The law reports

July 1st, 2016
x
Bookmark

May 2016 (3) South African Law Reports (pp 1 – 314); [2016] 2 All South African Law Reports April (pp 317 – 637)

Heinrich Schulze BLC LLB (UP) LLD (Unisa) is a professor of law at Unisa.

Heinrich Schulze BLC LLB (UP) LLD (Unisa) is a professor of law at Unisa.

 

This column discusses judgments as and when they are published in the South African Law Reports, the All South African Law Reports and the South African Criminal Law Reports. Readers should note that some reported judgments may have been overruled or overturned on appeal or have an appeal pending against them: Readers should not rely on a judgment discussed here without checking on that possibility – Editor.

 

Abbreviations:

ECG: Eastern Cape Division, Grahamstown
GJ: Gauteng Local Division, Johannesburg
GP: Gauteng Division, Pretoria
KZD: KwaZulu-Natal Local Division, Durban
SCA: Supreme Court of Appeal
WCC: Western Cape Division, Cape Town

Attorneys

What is trust money? Bridging finance: In Attorneys Fidelity Fund v Injo Investments CC 2016 (3) SA 62 (WCC) the second defendant, a firm of attorneys (the firm), had misappropriated money, which was paid into its trust account. The payment was made for the purpose of providing bridging finance to certain clients of the firm. The payments had been made in terms of ‘discount agreements’ entered into between the respondent (plaintiff) and such clients of the firm, on the strength of false representations made by the firm that these clients had sold their immovable properties and required finance, pending payment to them of the proceeds of such sales on transfer.

The plaintiff’s claim was for an amount of R 1,04 million and arose from eight substantially identical claims, in respect of which, the plaintiff had already obtained default judgment against the firm. Having ultimately failed to recover the money from the firm, the plaintiff sued the appellant, the Attorneys Fidelity Fund Board of Control (the Fund), in terms of s 26(a) of the Attorneys Act 53 of 1979 (the Act), on the basis that it had suffered pecuniary loss as a result of the theft by the firm of money entrusted to it. The Fund was sued in its capacity as professional indemnity insurer. The Fund repudiated liability.

The plaintiff then successfully sued the Fund in the court a quo. The key issue to be decided on appeal, was whether the money paid by the plaintiff into the trust account of the firm was entrusted by the plaintiff to the firm, as envisaged in s 26(a) of the Act. It was the Fund’s contention that it was not. Such assertion was based on the fact that the plaintiff had made payment into the firm’s trust account only to discharge its obligation to the firm’s ‘client’, and given that it was the client who had nominated the firm’s trust account as the payment mechanism, and there was nothing in the discounting agreement which stipulated that no other mechanism could be used – this was irrespective of what the plaintiff might have asserted or thought to the contrary.

The plaintiff further argued that its intention when making payment into the firm’s trust account was the determining criterion; in the circumstances, rather than payment to the firm being in discharge of a debt, it was intended by the plaintiff to be security for payment by the firm to the client. Accordingly, so the plaintiff continued, intention was sufficient to establish entrustment for purposes of s 26(a). In support of its claim it relied on, inter alia, Industrial and Commercial Factors (Pty) Ltd v Attorneys Fidelity Fund Board of Control 1997 (1) SA 136 (A) (the ICF case).

Cloete J held that at all material times the firm purported to represent the client in accepting payment of the money into its trust account. The firm’s obligation was not to retain the money in trust and to deal with it on the client’s behalf, but simply to pay it straight over to the client. The court referred with approval to Attorneys Fidelity Fund Board of Control v Mettle Property Finance (Pty) Ltd 2012 (3) SA 611 (SCA) in finding that the firm’s trust account was nothing other than a conduit. There was thus no entrustment of money by the plaintiff to the firm.

The court further held that to the extent that the court in the ICF case relied on the intention of a claimant in paying over money into the trust account of the wrongdoing attorneys, it did so in the light of the particular facts of that case. In accordance with the approach adopted in the Mettle Property case, the payer’s intention was not the overriding criterion in determining whether there had been entrustment for the purposes of s 26(a) of the Act.

