Court, however, found that: ‘…Accordingly, the factual matrix indicates that the addendum was just that: an alteration in one minor respect of what was assumed to be a valid contract. And that is confirmed by the words at the end that state that the agreement remained of full force and effect. The high court was thus wrong in finding that the addendum “revived” the agreement for the sale of the property by Basinview to Pangbourne, with tacit terms read in as to the dates of 7 Endumeni para 17 and 25. 8 Pangbourne Properties Ltd v Basinview Properties (Pty) Ltd (381/10) [2011] ZASCA 20 (17 March 2011). 13 signature, and dates for the fulfilment of the conditions. And Basinview’s argument that it actually constituted a new agreement on the same terms (more or less) likewise is untenable.’9 [21] The appellant also relied upon Abrinah 7804 (Pty) Ltd v Kapa Koni Investments CC (Abrinah).10 The issue in Abrinah was whether, after an agreement had lapsed due to the failure of a suspensive condition, the party for whose benefit the condition had been inserted, could waive compliance therewith after the contract had lapsed. In other words, could such ex post facto waiver revive the agreement? [22] The court in Abrinah found that the issue had been subject to some conflicting judgments.11 It went on to state: ‘In Mekwa Nominees v Roberts it was however held, with reference to Phillips v Townsend and Meyer v Barnardo, that a contract that had lapsed due to the non-fulfilment of a suspensive condition could not be revived by waiving the suspensive condition at that stage. This controversy was effectively settled in Trans-Natal Steenkoolkorporasie Beperk v Lombaard en ‘n Ander, where the Phillips and Mekwa judgments, as well as the judgment to the same effect in Meyer v Barnardo, were approved. . . . Thereafter the appellant, just like the respondent, and for the same reasons, would not have been able to waive any right that it may earlier have had in respect of the contract. “The condition…was clearly a condition inserted for the benefit of the purchaser. When it was not fulfilled the agreement lapsed. The lapsing of the agreement could not possibly have given rise to a right on the part of the seller which could unilaterally be waived by the seller, thereby resurrecting the agreement, …” “An agreement subject to a suspensive condition automatically falls away if the condition is not fulfilled by the date fixed by the parties for its fulfilment (Meyer v Barnardo and Another). It follows, therefore, that nothing which is done after the date fixed for the fulfilment of the 9 Ibid para 23 and 24. 10 Abrinah 7804 (Pty) Ltd v Kapa Koni Investments CC [2017] ZANCHC 63; 2018 (3) SA 108 (NCK) para 66 (Abrinah). 11 Wacks v Goldman 1965 (4) SA 386 W; Mekwa Nominees v Roberts 1985 (2) SA 498 (W); Phillips v Townsend 1983 (3) SA 403 (C) and Meyer v Barnardo and Another 1984 (2) SA 580 (N). 14 condition can affect the position. If the condition is held to have been fulfilled by the relevant date, the contract is good and enforceable; if not, there is no binding contract between the parties thereto. No question of fictional fulfilment can therefore arise by reason of the conduct of one of the parties to a contract after the date fixed for the fulfilment of the condition.”.’12 (Footnotes omitted.) (Original emphasis.) [23] Similarly, in Cronje v Tuckers Land and Development Cooperation (Pty) Limited (Cronje),13 the question was whether a subsequent agreement to revive an agreement that was subject to a suspensive condition after the suspensive condition had failed, could have any validity. The court held that: ‘Here, however, the defendant is confronted by this difficulty: A revival of the whole of the written agreement, including the reference to 24 months (from the date of signature of the original contract), would again bring the condition in clause 4 into effect and cause the termination (or self-destruction) of the agreement immediately on revival. This could obviously not have been, or ever be, intended by the parties seeking to “revive” the written agreement. Thus, the parties to a written agreement containing a clause such as clause 4 of the agreement in this case, who seek to revive the lapsed agreement, will, in addition to agreeing to revive the agreement, also have to eliminate the operation of such clause in the “revived” agreement . . . [T]he parties would agree to revive their agreement without the condition in clause 4 in its original form. If a new date for the coming into operation of the condition were to be orally agreed upon at the time of the “revival” this could presumably amount to an attempted revival and simultaneous variation of a material term of the old written agreement – which attempt would be ineffective because of the provisions of s 1 (1) of Act 71 of 1969. Even if the parties agreed to “revive” the old written agreement with exception of the whole of clause 4, the simplicity of the situation in Neethling v Klopper (supra) no longer pertains: it is no longer a question simply whether the original agreement (at least as to its material terms) has again become effective or not; it becomes necessary to look at the consensus of the reviving agreement to determine which clause or clauses of the original agreement would not be revived.’ 12 Abrinah paras 35-37 and 47; see also Trans- Natal Steenkoolkorporasie Bpk v Lombaard en 'n Ander 1988 (3) SA 625 (A). 13 Cronje v Tuckers Land and Development Corporation (Pty) Ltd 1981 (1) SA 256 (W) at 259G-260. 15 [24] In McPherson v Khanyise Capital (Pty) Ltd,14 the court analysed the various authorities and concluded as follows: ‘In this respect the respondents’ case falls foul of the doctrine enunciated by the Coetzee J in Mekwa Nominees v Roberts. In that case Coetzee J enunciated the proposition that, after a contract has lapsed by reason of the failure of a suspensive condition, it is too late for the parties to revive their agreement by waiving the suspensive condition, even if they have the power to waive the suspensive condition under their agreement. . . Mekwa Nominees, insofar as it followed the reasoning of Phillips v Townsend, departed from a line of previous Transvaal cases, starting with Wacks v Goldman, 1965 (4) SA 386 (W) which held to the contrary. Fortunately for us the controversy has since been laid to rest by the judgment of Van Heerden JA in the Appellate Division in Trans-Natal Steenkoolkorperasie Beperk v Lombaard en ʼn Ander, 1988 (3) SA 625 (A) 640, in which the learned Judge held; “ʼn Analogiese posisie geld indien ʼn kontrak onderhewig gestel word aan ʼn opskortende voorwaarde dat iets voor of op ʼn bepaalde datum moet plaasvind; soos bv dat die koper ʼn lening moet bekom. In ʼn aantal Transvaalse gewysdes is die houding ingeneem dat indien so ʼn bepaling ten gunste van slegs een party verlei is, hy ook na die sperdatum van die voordeel daarvan afstand kan doen. In die tagtiger jare is egter in drie uitsprake bevind dat ʼn latere afstand doening nie tot herlewing van die kontrak kan lei nie; Phillips v Townsend, 1983 (3) SA 403 (K); Meyer v Barnardo and Another, 1984 (2) SA 518 (N); Mekwa Nominees v Roberts, 1985 (2) SA 498 (W). Ek hoef slegs te sê dat ek ten volle saamstem met die gevolgtrekkings wat in hierdie drie sake bereik is.”.’15 [25] The court, in McPherson, summarised the position as follows: ‘A suspensive condition cannot be waived or extended after the time for fulfilment of the condition has passed. 14 McPherson v Khanyise Capital (Pty) Ltd [2009] ZAGPHC 57 (McPherson) paras 21-23. 15 Translation: ‘An analogous position applies if a contract is made subject to a suspensive condition that something must take place on or before a specified date, e.g. that the purchaser must obtain a loan. In a number of Transvaal cases, the attitude was taken that if such a provision was included in favour of only one party, he could also waive its benefit after the deadline. In the eighties, however, it was found in three judgments that a later waiver could not lead to revival of the contract…I fully agree with the conclusion arrived at in these cases.’ 16 An agreement that has “lapsed” by virtue of the non-fulfilment of a suspensive condition or the failure of a resolutive condition cannot be “revived”. It is necessary for the parties to enter into an entirely new agreement. The new agreement can of course be on the same terms and conditions as the old. If the new agreement is concluded on the same terms and conditions as the old, but the suspensive conditions are not excised, or extended, the new agreement “self-destructs”. This is because the agreement is by its terms subject to a suspensive condition that has failed.’16 (Emphasis added.) [26] In McPherson, as opposed to this case, the attempted revival of the contract was not in writing signed by both of the parties. It thus failed to comply with the formalities of the Act. Secondly, the language in the correspondence relied upon, for the revival, did not denote an intention to ‘revive’ the old agreement by the conclusion of a new agreement on the same terms and conditions. Thirdly, even if the agreement were somehow revived, it would immediately self-destruct because there the date for the fulfilment of the condition was not extended.17 [27] The intention of the parties in similar situations to the present case, was considered in Neethling v Klopper en Andere (Neethling).18 The facts and conclusions in Neethling, were analysed by Streicher JA in Fairoaks where he stated: ‘Steyn CJ concluded [in Neethling] that for these reasons the revival of a cancelled contract in respect of land by waiver of the rights arising from the cancellation of the contract need not comply with the formalities prescribed in respect of agreements for the sale of land. Referring to this passage in the judgment counsel for the appellant submitted that this court decided that whenever parties agree to the revival of a contract of sale of land by way of a withdrawal of a cancellation of the contract, compliance with the formalities is not required. 16 McPherson para 28. 17 McPherson para 28. 18 Neethling v Klopper en Andere 1967 (4) SA 459 (A). 17 I do not think that Steyn CJ's concluding words were intended to be read in isolation. It is in my view clear from his reasoning that in order to determine whether an agreement should comply with the prescribed formalities one has to determine what the intention of the parties was. In that case there was a valid cancellation (so he assumed). But, the validity of the cancellation was disputed by Klopper. There was, therefore, a dispute as to whether the contract had been validly cancelled and that dispute was settled on the basis that Neethling would waive his claim to have validly cancelled the contract. In those circumstances he found that there was no intention to enter into a new contract of purchase and sale. It does not follow that an agreed waiver of a cancellation of an agreement of sale would not constitute a new agreement of sale where the parties were agreed that the contract had been validly cancelled. In each case the true nature of the transaction will have to be investigated in order to determine whether it constitutes an agreement of purchase and sale. If the intention was to buy and sell ie to enter into a new contract on the same terms as the cancelled contract, the agreement will have to comply with the prescribed formalities even though the mechanism employed to give effect to that intention was the withdrawal of the cancellation. . . . Not only is it alleged that the parties by way of the letters B1 and C1 “agreed in writing . . . to revive the lapsed agreement of sale” it is alleged that it was an express term of the revived agreement that clause 13.2 thereof be amended to the effect that compliance therewith was to occur upon or before transfer of the property. The amendment is material as the time allowed in clause 13.2 for the fulfilment of the condition was inserted in order to create certainty as to the fate of the contract and affected both parties. The contract which had lapsed because of the non-fulfilment of the condition had become, as a result of the amendment, subject to a new material condition, the time for fulfilment of which had not been stipulated. It follows that the parties by agreeing to revive the lapsed agreement with amendments, entered into an agreement to buy and sell on terms different from the terms previously agreed to. Such an agreement has to comply with the provisions of s 2(1) of the Act.’19 [28] The appellant’s reliance on Pangbourne, Abrinah, McPherson, Cronje and Fairoaks is flawed because those authorities are distinguishable. Firstly, they dealt with different issues, namely: in Abrinah, whether a condition could be 19 Fairoaks para 18-19 and 21. 18 waived after the contract had lapsed; secondly, in McPherson and Cronje, whether a contract which the parties sought to revive, would self-destruct as the date for fulfilment of the suspensive condition was not amended, and had already passed; and thirdly, in Fairoaks, whether the ‘revived’ agreement required compliance with the formalities of the Act. All three of these issues are adequately dealt with in the present case. [29] In contrast to the position in Fairoaks, the second addendum, by incorporating the terms of the OTP, complied with the formalities required by the Act. And, contrary to the other authorities relied upon by the appellant, the imputed clause (which would self-destruct, without an amendment), was expressly amended to provide for a later date for fulfilment. The second addendum and the revival of the sale do not fall foul of the Act. The purpose of the Act is to avoid uncertainty and disputes. The essential terms and conditions on which the parties agreed to sell the property (including the purchase price) are clearly ascertainable from the second addendum read together with the OTP, to which it expressly refers. The seller contends further that the parties’ subsequent conduct affirms the fact that it was at all times their intention to revive the sale and to procure the transfer of the property. [30] The facts in present case are similar to those in Benkenstein v Neisius and Others,20 where the court dealt with a situation where, as in the present case, the addendum clearly provided for a new date for the fulfilment of a suspensive condition. Thus, in contrast to Abrinah and Pangbourne, there was no question of the addendum self-destructing due to the date of the suspensive condition not being extended.21 The court thus found that ‘the consensus of the parties was complete’.22 20 Benkenstein v Neisius and others 1997 (4) SA 835 C. 21 Ibid at 842I-J. 22 Ibid at 847F-G. 19 [31] The position was also explained by Nicholas J in DS Enterprises (Pty) Ltd v Northcliff Townships (Pty) Ltd,23 where, in referring to Neethling, it was held that the conduct of the parties ‘makes it clear that all the parties intended to do was continue with their written contract of sale’.24 In Fairoaks, Streicher JA stated that: ‘…In each case the true nature of the transaction will have to be investigated in order to determine whether it constitutes an agreement of purchase and sale. If the intention was to buy and sell ie to enter into a new contract on the same terms as the cancelled contract, the agreement will have to comply with the prescribed formalities even though the mechanism employed to give effect to that intention was the withdrawal of the cancellation.’25 [32] In this matter, at the time that the second addendum was concluded, there was no dispute between the parties as to their intention. The second addendum expresses clearly the parties’ intention to continue with the sale of the property. The preamble of the second addendum expressly records the parties’ shared intention that ‘transfer [of the property] is intended to take place on or about 30 April 2020’. [33] This intention is borne out by various instances. The Standard Bank bond was already in place from 14 February 2020, days before the second addendum was concluded. The appellant’s reasoning that the approval of the Standard Bank bond ‘fell away’ because it was provided prior to conclusion of the second addendum, is ill-conceived. Standard Bank, in fact, issued a guarantee of payment on or about 5 March 2020 pursuant to the bond approval. They would obviously not have done so if the bond had ‘fallen away’. 23 DS Enterprises (Pty) Ltd v Northcliff Townships (Pty) Ltd 1972 (4) SA 22 (W). 24 Ibid at 28E-F. 25 Fairoaks para 19. 20 [34] The FNB bond was a further advance under an already existing bond over the purchasers’ Buitenkant Street property. That bond approval was timeously provided and the guarantee was also issued on the strength thereof. In addition, the appellant timeously deposited the balance of the purchase price into the DM Inc’s trust account. Thus, both parties were aware and accepted that the suspensive conditions had been fulfilled and their intention was that the second addendum revived and incorporated the terms of the lapsed OTP. [35] Subsequent to the signing of the second addendum, the appellant made payment of R1 950 000; she indicated to the seller that she should ‘desist from marketing the property’ as all the suspensive conditions had been fulfilled; bond attorneys were appointed to attend to the registration of the purchasers’ two bonds; Standard Bank issued their guarantee under their approved bond, to secure payment of R1 500 000 of the purchase price; First National Bank issued their guarantee under their approved bond, to secure payment of R1 500 000 of the purchase price; the parties signed the transfer documents, which included the purchasers’ signing powers of attorney to authorise the conveyancer to effect transfer; rates clearance and other certificates were applied for in respect of the property; the parties concluded a separate agreement in terms of which the purchasers purchased furniture and other items situated in the home on the property from the seller; on multiple occasions the purchasers requested early occupation of the property; even after the declaration of the state of disaster, as a result of the COVID-19 pandemic, the transfer process continued with regular updates and correspondence between the parties and the conveyancer; and, on 12 May 2020, the parties agreed that the purchasers could take occupation of the property during the first week of June. On 21 May 2020, when the purchasers sought to cancel the sale, the appellant did not contend that the sale had ‘failed’, as she did in her founding papers. The reason she gave then was the purchasers’ changed financial circumstances. 21 [36] Although the subsequent conduct of the parties would not assist if the second addendum did not revive the sale, and/or if the formalities in terms of the Act were not complied with, the purchasers’ conduct goes towards demonstrating the intention at the time of signing the addendum. Such intention is manifest from the state of mind of the parties, before and after the signing of the second addendum. [37] The seller submits, correctly, in my view that ‘the Court, with respect, need not be “too astute” to label the conduct of the parties as being to “revive” or “reinstate” the sale agreement, or even whether the parties concluded an entirely fresh agreement of sale. What is abundantly clear from the second addendum is the parties’ intention to procure the sale and transfer of the property.’ Such intention is borne out by the signing of the second addendum, which passes muster in relation to each element required to render the addendum, incorporating the OTP, as valid and compliant with the Act. [38] Accordingly, I am of the view that the agreement of sale, embodied in the OTP, was validly revived by the second addendum and the appeal must therefore fail, but on different grounds to that of the full court. [39] Accordingly, I would make the following order: The appeal is dismissed with costs. _______________________ S E WEINER JUDGE OF APPEAL 22 Schippers JA (Kgoele JA and Baartman AJA concurring) [40] I have had the advantage of reading the judgment of my colleague, Weiner JA (the first judgment). I gratefully adopt her setting out of the factual background to the appeal, the litigation history, and the abbreviations used. [41] I agree that the issue raised by the full court of its own accord, namely that the OTP does not contain an express nor implied term that the seller can extend the date for compliance with clause 7.2 of the OTP only once, is impermissible, for the reasons stated in the first judgment. I would merely add that there is no evidence that the parties, when concluding the second addendum, considered that the right to extend the expiry date in clause 7.2, was being exercised for a second time. On the contrary, the first respondent states that she thought that the OTP had lapsed. [42] The first judgment states that the appellant’s contention that the second addendum did not revive the OTP and that it was not a fresh agreement would lead to an absurd result, and would not reflect the actual intention of the parties. The first judgment concludes that ‘the agreement of sale, embodied in the OTP, was validly revived by the second addendum and the appeal must therefore fail’. With respect, I am unable to agree with the first judgment in the result or in principle. [43] There is a long line of authority which establishes the principle that a suspensive condition in a contract suspends in whole or in part, the operation of the obligations flowing from the contract, pending the occurrence or non-occurrence of a specific uncertain future event. If the condition is fulfilled, the 23 obligations under the contract become enforceable. If the condition is not fulfilled, the contract becomes unenforceable.26 [44] It is common ground that the contract for the sale of the property lapsed due to the non-fulfilment of a suspensive condition in clause 7.2 of the OTP, namely that the purchasers were required by 19 February 2020, to provide written approval of a mortgage bond in the sum of R4 950 000, by a financial institution (the suspensive condition). Consequently, the sole issue in this appeal is whether the second addendum could revive or reinstate the OTP, which had lapsed on 19 February 2020. [45] The second addendum, entitled, ‘ADDENDUM TO AGREEMENT OF SALE’, and concluded on 20 February 2020 after the non-fulfilment of the suspensive condition, is quoted in paragraph 7 above. It records the following. The seller and the purchasers concluded the OTP on 4 February 2020. Transfer should take place on 30 April 2020. Clause 7 of the OTP required the purchasers to have bond approval in the sum of R4 950 000 by 14 February 2020, which was extended by the seller to 19 February 2020. The addendum further records that the purchasers requested an amendment (to the OTP) that written approval be obtained from a financial institution, for the registration of two mortgage bonds in the sum of R1 500 000 each, over (a) the property, and (b) the property currently owned by the purchasers; and that they should provide a bank guarantee in the sum of R1 950 000 to DM Inc, by 25 February 2020, for the cash portion of the purchase price. [46] The second addendum then states that the seller and purchasers have agreed to the above amendments, ‘failing which the OTP and Addendum will expire and 26 Command Protection Services fn 4 para 10; Swart v Starbuck and Others [2017] ZACC 23; 2017 (10) BCLR 1325; 2017 (5) SA 370 (CC) (Swart) para 6; G B Bradfield R H Christie’s Law of Contract 8 ed (2022) at 183. 