The Law Reports

February 24th, 2016
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January 2016 (1) South African Law Reports (pp 1 – 322); [2015] 4 All South African Law Reports December no 1 (pp 543 – 688); and no 2 (pp 690 – 815); [2014] 3 All South African Law Reports July no 1 (pp 1 – 114); and no 2 (pp 115 – 257)

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

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

Banking

Unauthorised withdrawals: In DA Ungaro & Sons (Pty) Ltd v Absa Bank Ltd [2015] 4 All SA 783 (GJ) the court held that where a bank allows the manager of a company who has opened an account in the name of the company to make unauthorised withdrawals from the account, the bank will be held liable to the company.

The facts were as follows: In July 2000 the plaintiff’s manager, Huang, opened a savings account with the defendant, Absa, on behalf of and in the name of the plaintiff. Over a period of a year Huang unlawfully withdrew more than R 11 million from the savings account, of which R 9 million was eventually recovered. Some of these withdrawals had seemingly been performed telephonically and included cash withdrawals.

The plaintiff claimed the remaining R 2,6 million from Absa on the basis that the latter was negligent in letting Huang withdraw money from the account while in fact he was not authorised to do so.

The plaintiff further argued that there was an obligation on Absa to obtain written authority on each occasion from the plaintiff when the account was operated on by any person.

It was common cause that Absa had not loaded signatories on its computer system in respect of the account. Absa argued that the plaintiff acted negligently in clothing Huang with authority to partly operate on the account.

Three issues arose for decision –

  • first, whether the opening of the account on behalf of the plaintiff resulted in the conclusion of an agreement between the plaintiff and Absa;
  • secondly, if so, whether it was a term of the agreement, express or tacit, that Absa agreed to make payments out of the plaintiff’s account only on the instructions authorised by the plaintiff; and/or
  • thirdly, whether Absa and its official acted negligently in dealing with the account.

Moshidi J pointed out that it is trite that the relationship between a banker and its client is based on mandate. The reciprocal rights and duties included in the contract between a banker and its client are to a great extent based on custom and usage. There was thus an agreement between the plaintiff and Absa.

The court held that it was an implied term of the agreement that Absa agreed to only make payments and transfers out of an account on specific instructions by the plaintiff. When each of Absa’s employees attended to the numerous unauthorised withdrawals, they were mindless whether Huang could in fact withdraw or transfer funds.

As no card and PIN had been issued in respect of the plaintiff’s account, Absa’s employees would have known, or ought to have known that the only way money could be withdrawn from the account, was by the signature of an authorised person from the plaintiff.

In the absence of any indication on the plaintiff’s file with Absa as to the names and identity of authorised persons who could withdraw money from the plaintiff’s account, steps should have been taken by Absa to obtain the plaintiff’s company documents to clarify the issue and to ensure that Absa had all the appropriate information at hand. A reasonable banker should have and would have done so in the circumstances of the present case.

The plaintiff’s claim was accordingly allowed with costs.

Consumer protection

Housing – exemption from registration as a builder: In Ruiters v Minister of Human Settlements and Another 2016 (1) SA 239 (WCC) the court was asked to consider the grounds for an exemption of the requirement of registration and enrolment as a builder.

At the heart of the present matter was s 10 of the Housing Consumers Protection Measures Act 95 of 1998 (the Act). It provides that no person shall ‘carry on the business of a home builder … unless that person is a registered home builder [with the National Home Builders Registration Council [the council]]’. Section 14 of the Act provides that a home builder shall not commence the construction of a home unless ‘the council has issued a certificate of enrolment … to the home builder’. Section 10A, however, provides that an owner builder ‘may, in terms of section 29, apply to the council for exemption from sections 10 and 14’.

Section 29(1)(a) – (c) provides that the council may exempt a person or a home from any provisions of the Act if satisfied that –

‘(a) the granting of the exemption would be in the public interest;

(b) … would not undermine the objectives of this Act or the effectiveness of the council; or

(c) should the exemption not be granted, the effect would be extremely prejudicial to the interest of the applicant and housing consumers’.

At stake in the present case was whether the council may refuse an owner builder’s application for a s 10A exemption on the basis that construction of the home in respect of which exemption was sought had commenced at the time of such application.

Donen AJ held that in the light of part (b) of the definition of ‘home builder’, read with s 10A (which must in turn be read with s 29 of the Act), it seemed incumbent on the council, when it was faced with an application for exemption, to investigate and establish the jurisdictional fact for an application for exemption, namely that an applicant was in fact an owner builder. If an applicant satisfied the council that he or she was a bona fide owner builder, the duties that rest on a home builder, and consequences of breach of those duties, ceased to exist from the time that the owner builder applied for exemption.