The appeal was accordingly upheld with costs.

Constitutional law

Language rights: In Lourens v Speaker of the National Assembly of Parliament of the Republic of South Africa and Others [2016] 2 All SA 340 (SCA) the appellant, Lourens, practised as an attorney. He is Afrikaans-speaking. He argued that the current practice of Parliament in relation to the language used for legislation, and the rules of Parliament in that regard, amounted to unfair discrimination against him and all non-English speaking people in the country in that Bills are introduced into Parliament invariably in English, are published in English, and that the official text that is sent to the President for signature is also, invariably, in English only.

Accordingly, so Lourens argued, the failure to translate all Acts of Parliament into all 11 official languages amounts to unfair language discrimination in terms of the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000 (the Equality Act).

He brought proceedings in the Equality Court seeking, inter alia, a declaration that the respondents (the government) were guilty of conduct that amounted to unfair language discrimination as suggested above. The Equality Court dismissed the application but granted leave to appeal to the SCA because the issues raised were ‘important constitutional questions of national importance’, which deserved the attention of the SCA.

Lewis JA held that although s 6 of the Constitution accords 11 languages official status,
s 6(3) expressly allows government at national and provincial level to act in a minimum of two of the official languages. Thus, the Constitutional Assembly intended that not all official languages have to be employed in the process of government.

The court referred to the provisions of the Constitution that govern the processes of Parliament and the enactment of statutes, and then the joint rules of Parliament that deal with its use of language. It found that recently, Parliament had been in breach of its own rules and of s 6(3) of the Constitution in that many of the Acts of Parliament passed since 1996 were published in only one language – English. Similarly, amendments to Acts, even those where the signed version of which was in Afrikaans, had been amended in English only.

The court pointed out that s 9 of the Constitution, dealing with equality, is given effect to by the provisions of the Equality Act. Lourens was required to make out a prima facie case of discrimination on the ground of language. While not disputing that there was discrimination, the government argued that such discrimination was not unfair. Section 14 of the Equality Act sets out the test for fairness. Applying the test set out therein, the court found that in so far as Parliament and the National Government did not pass Bills, and enact them, in all official languages, they were not guilty of unfair discrimination. Although Parliament’s failure to comply with its own rules relating to language as set out above had to be remedied, the appeal had to fail. Government did not ask for the costs of the appeal.

Consumer Protection Act

Defects in second-hand goods: In Vousvoukis v Queen Ace CC t/a Ace Motors 2016 (3) SA 188 (ECG) the court was asked to consider whether the provisions in the Consumer Protection Act 68 of 2008 (CPA) protecting consumers against defective goods, also includes second-hand or used goods.

The facts were that Vousvoukis (the consumer), a businessman of Queenstown, instituted an action against Ace Motors (the supplier) for the restitution of the purchase price of a second-hand BMW motor (the vehicle) that he bought from the latter in September 2011 for the sum of
R 470 000. In December 2011, having driven approximately 4 000 km the vehicle experienced mechanical problems. It was agreed that the engine would be replaced at the expense of the supplier. The repaired vehicle was eventually returned to the consumer in February 2012. In July 2012, after another 8,000 km the replaced engine experienced mechanical problems. The oil pump drive gear was badly damaged due to some unknown cause.

The consumer tendered the return of the vehicle, but the tender was rejected. He then lodged proceedings claiming termination of the agreement claiming a refund of the purchase price. In the alternative he claimed restitution in terms of s 56 of the CPA in that the supply of the vehicle contravened the implied warranty of quality provisions of s 55. In a further alternative he claimed that the second engine that was installed contained a latent defect at the time of installation. He claimed restitution under the actio redhibitoria.

The supplier argued that the provisions of ss 55 and 56 of the CPA were inapplicable as they did not apply to used goods and that the defect was not so serious that the buyer was entitled to rescind the contract. Section 5(1)(a) provided specifically that the Act applies to ‘every transaction occurring within [South Africa]’, unless it was specifically exempted.