24 be of no further force or effect’; and that ‘[a]side from the above amendments to the OTP, the Seller and Purchaser confirm and agree that all other terms and conditions of the Agreement are to remain the same’. [47] The appellant submits that the second addendum makes it clear that the parties were oblivious to the fact that a whole new contract was required. They were under the erroneous impression that they could simply extend the time period within which the suspensive condition had to be fulfilled. This, the appellant says, could not be done. [48] The appellant contends that even if it were possible to read the Agreement as a reference to the OTP, this would cause both agreements to self-destruct on account of clause 19 of the OTP, which, in relevant part, provides: ‘19. EXPIRY The first signature to this Agreement shall constitute an irrevocable offer, which may not be withdrawn prior to presentation to the Seller of the Purchaser, whichever the case may be, and which thereafter shall remain available for acceptance until 15h00 on 04/02/2020 whereafter it shall lapse and be of no further force or effect. [49] The respondents submit that the purpose of the second addendum was simply to record the different funding arrangements preferred by the purchasers; to provide a deadline of 9 am on 25 February 2024 for the provision of a bank guarantee, and ‘to revive the sale’. They contend that the parties’ intention to revive the sale is apparent from the wording of the second addendum. It states, inter alia, that transfer was to take place on 30 April 2020; that the sale will remain in force and effect but would expire if the bank guarantee is not timeously provided; and that ‘all other terms and conditions of the Agreement are to remain the same’. This, so it is submitted, shows that the parties intended the second addendum to have the effect of implementing the sale of the property, which is ‘nothing more than the revival or reinstatement of the sale’. 25 [50] That the parties intended to ‘revive’ the OTP is clear from the evidence. The wording of that document makes it clear that the parties intended to ‘amend’ the OTP. Indeed, the second addendum records that it is an ‘addendum’ to a sale agreement. It purports to amend clause 7 of the OTP by replacing the suspensive condition and extending the period for payment of the purchase price to 25 February 2020, ‘failing which the OTP and the Addendum will expire and be of no further force or effect’. And the second addendum states that the parties agree that all other terms and conditions of the ‘Agreement’ (apparently an error, the parties intended to refer to the OTP) would remain the same. [51] The appellant is thus correct that the respondents laboured under the erroneous impression that they could simply extend the time fixed for the fulfilment of the suspensive condition, and did not appreciate that a new contract had to be concluded. This is reinforced by the context in which the addendum was concluded and its purpose. The seller, in her affidavit, states that the second addendum is not ‘intended to be read on its own’; that ‘it incorporates the sale agreement [the OTP]’; that ‘[her] intention in signing the second addendum was to revive and keep the property sale transaction “alive”, by providing additional time for the purchasers to furnish the guarantee for the balance of the purchase price’; and that the intention of the parties was to proceed with the sale ‘on the terms set out in the sale agreement as amended by the second addendum’. [52] However, the purported revival of the OTP and extension of the time fixed for the fulfilment of the suspensive condition, after the expiry date for its fulfilment, is legally incompetent. The OTP lapsed on 19 February 2020 by the operation of law, and with it, the suspensive condition. Indeed, this is conceded in the respondents’ written submissions, which state that ‘in terms of the first addendum, the ‘sale lapsed . . . because the deadline had come and gone’. 26 [53] Consequently, there was nothing to revive, and the OTP and all its terms became unenforceable.27 In Fairoaks,28 Streicher JA summarised the position as follows: ‘The condition . . . was clearly a condition inserted for the benefit of the purchaser. When it was not fulfilled the agreement lapsed. The lapsing of the agreement could not possibly have given rise to a right on the part of the seller which could unilaterally be waived by the seller, thereby resurrecting the agreement . . .’ [54] This principle was applied in Pangbourne.29 It has consistently been followed by this Court, and affirmed by the Constitutional Court.30 That a contract which has lapsed due to non-fulfilment of a suspensive condition cannot be revived, because there is no right that can be waived, was settled in Trans-Natal Steenkoolkorporasie.31 Van Heerden JA said: ‘An analogous position applies if a contract is rendered subject to a suspensive condition that something must occur on or before a specific date; as for example, that the buyer must obtain a loan. In a number of Transvaal cases the approach has been adopted that if such a provision is introduced in favour of only one party, he can also after the expiry date, waive the benefit. In the 80s, however, it was held in three cases that a subsequent waiver cannot result in the revival of the contract: Phillips v Townsend 1983 (3) SA 403 (K); Meyer v Barnardo and Another 1984 (2) SA 580 (N); and Mekwa Nominees v Roberts 1985 (2) SA 498 (W). I need to say only that I fully agree with the conclusions reached in these three cases.’32 (own translation.) [55] The full court erred in disregarding this principle, despite referring to Fairoaks. It held that the appellant, by signing the second addendum, gave expression to the intention of the parties, substantially on the same terms and 27 Trans-Natal Steenkoolkorporasie Bpk fn 12; Fairoaks fn 4 para 22; Pangbourne fn 4 para 6; Command Protection Services fn 4 para 10; Swart fn 26 para 6. 28 Fairoaks fn 4 para 22. 29 Pangbourne fn 4 paras 6 and 24. 30 See the authorities cited in fn 4. 31 1988 (3) SA 625 (A) at 640B-C. 32 The original text is quoted in para 24 of the first judgment. 27 conditions in the OTP, save that clauses 7.1 and 7.2 were varied. But clause 7.2 could not be varied after the expiry date for the fulfilment of the suspensive condition. [56] Neither could the parties to the OTP extend its validity in accordance with the terms of the second addendum – the OTP was invalid and unenforceable on 20 February 2020. For this reason, the respondents’ argument that the purchasers sought ‘to provide additional time for fulfilment of the suspensive condition’, is unsustainable. [57] The above passage in Trans-Natal Steenkoolkorporasie33 is also quoted in the first judgment,34 with reference to McPherson.35 The first judgment states that McPherson can be distinguished from this case, because the attempted revival of the contract in McPherson was not in writing and signed by both parties’;36 and that the issue in McPherson, was ‘whether a contract would self-destruct as the date for fulfilment of the suspensive condition was not amended, and had already passed’.37 [58] But that is not so. The court in McPherson held that a suspensive condition cannot be waived or extended after the time for the fulfilment of the condition has passed; that an agreement which has lapsed because of the non-fulfilment of the condition cannot be ‘revived’; and that the parties are required to enter into an entirely new agreement, which can be on the same terms and conditions as the 33 1988 (3) SA 625 (A) at 640B-C. 34 See para 24 above. 35 McPherson fn 14. 36 See para 26 above. 37 See para 28 above. 28 old.38 This is consistent with the holding in Fairoaks,39 Pangbourne,40 and Abrinah.41 [59] In support of their contention that by signing the second addendum, the seller and the purchasers intended to revive or reinstate the OTP, which rendered it enforceable, the respondents rely on Benkenstein.42 In that case the parties concluded an agreement for the sale of a farm on 28 June 1996. The offer to purchase was subject to a suspensive condition in clause 19 thereof, namely the sale of the purchaser’s property by 6 August 1996 or such extended period as the sellers may allow in their sole discretion. On 16 July 1996 the sellers signed an addendum to the offer to purchase, in which they amended the offer to purchase and agreed that the sale of the purchaser’s property had to take place by 6 September 1996 or such extended period as the sellers would allow. The purchaser’s property was not sold by 6 September 1996. On 13 September 1996 the parties signed a further addendum to the offer to purchase, in terms of which they agreed to ‘waive’ the suspensive condition. [60] Despite its attention having been drawn to both Phillips43 and Mekwa,44 the court in Benkenstein held that the offer to purchase was enforceable. It stated that by signing the addendum on 13 September 1996, the parties, ‘effectively reaffirmed their intention to sell the property on the terms set out in the offer to purchase with the deletion of clause 19 thereof. Notwithstanding that they referred to clause 19 as having been “waived”, the parties clearly evinced an intention to give effect to the original decision to sell the property to applicant.’45 38 McPherson fn 14 para 28. 39 Fairoaks fn 4 para 22. 40 Pangbourne fn 4 para 24. 41 Abrinah fn 10 para 47. 42 Benkenstein fn 19. 43 Phillips fn 11. 44 Mekwa fn 11. 45 Benkenstein fn 19 at 841D-E. 29 [61] This conclusion is at odds with the decision in Phillips, in which Schock J held that even where a suspensive condition is inserted solely for the benefit of one party that he might waive it, he may not do so after the expiry of the time limit for the fulfilment of the condition. The reasoning of Schock J is compelling: ‘Subject to what follows I am prepared to assume for the purposes of this judgment that the condition in question was exclusively for the benefit of the plaintiff. However, in my judgment this cannot avail plaintiff because of the time limitation in the condition which admittedly was inserted at the instance of defendant. If the contract remained valid despite the lapse of the time there provided, without a bond having been obtained and without the plaintiff having waived it during that time, it would render the time limitation entirely without content or purpose. Defendant would then be in no different position than she would have been had there been no time limitation. Clearly, defendant had a purpose in requiring the time limitation. The manifest object of the time limitation was to ensure certainty so that the defendant would know at an early date whether she had a firm buyer or not . . . If during this period [when the plaintiff was seeking to obtain a bond] defendant tried to hold him to the contract he clearly would have pleaded the condition, namely that he had not succeeded in getting the money and defendant could in those circumstances certainly not have held him to the contract. It would have been most unreasonable and contrary to the manifest intentions of the parties in this case that, after the 10-day period, defendant should be bound by the contract and plaintiff not, and yet that would be the position if in fact there could be a waiver by plaintiff at some stage after the lapse of the 10-day period….’46 (Emphasis added.) [62] Similarly, in Mekwa47 Coetzee J said: ‘It seems to me that, even if the instant condition is exclusively for the benefit of the purchaser, it necessarily follows from the stipulation of the time limit for obtaining the bond that that is also the time limit for the exercise of the purchaser’s right of waiver of the condition and communication of his decision. The reasoning of Schock J [Phillips] and Kumleben JA [Nel v Barnado], with respect, is impeccable. If they are not correct, what is the point of stipulating a time limit at all?’ 46 Phillips fn 11 at 408E-H. 47 Mekwa fn 11 at 501J-502B. 30 [63] Little wonder then, that Van Heerden JA in Trans-Natal Steenkoolkorporasie, confirmed these decisions as being correct.48 It goes without saying that Benkenstein runs counter to Phillips and Mekwa, as well as Fairoaks and Pangbourne. It was wrongly decided and should not be followed. [64] The full court, however, held that Pangbourne differs materially from the facts in this case. Although the suspensive condition in the two cases is different, Pangbourne is on all fours with this case. The relevant facts in Pangbourne are briefly the following. The appellant purchased the respondents’ business of letting immovable property. The agreement was subject to three suspensive conditions, one of which was that the boards of directors of the purchaser and the seller, were required to approve the purchase and sale by written resolution. The suspensive conditions were for the benefit of all parties and could not be waived. Clause 4.4.2 of the relevant agreement provided that the condition relating to board approval had to be fulfilled within 14 days of the signature date; and clause 4.5, that the parties could in writing extend the dates of fulfilment, prior to those dates, by mutual agreement. Clause 4.6 stated that in the absence of such extension, if the conditions were not fulfilled, the agreement would become unenforceable, and that ‘the parties shall be restored to the status quo ante’. [65] Pangbourne’s board of directors did not pass the resolution within the 14-day period stipulated. Pangbourne argued that the contract had lapsed because the suspensive condition was not fulfilled. The court of first instance, however, found that the agreement had been ‘revived’ by a written addendum concluded after the expiry date of the suspensive condition. That finding, this Court held, was wrong: the parties could not waive the fulfilment of the condition. Lewis JA stated that ‘the alleged waiver was not only precluded by the express terms of the 48 Trans-Natal Steenkoolkorporasie fn 12 at 640B-C. 31 agreement but also occurred after the date by which the condition should have been fulfilled’; and that ‘there was no basis on which to find that the agreement was enforceable’.49 [66] Further, contrary to the finding by the full court that Pangbourne is distinguishable because clause 4.6 provided that the entire agreement would become of no force and effect upon the non-fulfilment of the relevant suspensive condition, clause 4.6 does no more than confirm the common-law principle: it is a belt-and-braces approach. In addition, the court’s finding that in the present case, ‘the suspensive condition provided expressly for the grant of a 30-day extension of time in writing’, which was granted by the seller, is apparently based on its erroneous conclusion that the seller had exercised the right to extend the date for the fulfilment of the suspensive condition, on two occasions. As stated, the OTP lapsed on 19 February 2020. [67] It follows that the full court’s reliance on Endumeni for its conclusion that the second addendum should be interpreted in a manner that makes commercial sense and does not lead to absurd results, is misplaced. The unitary exercise of interpretation enunciated in Endumeni applies to a valid contract:50 not to an unenforceable contract that is purportedly ‘revived’ or ‘extended’ in terms of a right that does not exist. [68] For the above reasons, it is unnecessary to consider whether the second addendum constitutes a new agreement, or the appellant’s argument that the addendum brings about the self-destruction of the OTP. On the evidence, the second addendum is not a new agreement. The respondents’ case is that the 49 Pangbourne fn 4 paras 24 and 25. 50 Endumeni fn 6 para 18; 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. 32 purpose of the second addendum was to ‘revive’ the transaction, and that the purchasers signed it on that basis. What is more, DM Inc’s conveyancer was of the view that the OTP did not lapse, but even if it did, the second addendum had ‘revived and amended’ the OTP. [69] In the draft order contained in the appellant’s heads of argument, an order is sought that the first and second respondents should pay the appellant all amounts paid to them to give effect to the transfer of the property. However, this was not part of the relief sought in the notice of motion, and no case for such relief was made out in the founding papers. Consequently, the order sought cannot be granted. [70] What remains is the question of costs. The parties were throughout represented by junior counsel, save that the appellant was represented in this appeal by senior and junior counsel. Given the narrow issue in the appeal, the costs of senior counsel are not justified. [71] It follows that the appeal must succeed. I make the following order: 1 The appeal is upheld with costs. Such costs shall include the costs of only one counsel. 2 The order of the full court of the Western Cape Division of the High Court, Cape Town, is set aside and replaced with the following order: ‘1. The appeal succeeds with costs. 2. The order of the court a quo dated 4 March 2022, is set aside and replaced with the following order: 2.1 It is declared that: (a) the Offer to Purchase Erf 150003, Kenilworth Upper, Cape Town, located at 8 Selwyn Road, Kenilworth, Western Cape (the property), concluded on 4 February 2020 between the first 33 respondent as seller, and the third and fourth respondents as purchasers (the Offer to Purchase); and (b) the Addendum to Agreement of Sale, concluded between the seller and the purchasers on 20 February 2020, purportedly to extend the suspensive condition in clause 7.2 of the Offer to Purchase, after the expiry date for the fulfilment of that condition, are invalid and unenforceable. 3. The first and second respondents shall pay to the applicant the sum of R1 950 000, which she paid to them on behalf of the third and fourth respondents in respect of the purchase price of the property, together with the interest on that amount to which the applicant is entitled. 4. The first and second respondents shall pay the costs of the application, jointly and severally, the one paying the other to be absolved.’ __________________ A SCHIPPERS JUDGE OF APPEAL 34 Appearances For the appellant: R S Van Riet SC with P Tredoux Instructed by: De Waal Grobbelaar Fisher Inc, Cape Town JL Jordaan Attorneys, Bloemfontein For the first and second respondents: N C De Jager Instructed by: DML Inc, Cape Town Phatshoane Henny 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: 10 October 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 Maria Luisa Palma Codevilla v Paula Jane Kennedy-Smith NO and Others (494/2023) [2024] ZASCA 136 (10 October 2024) Today the Supreme Court of Appeal (SCA) handed down judgment against an order granted by the Western Cape Division of the High Court, Cape Town (the high court) sitting as court of appeal. The SCA majority judgment upheld the appeal with costs, including the costs of one counsel. This appeal concerned a dispute over the sale of immovable property. The property in question was sold by the first respondent (the seller), represented by a law firm, the second respondent. The purchasers were the third and fourth respondents, who are the daughter and son-in-law of the appellant, Maria Luisa Palma Codevilla. The appellant had financially assisted the purchasers in the transaction to purchase the property. On 4 February 2020, the purchasers made an offer to purchase (OTP) the property for R5,150,000, subject to a suspensive condition that they had to secure a mortgage bond for R4,950,000 by 14 February 2020. This deadline was extended to 19 February 2020 through a first addendum. Despite efforts, the purchasers failed to provide the required bond or payment by the new deadline, causing the agreement to lapse. On 20 February 2020, the parties signed a second addendum, amending the financial arrangements and providing a new deadline for the provision of a bank guarantee by 25 February 2020. However, in May 2020, the purchasers faced financial difficulties due to the COVID-19 pandemic and sought to cancel the sale. The appellant, having paid R1,950,000 on behalf of the purchasers, sought the return of this amount, arguing that the agreement had lapsed and was not revived by the second addendum. The high court found that the parties had intended to revive the agreement and that the second addendum had that effect. It further held that the second addendum amounted to a ‘fresh agreement’ incorporating the terms of the OTP as amended by the first addendum. Leave to appeal was granted to a full court of the high court (the full court), which dismissed the appeal based on different grounds. The full court found that a new agreement was not concluded, but 2 that in terms of clause 7.2 of the OTP, the offer was validly extended for the 30-day period contained in the clause. Special leave to appeal was granted by this Court. The central issue before the SCA was whether the second addendum, signed after the failure of the suspensive condition, effectively revived the original agreement or whether a new contract was required. The Court also considered whether the second addendum complied with the formalities required under the Alienation of Land Act 68 of 1981. In a minority judgment, the Court found that the second addendum had the effect of reviving the original agreement. The minority judgment placed emphasis on the intention of the parties, noting that their conduct demonstrated a clear intention to continue with the sale, despite the lapse of the suspensive condition. The minority judgment further held that the second addendum reflected the parties’ agreement to proceed with the sale on amended financial terms, thereby reviving the original contract in compliance with the Alienation of Land Act. The majority judgment reached a different conclusion, and held that the second addendum could not revive the lapsed agreement. The Court confirmed that the suspensive condition in the original sale agreement had not been fulfilled by the deadline of 19 February 2020, which caused the contract to lapse. The Court further held that, according to settled legal principles, once an agreement lapses due to the non-fulfilment of a suspensive condition, any subsequent attempt to revive it is legally invalid unless a new agreement is concluded. The majority thus held that the second addendum, which was signed after the failure of the suspensive condition, could not operate as a new agreement. The parties mistakenly believed that they could simply extend the time for fulfilling the suspensive condition without entering into a new contract. The SCA found that the second addendum did not create a new binding agreement, and thus the original sale agreement remained unenforceable. The SCA majority upheld the appeal and held that the appellant was entitled to recover the monies she had paid on behalf of the purchasers, along with any accrued interest. The first and second respondents were ordered to pay the appellant’s costs, including the costs of one counsel. ~~~~ends~~~~

4288