The only considerations raised by the Act were whether the applicant fulfilled the definition of an owner builder, and satisfied the council as to the criteria mentioned in ss 29(1)(a), (b) and (c). A builder complying with the definition of an owner builder could not conceivably harm the interests of housing consumers or the council in any way which required regulation under the Act.

Furthermore, severe prejudice to a bona fide owner builder would result if exemption were not granted, because the burdens of protecting housing consumers would be imposed on him or her for no reason. This would not be in the public interest. Prima facie, therefore, a proven owner builder satisfied the requirements of ss 29(1)(a), (b) and (c).

Finally, the court ordered that the decision of the Minister be set aside and that the matter be referred back to the council for determination as to whether the applicant is entitled to exemption in terms of s 10A and s 29 of the Act. The Minister was ordered to pay the applicant’s costs.

Constitutional law

Powers of Public Protector: In South African Broadcasting Corporation Soc Ltd and Others v Democratic Alliance and Others (Corruption Watch as amicus curiae) [2015] 4 All SA 719 (SCA) the facts were as follows: In February 2014 the seventh respondent, the Public Protector, released a report detailing ‘pathological corporate deficiencies’ within the first appellant, the South African Broadcasting Corporation (SABC). The report singled out the third appellant, the Chief Operating Officer (COO) of the SABC, Motsoeneng, for scathing criticism.

The Public Protector found that –

  • Motsoeneng’s appointment as Acting COO was irregular;
  • his salary progression from R 1,5 million to R 2,4 million in one fiscal year was irregular;
  • he had fraudulently misrepresented to the SABC that he had a matric qualification; and
  • he had grossly abused his powers to benefit himself and others, including the unilateral adjustment of certain SABC employees’ salaries.

The Public Protector directed the SABC and the second appellant, the Minister of Communication, to implement various remedial steps, including, the institution of disciplinary proceedings against Motsoeneng; and to submit implementation plans. In July 2014, instead of implementing the Public Protector’s remedial action, the SABC permanently appointed Motsoeneng as COO.

The justification for ignoring the Public Protector’s remedial action was that the SABC had appointed a firm of attorneys to investigate the correctness of the findings contained in the Public Protector’s report. The attorneys’ report exonerated Motsoeneng.

The first respondent, the Democratic Alliance (DA), approached the court a quo for an order for the suspension of Motsoeneng and the institution of disciplinary proceedings against him.

The court a quo held that the SABC had to institute disciplinary proceedings against Motsoeneng. It also held that the findings of the Public Protector were not ‘binding and enforceable’ in the same way as a court order.

On appeal Navsa and Ponnan JJA held that the court a quo’s finding that the SABC had to institute disciplinary proceedings against Motsoeneng were correct. In the light of Motsoeneng’s senior position at the SABC there was a real risk that the integrity of the disciplinary process against him would be undermined if he was not suspended.

However, the court held that the reasoning in the court a quo regarding the Public Protector’s powers was wrong. The office of the Public Protector, like all institutions provided for in ch 9 of the Constitution, is a venerable one. Remedial action recommended by the Public Protector should not be ignored.

State institutions are obliged to heed the principles of co-operative governance as prescribed by s 41 of the Constitution. Any person or institution aggrieved by a finding of the Public Protector might, in appropriate circumstances, challenge that by way of a review application.

However, in the absence of a review application, such a person or institution may not embark on a parallel investigation process and adopt the position that the outcome of that parallel process trumps the findings, decision or remedial action taken by the Public Protector.

The appeal was accordingly dismissed with costs.

Credit law

Scope of National Credit Act (credit provider): In Asmal v Essa 2016 (1) SA 95 (SCA); [2014] 3 All SA 115 (SCA) Asmal borrowed money from Essa to buy medical equipment. In return Asmal gave Essa a number of blank cheques, the amounts of which included a ‘participating share of the profit’ to be made by Asmal on the resale of the equipment. The profit share was to be determined by Asmal. The cheques were dishonoured and Essa, who was not a registered credit provider, sued for provisional sentence. Section 40 of the National Credit Act 34 of 2005 (the NCA) provides who is a credit provider and requires it to register as such.

The question put to the court was whether the loans were ‘credit agreements’ in terms of s 8 of the NCA, in which case provisional-sentence proceedings would fail because of Essa’s failure to comply with several aspects of the Act.

Asmal averred that since the cheques were not meant to be cashed but were security for the underlying loans, the loans were ‘secured loans’ in terms of s 8(4)(d), alternatively that the profit shares were a ‘charge’ in terms of s 8(4)(f), either of which would mean that the loans were indeed credit agreements that were covered by the Act.

The court a quo dismissed Asmal’s ‘charge’ argument.