Pickering J held that although there is a definition of ‘used goods’ in the CPA, the term is not referred to again in the Act. None of the exemptions were relevant to the present transaction. The court held that the generic term ‘goods’ includes used goods. There is no indication that the legislature intended to exclude used goods from the protection against defective goods in ss 55 and 56.

The court further held that even if there is uncertainty, the CPA must be interpreted in a manner which best promotes the spirit and purpose of the Act. To exclude used goods would undermine the Act and would exclude protection for that part of the population most in need of such protection, namely the socio-economically vulnerable.

The court pointed out that the protection against defective goods under the CPA lapses after the six month period stipulated in s 56(2). Equally, the protection for defective repairs lapses after three months in terms of s 56(3).

In the present case both these terms had lapsed and the consumer was not entitled to rely on the protective rights under ss 55 and 56. The replacement of the engine did not amount to a new supply of goods or separate transaction, but was a repair under the original transaction, especially since the supplier paid for the engine itself. The seller did not supply a defective engine, but a defective vehicle.

The court further confirmed that neither a court nor the National Consumer Tribunal has the power to extend the periods stipulated in s 56. However, where the statutory rights have lapsed, consumers still retain their common law rights under the aedilitian actions for latent defects. In order to terminate the agreement, the consumer must prove that the defect was serious enough to warrant termination. The test is whether a reasonable consumer would have declined to enter the transaction if he had known about the defect.

The court concluded that the latent defect was not serious enough to warrant rescission as the defect could be repaired relatively easily by replacing the oil pump at a cost of about R 15 000.

The consumer’s claim for rescission under the CPA, alternatively under the actio redhibitoria, were accordingly rejected with costs.

Contract law

Authority to enter into contract, essential requirements: The facts in Millcreek Trading CC t/a Pro Arm Firearm Training Academy v Passenger Rail Agency of South Africa (PRASA) t/a Metrorail [2016] 2 All SA 537 (KZD) were as follows: The plaintiff, Millcreek, a close corporation, alleged that the defendant, Passenger Rail Agency of South Africa (PRASA) had committed breach of contract. Millcreek’s core business is in the area of providing firearm training and the obtaining of competency certificates in terms of the Firearms Control Act 60 of 2000 (the Firearms Act). It alleged that it was approached in 2008 by an employee of PRASA to urgently undertake work on behalf of the latter in securing competency certificates for its protection officers, who were required to carry firearms as part of their duties. The issuing of a competency certificate is regulated by the provisions of ch 4 of the Firearms Act.

Millcreek immediately commenced work on the basis of the urgent request, and took fingerprints, as well as photographs of the protection officers for certification. It also engaged with various service providers for the printing of firearm manuals in respect of each of the firearm unit standards applicable to the protection officers, as well as securing the services of trainers to conduct the necessary training. Shortly thereafter, Millcreek was invited and duly submitted a bid in respect of a tender put out by PRASA for training for its protection officers in terms of the new firearm standards. However, in December 2008, Millcreek was informed that it had not been successful in its bid.

In seeking to claim damages from PRASA in the amount of R 489 072 for ‘lost profit and opportunity’, Millcreek did not rely on a written agreement, and based its claim entirely on a verbal agreement concluded with one Chami, an employee of PRASA and whom Millcreek alleged it had at all material times believed to be duly authorised to represent PRASA and to contract on its behalf.

PRASA, in turn, contended that no legally binding and enforceable agreement had been entered into between it and Millcreek, and even if Millcreek contracted with Chami, the latter lacked the necessary authority to do so on behalf of PRASA. PRASA further specifically pleaded that the procurement of services and goods by PRASA, as a state entity, was regulated by the provisions of the Public Finance Management Act 1 of 1999 (PFMA) read with s 217 of the Constitution. Accordingly, the procurement of goods and services by PRASA in excess of R 350 000 had to be undertaken via a competitive and prescribed bidding process. It was contended that Millcreek was fully aware of the procedures required to contract with PRASA, and knew or ought to have been aware that when it contracted with Chami, that such contract was inevitably concluded in breach of the PFMA and that it would accordingly be unenforceable.

Chetty J held that the onus was on Millcreek to establish the essential requirements for a valid contract with PRASA, including the authority of Chami to contract on behalf of and bind PRASA.