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no: 504/2023 In the matter between: IRD GLOBAL LIMITED APPELLANT and THE GLOBAL FUND TO FIGHT AIDS, TUBERCULOSIS AND MALARIA RESPONDENT Neutral citation: IRD Global Limited v The Global Fund to fight AIDS, Tuberculosis and Malaria (504/2023) [2024] ZASCA 109 (04 July 2024) Coram: MOCUMIE and SCHIPPERS JJA and KOEN, DAWOOD and BAARTMAN AJJA Heard: 15 May 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down of the judgment is deemed to be 11h00 on 4 July 2024. Summary: Civil procedure – interim interdictory relief – jurisdiction – alleged defamatory statement published on the Internet accessed in South Africa - whether the appellant was entitled to interim interdictory relief as sought in the high court – whether the high court correctly found that it lacked jurisdiction – whether it was appropriate to order additional security for costs – appeal dismissed. 2 ___________________________________________________________________ ORDER ___________________________________________________________________ On appeal from: Gauteng Division of the High Court, Johannesburg (Van Nieuwenhuizen AJ, sitting as a court of first instance): The appeal is dismissed with costs including the costs of two counsel, where so employed. ___________________________________________________________________ JUDGMENT ___________________________________________________________________ Baartman AJA (Mocumie and Schippers JJA, and Koen and Dawood AJJA concurring): [1] The dispute in this appeal is whether the Gauteng Division of the High Court, Johannesburg, per Van Niewenhuizen AJ, (the high court) was correct in holding that it did not have jurisdiction to entertain an application for interim relief (the main judgment) and whether that court correctly exercised its discretion when it granted the respondent’s application for additional security for its costs (the security judgment). The appeal is with the leave of the high court. [2] The appellant, a global health delivery and research organisation, was founded in Pakistan in 2004. It is registered in Singapore and is alleged to have an established project profile in 17 countries and affiliates in nine countries, including in South Africa. The appellant works with governments and community organisations in the public health sector ‘to address the global health delivery gaps by marginalised communities’ lack of access to healthcare’. The respondent, an international organisation established in Switzerland, is involved in the fight against Aids, Tuberculosis and Malaria as ‘donor and implementor of Global Fund-supported programs’. Both parties are peregrini of the high court and own no immoveable property in South Africa. 3 [3] On 1 April 2021, the respondent published a report on its website, compiled by its investigating unit, known as the Office of the Inspector General (OIG), titled ‘global fund Grant in Pakistan-Prohibited practices compromised procurement in tuberculosis program’. The report resulted from an investigation into the respondent’s tuberculosis grant in Pakistan to Indus Hospital (Indus) in which the appellant had acted as technical assistance provider implementing various tuberculosis-related health projects. The report, which is globally available on the respondent’s website, contains numerous allegations that the appellant considers defamatory. The position was aggravated as the report was accompanied by a letter of endorsement from the respondent’s executive director confirming allegations, such as conflict of interest, collusive and anti-competitive practices, data inflation and overcharging, that were levelled against the appellant and Indus in administering the tuberculosis grant. [4] However, on 15 July 2019, prior to the publication, the respondent had informed the appellant that OIG would be conducting the investigation and on 18 June 2020, the OIG made its preliminary and confidential findings available to the appellant and other interested parties. Those preliminary findings included the following: ‘39.4.1 Finding 1 – The appointment of the [appellant] breached the Global Fund’s policies and involved multiple unmitigated conflicts of interest; 39.4.2 Finding 2 – Indus fraudulently steered the Projects to [the appellant]; 39.4.3 Finding 3 – Multiple irregularities in the implementation of the projects by [the appellant], including data fraud; 39.4.4 Finding 4 – Conflicts of interest and irregularities in the awarding of an IT contract to Interactive Health Solutions.’ [5] On 16 July 2020, the appellant submitted a comprehensive response in which it dealt with the findings and gave an exculpatory account. On 15 January 2021, the initial draft report was leaked and published in Arab News. Despite, the appellant’s comprehensive response, the respondent persisted with its version and made the report available on its website, substantially confirming the allegations in the leaked draft report. [6] The appellant’s South African attorney, acting on instructions, accessed the respondent’s website and downloaded the report in Johannesburg. The appellant, on 4 the basis that the report was accessed in Johannesburg, intends to pursue a defamation action in the high court against the respondent. In May 2021, the appellant launched an urgent application in the high court seeking interim relief. The following prayers are relevant to this judgment: ‘… 2. Pending the final determination of an action or application to be instituted by the applicant within 30 days of the Order for defamation against the respondent: 2.1 the report on the respondent’s website, titled Global Fund Grant in Pakistan – … are within 1 (one) day of this Order, to be retracted and removed by the respondent from its website; 2.2 the respondent, within 5 (five) days of this Order, is to publish the following statement on its website: “The High Court in South Africa has granted an interim order against [the respondent] …pending the final determination of an application or action to be instituted by [the appellant] to obtain a permanent interdict against [the respondent] in respect of the Report on the basis that the statements contained therein are defamatory and untruthful as against [the respondent].” 2.3 interdicting the respondent and its officials from making any further statements of a defamatory nature and effect against the applicant, including but not limited to repeating the contents of the Published Report and the Published Letter; 2.4 restraining the respondent and its officials from sharing, distributing or disseminating the Published Report or any other iteration of a report prepared pursuant to the OIG’s investigation, with any person, entity or the public at large; 2.5 interdicting the respondent from making any recommendation or imposing any sanctions in respect of [the respondent] pursuant to the Sanctions Panel Procedures Relating to the Code of Conduct for Suppliers, [annexure FA60 to the founding affidavit], or any other basis;…’ [7] The respondent took the following preliminary points, instead of dealing with the merits of the application, but indicated that it would seek a postponement to do so. These points are: (a) The high court lacked jurisdiction to entertain the application; (b) The relief sought was not competent; (c) The requisites for interim relief were not satisfied; (d) The application should be brought in either Pakistan or Switzerland. 5 [8] As both parties are peregrini of the court, the respondent sought security for its costs. Reluctantly, without admitting that same was due, the appellant put up security for costs. Thereafter, the application was enrolled in the urgent court where Fisher J struck it from the roll for lack of urgency and directed the appellant to pay the costs of the application. The security that had been put up was used to settle the costs order leaving a balance of R91 000. In September 2021, Tsautse AJ heard the opposed application, although judgment remained outstanding for an inordinate period. The deputy judge president unsuccessfully attempted to persuade Tsautse AJ to deliver the judgment and as a last resort, directed a new hearing before a different judge. [9] At that hearing on 12 September 2022, the respondent, without conceding the court’s jurisdiction, sought an increase in the security for its costs alleging that the R91 000 balance from the original security was insufficient to cover the new situation. The main application and the request for additional security were heard together. While the hearing was in progress, Tsautse AJ ‘uploaded’ the outstanding judgment. After a short adjournment, having considered the uploaded judgment, both parties requested the court to proceed with the rehearing. [10] The learned judge found in favour of the respondent in respect of its claim for additional security and directed the appellant to pay such additional security as the Taxing Master may determine. The main judgment held that there was ‘no actual publication to a third party’ as the appellant’s attorney had accessed the publication to assess its impact and advise his client. The circumstances in which the publication was downloaded persuaded the court that ‘[the respondent] did not publish anything in South Africa’. [11] The high court further held that the matter was distinguishable from Akani Retirement Fund Administrators (Pty) Ltd v NBC Holdings (Pty) Ltd and Another1 as ‘the terms of use limit the user’s rights’ in respect of the publication relevant to this matter. The learned judge was not persuaded that the reputational harm the appellant had suffered had arisen from publication in South Africa as the harm had been caused 1 Akani Retirement Fund Administrators (Pty) Ltd v NBC Holdings (Pty) Ltd and Another [2020] ZAGPJHC 174. 6 when Arab News had published the initial leaked draft report. In addition, the report relates to alleged conduct in Pakistan in relation to a project that the respondent funded and in which the appellant partook. Cumulatively, these factors led the high court to hold that it did not have jurisdiction to entertain the application and that South Africa was not a forum of convenience. Therefore, the application was dismissed with costs. [12] In this Court, the appellant persisted in its stance that the high court had jurisdiction to entertain the application and that it should not have been ordered to provide additional security. Among others, the respondent submitted that the relief sought was incompetent and therefore the appeal should fail. I deal with both judgments below. The main judgment [13] A basic principle in our law of jurisdiction is that of effectiveness.2 A court must be able to give effect to its judgment so that, ‘in the case of a judgment sounding in money, the judgment can be satisfied by attaching and selling in execution assets belonging to the judgment debtor if the judgment is not paid’.3 Where a judgment debtor has immovable property in South Africa, a court can order its attachment and so give effect to its judgment. Jurisdiction is also exercised where litigants submit to the court’s jurisdiction. The respondent in this matter has not submitted to the court’s jurisdiction. [14] In Bid Industrial Holdings (Pty) Ltd v John Francis Roderick Strang and Others4 (Strang) this Court held as follows: ‘In my view it would suffice to empower the court to take cognisance of the suit if the defendant were served with the summons while in South Africa and, in addition, there were an adequate connection between the suit and the area of jurisdiction of the South African court concerned from the point of view of appropriateness and convenience of its being decided by that court. Appropriateness and convenience are elastic concepts which can be developed case by case. 2 Thermo Radiant Oven Sales (Pty) Ltd v Nelspruit Bakeries (Pty) Ltd [1969] 2 All SA 338 (A); 1969 (2) SA 295 (A) at 346. 3 23(2) Lawsa 3 ed para 6. 4 Bid Industrial Holdings (Pty) Ltd v John Francis Roderick Strang and Others [2007] ZASCA 144; [2007] SCA 144 (RSA); [2008] 2 All SA 373 (SCA); 2008 (3) SA 355 (SCA) para 56. 7 Obviously the strongest connection would be provided by the cause of action arising within that jurisdiction.’ [15] The appellant sought to overcome the jurisdiction issue on the basis that it has an affiliate in South Africa; the report was accessed in Johannesburg; the respondent has immunity in Switzerland; and the respondent has an office and funds in South Africa. It turns out that the respondent has neither an office nor funds in this country. Instead, funds are sent directly by donors to grant recipients in South Africa. [16] In King v Lewis5 the court said the following: ‘We do not suggest, nor did Mr Browne, that Gutnik is a gateway for the introduction of a new rule in the law of England relating to Internet publications. It established no new rule in Australia. But the court’s rejection of sweeping submissions that would have done away with Duke of Brunswick in favour of the “single publication rule” known in many States of the USA, alongside the dicta in Gutnick which emphasise the internet publisher’s very choice of a ubiquitous medium, at least suggests a robust approach to the question of forum: a global publisher should not be too fastidious as to the part of the globe where he is made a libel defendant. We by no means propose a free-for-all for claimants libelled on the Internet. The court must still ascertain the most appropriate forum; the parties’ connections with this or that jurisdiction will have to be considered; there will be cases (like the present) where only two jurisdictions are really in contention. We apprehend this third strand in the learning demonstrates no more than this, that in an Internet case the court’s discretion will tend to be more-textured than otherwise; for that is the means by which the court may give effect to the publisher’s choice of a global medium. But as always, every case will depend upon its own circumstance. …. …The relative importance of all factors which must be examined – place of the tort, the parties’ connection with this or that jurisdiction, the publisher’s choice to go on the Internet- are not legal rules. They are matters which will inform the judge who must decide where the balance of convenience lies.’ (Emphasis added). [17] Applying the above principles to the facts of this matter, it is obvious that neither party, both peregrini, has any real connection to South Africa. The process was not served in South Africa and the respondent does not have a place of business locally. 5 King v Lewis [2004] EWCA Civ 1329 paras 31 and 36. 8 Although, the respondent actively seeks South African donors, such funds are donated to grant recipients, therefore the respondent does not have access to the funds in South Africa. The appellant’s local affiliate has not joined in the litigation and there is no indication that the publication has had any effect on it. [18] There is further no connection between the high court’s jurisdiction and the dispute. As indicated above, the cause of action arose in Pakistan where the appellant and Indus are alleged to have compromised the tuberculosis grant. Therefore, the background facts, convenience and the law governing the relevant transaction, are outside the court’s area of jurisdiction.6 The only connection to the high court’s jurisdiction is that the attorney accessed the report in its jurisdiction; that is insufficient as is apparent from the Strang judgment. Internet publication, with its global reach, for practical purposes must be contained otherwise multiple actions may follow in jurisdictions with no real connection to the parties or the issue in dispute other than publication. Self-evidently such a situation is untenable and may cause grave inconvenience to the court, witnesses and litigants. In the circumstances of this matter, adequate connecting factors for jurisdiction are absent and the court would be unable to give effect to its judgment. Although the jurisdiction issue is dispositive of the matter, I deem it necessary to deal briefly with the requirements for an interim interdict and the relief claimed. [19] The respondent contends that the appellant did not make out a case for interim relief. The appellant sought interim relief pending the finalisation of the defamation action it intends to institute. As indicated above, the respondent did not file an answering affidavit dealing with the merits of this matter due to time constraints. However, the report, the history leading to its creation and the appellant’s exculpatory response prior to publication are part of the papers. The respondent at an early stage indicated that it stands by the allegation, asserts the truth thereof and relies on truth and public interest for the publication. This was after the respondent had undertaken an elaborate investigation over many months and had given the appellant an opportunity to comment on its initial findings. Therefore, the allegations cannot be 6 Multi-links Telecommunications Ltd v Africa Prepaid Services Nigeria Ltd [2013] ZAGPPHC 261; [2013] 4 All SA 346 (GPN); 2014 (3) SA 265 (GP). 9 approached on the basis that they were spurious and defamatory as the respondent has indicated after considering the appellant’s exculpatory reply that it stands by the truth of the allegations contained in the report. [20] As indicated above, on 15 January 2021, Arab News published a leaked copy of the initial draft report and on 1 April 2021, the respondent published the report on its website. Yet the appellant only approached the court in May 2021 for interim relief and three years later, in 2024, issued summons. There was arguably a basis for interim relief three years ago. The appellant has not made out a case for an interdict to restrain future defamatory publications and there is no evidence that the harm is ongoing. The right the appellant seeks to protect is not under threat of irreparable harm as the harm occurred three years earlier. [21] An interdict is not competent relief where the respondent has put up a valid defence to the defamation charge. It follows that the appellant has not established a prima facie right, even one open to some doubt, which needs to be protected by an interdict. Therefore, there is no need to enquire into irreparable harm, the balance of convenience or a satisfactory alternative remedy. [22] The appellant further seeks a retraction and an apology on motion. Although, styled as interim, the relief is in fact final in effect. This Court in Tau v Mashaba and Others,7 criticised that process as follows: ‘…An order to retract the initial statements, to issue an unconditional apology for them and to ensure publication of the retraction and apology, presupposes a finding that the initial statements were defamatory of the respondent. That would involve a final determination of the rights of the parties, which has to be made in the defamation action. Further, if such an order were to be executed, it could not be undone: the notion of an interim retraction or apology is untenable.’ [23] Wallis JA expressed similar sentiments in NBC Holdings (Pty) Ltd v Akani Retirement Fund Administrators (Pty) Ltd8 (NBC Holdings) as follows: 7 Tau v Mashaba and Others [2020] ZASCA 26; 2020 (5) SA 135 (SCA) para 17. 8 NBC Holdings (Pty) Ltd v Akani Retirement Fund Administrators [2021] ZASCA 136; [2021] 4 All SA 652 (SCA) para 10. 10 ‘A good deal of the complexity of this case arose because Akani sought relief by way of urgent motion proceedings and not by way of action. In order to do this, it tied its claim for the publication of a retraction to a vague and general interdict. Furthermore, it said that it reserved its right ‘to pursue other aspects and relief flowing from NBC’s …. misconduct at a later date’. justifying this on the basis that only urgent matter could be traversed in these proceedings. The judge rightly rejected the claim for an interdict, thereby exposing the true nature of the proceedings as being for final relief to remedy the damage that Akani claimed it had suffered as a result of the publication of the letter…’ [24] It is now settled law that an apology or a retraction may serve the same purpose as an award of damages in a defamation action or may be ordered in conjunction with an award of damages.9 However, that relief requires the institution of an action. It follows that the appellant is not entitled to the relief it sought on motion and that the application must fail on this basis too. [25] Contrary, to the above established principles, the court in Ramos v Independent Media (Pty) Ltd and Others,10(Ramos) on motion proceedings found that the publication that formed the subject of those proceedings was defamatory, false and untrue. It interdicted the respondent from republishing the article or any false statement implying that the applicant had ‘participated in fixing the rand or committed corruption or treason in relation to the fixing of the rand’. It ordered a retraction and directed the respondent to publish an apology. The court reasoned that it could make the orders on motion as the applicant did not ask for damages. However, as indicated above, damages may now consist of a retraction, an apology, a monetary amount or any combination thereof. [26] I therefore respectfully disagree with the court in Ramos and hold that motion proceedings remain unsuited to deal with defamation allegations. A trial is necessary to determine the veracity of the alleged defamatory statements and thereafter an award can be made consisting of an apology, a monetary amount, a retraction or a combination of same. Recently, in Malema v Rawula,11 this Court confirmed that awards of damages may not be claimed in motion proceedings. 9 NBC Holdings para 15. 10 Ramos v Independent Media (Pty) Ltd and Others [2021] ZAGPJHC 60 para 126. 11 Malema v Rawula [2021] ZASCA 88 para 26. 11 The security judgment [27] In directing that additional security be provided, the trial court exercised a discretion in the strict sense.12 There is no numerus clausus of factors to which a court may have regard in arriving at a decision it considers just in any given case. In the exercise of its discretion, the court considered that the respondent had sought security at an early stage in the proceedings, which was provided, albeit under protest. That security was for an urgent application in which jurisdiction was challenged. The further developments, such as the long outstanding judgment resulting in a rehearing, were considered unusual. Both parties are peregrini of the South African courts and the respondent, if successful, might be put to the inconvenience of pursuing its costs in a foreign jurisdiction. Because the trial court exercised a discretion in the strict sense; therefore, it is not open to a court on appeal to interfere with the exercise of the discretion unless it has not been exercised judicially or has been exercised on a wrong principle of law or a wrong appreciation of the facts.13 The factors considered included the factual situation; there is no indication that the court overemphasised any factor or exercised its discretion incorrectly. I am unable to find a ground for interference. It follows the appeal against the security judgment must fail. Order [28] The following order is granted: The appeal is dismissed with costs including the costs of two counsel, where so employed. _______________________________ E BAARTMAN ACTING JUDGE OF APPEAL 12 See Magida v Minister of Police 1987 (1) SA 1 (A); [1987] 1 All SA 218 (A). Knox D’Arcy Ltd and Others v Jamieson and Others 1996 (4) SA 348 (A) at 361H. 13 Giddey NO v JC Barnard and Partners [2006] ZACC 13; 2007 (5) SA 525 (CC); 2007 (2) BCLR 125 (CC) para 21. 