On appeal Maya JA held that the NCA was intended to protect consumers against, inter alia, hidden costs arising from credit agreements. Therefore, the parties had to quantify the charge, fee or interest and specify the manner of their payment when they concluded the credit agreement. It followed that the indeterminate profit shares agreed on by Asmal and Essa, for which no date of payment was fixed, and whose value, if any, was to be determined by Asmal at his sole discretion, did not qualify as a ‘charge’ under the Act.

The court a quo correctly rejected Asmal’s argument that the agreements were secured loans because the cheques were not pledged or ceded to Essa as required in the definition of the ‘secured loan’ in s 1 of the Act. The cheques were issued by Asmal with the intention that they would be honoured on due presentment and, if they were dishonoured, that Asmal would compensate Essa as holder.

Asmal’s reliance on Essa’s not being registered as a credit provider was also misplaced. Section 40 required the existence of a credit agreement to kick in, and since there were no credit agreements between Asmal and Essa, the latter was not required to register. Nor was Essa compelled to comply with the Act’s debt-enforcement procedures before commencing litigation against Asmal.

The parties did not intend to conclude any credit agreements or bring their dealings within the scope of the Act. Essa was thus fully entitled to invoke the provisional sentence procedure to enforce his claims, which were disputed on purely technical grounds.

The appeal was dismissed with costs.

Criminal law

Arson – own property: The case of Dalindyebo v S [2015] 4 All SA 689 (SCA) enjoyed a high level of media attention, mostly because of the royal status and political affiliations of the accused. The present discussion will be restricted to one specific aspect of the trial, namely the question whether the crime of arson can be committed when a person sets fire to his own immovable property.

The appellant (the accused) was the Paramount Chief of a tribe in the Eastern Cape. The state’s case against him was that he had set fire to dwellings that housed the three complainants, who were his ‘subjects’ and tenants, to secure their eviction when he considered that they had breached tribal rules. He was also alleged to have publicly assaulted three young men as punishment, without a trial, for criminal acts allegedly committed by the young men in question. Arising from the above, the accused was charged and convicted of, inter alia, arson and kidnapping. The sentence imposed on the various counts resulted in an effective term of 15 years’ imprisonment.

The accused challenged his convictions on a number of constitutional grounds, none of which will be discussed here. Furthermore, the accused challenged the merits of his conviction of arson. He argued that the two houses he had set on fire were his property and he could, therefore, not rightly have been convicted of arson.

Navsa AJ and Baartman AJA pointed out that a primary problem for the accused was that while the farm, on which the dwellings which he had set alight, was registered in his name, the restrictions contained in the title deed were significant. The restrictions showed that the land was held by the accused as hereditary monarch for the benefit of his tribe and subjects. Therefore, it could not be said that the property was his to set fire to at will. In any event, so the court reasoned, arson can be committed where a person sets fire to his own immovable property with the intention to injure another person.

The appeal was thus dismissed and the accused’s conviction confirmed.

Delict

Loss of support – non-­biological child: The facts in Engela v Road Accident Fund 2016 (1) SA 214 (GJ) were as follows: The plaintiff and her partner (the deceased) lived in a permanent heterosexual relationship. The plaintiff sued the defendant, the Road Accident Fund (RAF) for the loss of support sustained by her two sons, T and O, as a result of the death of the deceased, her ex-husband, in a motor vehicle accident. T was the illegitimate son of the plaintiff with another man, and brought into the marriage with the deceased. Subsequent to their divorce and a brief separation, the plaintiff and deceased reconciled, and commenced living together again as a family of four. There existed no express agreement between the deceased and the plaintiff that the former would support T.

The question that arose was whether the deceased owed T a duty of support at the time of the former’s death, which called for the court to decide whether the principle in Paixão and Another v Road Accident Fund 2012 (6) SA 377 (SCA), which extended the dependant’s action to permanent heterosexual relationships, applied. The RAF argued that Paixão was distinguishable because there the deceased had promised to enter into a marriage relationship as soon as he had divorced his wife, while in the present case the parties had, post-divorce and on reconciling, specifically agreed not to conclude another marriage relationship.

Mashile J confirmed that the salient principle of the Paixão case was the extension of the dependant’s action to permanent heterosexual relationships. In applying this principle to the facts of the Engela case, the court reasoned that underlying the agreement entered into between the parties regulating the resumption of their relationship, was a mutual commitment to live together as a family. It was irrelevant whether or not such agreement was governed by a marriage certificate.

The court further held that the duty of support would not only arise in circumstances where the deceased had during his lifetime undertaken to support an illegitimate child beyond the dissolution of a marriage. The absence of such an agreement would not affect the deceased’s legal duty to financially support T.