The court found that Millcreek’s evidence was deficient in that it omitted mention of the agreed contract price and details of whether the service provided by Millcreek was sufficient to comply with the certification process in terms of the Firearms Act. The absence of any evidence from Millcreek as to payment in terms of the contract was relevant to PRASA’s contention that any contract in excess of R 350 000 was required to follow a competitive bidding process. There was also no documentation placed before the court to confirm that the sole member of Millcreek was authorised, even as a peace officer, to take fingerprints for competency certificates. Significantly, of the 110 applications for firearm competency which Millcreek claimed to have processed, 31 of the applicants were shown not to have been in PRASA’s employment at the time.

Millcreek further failed to call Chami to prove its claim that he had the necessary authority to enter into contracts on behalf of PRASA. There was also no evidence adduced to suggest that Millcreek was justified in believing that Chami had the requisite authority to bind PRASA. Moreover, as PRASA was a state-owned enterprise it was improbable that a single employee of it could have the authority to bind PRASA.

Millcreek’s claim was accordingly dismissed with costs.

Exit agreement: In Padayachee v Adhu Investments CC and Others [2016] 2 All SA 555 (GJ) the parties concluded an agreement involving the plaintiff, the first two defendants, and certain other entities. The plaintiff was to be paid a fee of R 2,5 million (the fee) for assisting in the raising of funds from a funder to facilitate a transaction. The plaintiff would then exit the transaction.

The plaintiff instituted action against the first and second defendants for damages for financial loss caused by them to him by preventing payment of the fee. He averred that the defendants failed to perform such acts as might be necessary to give effect to the terms of the exit agreement. The first two defendants admitted the conclusion of the exit agreement, but denied that the conditions necessary for payment of the fee were met. They denied that the plaintiff had done what was required of him for payment of the fee. The duties of the plaintiff and second defendant were recorded in the written agreement.

Two issues arose for determination:

  • First, what the plaintiff’s obligations in terms of the exit agreement were and whether he complied with his obligations.
  • Secondly, whether the second defendant breached the exit agreement; and if so, whether the plaintiff was obliged to comply with the breach clause in the exit agreement and whether he did.

In deciding the matter Opperman AJ held that the factual disputes which existed between the evidence adduced on behalf of the plaintiff, and the evidence presented on behalf of the defendants be dealt with in the manner laid down in Stellenbosch Farmers Winery Group Ltd and Another v Martell et Cie and Others 2003 (1) SA 11 (SCA). In the latter case the court held that: ‘To come to a conclusion on the disputed issues a court must make findings on (a) the credibility of the various factual witnesses; (b) their reliability; and (c) the probabilities’ (my italics).

In applying these guidelines, the court in the Padayachee matter held that the first question for determination was whether the evidence of the plaintiff and second defendant, over and above that which was recorded in the agreement in relation to what their obligations were, was admissible in evidence. Evidence about what the parties thought their obligations are, which is at variance with the express provisions of the exit agreement, would be inadmissible as offending the integration rule (a sub-rule of the parol evidence rule).

The court further referred to the ‘new’ approach to interpretation, which has abolished one of the branches of the parol evidence rule (that is, the ‘interpretation rule’, which stated that extrinsic evidence was not admissible in order to determine the meaning of a written instrument). However, the abolishment of the one ‘branch’ does not affect the operation of the other ‘branch’ of the parol evidence rule, being the so-called ‘integration rule’, which determines the content or limits of a written instrument. Thus, the integration rule remains in force.

The court accordingly held that the evidence of the plaintiff was to be preferred to that of the second defendant. It concluded that the plaintiff had performed his contractual obligations in terms of the exit agreement.

Judgment in the amount of R 2,5 million was granted against the defendants jointly and severally.