12 Appearances For the appellant: M Du Plessis SC and D Wild Instructed by: Webber Wentzel, Johannesburg Honey Attorneys Inc, Bloemfontein. For the respondent: A Franklin SC and N Qwabe Instructed by: Bowman Gilfillan Inc, Johannesburg Symington and De Kok Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 4 July 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 IRD Global Limited v The Global Fund to fight AIDS, Tuberculosis and Malaria (504/2023) [2024] ZASCA 109 (4 July 2024) Today the Supreme Court of Appeal (SCA) handed down judgment dismissing with costs, including the costs of two counsel, an appeal against the Gauteng Division of the High Court’s, Johannesburg (the high court) refusal to grant interim relief. The appellant, a global health delivery and research organisation, was founded in Pakistan in 2004 and registered in Singapore. The respondent, an international organisation established in Switzerland, was involved in the fight against Aids, Tuberculosis and Malaria as donor and implementor of Global Fund-supported programs. Both parties were peregrini of the high court and owned no immoveable property in South Africa. On 1 April 2021, the respondent published a report on its website, compiled by its investigating unit, known as the office of the Inspector General (OIG), titled ‘Global Fund Grant in Pakistan-Prohibited practices compromised procurement in tuberculosis program’. The report resulted from an investigation into the respondent’s tuberculosis grant in Pakistan to Indus Hospital (Indus) in which the appellant had acted as technical assistance provider implementing various tuberculosis-related health projects. The report, which was globally available on the respondent’s website, contained numerous allegations that the appellant considered defamatory. The appellant’s South African attorney accessed the website and downloaded the report in Johannesburg. The appellant, on the basis that the report was accessed in Johannesburg, intended to pursue a defamation action in the high court against the respondent. In May 2021, the appellant launched an urgent application in the high court seeking interim relief, among others, that the report be retracted and removed from the respondent’s website pending finalisation of the action it intended to institute. As both parties were peregrini of the court, the respondent sought security for its costs. The appellant put up security without admitting that same was due. Tsautse AJ heard the interdict application in which the respondent alleged that the high court lacked jurisdiction to entertain the application. However, as the judgment remained long outstanding, the application was set down for rehearing before another judge. In the 2 latter hearing the respondent claimed additional security for its costs without conceding the high court’s jurisdiction. The high court found in favour of the respondent on both the issues of additional security and on the main application regarding the court’s lack of jurisdiction. However, the high court granted leave to appeal to the SCA. Before this Court the dispute was whether the high court was correct in holding that it did not have jurisdiction to entertain an application for interim relief (the main judgment) and whether that court correctly exercised its discretion when it granted the respondent’s application for additional security for its costs (the security judgment). Regarding the issue of jurisdiction, the SCA found that neither party, both peregrini, had any real connection to South Africa. The process was not served in South Africa and the respondent did not have a place of business locally. Although, the respondent actively sought South African donors, such funds were donated directly to grant recipients, therefore the respondent did not have access to the funds in South Africa. The appellant’s local affiliate had not joined in the litigation and there was no indication that the publication had any effect on it. There was further no connection between the high court’s jurisdiction and the dispute. The cause of action arose in Pakistan where the appellant and Indus were alleged to have compromised the tuberculosis grant. Therefore, the background facts, convenience and the law governing the relevant transaction were outside the court’s area of jurisdiction. The only connection to the high court’s jurisdiction was in the attorney having accessed the report in its jurisdiction, which according to the SCA was insufficient. Furthermore, the SCA held that adequate connecting factors for jurisdiction were absent and the court would be unable to give effect to its judgment. In respect of the issue of security, the SCA held that the trial court exercised a discretion in the strict sense; therefore, it was not open to a court on appeal to interfere with the exercise of the discretion unless it had not been exercised judicially or had been exercised on a wrong principle of law or a wrong appreciation of the facts. The SCA further held that the factors considered included the factual situation; there was no indication that the court overemphasised any factor or exercised its discretion incorrectly. It could therefore not find a ground for interference. The appeal was thus dismissed with costs including the costs of two counsel where so employed. ~~~~ends~~~~

4225

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Not Reportable Case no: 69/2023 In the matter between: CUDUCAP (PTY) LTD Appellant and PHILIPPUS JOHANNES DE BRUYN Respondent Neutral citation: Cuducap (Pty) Ltd v De Bruyn (Case no 69/2023) [2024] ZASCA 62 (29 April 2024) Coram: MOLEMELA P, MBATHA, MEYER AND GOOSEN JJA AND BLOEM AJA Heard: 13 March 2024 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 11h00 am on 29 April 2024. Summary: Joinder – appeal court taking point of non-joinder mero motu - court would not deal with matters where a third party who may have a direct and substantial interest in the litigation was not joined in the suit or where adequate steps could not be taken to ensure that its judgment will not prejudicially affect such party’s interests, nor would it make findings adverse to any person’s interests, without that person first being a party to the proceedings before it. 2 ORDER On appeal from: Western Cape Division of the High Court (Erasmus J, Saldanha and Slingers JJ concurring, sitting as court of appeal): 1. The appeal is upheld with costs, including those of two counsel where so employed. 2. The order of the full court of the Western Cape Division of the High Court granted on 13 September 2022 is set aside and replaced with the following order: ‘(a) The appeal is upheld with costs, including those of two counsel where so employed. (b) The order of the Western Cape Division of the High Court granted on 11 December 2020 is set aside and replaced with the following order: (i) The matter is remitted to the High Court to consider which third parties who may have a direct and substantial interest in the litigation should be joined in the suit. (ii) The costs of the application are reserved until the final determination of the application.’ JUDGMENT Meyer JA (Molemela P and Mbatha and Goosen JJA and Bloem AJA concurring): [1] The appellant, Cuducap (Pty) Ltd (Cuducap), appeals an order of the full court of the Western Cape Division of the High Court, per Erasmus J with Saldanha and Slingers JJ concurring, (the full court), setting aside an eviction order granted by the Western Cape Division of the High Court, per Magona AJ (the high court), against the respondent, Mr Philippus Johannes de Bruyn (Mr de Bruyn), from a residential immovable property situated at 11 Rotterdam Street, Goodwood, Western Cape (the property), and replacing it with an order that was not claimed. The appeal is with special leave of this Court. 3 [2] First, the pertinent background facts, which are largely common cause. During 2012, Mr de Bruyn experienced financial problems and became unable to repay his monthly mortgage loan repayments owing to Absa Bank Ltd (Absa), which debt was secured by a mortgage bond over the property. He was introduced to a certain Ms Yvette Fourie (Ms Fourie), a representative of a business called Mortgage Recovery. That business assisted persons in financial distress who owned an immovable property by introducing them to an investor. The investor would purchase the property from such person in distress (the deed of sale), conclude an instalment sale agreement (instalment sale agreement) in terms of which the person in distress purchases the property back from the investor. In addition, a fixed term lease agreement is concluded in terms of which the person in distress rents the property from the investor (lease agreement) while making payments under the instalment sale agreement. The investor would apply for mortgage loan finance and a mortgage bond would be registered against the title deed of the property. The proceeds of the mortgage loan finance would be utilised to pay the debts of the person in distress and a portion would be paid to the investor (the new owner of the property). [3] Ms Fourie introduced Mr de Bruyn to such an investor, Cuducap, represented by its only two directors, Mr Helperus Retzma Joe van Ryneveld and Ms Engela Wilhelmina van Ryneveld (the Van Rynevelds). They, on behalf of Cuducap, agreed to invest in the property. On 28 January 2013, a deed of sale was concluded in terms of which the property was sold to Cuducap for R1,6 million. Ownership of the property subsequently passed to Cuducap, who held the property under Title Deed No. T23763/2013. Cuducap financed its acquisition of the property by means of a mortgage loan it obtained from Standard Bank Ltd (Standard Bank), which loan was secured by means of the registration of a mortgage bond over the property. It paid Absa the outstanding amount of R443 500, which was owing by Mr de Bruyn on his Absa mortgage loan, and the mortgage bond in favour of Absa was cancelled. It also paid Mr de Bruyn the cash amount of R215 250.00. [4] On 1 June 2013, an instalment sale agreement was concluded between Cuducap and Mr de Bruyn, in terms of which the property was resold to Mr de Bruyn for the total amount of R1 528 500.77, payable over five years as follows: (a) an initial instalment of R750 147.22 payable on or before 1 June 2013. This initial instalment 4 was calculated as the balance of the purchase price due by Cuducap to Mr de Bruyn, whereafter it was divided by 59 months to determine the ‘rental’ of R12 714,36 payable by Mr de Bruyn to Cuducap; (b) 59 monthly instalments of R2 500 also payable as ‘rental’ by Mr de Bruyn to Cuducap from 1 June 2013, totaling an amount of R147 000; and (c) a final payment of R630 853.55 payable by Mr de Bruyn to Cuducap on 1 April 2018. On 1 June 2013, a lease agreement was also concluded between Cuducap and Mr de Bruyn. In terms thereof: (a) Cuducap leased the property to Mr de Bruyn for a period of 59 months from 1 June 2013 to 1 April 2018; and (b) Mr de Bruyn was obliged to pay monthly rental in the amount of R12 714.36 plus an additional monthly rental in the amount of R2 500. [5] Mr de Bruyn made the monthly payments of R2 500 (on average) for the period 1 June 2013 to 1 July 2016. He thereafter failed to pay to Cuducap any further amount, and also not the final amount of R630 853.55 due on 1 April 2018. Cuducap, in turn, failed to duly repay to Standard Bank its monthly mortgage loan instalments. Standard Bank obtained default judgment against Cuducap and the Van Rynevelds qua sureties, and became entitled to sell the property in execution. On 6 August 2018, Cuducap caused a letter of demand to be sent to Mr de Bruyn wherein he was afforded a period of 30 days within which to remedy his breaches. He failed to do so. Cuducap provided him with a cancellation notice on 6 September 2018, and demanded that he vacate the property. Cuducap wished to sell the property by private treaty before Standard Bank had caused it to be sold in execution by public auction at a lesser forced sale price. Mr de Bruyn refused to vacate the property. [6] On 29 October 2018, Cuducap initiated proceedings in the high court, claiming the eviction of Mr de Bruyn ‘and all other unlawful occupiers who occupy the property’ from the property, in terms of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (PIE Act) (the eviction application). Mr de Bruyn opposed the eviction application, essentially on the grounds that the three agreements are interrelated and constitute a transaction that is contra bonos mores and, therefore, unlawful and invalid. He maintained that the property should be re-transferred to him. He argued that similar schemes were declared ‘fraudulent schemes’ or to be contrary 5 to public policy.1 Cuducap, on the other hand, argued that there are material distinctions between the cases relied upon by Mr de Bruyn and the facts of the eviction application in casu, ‘rendering these authorities to have no real application’. [7] The high court held that the instalment sale agreement and the lease agreement were ‘contrary to public policy’, ‘void ab initio’, and therefore ‘unenforceable’. It held that the deed of sale ‘was an independent agreement’, valid, and that Mr de Bruyn was an unlawful occupier who occupied the property without the consent of Cuducap. It, therefore, granted the following order on 11 December 2020: ‘1. The application succeeds. 2. The First Respondent [Mr de Bruyn], and all other unlawful occupiers who occupy the property, situated at 11 Rotterdam Street Goodwood, Western Cape (hereinafter “the property”) and who purport to hold title thereto by virtue of the First Respondent’s unlawful occupation, be evicted from the property from 31 January 2021. 3. In the event of the First Respondent, and all those unlawful occupiers holding title under him, failing and/or refusing to vacate the property on the date so ordered, the Sheriff or his lawfully appointed Deputy is hereby authorized to enter upon the property and evict the First Respondent, along with all those unlawful occupiers holding title under him from 01 February 2021; 4. The First Respondent is to pay the costs of this application.’ (The eviction order.) [8] Unsatisfied with the eviction order, Mr de Bruyn, with leave of the high court, appealed to the full court. It held that all three agreements, on a proper interpretation, ‘must be dealt with as ‘one compactum’. It held that ‘[i]f the one falls, the whole deck of cards collapse’. The transaction, according to the full court, ‘was a scam’. It, therefore held that ‘the appeal succeeds insofar as the court a quo did not declare the sale agreement unlawful as well’. On 13 September 2022, it made the following order: ‘1. The appeal succeeds insofar as it relates to the two issues. 2. The court a quo’s order, insofar as it relates to the main sale agreement, is hereby set aside and substituted with the following order: a. It is declared that the transaction constituted by the deeds of sale executed by the appellant [Mr de Bruyn] and the respondent [Cuducap] on either 1 June 2013 or another 1 Absa v Moore [2015] ZASCA 171; 2016 (3) SA 97 (SCA); Absa Bank Ltd v Moore and Another [2016] ZACC 34; 2017 (2) BCLR 131(CC); 2017 (1) SA 255 (CC); Morley v Lambrechts (A526/2013) ZAWCHC 124 (21 August 2014). 6 date prior to that, is contrary to public policy and the agreement and its component parts is thus void ab initio. b. It is declared that the deed of transfer (T23763/13) in terms of which title of Erf 1122. Goodwood, City of Cape Town was conveyed from appellant, Philippus Johannes De Bruyn (ID Number 601028 5019 082) to respondent, Cuducap (Pty) Ltd (Registration no 2012/198147/07), shall be cancelled by the Registrar, The Registrar of Deeds, Cape Town is directed to give effect to this declaration in the manner and with the effect contemplated in terms of s 6 of the Deeds of Registries Act, 47 of 1937. (The right of the Registrar of Deeds to require confirmation of this Order in the sense contemplated by s 97(2) of the said Act, if he considers it meet, is reserved). c. It is declared that the mortgage bond in favour of Standard Bank in terms of which a mortgage bond was registered over Erf 1122, Goodwood, Cape Town shall be cancelled and the Registrar of Deeds, Cape Town is directed to give effect to this declaration in the manner and with the effect contemplated in terms of s 6 of the Deeds of Registries Act, 47 of 1937. (The right of the Registrar of Deeds to require confirmation of this Order in the sense contemplated by s 97(2) of the said Act, if he considers it meet, is reserved). 3. The respondent is to pay the costs of this application and the appeal.’ [9] It was not competent for the full court to make that order. It granted relief that was not sought by Mr de Bruyn. Furthermore, the full court made findings adverse to Standard Bank’s interests, without it being a party to the proceedings before the full court and the high court. The law on joinder is well settled. A court would not deal with matters where a third party who may have a direct and substantial interest in the litigation was not joined in the suit or where adequate steps could not be taken to ensure that its judgment will not prejudicially affect the party’s interests, nor would it make findings adverse to any person’s interests, without that person first being a party to the proceedings before it.2 [10] Mr de Bruyn alleged that the three agreements are interrelated, constitute a transaction that is contra bonos mores, unlawful, invalid, and that the property should be re-transferred to him. Given the high court’s stance that the instalment sale 2 Matjihabeng Local Municipality v Eskom Holdings Limited and Others; Mkhonto and Others v Compensation Solutions (Pty) Ltd [2017] ZACC 35; 2017 (11) BCLR 1408 (CC); 2018 (1) SA 1 (CC) para 92; Amalgamated Engineering Union v Minister of Labour 1949 (3) SA 637 (A) at 559, also cited in Transvaal Agricultural Union v Minister of Agricultural and Land Affairs and Others [2005] ZASCA 12; 2005 (4) SA 212 (SCA) para 64; Watson NO v Ngonyama and Another [2021] ZASCA 74; [2021] 3 All SA 412 (SCA); 2021 (5) SA 559 (SCA) para 51. 7 agreement was ‘contrary to public policy’, ‘void ab initio’, and therefore unenforceable, the high court should not have adjudicated the application without first ordering the joinder of Standard Bank and any third party who may have a direct and substantial interest in the litigation. This is because the instalment sale agreement was the underlying causa for the mortgage bond that was registered in favour of Standard Bank. I am not suggesting that a mortgagee should be joined in every application for the eviction of an unlawful occupier under the PIE Act. However, given the specific facts of this matter, there can be no doubt that Standard Bank as the mortgagee, has a direct and substantial interest which may be prejudicially affected by the judgment of the court. Courts have consistently refrained from dealing with issues in which a third party may have a direct and substantial interest without having that party joined in the suit, or if the circumstances of a case permit, taking other adequate steps to ensure that its judgment does not prejudicial affect that party’s interest.3 Given the circumstances of this case, the appropriate order is to remit the matter to the court of first instance so that it can take appropriate steps to safeguard the interests of parties who may have a direct and substantial interest in the litigation. [11] In the result the following order is made: 1. The appeal is upheld with costs, including those of two counsel where so employed. 2. The order of the Full Court of the Western Cape Division of the High Court granted on 13 September 2022 is set aside and replaced with the following order: ‘(a) The appeal is upheld with costs, including those of two counsel where so employed. (b) The order of the Western Cape Division of the High Court granted on 11 December 2020 is set aside and replaced with the following order: (i) The matter is remitted to the High Court to consider which third parties who may have a direct and substantial interest in the litigation should be joined in the suit. (ii) The costs of the application are reserved until the final determination of the application.’ ________________________ P A MEYER JUDGE OF APPEAL 3 Amalgamated Engineering Union v Minister of Labour 1949 (3) SA 637 (A) at 559. 8 Appearances For appellant: A Kantor SC with L L Zazeraj Instructed by: VWH Attorneys c/o Van Zyl Attorneys, Cape Town Symington & De Kok, Bloemfontein For respondent: J T Benadé Instructed by: Jacques van Niekerk Attorneys, Somerset West JL Jordaan, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 29 April 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 Cuducap (Pty) Ltd v De Bruyn (Case no 69/2023) [2024] ZASCA 62 (29 April 2024) Today the Supreme Court of Appeal (SCA) handed down judgment upholding an appeal, with costs, including those of two counsel where so employed, against the decision of the Western Cape Division of the High Court, Cape Town (the high court). During 2012, Mr de Bruyn experienced financial problems and became unable to repay his monthly mortgage loan repayments owing to Absa Bank Ltd (Absa), which debt was secured by a mortgage bond over the property. He was introduced to a certain Ms Yvette Fourie (Ms Fourie), a representative of a business called Mortgage Recovery. That business assisted persons in financial distress who owned an immovable property by introducing them to an investor. The investor would purchase the property from such person in distress (the deed of sale), conclude an instalment sale agreement (instalment sale agreement) in terms of which the person in distress purchases the property back from the investor, and a fixed term lease agreement in terms of which the person in distress rents the property from the investor (lease agreement) while making payments under the instalment sale agreement. The investor would apply for mortgage loan finance and a mortgage bond would be registered against the title deed of the property. The proceeds of the mortgage loan finance would be utilised to pay the debts of the person in distress and a portion would be paid to the investor (the new owner of the property). Ms Fourie introduced Mr de Bruyn to such an investor, Cuducap, represented by its only two directors, Mr Helperus Retzma Joe van Ryneveld and Ms Engela Wilhelmina van Ryneveld (the Van Rynevelds). They, on behalf of Cuducap, agreed to invest in the property. On 28 January 2013, a deed of sale was concluded in terms of which the property was sold to Cuducap for R1,6 million. Ownership of the property subsequently passed to Cuducap, who held the property under Title Deed No. T23763/2013. Cuducap financed its acquisition of the property by means of a mortgage loan it obtained from Standard Bank Ltd (Standard Bank), which loan was secured by means of the registration of a mortgage bond over the property. It paid Absa the outstanding amount of R443 500, which was owing by Mr de Bruyn on his Absa mortgage loan, and the mortgage bond in favour of Absa was cancelled. It also paid Mr de Bruyn the cash amount of R215 250.00. On 1 June 2013, an instalment sale agreement was concluded between Cuducap and Mr de Bruyn, in terms of which agreement the property was resold to Mr de Bruyn for the total amount of R1 528 500.77, payable over five years. Mr de Bruyn made the monthly payments of R2 500 (on average) for the period 1 June 2013 to 1 July 2016. He thereafter failed to pay to Cuducap any further amount, and also not the final amount of R630 853.55 due on 1 April 2018. Cuducap, in turn, failed to duly repay to Standard Bank its monthly mortgage loan instalments. Standard Bank obtained default judgment against Cuducap and the Van Rynevelds qua sureties, and became entitled to sell the property in execution. On 6 August 2018, Cuducap caused a letter of demand to be sent to Mr de Bruyn wherein he was afforded a period of 30 days within which to remedy his breaches. He failed to do so. Cuducap provided him with a cancellation notice on 6 September 2018, and demanded that he vacate the property. Cuducap wished to sell the property by private treaty before Standard Bank had caused it to be sold in execution by public auction at a lesser forced sale price. Mr de Bruyn refused to vacate the property. 2 On 29 October 2018, Cuducap initiated proceedings in the high court, claiming the eviction of Mr de Bruyn ‘and all other unlawful occupiers who occupy the property’ from the property. Mr de Bruyn opposed the eviction application, essentially on the grounds that the three agreements were interrelated and constituted a transaction that was contra bonos mores and, therefore, unlawful and invalid. He maintained that the property should be re-transferred to him. He argued that similar schemes were declared ‘fraudulent schemes’ or to be contrary to public policy. Cuducap, on the other hand, argued that there were material distinctions between the cases relied upon by Mr de Bruyn and the facts of the eviction application in casu, rendering these authorities to have no real application. The high court held that the instalment sale agreement and the lease agreement were ‘contrary to public policy’, ‘void ab initio’, and therefore ‘unenforceable’. However, It held that the deed of sale was an independent agreement and thus valid, and that Mr de Bruyn was an unlawful occupier who occupied the property without the consent of Cuducap. Unsatisfied with the eviction order, Mr de Bruyn, with leave of the high court, appealed to the full court. It held that all three agreements, on a proper interpretation, must be dealt with as one compactum. It further held that if the one falls, the whole deck of cards collapse. The transaction, according to the full court, was a scam. It, therefore held that the appeal succeeded insofar as the court a quo did not declare the sale agreement unlawful as well. Aggrieved by the full court’s order, Cuducap appealed that order in this Court. Its main issue on appeal was whether the full court was correct in setting aside an eviction order granted by the high court against Mr de Bruyn and whether the contracts where contra bonus mores. The SCA held that it was not competent for the full court to make that order, because according to this Court, the full court granted relief that was not sought by Mr de Bruyn. Furthermore, the full court made findings adverse to Standard Bank’s interests, without it being a party to the proceedings before the full court and the high court. This Court further held that a court would not deal with matters where a third party who may have a direct and substantial interest in the litigation was not joined in the suit or where adequate steps could not be taken to ensure that its judgment would not prejudicially affect the party’s interests, nor would it make findings adverse to any person’s interests, without that person first being a party to the proceedings before it. Given the specific facts of this matter, the SCA held that there could be no doubt that Standard Bank as the mortgagee, had a direct and substantial interest and it could be prejudicially affected by the judgment of the court. Courts have consistently refrained from dealing with issues in which a third party may have a direct and substantial interest without having that party joined in the suit, or if the circumstances of a case permit, taking other adequate steps to ensure that its judgment did not prejudicially affect that party’s interest. Given the circumstances of this case, the SCA in conclusion held that the appropriate order would be to remit the matter to the court of first instance so that it could take appropriate steps to safeguard the interests of parties who may have a direct and substantial interest in the litigation. In the result the appeal was upheld with costs, including those of two counsel. ~~~~ends~~~~

4227

non-electoral

2024

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA JUDGMENT Reportable Case no:396/2023 In the matter between: OPTIVEST HEALTH SERVICES (PTY) LTD APPELLANT and THE COUNCIL FOR MEDICAL SCHEMES FIRST RESPONDENT THE REGISTRAR OF THE COUNCIL FOR MEDICAL SCHEMES SECOND RESPONDENT OPEN WATER ADVANCED RISK SOLUTIONS (PTY) LTD THIRD RESPONDENT Neutral citation: Optivest Health Services (Pty) Ltd v The Council for Medical Schemes and Others (396/2023) [2024] ZASCA 64 (30 April 2024) Coram: MOCUMIE ADP, WEINER and GOOSEN JJA and COPPIN and BLOEM AJJA Heard: 5 March 2024 Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, published on the Supreme Court of Appeal 2 website, and released to SAFLII. The date and time for hand-down is deemed to be 11h00 on 30 April 2024. Summary: Whether s 44(4) of the Medical Schemes Act 131 of 1998 (the Act) enables the Council and Registrar of Medical Schemes to investigate the conduct of a broker – whether the Council was obliged to utilise the mechanisms of s 47 of the Act – whether the Council’s conduct was lawful, procedurally fair and rationally connected to the purpose of the Act. 3 _______________________________________________________________ ORDER _______________________________________________________________ On appeal from: Gauteng Division of the High Court, Pretoria (Nyathi J, sitting as court of first instance): The appeal is dismissed with costs, including the costs of two counsel. _____________________________________________________________ JUDGMENT _______________________________________________________________ Weiner JA (Mocumie ADP, Coppin and Bloem AJJA concurring): Introduction [1] The appellant is Optivest Health Services (Pty) Ltd (Optivest), which is accredited as a broker by the Council for Medical Schemes (the Council) in terms of s 1,1 read with s 652 of the Medical Schemes Act 131 of 1998 (the Act) and the regulations made in terms of the Act (the regulations). 1 Section 1 of the Act defines a broker to mean ‘a person whose business, or part thereof, entails providing broker services. . .’ ‘broker services’ are defined as: ‘(a) The provision of service or advice in respect of the introduction or admission of members to a medical scheme; or (b) The ongoing provision of service or advice in respect of access to, or benefits or services offered by, a medical scheme.’ 2 Section 65 provides as follows: ‘(1) No person may act or offer to act as a broker unless the Council has granted accreditation to such a person on payment of such fees as may be prescribed. (2) The Minister may prescribe the amount of the compensation which, the category of brokers to whom, the conditions upon which, and any other circumstances under which, a medical scheme may compensate any broker. (3) No broker shall be compensated for providing broker services unless the Council has granted accreditation to such broker in terms of subsection (1). (4) An application for accreditation shall be made to the Council in the manner and be accompanied by such information as may be prescribed, and any other information as the Council may require. (5) A medical scheme may not directly or indirectly compensate a broker other than in terms of this section. (6) A broker may not be directly or indirectly compensated for providing broker services by any person other than — (a) a medical scheme; (b) a member or prospective member, or the employer of such member or prospective member, in respect of whom such broker services are provided; or (c) a broker employing such broker.’ 4 [2] The first respondent is the Council. Section 3 of the Act provides for the establishment of the Council. The second respondent is the Registrar of the Council appointed in terms of s 18 of the Act. In terms of s 18(3), the Registrar shall act in accordance with the provisions of this Act and the policy and directions of the Council. (The first and second respondents will either be referred to collectively as ‘the respondents’, or individually as ‘the Registrar’ or ‘the Council’ where appropriate). [3] The third respondent, Open Water Advanced Risk Solutions (Pty) Ltd (Open Water), is the company which was appointed by the Registrar in terms of s 44(2) of the Act, read with s 134(1)(a) of the Financial Sector Regulation Act 9 of 2017 (the FSR Act), to undertake an inspection into Optivest after a tip-off was received from an anonymous former employee of Optivest regarding conduct that was alleged to be unlawful, which required further investigation. [4] This appeal concerns the powers of the Council to investigate the alleged non-compliance with the provisions of the Act by a broker accredited by the Council in terms of s 65 of the Act, by way of an inspection in terms of s 44(4) of the Act, read with the relevant provisions of the FSR Act. The Gauteng Division of the High Court, Pretoria (the high court) held that it did have such power and dismissed an application by Optivest challenging the exercise of that power with costs. This is an appeal against that order with the leave of that court. [5] The preamble of the Act sets out its purpose as follows: ‘To consolidate the laws relating to registered medical schemes; to provide for the establishment of the Council for Medical Schemes as a juristic person; to provide for the appointment of the Registrar of Medical Schemes; to make provision for the registration and control of certain activities of medical schemes; to protect the interests of members of medical schemes; to provide for measures for the co-ordination of medical schemes; and to provide for incidental matters.’ (Emphasis added.) 5 [6] The issues in this appeal are whether, upon a proper construction of inter alia ss 7 and 44(4) of the Act, the respondents have the power to investigate a complaint concerning a broker, in this case, Optivest. It also involves the question as to whether the respondents were obliged to utilise the mechanisms in s 47 of the Act, by giving Optivest the opportunity to respond to the complaint before embarking on the investigation of Optivest’s activities. Related to these issues are the defences raised by Optivest that the decision by the Council to appoint Open Water to investigate Optivest was unlawful, procedurally unfair and lacked rationality. The legislative scheme [7] The functions of the Council are outlined in s 7 of the Act. Section 7(a) provides for the duty to protect the interests of beneficiaries at all times. Section 7(h) gives the Council the power to perform any other functions conferred on it by the Minister under the Act. Section 8(h) empowers the Council to take any appropriate steps which it deems necessary or expedient to perform its functions in accordance with the provisions of the Act. The Council is a financial sector regulator and the executive officer of the Council refers to the Registrar, whose functions include the management of the affairs of the Council (s 18(2)). The decision to investigate a Medical Scheme or ‘any person’ for non-compliance with the Act is exclusively within the powers of the Registrar in terms of the Act. [8] Section 44(4) provides for inspections. In terms thereof: ‘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.’ (Emphasis added.) 6 [9] Related to the powers referred to above, are those contained in ss 129(2) and (3), 134, 135, 136 and 137 of the FSR Act, which respectively provide as follows: ‘129. Application and interpretation of Chapter. – . . . (2) The Council for Medical Schemes may exercise powers in terms of this Chapter in respect of powers and functions set out in the Medical Schemes Act, and powers and functions granted to it in this Act. (3) In relation to the exercise of the powers in terms of this Chapter by the Council for Medical Schemes in respect of a medical scheme, a reference in this Chapter to – (a) a financial sector regulator or the responsible authority must be read as including a reference to the Council for Medical Schemes; (b) the head of a financial sector regulator must be read as including a reference to the Registrar of Medical Schemes appointed in terms of section 18 of the Medical Schemes Act; (c) a financial sector law must be read as including a reference to regulatory instruments and to the Medical Schemes Act; and (d) a licensed financial institution must be read as including a reference to a medical scheme registered in terms of the Medical Schemes Act or an administrator of a medical scheme approved in terms of the Medical Schemes Act. . . . 134. Investigators. – (1) A financial sector regulator may, in writing, appoint a person as an investigator and may appoint any person to assist the investigator in carrying out an investigation. . . . 135. Powers to conduct investigations. – (1) A financial sector regulator may instruct an investigator appointed by it to conduct an investigation in terms of this Part in respect of any person, if the financial sector regulator— (a) reasonably suspects that a person may have contravened, may be contravening or may be about to contravene, a financial sector law for which the financial sector regulator is the responsible authority; or (b) reasonably believes that an investigation is necessary to achieve the objects referred to in section 251(3)(e) pursuant to a request by a designated authority in terms of a bilateral or multilateral agreement or memorandum of understanding contemplated in that section.’ 7 Section 136 deals with the powers of investigators to question and require production of documents or other items.3 The powers of the investigator are set out in s 137 of the FSR Act.4 3 Section 136 provides as follows: ‘136. Powers of investigators to question and require production of documents or other items. (1)(a) An investigator may, for the purposes of conducting an investigation, do any of the following: (i) By written notice, require any person who the investigator reasonably believes may be able to provide information relevant to the investigation to appear before the investigator, at a time and place specified in the notice, to be questioned by an investigator; (ii) by written notice, require any person who the investigator reasonably believes may be able to produce a document or item relevant to the investigation, to— (aa) produce the document or item to an investigator, at a time and place specified in the notice; or (bb) produce the document or item to an investigator, at a time and place specified in the notice, to be questioned by an investigator about the document or item; (iii) question a person who is complying with a notice in terms of subparagraph (i) or (ii)(bb); (iv) require a person being questioned as mentioned in subparagraph (i) or (ii)(bb) to make an oath or affirmation, and administer such an oath or affirmation; (v) examine, copy or make extracts from any document or item produced to an investigator as required in terms of this paragraph; (vi) take possession of, and retain, any document or item produced to an investigator as required in terms of this paragraph; and (vii) give a directive to a person present while the investigator is exercising powers in terms of this section, to facilitate the exercise of such powers. (b) An investigator who takes a document or item in terms of paragraph (a)(vi) must give the person producing it a written receipt. (c) Subject to paragraph (d), the investigator must ensure that a document or item taken in terms of paragraph (a)(vi) is returned to the person who produced it when— (i) retention of the document or item is no longer necessary to achieve the object of the investigation; or (ii) all proceedings arising out of the investigation have been finally disposed of. (d) A document or item need not be returned to the person who produced it if — (i) the document or item has been handed over to a designated authority; or (ii) it is not in the best interest of the public or any member or members of the public for the document or item to be returned. (e) A person otherwise entitled to possession of a document or item taken in terms of paragraph (a)(vi), or its authorised representative, may, during normal office hours and under the supervision of the financial sector regulator, examine, copy and make extracts from the document, or inspect the item. (2) A person being questioned in terms of this section is entitled to have a legal practitioner present at the questioning to assist the person.’ Section 137 provides as follows: ‘137. Powers of investigators to enter and search premises. – (1) An investigator may, for the purposes of conducting an investigation, do any of the following (a) Enter any premises . . . (ii) without prior consent and without prior notice to any person— . . . (bb) with the prior authority of the head of a financial sector regulator or a senior staff member of the financial sector regulator delegated to perform the function, if the head of a financial sector regulator or senior staff member on reasonable grounds believes that — . . . (CC) it is necessary to enter the premises to conduct the investigation and search the premises as referred to in paragraph (b) or (c), and to do anything contemplated in subsection (6); (b) if the investigation is one referred to in section 135(1)(a), search the premises for evidence of a contravention of a financial sector law; or 8 [10] Insofar as the FSR Act refers to the Council as ‘a financial sector regulator’, as stated above, this must be understood as referring to the Council acting through the Registrar. That is so because the Registrar is its executive officer and has the responsibility, in terms of the Act, to manage the Council’s affairs, and to initiate investigations or inspections as envisaged in the Act. [11] Section 47 of the Act provides: ‘(1) The Registrar shall, where a written complaint in relation to any matter provided for in this Act has been lodged with the Council, furnish the party complained against with full particulars of the complaint and request such party to furnish the Registrar with his or her written comments thereon within 30 days or such further period as the Registrar may allow. (2) The Registrar shall, as soon as possible after receipt of any comments furnished to him or her as contemplated in subsection (1), either resolve the matter or submit the complaint together with such comments, if any, to the Council, and the Council shall thereupon take all such steps as it may deem necessary to resolve the complaint.’ [12] Section 65(1) of the Act deals with accreditation of brokers. It prohibits parties from acting or offering to act as brokers unless the Council has granted accreditation to such persons on payment of such fees as may be prescribed. [13] Regulation 28B(1) provides that any person desiring to be accredited as a broker must apply in writing to the Council. The Council is responsible for the accreditation of brokers to provide broker services, which are defined to include the provision of services or advice in respect of: (a) the introduction or admission of members to a medical scheme; or (b) the ongoing provision of services or (c) if the investigation is one referred to in section 135(1)(b), search the premises pursuant to the request, subject to section 251 (6)(a) While on the premises in terms of this section, an investigator, for the purpose of conducting the investigation, has the right of access to any part of the premises and to any document or item on the premises. . .’ 9 advice in respect of access to, or benefits or services offered by, a medical scheme. [14] Regulation 28C provides for the suspension or withdrawal of accreditation given to a broker (for example) under Regulation 28B, if the Council is satisfied on the basis of available information, that the relevant broker inter alia has, since the granting of such accreditation, conducted his or her business in a manner that is seriously prejudicial to clients or the public interest. Background [15] On 27 May 2019, an anonymous tip-off was made by a former employee of Optivest through the Deloitte tip-off line. The tip-off was in the form of an email which was brought to the attention of the Registrar on or about the 31 May 2019. The author of the email containing the anonymous tip-off requested that this issue be forwarded to the correct department for investigation. In the email, it was alleged that the author had been working for Optivest and could not approach anyone at the company. The author alleged that: ‘Optivest Heath Services gives medical aid members an option to pay a service fee. Many members opt to have it, and some don’t even know that it was added. Down the line, members resign from the medical scheme, not knowing they still paying a service fee to Optivest. I have come across profiles of members paying service fees for years, without a medical aid profile. When asked if we can inform members, I was told we are not allowed to inform members that they are still paying a service fee. There are more than ten thousand “orphan” service fee profiles.’ [16] The Council’s Compliance and Investigation Unit (the Investigation Unit) prepared a report to the Registrar on 29 July 2019. It had formed the view that the allegations, if true, indicated that there were irregularities and non- 10 compliance with the Act and its regulations by Optivest, which warranted further investigation in the form of an inspection in terms of s 44(4)(a) of the Act, read with the FSR Act. [17] On 30 August 2019, Open Water was appointed in terms of s 44(2) of the Act5 read with s 134(1), 129(2) and (3) of the FSR Act, to conduct an inspection, in terms of s 44(4)(a) of the Act, ‘into the affairs of Optivest or any part of the affairs of the financial institutions and/or any person that directly or indirectly manages the affairs of Optivest. . .’. The purpose of the investigation was to- ‘5.1 investigate Optivest’s compliance with the MSA and its regulations regarding the receipt of and dealing with commissions/service fees received from medical schemes and/or medical scheme members; and 5.2 obtain and investigate all documentation relating to all broker commissions/ service fees paid to Optivest by medical schemes and or members of schemes as well as the circumstances surrounding such payments.’ [18] The appointment letters of the investigators set out detailed directions with clear parameters in respect of the issues to be inspected. The Registrar approved the recommendation from the Investigation Unit on 30 July 2019. On 21 October 2019, Open Water attended at the premises of Optivest to investigate Optivest’s affairs as per the mandate granted to it in its appointment letter. No notice was given to Optivest of the investigation, considering that it was based on a tip-off from a former employee and involved alleged fraudulent conduct, which could be concealed if notice was given. 