Delict

False imputation of racism: In Du Plessis v Media 24 t/a Daily Sun and Another 2016 (3) SA 178 (GP) the defendant-newspaper falsely imputed an act of racism to Du Plessis (the plaintiff). It reported, under the headlines, ‘Frozen – for an onion’ and ‘Orel was in a cold room for two hours’ that the plaintiff, who is a produce-market stall owner, tied the hands of a suspected onion thief, Orel Khoza, with ‘a plastic strip’ and ‘shoved’ him into a cold-storage room, where he remained ‘for two hours’, until the police, alerted by Khoza’s friends, arrived.

The article went on to state that the ordeal left Mr Khoza with ‘frozen hair’ and that he was ‘still shivering’ an hour later. The court found most of this to be exaggeration: Although the plaintiff had indeed locked Khoza in a cold-storage room for stealing an onion, he was not tied up as alleged, nor ‘shoved’, nor detained for two hours (it was 45 minutes), nor found with his hair frozen (he was bald), nor found still shivering.

The plaintiff alleged that the article had racial undertones and was inherently defamatory. The defendant claimed public interest and denied that the article was inherently defamatory. They argued that since the plaintiff did not claim innuendo, the court could not ascribe racial undertones to the article. They further argued that even if these were found to exist, they would only tend to increase public interest.

Tokota AJ held that the article was an embellishment and substantially false account of the event. The article would be viewed by the ordinary reader as intending to impute that the plaintiff had little or no regard for other groups in the community. As such, the article was inherently defamatory. Innuendo need not have been pleaded.

The fact that the article was substantially false militated against the ‘public-interest’ defence. It was not in the public interest to embellish information – so as to create unnecessary sensation – which undermined the integrity of an individual.

The defendant newspaper was guilty of defamation and ordered to pay the plaintiff
R 80 000 in compensation.

Restraint from unlawful interference: In Masstores (Pty) Ltd v Pick n Pay Retailers (Pty) Ltd and Another [2016] 2 All SA 351 (SCA) the court was asked to consider the parameters of a restraint clause in a lease agreement.

The facts in Masstores were that in February 2006, the appellant, Masstores, leased part of the CapeGate shopping centre in Brackenfell for the purpose of operating a retail business. The lease agreement stipulated that a general food supermarket could not be operated on the leased premises. In May 2006, the first respondent, Pick n Pay, concluded a lease agreement in terms of which it leased premises at the same shopping centre. Its lease agreement contained an exclusivity clause in terms of which the lessor, Hyprop, would not permit the operation of another supermarket in the centre.

Although Masstores’ products initially excluded food, just before 2010 it began selling non-perishable food and grocery items. In September 2013, Masstores introduced fresh fruit and vegetables and fresh pre-packed meat products at its store in the shopping centre. As a result, Pick n Pay launched an application in the court a quo, seeking a final interdict against Masstores, restraining it from interfering in the contractual relationship between Pick n Pay and Hyprop by carrying on a business exclusively granted to Pick n Pay in terms of the latter’s lease agreement. The court upheld Pick n Pay’s contentions, and granted a final interdict.

On appeal Majiedt JA confirmed that a delictual action lies in instances where an outside party knowingly deprives a person of his rights under a contract with another.

Masstores denied that it had operated a supermarket in violation of the lease agreement. Masstores contended that the word ‘supermarket’ had a specialised meaning. The SCA rejected this contention and agreed with Pick n Pay that it was an ordinary and well-known word with an ordinary meaning. The trial court relied on a dictionary meaning of the word ‘supermarket’ in terms of which the store must be large and it must carry a wide range of products. The SCA approved this meaning and rejected Masstores’ attempts to introduce expert evidence on the meaning of the word.

On the photographic evidence, it was clear that Masstores conducted a general food supermarket at its store and was, therefore, trading in competition with Pick n Pay in breach of Masstores’ lease obligations.

Next, the SCA considered the three requirements that had to be met for a successful claim by Pick n Pay based on the unlawful interference by Masstores in the former’s contractual relationship with Hyprop. There had to be an unlawful act; which constitutes an interference in the contractual relationship; and which is committed with some form of dolus.

In applying these three requirements to Masstores’ conduct, the court held, first, that in trading in competition with Pick n Pay, contrary to its contractual restraint, after it was made aware of Pick n Pay’s right to exclusivity, Masstores acted unlawfully.