5Section (44)(2) stipulates that: ‘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 No. 38 of 1984), as if he or she has been appointed an inspector under that Act.’ 11 [19] The initial inspection took place at Optivest’s premises on 21 and 22 October 2019. Optivest co-operated with Open Water on these occasions. The inspectors returned to the premises on 14 November 2019 to continue its inspection and interview Optivest officials. At this point, Optivest withdrew its co-operation and sought to challenge the Council’s authority to conduct an inspection into its affairs. It refused to hand over certain documentation which Open Water required to complete its investigation. These included audited financial statements and its agreements with its affiliated entities. As a result, Open Water produced ‘a second draft investigation report’ dated the 29 November 2019 (the draft report), which contained certain preliminary findings against Optivest, which the respondents contend are ‘damning’. [20] On 10 December 2020, Optivest instituted review proceedings seeking to review and set aside the decisions taken by the Registrar, alternatively, the Council, to: (a) initiate an investigation into Optivest’s affairs; (b) appoint Open Water to undertake the investigation on its behalf; and consequently, (c) to review and set aside the second draft report. Optivest also sought an order for the return of all information and documentation obtained in the course of the investigation. [21] Optivest’s review was based on three main grounds. It contended that: (a) the Council was not empowered by the Act or the FSR Act to initiate an investigation into it because it is a broker and not a medical scheme (the lawfulness challenge); (b) the investigation was allegedly initiated pursuant to a written tip-off. Accordingly, Optivest should have been afforded audi alterem partem (audi) in terms of s 47 of the Act (the procedural challenge); and 12 (c) the investigation was not rationally connected to the purpose sought to be achieved (the rationality challenge). [22] The high court dismissed Optivest’s application and found that: (a) the Council acted intra vires the powers statutorily vested in them in initiating the investigation; (b) Optivest, having applied for and been granted accreditation, is subject to the regulatory regime provided for by the Act; and (c) the mischief which the Council was called upon to investigate also occurred within the ambit of Optivest’s accreditation. [23] In the appeal, Optivest contends that the high court’s findings were incorrect and it seeks to challenge the decision on five grounds. These are encompassed in the three grounds raised in the high court. Optivest claims that the high court erred in the following respects: (a) in finding that the Registrar and Council acted within their powers in investigating Optivest’s affairs. This is rooted in the first three related grounds of appeal referred to above; (b) in its construction of the Council’s investigatory powers both under the Act and FSR Act in finding that the Council and the Registrar acted intra vires; (c) in its construction of section 44(4) of the Act and the provisions of the FSR Act; (d) in finding that the power to investigate brokers is reasonably incidental to the power to accredit brokers; (e) by failing to consider properly Optivest’s contention that the investigation was not rationally related to the complaint received; and (f) in finding that the Council was not required to furnish Optivest with a copy of the complaint before pursuing the investigation. 13 [24] The challenges and basis for the review of the actions taken by the respondents must be seen in the light of what was said in this Court in Bonitas Medical Fund v The Council for Medical Schemes (Bonitas),6 where it was held that: ‘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”. 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.’ [25] Significantly, this Court in Bonitas, in dealing with s 44(4)(a) stated that: ‘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). . . . 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 6 Bonitas Medical Fund v The Council for Medical Schemes [2016] ZASCA 154; [2016] 4 All SA 684 (SCA) paras 8-9. 14 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. . . or offended against the principle of legality. . .’7(Footnotes omitted.) The lawfulness challenge [26] Optivest submitted that the Council can only investigate or inspect the affairs of medical schemes, (or other persons related thereto), but not brokers despite them having been accredited by it under the Act. Optivest contends that the provisions of s 44 of the Act (save for ss (2), (3) and (4)) indicate that the powers stated therein are limited to medical schemes. Although s 44(4) refers to ‘any person’ or ‘any other person’, this reference, so Optivest contends, is to one upon whom the Act imposes a positive duty in relation to their duties to a medical scheme, for example, a trustee. It submits, as Goosen JA finds in the dissenting judgment, that the entire apparatus of s 44 is aimed at medical schemes. [27] The respondents contend for a wider construction of s 44(4)(a). They submit that the legislature, in including the words ‘any person’, as opposed to citing only a medical scheme or seeking to limit the list of persons which qualify as such in s 44(4) made a clear policy decision. Section 44(1) specifically contemplates an inspection into the affairs of a medical scheme,8 but the provisions of s 44(4) must be read to mean something other than a medical scheme (whilst it may include it). 7 Ibid paras 14-15. 8 S 44(1) of the Act provides: ‘A medical scheme shall, at the written request of the Registrar, or during an inspection of the affairs of a medical scheme, by the Registrar or such other person authorised by him or her, produce at any place where it carries on business, its books, documents and annual financial statements in order to enable the Registrar or such other person authorised by him or her to obtain any information relating to the medical scheme required in connection with the administration of this Act.’ 15 [28] The respondents also submit that the words in s 44(4)(a) must be given their ordinary grammatical meaning, unless it would result in absurdity or inconsistency.9 As Wallis JA opined in the seminal case of Natal Joint Municipal Pension Fund v Endumeni Municipality: ‘The present state of the law can be expressed as follows. Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. Whatever the nature of the document, consideration must be given to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appears; the apparent purpose to which it is directed and the material known to those responsible for its production. Where more than one meaning is possible each possibility must be weighed in the light of all these factors. The process is objective not subjective. A sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document. Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or businesslike for the words actually used. . . . . . . “the exercise of construction is essentially one unitary exercise.”.’10(Footnotes omitted.) [29] In Cool Ideas 1186 CC v Hubbard,11 the Constitutional Court summarised the principles applicable to statutory interpretation as follows: ‘A fundamental tenet of statutory interpretation is that the words in a statute must be given their ordinary grammatical meaning, unless to do so would result in an absurdity. There are three important interrelated riders to this general principle, namely: (a) that statutory provisions should always be interpreted purposively; (b) the relevant statutory provision must be properly contextualised; and (c) all statutes must be construed consistently with the Constitution, that is, where reasonably possible, legislative provisions ought to be interpreted to preserve their constitutional validity. 9 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18. 10 Ibid paras 18-19. 11 Cool Ideas 1186 CC v Hubbard [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869 (CC) para 28. 16 This proviso to the general principle is closely related to the purposive approach referred to in (a).’ (Footnotes omitted.) [30] The Registrar's powers are set out in Chapter 9 of the Act and include the powers to, inter alia, require additional particulars, make inquiries and conduct inspections and produce reports. The respondents contend that the high court was correct in finding that their powers to conduct inspections appear from the Act, the regulations and the FSR Act, all of which should be read together. [31] Optivest claims that the Council’s additional powers under ss 129, 134 and 135 of the FSR Act only apply to the inspection of medical schemes. The respondents contend that this does not align with the express wording of the sections. The subsection expands upon and/or extends the Council’s investigatory powers into others besides a medical scheme. The Financial Services Tribunal considered the proper construction of ss 134 and 135 in MediHelp Medical Scheme v the Registrar for Medical Schemes and Another12 and stated thus: ‘The appointment of investigators is regulated in the FSR Act by sections 134 and 135. Reading the provisions in the light of the definitions in sec 129, the Council [financial sector regulator] may, in writing, appoint a person as an investigator and may instruct the investigator appointed by it to conduct an investigation in terms of this Part in respect of any person, if the Council reasonably suspects that a person may have contravened, may be contravening or may be about to contravene, the Medical Schemes Act [a financial sector law] for which the Council [financial sector regulator] is the responsible authority.’ [32] The Act does not expressly provide for an inspection into the affairs of brokers, but it does use the words ‘any person.’ Optivest contends that it is a reference to one upon whom the Act imposes a positive duty in relation to their duties to a medical scheme, for example, a trustee. The respondents submit that, 12 Medihelp Medical Scheme v Registrar For Medical Schemes and Another [2020] ZAFST 88 para 10. 17 Optivest does perform a positive duty as it is required in terms of the Act to provide services and advice to beneficiaries. And, in its affidavit, Optivest refers to those that perform a positive service by including ‘[t]he supplier of a service, which has rendered a service to a beneficiary, that is obliged, under s 59(1) of the Act to furnish that beneficiary with a statement reflecting the particulars of the service supplied’. It is clear that a broker falls into that category, as defined.13 [33] The respondents contend that Optivest’s submissions are inconsistent with the express wording of ss 134 and 135 of the FSR Act, read with s 129. They submit that on a contextual and purposive interpretation of the Act, the only jurisdictional fact required for an inspection under s 44(4)(a) is that the Registrar must be of the opinion that such an inspection will provide evidence of any irregularity or non- compliance with the Act by ‘any person’. [34] The respondents submit that a broker must be certified in terms of s 65 of the Act and that regulation 28C empowers the Council to suspend or withdraw accreditation given to a broker if the Council is satisfied that the broker has, since the granting of such accreditation, conducted their business in a manner that is seriously prejudicial to clients or the public interest. These powers, the respondents submit, give rise to an implied primary power or, at the very least, an ancillary power in s 44(4)(a) and (b) that an inspection can be commissioned into the affairs of a broker of a medical scheme to ensure compliance with the Act. This, the respondents argue, is consistent with the maxim of construction encapsulated in the phrase ex accessorio aius, de quo verba loquuntur14,which the Constitutional Court has held to be a useful tool of interpretation.15 13 Op cit fn 1. 14Which translates to: ‘if the principal thing is prohibited or permitted, the accessory thing is likewise prohibited or permitted’. 15 AmaBhungane Centre for Investigative Journalism NPC and Another v Minister of Justice and Correctional Services and Others; Minister of Police v AmaBhungane Centre for Investigative Journalism NPC and Others [2021] ZACC 3; 2021 (4) BCLR 349 (CC); 2021 (3) SA 246 (CC). (Amabhungane). 18 [35] Where legislation grants certain powers, whatever is reasonably incidental to the proper carrying out of an authorised power is considered as impliedly authorised. This principle finds application in this context. This question of an implied primary power as opposed to an ancillary power was dealt with in the Constitutional Court as follows: ‘A primary power is a power to do something required to be done in terms of an Act and which does not owe its existence to, or whose existence is not pegged on, some other power; it exists all on its own. That is what makes it primary, and not ancillary. If it owed its existence to another primary power, then it would be an ancillary power.’16 [36] The Constitutional Court, in AmaBhungane, stated the following regarding the difference between an implied primary and an ancillary power as follows: ‘A distinction must be drawn between an implied primary power and an ancillary implied power. I consider it necessary to draw this distinction because quite often discussions of implied powers entail ancillary implied powers, and not primary implied powers. The distinction will be better understood if I first discuss the well-known concept, the ancillary implied power. An ancillary implied power arises where a primary power – whether express or implied – conferred by an Act cannot be exercised if the ancillary implied power does not also exist. For example, in Masetlha Moseneke DCJ, considering the President’s power to dismiss a head of an intelligence agency under section 209(2) of the Constitution, held: “The power to dismiss is necessary in order to exercise the power to appoint. . . Without the competence to dismiss, the President would not be able to remove the head of the Agency without his or her consent before the end of the term of office, whatever the circumstances might be. That would indeed lead to an absurdity and severely undermine the constitutional pursuit of the security of this country and its people. That is why the power to dismiss is an essential corollary of the power to appoint. . .”17 There, the power to dismiss was found to be an essential corollary of the power to appoint, and this Court thus interpreted the power in section 209(2) of the Constitution to appoint the 16 Ibid para 69. 17 Ibid paras 63-67. 19 head of the NIA to include a power to dismiss. The power to dismiss was an ancillary implied power, ancillary because it flowed from the power to appoint. In Matatiele Municipality Ngcobo J wrote: “It was . . . inevitable that the alteration of provincial boundaries would impact on municipal boundaries. This is implicit in the power to alter provincial boundaries. It is trite that the power to do that which is expressly authorised includes the power to do that which is necessary to give effect to the power expressly given. The power of Parliament to redraw provincial boundaries therefore includes the power that is reasonably necessary for the exercise of its power to alter provincial boundaries.” What I refer to as an ancillary power arises in the context of one power being necessary in order for an unquestionably existing power to be exercised. Examples of implied powers that I have picked up from academic writings have also been about implied ancillary powers. Hoexter says: “As a general rule, express powers are needed for the actions and decisions of administrators. Implied powers may, however, be ancillary to the express powers, or exist either as a necessary or reasonable consequence of the express powers. Thus ‘what is reasonably incidental to the proper carrying out of an authorised act must be considered as impliedly authorised’.” According to De Ville— “[w]hen powers are granted to a public authority, those granted expressly are not the only powers such public authority will have. The powers will include those which are reasonably necessary or required to give effect to and which are reasonably or properly ancillary or incidental to the express powers that are granted.’ 18 [37] Although the Act does not define the meaning of the phrase ‘any person’ in s 44(4)(a) or (b), a contextual and purposive interpretation is required in order to determine whether there is an implied ancillary power to investigate a broker under the Act. The following indicators are, the respondents submit, relevant: 18 Ibid. 20 (a) Section 135 of the FSR Act also provides that a financial sector regulator may instruct an investigator appointed by it to conduct an investigation in respect of ‘any person’, if the financial sector regulator ‘reasonably suspects that a person may have contravened, may be contravening or may be about to contravene, a financial sector law for which the financial sector regulator is the responsible authority.’ (b) The Council’s functions (as set out in s 7) include the protection of the interests of beneficiaries19 and the performance of any other function conferred on it by the Act.20 The Act, therefore, provides the Council and Registrar with a wide scope of functions to ensure that the interests of beneficiaries are protected from practices that do not comply with the Act. No limitation is indicated in relation to this function. The power in s 44(4)(a) exists to promote the object of the Council’s functions.21 (c) The Council’s’ powers (as set out in s 8 of the Act) entitles it to take any appropriate steps which it deems necessary or expedient to perform its functions in accordance with the Act.22 No limitation applies in respect of this power and the Council could take any steps necessary to fulfil its functions which, are outlined in ss 7(a) and (h). (d) In relation to accreditation of brokers, Regulation 28C empowers the Council to suspend or withdraw accreditation given to a broker if the Council is satisfied that the broker has, since the granting of such accreditation, conducted their business in a manner that is seriously prejudicial to clients or the public interest. (e) Section 65 of the Act regulates broker services and commission as well as accreditation by the Council. Regulation 28 of the Act regulates the fees payable to brokers. 19 Section 7(a) of the Act. 20 Section 7(h) of the Act. 21 Op cit fn 6 and 7. 22 Section 8(k) of the Act. 21 (f) Regulation 28 (9) of the Act provides that any person who has paid a broker compensation where there has been a material misrepresentation, or where the payment is made consequent to unlawful conduct by the broker, is entitled to the full return of all the money paid in consequence of such material misrepresentation or unlawful conduct. The Council is thus empowered to direct a broker to refund a beneficiary in respect of payments which fall foul of regulation 28(9). The implied (ancillary) power to investigate such a breach, must be included in the Council’s functions. Without such power, the remedy is ineffectual. [38] Section 135 of the FSR Act must be read together with ss 8 and 44(4)(a) of the Act. These sections encompass not only an express power to conduct an inspection, but the implied power to rely upon the relevant regulations, which provide some of the remedies which may be utilised to deal with a non-compliant broker. The Act regulates the accreditation, de-accreditation, remuneration and refunds to members as result of a misrepresentation or unlawful conduct of a broker. The regulations provide the remedies which the respondents can utilise to deal with such non-compliance. Thus, on a contextual and purposive interpretation, taking into account the inter-relationship between the Act and the regulations, the phrase ‘any person’ must be interpreted to include a broker and the Council must have the implied auxiliary power to investigate a broker. [39] The interpretation, proffered by Optivest, which would exclude or limit this power to investigate brokers in the context of the Act and regulation 28, is untenable. It means that the Council would not be entitled to conduct an inspection in order to perform its functions of monitoring or investigating any non-compliance with the Act and regulations, or determining whether a broker has received payment from beneficiaries as a result of a misrepresentation or unlawful conduct under any applicable legislation. A court must construe the 22 language in a statute against the background of the perceived mischief which the statute aims to address.23 The interpretation proffered by Optivest would fly in the face of this. [40] The Council and its duly appointed inspectors may exercise powers in terms of ss 129, 134, 135, 136 and, 137 of the FSR Act, which encompasses the powers set out in the Act. Section 129(2) provides that the Council may exercise powers in terms of Chapter 9 of the FSR Act in respect of its powers and functions in the Act and the FSR Act. The contention by the respondents that the Act, the regulations, and the FSR Act point to an implied power for the Council to inspect brokers on the grounds that it is reasonably incidental to the proper carrying out of its authorised powers under ss 44(4) and 65 of the Act and ss 134 and 135 (read with s 129) of the FSR Act, read with Regulations 28 B and C of the Act, has merit. [41] This approach is apposite to the interpretation of statutes which requires them to be read alongside each other so as to make sense of their provisions together. The ‘mischief rule’ directs a Court to construe the language in a statute against the background of the perceived mischief that the statute addresses. It is clear that the ‘mischief’ addressed by the Act is the non-compliance with the provisions of the Act and the regulations. [42] I therefore find that the Council, in terms of s 44(a), read with the relevant regulations and provisions of the FSR Act, has the power to inspect and investigate the conduct of brokers, such as Optivest. The procedural challenge 23 Op cit fn 11 above. 23 [43] Section 47 deals with written complaints against a party and stipulates the timelines for the representations from the person/s against whom a complaint has been laid. This complaint may or may not, lead to an inspection, but the respondents submit, it is not peremptory or a jurisdictional requirement for s 44(a) to be triggered. Section 44 operates independently of the complaints procedure set out in s 47 of the MSA. Section 44 gives the Registrar the power to appoint an investigator, whilst s 47 regulates the complaints process. The respondents contend that the purpose of s 44(4) would be defeated if the right of audi was required, in all circumstances. Section 44(4) provides for a regulatory mechanism,24 and the power under s 44(4), read with the relevant provisions of the FSR Act must enable the Registrar to act in terms of s 44(4)(a) with expedition and without notice, in order to be effective. [44] It is in the public interest for a medical scheme or ‘any other person’ suspected of non-compliance with the Act or improper conduct not to be provided with the opportunity to hide or destroy evidence. Without the element of surprise, the effectiveness would be lost. The right to audi is properly provided for by a response to the draft report, which Optivest chose not to deal with. Optivest had the opportunity to exercise its rights provided for in s 47, after it received the draft report, which sets out the details of the complaint. It chose not to do so. The rationality challenge [45] The purpose of the power contained in s 44(4) of the Act, as the respondents correctly submit, is rationally connected to achieving the purpose of the Act and the rationale behind the power provided for in the sub-section. The Council is empowered to monitor and investigate non-compliance with the Act 24 Bonitas para 7. 24 in order to protect the interests of beneficiaries. The Council is then empowered to take any appropriate steps which it deems necessary or expedient to perform its functions in accordance with the provisions of the Act. The power in terms of s 44(4) of the Act were entrusted to it to achieve such purpose. [46] Open Water’s report was based upon an examination of the following information and documents: (a) documentation describing Optivest’s business processes; (b) Optivest’s marketing and business framework; (c) the operation of the Optivest’s call centre; (d) documentation in respect of refunded service fees; (e) statistics on the collection, rejection and refunding of service fees; and (f) data in respect of service fees raised for Optivest’s clients. The further documentation obtained from Optivest (including publicly available information) was also referred to in the draft report. Optivest refused to provide Open Waters with any further documentation. [47] Based upon the limited information available to it, Open Water was able to make certain preliminary and critical findings in the draft report based upon the fact that Optivest, in charging its clients a service fee, contravened the Act and regulation 28 in that: (a) Open Water found no agreement setting out the terms of the service fee agreement between the parties; (b) call centre staff did not explicitly explain the purpose of the service fee or that it was optional; (c) call centre staff were instructed by management not to discuss the service fee with clients and was only to respond when clients enquired; (d) the services offered to clients as justification for the service fee are the same as the services expected to be provided by brokers; (e) Optivest charges a service fee which is recovered from its clients per debit order, separate from the commissions received from medical aid schemes, and 25 the debit forms do not appear to meet the requirements of a legal contract which would be required to debit such fee; (f) the services provided by Optivest and its related entities constitutes both ‘advice’ as well as ‘intermediary services’ and is, therefore, subject to both the Act and the FSR Act; and (g) debit orders are made without consent or agreement and are therefore, unenforceable. Thus, all the fees derived therefrom constitute irregular transactions under the Act and the Regulations. [48] Open Water accordingly recommended that: (a) ‘due to the compliance deficiency on the part of [Optivest] and/or its related parties, the Council should consider implementing the remedies contained in regulation 28(9) of the [Act], particularly what the Act sought to achieve regarding payment of fees in that: ‘Any person who has paid a broker compensation where there has been “material misrepresentation” or where the payment is made consequent to unlawful conduct by the broker, is entitled to the full return of all of the money paid in consequent [sic] of such material misrepresentation or unlawful conduct’; and (b) the service fees collected from clients under the above misrepresentation should be retrospectively quantified and reimbursed to the respective clients; as such funds would be proceeds of an unlawful transaction.’ [49] Accordingly, and keeping in mind the limited test for review set out in Bonitas, I hold that the conduct of the Council and the Registrar was lawful and in accordance with the rule of law, was not procedurally unfair, or arbitrary, was rationally connected to the purpose sought to be achieved by the Act and did not offend against the principle of legality .25 25 Bonitas para 15. 26 [50] In the result the following order is granted. The appeal is dismissed with costs, including the costs of two counsel. ______________________ S E WEINER JUDGE OF APPEAL Goosen JA (dissenting): [51] I have had the privilege of reading the judgment prepared by my colleague Weiner JA (the main judgment). Regrettably, I do not agree with the outcome and the reasoning employed to sustain it. I would uphold the appeal with costs and set aside the order of the high court. I would replace the high court order with one granting the relief sought by the appellant in its notice of motion, save that I would only award costs of the application on an ordinary scale. [52] The main judgment holds that s 44(4)(a) of the Act applies and therefore authorises the Registrar to conduct an inspection of the business activities of a broker accredited in terms of the Act. It also holds that, as far as there may be a complaint which is subject to s 47 of the Act, the existence of the complaint does not preclude the use of the powers conferred by s 44. [53] The central issue is one of interpretation. The principles applicable to the interpretation of a statutory provision are clear. What is required is a unitary exercise to assign meaning in which text, context and purpose are considered. This Court, with reference to the oft cited passage from Endumeni,26 explained in Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others that: 26 Endumeni fn 9 above. 27 ‘It is the language used, understood in the context in which it is used, and having regard to the purpose of the provision that constitutes the unitary exercise of interpretation. I would only add that the triad of text, context and purpose should not be used in a mechanical fashion. It is the relationship between the words used, the concepts expressed by those words and the place of the contested provision within the scheme of the agreement (or instrument) as a whole that constitutes the enterprise by recourse to which a coherent and salient interpretation is determined.’27 [54] The legislative context consists of the provisions of the Act read as a whole. The history of the particular enactment may also serve as context. As noted in Nissan SA (Pty) Limited v Commissioner for Inland Revenue: ‘Whatever the permissible scope for, and the limitations upon, the use of the legislative history of a particular provision as an aid to interpretation may be, I think it is obvious that where a provision has been amended and the amendment is deemed to have taken effect while the provision in its unamended state was operative, one is entitled to examine the implications of that in order to see whether they throw any light upon the interpretation which should be accorded to the amendment.’ 28 [55] In this instance, ss 44(2) and (3) of the Act refer to the Inspection of Financial Institutions Act, 34 of 1984. That Act was repealed by the Inspection of Financial Institutions Act, 80 of 1998 (the 1998 Inspection Act) which was, in turn, repealed by the FSR Act.29 The Act has yet to be amended to reflect the current state of affairs. In light of this, s 12(1) of the Interpretation Act 33 of 1957, applies. It reads as follows: ‘Where a law repeals and re-enacts, with or without modifications, any provision of a former law, references in any other law to the provision so repealed shall, unless the contrary intention appears, be construed to refer to the provision so re-enacted.’ 27 Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 94 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) para 25. 28 Nissan SA (Pty) Limited v Commissioner for Inland Revenue [1998] ZASCA 59; [1998] 4 All SA 269 (SCA); 1998 (4) SA 860 (SCA) at 870H-I; see also Joosub Ltd v Ismail 1953 (2) SA 461 (A) at 466. 29 The FSR Act came into operation on 1 April 2018. 28 [56] In the circumstances, an examination of both the repealed provisions and the re-enacting provisions, is required to come to a proper understanding of the legislative context within which meaning is to be assigned to the language of s 44 of the Act. One further relevant aspect is that s 44(4) was introduced by way of the Medical Schemes Amendment Act, 55 of 2001.30 The long title of the Amendment Act describes its purpose, inter alia, ‘to determine the circumstances under which inspections may occur’. At the time that s 44(4) was introduced, the provisions of the 1998 Inspection Act applied. The consequence, as will be demonstrated, was to circumscribe the ambit of the authority to conduct inspections in unequivocal terms, at least until the subsequent repeal of the 1998 Inspection Act. [57] Before turning to this, the following provisions of the Act provide the immediate legislative context within which s 44 must be read. The Council’s functions are set out in s 7. They include the obligation to protect the interests of beneficiaries of medical schemes;31 to control and co-ordinate the functioning of medical schemes;32 and to investigate complaints and settle disputes ‘in relation to the affairs of medical schemes’ as provided by the MSA.33 The Council’s powers are spelt out in s 8. Its regulatory authority is expressed as the power to approve the registration, suspension, and cancellation of registration of medical schemes.34 To facilitate the performance of its functions, it is granted the power to take all steps necessary or expedient in accordance with the Act.35 30 The Medical Schemes Amendment Act, 55 of 2001 came into operation on 1 March 2002. It is noteworthy that this Amendment Act did not amend s 44(2) and (3) to refer to the 1998 Inspection Act. 31 Section 7(a) of the Act. 32 Section 7(b) of the Act. 33 Section 7(d) of the Act. 34 Section 8(f) of the Act. 35 Section 8(k) of the Act. 29 [58] Section 24 of the MSA requires the registration of a medical scheme. The effect of such registration is addressed in s 26. This section sets out an array of requirements regulating the conduct of the business of a medical scheme. Section 35 provides for the financial arrangements of a medical scheme and the prudential requirements for the conduct of the business of a medical scheme.36 These provisions bear emphasis because they encapsulate the affairs of a medical scheme which are subject to supervisory control by the Council, in the interests of members of medical schemes. [59] Chapter 9 of the Act deals with the powers of the Registrar. In terms of s 42, the Registrar has the right to request information additional to that disclosed in an application for registration or in a return submitted by a medical scheme. Section 43 permits the Registrar to address enquiries to a medical scheme ‘in relation to any matter connected with the business or transactions of a medical scheme.’37 Section 44 which deals with the power to conduct inspections reads as follows: ‘(1) A medical scheme shall, at the written request of the Registrar, or during an inspection of the affairs of a medical scheme, by the Registrar or such other person authorised by him or her, produce at any place where it carries on business, its books, documents and annual financial statements in order to enable the Registrar or such other person authorised by him or her to obtain any information relating to the medical scheme required in connection with the administration of this Act. 36 The ‘business of a medical scheme’ is defined in s 1 of the Act to mean: ‘the business of undertaking, in return for a premium or contribution, the liability associated with one or more of the following activities: (a) Providing for the obtaining of any relevant health service; (b) granting assistance in defraying expenditure incurred in connection with the rendering of any relevant health service; or (c) rendering a relevant health service, either by the medical scheme itself, or by any supplier or group of suppliers of a relevant health service or by any person, in association with or in terms of an agreement with a medical scheme.’ 37 Section 43 provides that: ‘The Registrar may address enquiries to a medical scheme in relation to any matter connected with the business or transactions of the medical scheme, and the medical scheme shall reply in writing thereto within a period of 30 days as from the date on which the Registrar addressed the enquiry to it, or within such other period as the Registrar may specify.’ 30 (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 No. 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. (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. (5) The Registrar may, at any time by notice in writing, direct a medical scheme to furnish to him or her within a period specified in that notice, or within such further period as the Registrar may allow— (a) a statement of its assets and liabilities, including contingent liabilities; and (b) any other document or information specified in the notice, relating to the financial or other affairs of the medical scheme over a period likewise specified.’38 (Emphasis added.) [60] In Bonitas,39 this Court described the nature and purpose of s 44 as ‘purely investigative’. In that matter, a registered medical scheme lodged an appeal against a decision by the Registrar to conduct an inspection of its affairs in terms of s 44(4)(a) of the Act. This Court held that no appeal lay against the decision to invoke the power. The Court did not deal with the reach of the power to conduct an inspection. [61] Section 44(1) uses the word ‘inspection’ to convey an examination of records, documents, and other material at the place of business of a medical scheme. It also qualifies the subject matter of the inspection by specifying that it 38 I have emphasised certain phrases which appear in the section for purposes of the discussion to follow. 39 Bonitas para 14. 31 is an inspection of the affairs of a medical scheme. This qualification accords with the defined ambit of the powers and functions of the Council. It also accords with the purpose of the regulatory scheme, namely to place the conduct of the business of a medical scheme under the supervisory control of the Council. [62] It is important to note that the Act does not specify or define the powers of an inspector. It does so with reference to the now repealed 1998 Inspection Act. This latter Act contained provisions which specifically limited the powers of inspection to the affairs of the financial institution.40 The 1998 Inspection Act also specifically defined the powers of an inspector in relation to ‘any other person’. Section 5(1) provided that: ‘In order to carry out an inspection of the affairs of an institution under section 3 or 3A an inspector may— (a)(i) summon any person, if the inspector has reason to believe that such person may be able to provide information relating to the affairs of the institution or whom the inspector reasonably believes is in possession of, or has under control, any document relating to the affairs of the institution, to lodge such document with the inspector or to appear at a time and place specified in the summons to be examined or to produce such document and to examine, or against the issue of a receipt, to retain any such document for as long as it may be required for purposes of the inspection or any legal or regulatory proceedings; (ii) administer an oath or affirmation or otherwise examine any person referred to in subparagraph (i); (b) on the authority of a warrant, at any time without prior notice— 40 Section 3 of the 1998 Inspection Act dealt with the power to inspect institutions (for which read medical scheme in light of the definition of a financial institution contained in the Act). It reads: ‘3(1) The registrar may at any time instruct an inspector to carry out an inspection of the affairs, or any part of the affairs, of a financial institution or associated institution. (2) If the registrar has reason to believe that a person, partnership, company or trust which is not registered or approved as a financial institution, is carrying on the business of a financial institution, he or she may instruct an inspector to inspect the affairs, or any part of the affairs, of such a person, partnership, company or trust.’ Section 4 provided for the powers of the inspector in relation to institutions. Subsection (1) qualified the exercise of the powers as follows: ‘(1) In carrying out an inspection of the affairs of an institution under section 3 or 3A an inspector may—. . .’ 32 (i) enter any premises and require the production of any document relating to the affairs of the institution; (ii) enter and search any premises for any documents relating to the affairs of the institution; (iii) open any strong-room, safe or other container which he or she suspects contains any document relating to the affairs of the institution; (iv) examine, make extracts from and copy any document relating to the affairs of the institution or, against the issue of a receipt, remove such document temporarily for that purpose; . . . but an inspector may proceed without a warrant, if the person in control of any premises consents to the actions contemplated in this paragraph.’ (Emphasis added). [63] These provisions demonstrate, unequivocally, that an investigative inspection carried out in terms of s 44 of the Act, as read with the 1998 Inspection Act, was plainly intended to relate only to the affairs of a medical scheme. That was the case both prior to, and after s 44(4) was introduced.41 The purpose of s 44(4) was, as the long title of the Amendment Act indicated, to provide for the circumstances in which inspections could be conducted. It provided for two scenarios, namely routine inspections (s 44(4)(b)) and ‘investigative’ inspections (s 44(4)(a)) where some impropriety was under investigation. At the stage that s 44(4) was introduced, there was no amendment of the 1998 Inspection Act to expand the powers of the Registrar or inspector to undertake an investigation of the affairs of ‘any other person’ or entity. Section 5 of the 1998 Inspection Act remained extant. At that stage, therefore, and until the subsequent repeal of the 1998 Inspection Act, s 44(4) did not entitle the Registrar to conduct an inspection of ‘any other person’, except in the context of an inspection of the affairs of a medical scheme. 41 See para 57 and fn 30 above. 33 [64] The question that arises is whether the repeal of the 1998 Inspection Act, without amendment of the Act, brought about an extension of the powers of investigation or inspection beyond that which was contemplated prior to the repeal and the enactment of the FSR Act. [65] The FSR Act is a comprehensive omnibus legislative instrument enacted with the stated purpose of establishing a system of regulation of the financial services sector.42 It provided for the establishment of two principal regulatory authorities to supervise financial product providers, namely a Prudential Authority and the Financial Sector Conduct Authority (the FSCA).43 Chapter 9 of the FSR Act is headed ‘Information gathering, Supervisory on-site inspections and investigations’. It deals with matters which were previously regulated by the 1998 Inspection Act. [66] In Ex parte Glavonic, it was held, with reference to the application of s 12(1) of the Interpretation Act, that: ‘To ascertain whether there is a re-enactment, with or without modifications, it is necessary to examine the object of the new legislation, and the scheme and pattern of it, and then to see whether this does not show an intention to put on the statute book what previously existed, with or without modification. D. v. The Minister of the Interior, 1962 (1) S.A. 655 (T) at p. 658H.’44 42 The Long Title states, inter alia, that it seeks: ‘. . . to establish a system of financial regulation by establishing the Prudential Authority and the Financial Sector Conduct Authority, and conferring powers on these entities; . . . to regulate and supervise financial product providers and financial services providers; . . . to make comprehensive provision for powers to gather information and to conduct supervisory on-site inspections and investigations; [and] to provide for information sharing arrangements. . .’. 43 Sections 32 and 56 of the FSR Act. 44 Ex parte Glavonic 1967 (4) SA 141 (N) at 142H. 34 [67] This Court, in Berman Brothers (Pty) Ltd v Sodastream (Pty) Ltd and Another,45 explained the nature of modifications contemplated by s 12(1) of the Interpretation Act as follows: ‘The question then is whether or not, bearing in mind these aforementioned differences, there has been a re-enactment with modifications of the relevant provisions of the 1916 Act. In D v Minister of the Interior 1962 (1) SA 655 (T), at p 659 D, the Full Bench of the Transvaal Provincial Division, approving the finding of WILLIAMSON J in the same case (see 1960 (4) SA 905, at 909) held that in this context the word “modifications”: “is not limited to the action of limiting or qualifying or toning down or restricting any statement; it can mean to make partial changes or to make changes in respect of certain qualities or to alter or vary without radical transformation. Insofar as the meaning of the word ‘modifications’ in sec. 12 (1) of the Interpretation Act is concerned it seems to me that WILLIAMSON J was correct when he held that it must mean any alteration which does not change the essential nature or character of the repealed provisions.” This interpretation and the test adopted were followed in Nkomo and Others v Minister of Justice and Others 1965 (1) SA 498 (SR, AD), at p 505 D-G; Ex parte Glavonic 1967 (4) SA 141 (N), at pp 142 H – 143 A and S v Msitshana 1978 (1) SA 386 (W), at pp 388 H – 389 C; and it seems to me that they should be followed by this Court. Applying the test in the present case, the question is whether or not the relevant provisions of the 1963 Act, in repealing and re-enacting with alterations the corresponding provisions of the 1916 Act, changed “the essential nature or character” of the repealed provisions.’ (My emphasis.) [68] Section 129 of the FSR Act concerns the application and interpretation of the chapter. It provides, in relevant part, as follows: ‘(2) The Council for Medical Schemes may exercise powers in terms of this Chapter in respect of powers and functions set out in the Medical Schemes Act, and powers and functions granted to it in this Act. (3) In relation to the exercise of the powers in terms of this Chapter by the Council for Medical Schemes in respect of a medical scheme, a reference in this Chapter to ─ 45 Berman Brothers (Pty) Ltd v Sodastream (Pty) Ltd [1986] ZASCA 27; [1986] 2 All SA 252 (A); 1986 (3) SA 209 (A) at 240. 35 (a) a financial sector regulator or the responsible authority must be read as including a reference to the Council for Medical Schemes; (b) the head of a financial sector regulator must be read as including a reference to the Registrar of Medical Schemes appointed in terms of section 18 of the Medical Schemes Act; (c) a financial sector law must be read as including a reference to regulatory instruments and to the Medical Schemes Act; and (d) a licensed financial institution must be read as including a reference to a medical scheme registered in terms of the Medical Schemes Act or an administrator of a medical scheme approved in terms of the Medical Schemes Act.’ [69] The balance of the chapter contains provisions relating to information gathering (s 131); powers to conduct supervisory on-site inspections (s 132); the appointment of an investigator (s 134); the power to conduct investigations (s 135) and the powers that may be exercised by investigators (ss 136 and 137). I shall touch upon these where necessary. Chapter 9 therefore re-enacts the 1998 Inspection Act with modifications. The most obvious modification is that the FSR Act no longer provides for the appointment of ‘inspectors’. It now provides for the appointment of ‘investigators’. In light of the investigative nature of an inspection envisaged by s 44(4) of the Act, nothing turns on this. It does not alter the essential character of the repealed provisions authorising an investigative investigation of the affairs of a medical scheme. [70] The second modification concerns the distinction between supervisory inspections and ‘investigations’. Section 132 provides that a financial sector regulator (for which read the Council of a Medical Scheme)46 may, upon notice, conduct a supervisory on-site inspection at the business premises of ‘a supervised entity’. The FSR Act defines a ‘supervised entity’ to include a ‘licenced financial institution’. Section 129(3)(d) specifies that for the purposes of the exercise of the powers conferred by the chapter, a licence financial 46 Section 129(3)(a) of the FSR Act. 36 institution must be taken to include a medical scheme registered in terms of the Act. The purpose of a supervisory inspection is to check compliance with a financial sector law (read with the Act)47 for which the regulator ‘is the responsible authority’.48 [71] Upon a careful reading of s 44(4)(b), which concerns routine inspections, the Registrar’s power to conduct a supervisory on-site inspection can only relate to the supervised entity under its regulatory or supervisory control. In this instance, it concerns a registered medical scheme. As concerns such inspection, the repeal of the 1998 Inspection Act and re-enactment of its provisions in the FSR Act, did not bring about an extension of the powers to inspect entities which are not supervised entities in terms of the Act. [72] The same applies in relation to s 44(4)(a). The qualification, however, is not expressed with reference to ‘supervised entity’. Section 135, which confers the power to investigate, is framed in broad terms. It states, in relevant part, that: ‘(1) A financial sector regulator may instruct an investigator appointed by it to conduct an investigation in terms of this Part in respect of any person, if the financial sector regulator— (a) reasonably suspects that a person may have contravened, may be contravening or may be about to contravene, a financial sector law for which the financial sector regulator is the responsible authority; or . . .’ [73] The main judgment places reliance upon this broad formulation to support the conclusion that Optivest is subject to the exercise of the Registrar’s investigatory powers because it is a licenced financial services provider accredited by the Council. In my view, there are two respects in which the conclusion is incorrect. First, the broad ambit of the powers of investigation are qualified by s 129 of the FSR Act. Subsection (3) refers to the exercise of Chapter 47 Section 129(3)(c) of the FSR Act. 48 Section 132(2)(a) of the FSR Act. 37 9 powers by the Council ‘in respect of a medical scheme’. When this qualification is applied to the substitution of terms as explained in sub-paragraphs (a) to (d), it is clear that the Chapter 9 powers can only be applied in relation to a medical scheme which falls under the supervisory control of the Council. Furthermore, the qualification is entirely consonant with the overall qualification of the Council’s supervisory powers as expressed in the provisions of the Act read as a whole. Secondly, the qualifying phrase ‘in respect of a medical scheme’ expressly ensures that the modifications effected by the FSR Act do not alter the essential character of the powers conferred by the 1998 Inspection Act. [74] Counsel for the respondents argued that the FSR Act had, in effect, broadened the regulatory powers of the Council. The argument did not, however, account for the legislative mechanism by which these changes were said to have been introduced. If it had been intended to broaden the ambit and scope of the powers which may be exercised by the Council, then an amendment of the provisions of the Act and s 44(4), in particular, could have been expected. In this regard, this Court’s approach to the limitations of reliance upon the provisions of the Interpretation Act to support such alteration are instructive. In Spinnaker Investments (Pty) Ltd v Tongaat Group Limited, it was observed that: ‘I deem it unlikely that the Legislature would depend solely on the provisions of the Interpretation Act if there were an intention to legislate with such far reaching consequences. The words of Lord MORRIS of Borth-Y-Gest (reported in Blue Metal Industries v R.W. Dilley (1969) 3 AER 437 at 442) are apposite: “The Interpretation Act is a drafting convenience. It is not to be expected that it would be used so as to change the character of legislation.” See too Floor v Davis (1979) 2 AER 677 at 681 (H.L.). I do not think that the Interpretation Act 1957 can be used to extend the ambit of the definition of “take-over scheme” so as to 38 fortify and lend weight to the meaning for which plaintiff contends. If that meaning had been intended, the draftsman would surely have said so.’49 [75] In addition, the accreditation of Optivest as a broker who is entitled to offer specific broker services in terms of the Act does not render it subject to the supervisory control of the Council in terms of the Act. ‘Broker services’ is defined by the Act to include ‘(a) the provision of service or advice in respect of the introduction or admission of members to a medical scheme; or (b) the ongoing provision of service or advice in respect of access to, or benefits or services offered by, a medical scheme’. These services are plainly advisory or intermediary services rendered in relation to a financial product.50 Optivest was obliged to be, and was in fact, licenced as a financial services provider in terms of the FAIS Act.51 As a matter of fact, therefore, Optivest’s conduct as a licenced financial services provider rendering advisory services, was subject to the conduct codes issued under the FAIS Act,52 and fell under the supervisory authority of the Financial Sector Conduct Authority (the FSCA).53 [76] These provisions establish that the regulatory and supervisory power of the FSCA is based upon the nature of the service, and not upon the content of the service. Thus, the fact that a broker service is provided in relation to a particular type of financial product, namely the benefits offered by a medical scheme, is of no significance insofar as the control of the service is concerned. Nor, in my view, does it matter that s 65 of the Act imposes upon an accredited broker, restrictions as to fees or any other obligations. A failure to comply with 49 Spinnaker Investments (Pty) Ltd v Tongaat Group Limited 1982 (1) SA 65 (A) at 75G-H. 50 See the definition of the terms ‘advice’, ‘financial product’ and ‘intermediary services’ as set out in s 1 of the Financial Advisory and Intermediary Services Act 37 of 2002 (the FAIS Act). 51 See ss 7 and 8 of the FAIS Act. 52 See s 15 of the FAIS Act. Section 16, significantly, provides that the published codes must comply with certain principles. One of those is to encapsulate the requirement that the service provider ‘comply with all applicable statutory or common law requirements applicable to the conduct of business’ (s 16(1)(e)). 53 See s 58(1)(a), read with s 5 and Schedule 2 of the FAIS Act. The effect is that the FSCA is the regulatory authority responsible for supervisory control of supervised entities which fall under the ambit of the FAIS Act. 39 such statutory obligations would render the broker concerned in breach of the conduct requirements imposed by the FAIS Act and that, in turn, would render the broker subject to regulatory sanction at the instance of the FSCA. [77] ‘Accreditation’ in terms of the Act is not the equivalent of licencing. It serves, as the term suggests, to permit or authorise the provision of advice in relation a particular product, and no more. Accreditation does not, in my view, place the broker concerned under the supervisory control of the Council and, upon such basis, subject to investigation by the Registrar utilising the power conferred by s 44 of the Act. To hold that accreditation places a broker under the supervisory control of the Council, even if only in relation to compliance with s 65 of the Act, as the main judgment does, would give rise to considerable regulatory conflict and inefficiency. This can be illustrated as follows. Assume that an accredited broker, in breach of s 65 is paid fees in excess of those which are prescribed and also receives indirect benefits for advising clients to become members of a particular medical scheme. Such conduct would entitle the Council to suspend or cancel the accreditation of the broker. The conduct would also constitute a breach of prescribed conduct rules in terms of the FAIS Act and a breach of the conditions of the licence issued to the broker. Yet, the Council would have no authority to take any action against the broker in terms of the FAIS Act. That authority rests with the FSCA. For such action to be taken, the Council would have to report the matter to the FSCA so that it, as the regulatory authority responsible for the supervision of the conduct of brokers, might act. The converse situation poses no such problems. The FSCA is entitled to investigate any conduct on the part of a broker, including possible non-compliance with the Act. The FSCA could act upon its findings. So too could the Council since the accreditation of a broker is subject to the fit and proper requirements established and regulated by the FAIS Act. 40 [78] The main judgment places some reliance upon the judgment of the Constitutional Court in AmaBhungane,54 which concerned circumstances in which the existence of authority or power to act may be implied in a statute. As I understand the main judgment, it calls in aid the potential for an implied authority to investigate the conduct of a broker as an interpretative tool. It is, however, not clear upon what basis the authority is to be implied. The Constitutional Court drew a careful distinction between ancillary powers and primary powers. Both forms may be implied in consequence of the interpretive exercise of determining meaning and giving effect to statutory provisions. It is, however, necessary to determine whether the implied power derives from and is therefore ancillary to an existing conferred power, or if it is implied as a primary power by virtue of a reading of the statute as a whole. [79] In the latter instance, the power is implied in order to render the statutory instrument effective. That was the situation in AmaBhungane where it was implied that the Minister was empowered to appoint a ‘designated judge’ despite the absence of an express provision to that effect. [80] In this instance, the power to conduct an investigative inspection of the affairs of an accredited broker does not meet the requirements for implying it as a primary power. The absence of an express authorisation to conduct such investigative inspection does not render the Act inoperative nor, for the reasons proffered above, does it exempt a broker from proper regulatory control and supervision. [81] Is the power to be implied as ancillary to some other expressly conferred power? The main judgment appears to accept that it must be on the basis of the existence of the power to accredit a broker and to enforce compliance with 54 AmaBhungane para 65. 41 regulation 28 of the regulations. In light of the reasoning adopted by the main judgment this issue does not arise, since the judgment accepts that the use of the phrase ‘by any other person’ in s 44(4)(a) of the Act is broad enough to expressly cover application of the section to brokers. There is therefore no need for an implied ancillary power. [82] In any event, I am unable to agree that such power is to be implied as ancillary to the power to accredit for the reasons I have already set out. Furthermore, reliance upon regulation 28 is misplaced. In Moodley and Another v Minister of Education and Others,55 this Court held, unequivocally, that: ‘It is not permissible to treat the Act and the regulations made thereunder as a single piece of legislation; and to use the latter as an aid to the interpretation of the former.’ [83] Still less may one use the regulations promulgated under an act as a source of primary power from which one might imply that an ancillary power has been conferred by the act. The main judgment suggests that this course is appropriate insofar as it suggests that the remedy provided by regulation 28(9) would be ineffective unless the power to conduct an investigative inspection of a broker is implied.56 Regulation 28(9), in any event, does not confer any remedial power upon the Council. It merely provides that a broker is liable to repay fees received in consequence of unlawful conduct.57 [84] This brings me to the procedural challenge based upon s 47 of the Act. The language of s 47 indicates that the Council is entitled to adjudicate complaints in relation to both registered entities (medical schemes) and 55 Moodley and Others v Minister of Education and Culture, House of Delegates and Another [1989] ZASCA 45; 1989 (3) SA 221 (AD) at 233E. 56 See paras 38(e) and 40 of the main judgment. 57 Regulation 28 (9) reads as follows: ‘Any person who has paid a broker compensation where there has been a material misrepresentation, or where the payment is made consequent to unlawful conduct by the broker, is entitled to the full return of all the money paid in consequence of such material misrepresentation or unlawful conduct.’ 42 accredited persons (in this case Optivest as an accredited broker). The section requires that if a written complaint is received, a copy of the complaint must be furnished to the party concerned to afford it the opportunity to respond to the complaint. [85] The main judgment holds that the Registrar is entitled to proceed to employ the machinery of s 44(4)(a) notwithstanding the existence of s 47 and the peremptory language used in the latter section. It therefore concludes that the complaint procedure does not serve as a bar to an investigative inspection as contemplated by s 44(4)(a). In light of my conclusion that the Registrar does not have the authority or power to conduct an investigative inspection of the business or affairs of a broker, the interplay between ss 44 and 47 does not arise. I accordingly express no view on whether the existence of a s 47 complaint precludes the employment of s 44(4) to parties to whom it applies. [86] For these reasons I would uphold the appeal on the terms indicated at the outset. __________________ G GOOSEN JUDGE OF APPEAL 43 Appearances For the appellant: J J Meiring with P S MacKenzie and S Mathe Instructed by: Von Lieres Cooper and Barlow, Cape Town Hendre Conradie Inc, Bloemfontein For the first and second respondent: R Tshetlo with Z Ngakane and S Mashiane Instructed by: MacRobert Inc, Pretoria Claude Reid Attorneys, Bloemfontein.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL From: The Registrar, Supreme Court of Appeal Date: 30 April 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 Optivest Health Services (Pty) Ltd v The Council for Medical Schemes and Others (396/2023) [2024] ZASCA 64 (30 April 2024) Today the Supreme Court of Appeal (SCA) dismissed an appeal with costs including those of two counsel. The appellant, Optivest Health Services (Pty) Ltd (Optivest), is accredited as a broker by the first respondent, the Council for Medical Schemes (the Council) which was established in terms of s 3 of the Medical Schemes Act 131 of 1998 (the Act). The second respondent is the Registrar of the Council appointed in terms of s 18 of the of the Act. The third respondent, Open Water Advanced Risk Solutions (Pty) Ltd (Open Water), is the company which was appointed by the Registrar in terms of s 44(2) of the Act, read with s 134(1)(a) of the Financial Sector Regulation Act 9 of 2017 (the FSR Act), to undertake an inspection into Optivest. This was after a tip-off was received from an anonymous former employee of Optivest regarding conduct that was alleged to be unlawful, which required further investigation. The tip-off was in the form of an email which was brought to the attention of the Registrar on or about the 31 May 2019. In the email, it was alleged that the author had been working for Optivest and could not approach anyone at the company. The Council’s Compliance and Investigation Unit (the Investigation Unit) prepared a report to the Registrar, which indicated that if the allegations were true, there were irregularities and non-compliance with the Act and the regulations by Optivest, which warranted further investigation in the form of an inspection in terms of s 44(4)(a) of the Act, read with the FSR Act. On 30 August 2019, Open Water was appointed in terms of s 44(2) of the Act, read with s 134(1), 129(2) and (3) of the FSR Act, to conduct an inspection into the affairs of Optivest, in terms of s 44(4)(a) of the Act. Open Water attended at the premises of Optivest to investigate Optivest’s affairs as per the mandate granted to it in its appointment letter. No notice was given to Optivest of the investigation, considering that it was based on a tip-off from a former employee and involved alleged fraudulent conduct, which could be concealed if notice was given. The initial inspection took place at Optivest’s premises. Optivest co-operated with Open Water on these occasions. The inspectors returned to the premises on a later occasion to continue its inspection and interview Optivest officials. At this point, Optivest withdrew its co-operation and sought to challenge the Council’s authority to conduct an inspection into its affairs. It refused to hand over certain documentation which Open Water required to complete its investigation. As a result, Open Water produced a second 2 draft investigation report dated the 29 November 2019 (the draft report), which contained certain preliminary findings against Optivest, which were regarded as ‘damning’. On 10 December 2020, Optivest instituted review proceedings in the Gauteng Division of the High Court, Pretoria (the high court) seeking to review and set aside the decisions taken by the Registrar. Optivest’s review was based on three main grounds: (a) that the Council was not empowered by the Act or the FSR Act to initiate an investigation into it because it is a broker and not a medical scheme (the lawfulness challenge); (b) that the investigation was allegedly initiated pursuant to a written tip-off and Optivest should have been afforded audi alterem partem in terms of s 47 of the Act (the procedural challenge); and (c) the investigation was not rationally connected to the purpose sought to be achieved (the rationality challenge). The high court dismissed Optivest’s application, finding that: (a) the Council acted intra vires the powers statutorily vested in them in initiating the investigation; (b) Optivest, having applied for and been granted accreditation, is subject to the regulatory regime provided for by the Act; and (c) the investigation fell within the bounds of the mischief which the Council was called upon to investigate. In the appeal before the SCA, Optivest contended that the high court’s findings were incorrect and it sought to challenge the decision on five grounds which were encompassed in the three grounds raised in the high court. The issues before the SCA were thus: whether, upon a proper construction of inter alia ss 7 and 44(4) of the Act, the respondents had the power to investigate a complaint concerning a broker; whether the respondents were obliged to utilise the mechanisms in s 47 of the Act, by giving Optivest the opportunity to respond to the complaint before embarking on the investigation of Optivest’s activities; whether the decision by the Council to appoint Open Water to investigate Optivest was unlawful, procedurally unfair and lacked rationality. In addressing these issues, the SCA, in a majority judgment, held that, the interpretation proffered by Optivest would exclude the investigation of brokers in the context of regulation 28. This would mean that the Council would not be entitled to conduct an inspection in order to perform its functions of monitoring or investigating any unlawful conduct or non-compliance with the Act and regulations, A court must construe the language in a statute against the background of the perceived mischief which the statute aims to address and the interpretation proffered by Optivest would fly in the face of this. On this point, it was concluded that the Council, in terms of s 44(a), read with the relevant regulations and provisions of the FSR Act, had the power to inspect and investigate the conduct of brokers such as Optivest. With regards to the procedural challenge, the majority judgment held that it was in the public interest for a medical scheme or ‘any other person’ suspected of non-compliance with the Act or improper conduct not to be provided with the opportunity to hide or destroy evidence as without the element of surprise, the effectiveness would be lost. The majority judgment reasoned that the right to audi alterem partem is properly provided for by a response to the draft report, which Optivest chose not to deal with. Lastly, on the issue of the rationality challenge, the majority judgment held that the purpose of the power contained in s 44(4) of the Act is rationally connected to achieving the purpose of the Act and the rationale behind the power provided for in the sub-section. As the Council is empowered to monitor and investigate non-compliance with the Act in order to protect the interests of beneficiaries, the Council is also empowered to take any appropriate steps which it deems necessary or expedient to perform its functions in accordance with the provisions of the Act. The power in terms of s 44(4) of the Act were entrusted to it to achieve such purpose. In the circumstances, the majority held that the conduct of the Council and the Registrar was lawful and in accordance with the rule of law, was not procedurally unfair, or arbitrary, was rationally connected to the purpose sought to be achieved by the Act and did not offend against the principle of legality. In the result, the appeal was dismissed with costs including those of two counsel. 3 The minority judgment held that the central issue in the matter was one of interpretation, pointing out that it was important to note that the Act does not specify or define the powers of an inspector, it does so with reference to the now repealed Inspection of Financial Institutions Act, 80 of 1998 (the 1998 Inspection Act). The latter Act contained provisions which specifically limited the powers of inspection into the affairs of the financial institution and specifically defined the powers of an inspector in relation to ‘any other person’. Making reference to s 5(1) of the 1998 Inspection Act, the minority judgment held the view that this section demonstrates that an investigative inspection carried out in terms of s 44 of the Act, as read with the 1998 Inspection Act, was intended to relate only to the affairs of a medical scheme and that was the case both prior to, and after s 44(4) was introduced. The issue before the SCA was whether the repeal of the 1998 Inspection Act, without amendment of the Act, brought about an extension of the powers of investigation or inspection beyond that which was contemplated prior to the repeal and the enactment of the FSR Act. In reaching its conclusion, the minority judgment held that, upon a careful reading of s 44(4)(b) of the Act, which concerns routine inspections, the Registrar’s power to conduct a supervisory on-site inspection can only relate to the supervised entity under its regulatory or supervisory control and that, in this instance, this only related to a registered medical scheme. As concerns such inspection, the repeal of the 1998 Inspection Act and re-enactment of its provisions in the FSR Act, did not bring about an extension of the powers to inspect entities which are not supervised entities in terms of the Act. In the result, the minority judgment concluded that the appeal ought to have been upheld. --------oOo--------