Secondly, it held that inducement or enticement is not a requirement in a claim based on the unlawful interference in a contractual relationship. It held that Masstores had acted wrongfully in preventing Pick n Pay from obtaining the performance to which it was entitled by virtue of its contractual right of exclusivity.

Thirdly, the court considered the requirement of intent. Pick n Pay had asked Masstores in writing to desist from conducting a supermarket at the leased premises, but the latter failed to heed the request. This constituted direct intent or, at the very least, dolus eventualis. The requirements of the delictual action had therefore been proved by Pick n Pay.

The appeal was dismissed with costs.

International law

Diplomatic immunity: The decision in Minister of Justice and Constitutional Development and Others v Southern African Litigation Centre (Helen Suzman Foundation and Others as Amici Curiae) [2016] 2 All SA 365 (SCA) enjoyed a high level of media attention, both locally and abroad. The facts are well-known and suffice it to mention here that the South African government failed to arrest and surrender the President of Sudan, Omar Hassan Ahmad Al-Bashir (Al-Bashir), when he attended a session of the Assembly of the Africa Union (AU) in Johannesburg in June 2015. The International Criminal Court (ICC) had earlier issued a warrant for Al-Bashir’s arrest for war crimes and crimes against humanity, and genocide.

South Africa is a signatory to the Rome Statute, which it incorporated into domestic law by enacting the Implementation of the Rome Statute of the International Criminal Court Act 27 of 2002 (the Implementation Act). Chapter 4 of the Implementation Act provides the mechanism whereby South Africa cooperates with the ICC in regard to the arrest and surrender of persons accused of international crimes.

A number of issues arose for decision in the SCA. The central issue before Wallis JA was whether Al-Bashir enjoyed immunity under customary international law and s 4(1) of the Diplomatic Immunities and Privileges Act 37 of 2001 (the DIPA). The government’s argument was that in terms of customary international law, heads of state enjoy immunity by virtue of the office they hold, and are not subject to the criminal or civil jurisdiction of the courts of other countries or any other form of restraint.

The court held that South Africa is bound by its obligations under the Rome Statute. It is obliged to cooperate with the ICC and to arrest and surrender to the court persons in respect of whom the ICC has issued an arrest warrant and a request for assistance. The relationship between the Implementation Act and the head of state immunity conferred by customary international law, on the one hand, and the DIPA, on the other hand, lies at the heart of this case. The Constitution provides a specific mechanism whereby obligations assumed under international agreements become a part of the law of South Africa.

Next the court considered whether there is an international crimes exception to the principle of head of state immunity, enabling a state or national court to disregard such immunity when called upon by the ICC to assist in implementing an arrest warrant. That question was answered in the negative. Whether the Implementation Act had the effect of removing the immunity that Al-Bashir would otherwise enjoy was a matter of the proper construction of the Implementation Act. The court held that the DIPA is a general statute dealing with the subject of immunities and privileges enjoyed by various people, including heads of state. The Implementation Act is a specific Act dealing with South Africa’s implementation of the Rome Statute. In that special area, the Implementation Act enjoys priority. Section 4(1)(a) of DIPA continues to govern head of state immunity unless such immunity is excluded by the operation of the Implementation Act.

The court concluded that the conduct of the South African Government in failing to take steps to arrest and detain Al-Bashir was inconsistent with South Africa’s obligations in terms of the Rome Statute and s 10 of the Implementation Act, and thus unlawful.

– News ‘Court criticised over Al-Bashir judgment’ 2015 (Aug) DR 6;

– LSSA News ‘Profession stands behind Chief Justice and judiciary in raising concern on the attacks on judiciary and the rule of law’ 2015 (Aug) DR 14;

– Law reports ‘International law’ 2015 (Nov) DR 39; and

– AGM News ‘Justice Minister focuses on transformation at Cape Law Society AGM’ 2015 (Dec) DR 8.

Land

Transfer of: In Absa Ltd v Moore and Another 2016 (3) SA (SCA) the respondents (the plaintiffs) fell victim to a property scam of one Brusson. The plaintiffs fell into arrears with their bond repayments and they were unable to pay other debts as well. They were in dire financial straits.

Under the impression that they were applying for a secured loan, the plaintiffs sold their house to an ‘investor’, one Kabini, to whom the defendant (Absa) granted a home loan secured by a mortgage bond. The property was transferred to Kabini and the plaintiffs’ five mortgage bonds cancelled simultaneously with the registration of Kabini’s bond. When Kabini later defaulted on his loan, Absa took judgment against him and attached the property in execution of his debt. At the time of execution the house was still occupied by the plaintiffs. The plaintiffs received some R 160 000 from Brusson while the purchase price payable by Kabini was R 686 000.

The High Court granted the plaintiffs’ application for an interdict prohibiting the proposed sale in execution and declaring the various transactions between Brusson, the plaintiffs and Kabini, as well as Kabini’s bond, to be invalid. The court ordered the restitution of the property to the plaintiffs subject to the reinstatement of their five bonds and payment to Absa of the money they received from Brusson (less payments already made to it).

On appeal Absa argued that it should not be deprived of its real right in the property when it was innocent of any wrongdoing. The plaintiffs, in turn, argued that since Kabini never acquired ownership, he could not have encumbered the property with a mortgage bond in favour of Absa.

Like other victims of the scam, the plaintiffs were made to sign the following documentation:

  • An offer to purchase under which an unnamed third party (the name of Kabini was later inserted) offered to buy the home.
  • A deed of sale under which Kabini sold the house back to the plaintiffs.
  • A memorandum of agreement which regulated the tripartite relationship between Brusson, the plaintiffs and Kabini.

The Brusson scam enjoyed judicial attention in a number of other judgments involving other banks and victims. Most of the judgments which dealt with the scam found that the transactions were invalid simulated sales. The High Court judgment followed one of these cases.

Lewis JA held that the transactions were not simulated. The plaintiffs and the other victims of the Brusson scam never intended to disguise their contracts as something they were not, but were instead hoodwinked as to their true nature. The real issues were –

  • what the victims really intended to achieve by contracting with Brusson and the so-called investors; and
  • whether the contracts were rendered invalid as a result of fraud.

When they signed the documentation, the plaintiffs thought they were obtaining a loan and not concluding a sale, and that they never had any intention of authorising a transfer of their property. The High Court’s finding of simulation was thus unwarranted. The plaintiffs were victims of the scam and were induced to enter into the contracts by the fraudulent misrepresentations of Brusson.

The registration of property has no effect if the transferor did not intend to transfer ownership. Kabini therefore did not acquire ownership. Nor had he the legal capacity to pass a bond over property he did not own. The High Court finding on these aspects and reliance on the SCA’s earlier decision in Nedbank Ltd v Mendelow and Another NNO 2013 (6) SA 130 (SCA) was thus correct. (Incidentally, the judgment in the latter case was delivered by Lewis JA; who also delivered the judgment in the Moore matter.)

There was, however, no basis for the High Court’s restitution-for-repayment order. Absa did not ask for it and the court could not make a contract between Absa and the plaintiffs or order the plaintiffs to pay money they did not owe. Neither could the court order that the plaintiffs register a bond over their property in favour of Absa, because there was simply no longer a contractual nexus between them.

The court concluded that Absa have an unsecured claim against Kabini and perhaps also against the conveyancer responsible for the registration of the bond in the first place. The court based this obiter comment on the possible liability of the conveyancer on s 15A(1) of the Deeds Registries Act 47 of 1937. Section 15A(1) provides generally that a conveyancer who prepares and signs the relevant documents in a property transfers, accepts responsibility for the accuracy of the facts mentioned in the documents.

The appeal was thus dismissed with costs.

Other cases

Apart from the cases and topics that were discussed or referred to above, the material under review also contained cases dealing with: Appeals, civil procedure, constitutional law (legislation), corporate law (business rescue), courts, criminal law, criminal procedure, evidence, government procurements, immigration, insolvency, intellectual property, judgments, labour law, local authority, practice, provincial government and revenue.

This article was first published in De Rebus in 2016 (July) DR 44.