In the present case there existed, on a balance of probabilities, a tacit agreement that the deceased would support T as his own child. The deceased accordingly owed T a legal duty of support at the time of his death.

The RAF was ordered to pay the plaintiff in her representative capacity as mother and natural guardian of O and T the amounts of R 799 894 and R 458 399, respectively, plus costs of suit.

Land

Agricultural land – option to purchase portion of agricultural land: The central issue in Four Arrows Investments 68 (Pty) Ltd v Abigail Construction CC and Another 2016 (1) SA 257 (SCA) was whether a contract concluded between the appellant, Four Arrows, and the first respondent, Abigail, conferred on Four Arrows an option to purchase a demarcated portion of an undivided immovable property. Alternatively, whether the contract constituted a sale of the property, which was subject to a suspensive condition.

Four Arrows argued that an option for the sale of a portion of agricultural land – the nature of the immovable property in question – does not fall within the prohibition contained in s 3(e)(i) of the Subdivision of Agricultural Land Act 70 of 1970 (the Act). This section provides that ‘no portion of agricultural land … shall be sold or advertised for sale … unless the Minister has consented in writing’. The definition of ‘sale’ in s 1 of the Act includes a sale subject to a suspensive condition.

Swain JA held that the object of the legislation was not only to prohibit concluding sale agreements, but also preliminary steps, which may be a precursor to the conclusion of a prohibited agreement of sale. The target zone of the Act is much wider. This is clear, for example, from
s 3(e)(i), which also prohibits advertisements for sale. Since advertisements obviously precede the actual sale or alienation of an undivided portion, it is by no means absurd to infer that the legislature intended to prohibit any sale of an undivided portion of farmland, whether conditional or not, unless and until the subdivision has actually been approved by the minister.

In this context the grant of an option would clearly be a precursor to the conclusion of a prohibited agreement of sale, at the election of the option holder. The fact that the option may provide that the option holder may only exercise the option after the consent of the minister was obtained, is irrelevant.

Four Arrows failed to prove that it was entitled to obtain transfer of the whole property and the appeal was accordingly dismissed with costs.

Marriage law

Three cases dealing with proprietary rights in terms of divorce proceedings were reported in the period under review.

Accrual system – when determined: The parties in KS v MS 2016 (1) SA 64 (KZD) were married on 4 April 1992. Prior to the marriage, and on 1 April 1992, the plaintiff and the defendant signed a power of attorney in favour of one Watson. This power of attorney authorised Watson to appear before a notary public and to execute an antenuptial contract on behalf of the parties. The antenuptial contract was annexed to the power of attorney and was initialled by the parties in confirmation thereof. The antenuptial contract provided, inter alia, that there shall be no community of property or profit or loss between the parties; and that the accrual system, shall be applicable to the marriage between the parties.

It was common cause that due to some reason unknown to the parties the aforesaid antenuptial contract was not executed and registered in the deeds office.

The plaintiff accordingly contended that the marriage was in community of property, as the antenuptial contract contemplated and intended by the parties had not been registered.

The crisp issue was whether accrual was determined at litis contestatio or the date of divorce.

Kruger J held that the established principle is that the operative moment is litis contestatio, for that is the moment when the dispute crystallises and can be presented to the court for decision.

This approach is in accordance with the obiter comments in MB v DB 2013 (6) SA 86 (KZD) (see law reports ‘Husband and wife’ 2014 (Jan/Feb) DR 43). The court rejected the reasoning in JA v DA 2014 (6) SA 233 (GJ) (see law reports ‘Marriage – property rights’ 2015 (Jan/Feb) DR 50), in which the court disagreed with earlier case law that the right to accrual, which existed during the marriage and which becomes crystallised at litis contestatio, is perfected at the date of dissolution of the marriage. The practical effect of litis contestatio, being the date of determination of accrual, is to expedite the trial and ‘do much to limit the temptation to squander assets that some spouses seem to find irresistible’. It will also discourage (as is frequently experienced in divorce litigation) the situation where a spouse deliberately delays the proceedings in order to increase his or her claim when the divorce order is eventually granted.

The court accordingly held that the marriage relationship between the parties was one out of community of property and subject to the accrual system. The date for determination of accrual is at litis contestatio.

Islamic law – r 43: In TM v ZJ 2016 (1) SA 71 (KZD) the wife, in a r 43 application, sought maintenance pendente lite, and certain other relief, for herself and two minor children pending a divorce action against her husband. The marriage had been conducted in terms of Islamic law and was not registered under the Marriage Act 25 of 1961 (the Act). In the divorce action she sought, inter alia, recognition of the validity of such marriages under the Act. The husband objected in limine, arguing that no marriage existed and accordingly r 43, which pertained to matrimonial matters, did not apply. His grounds for so arguing were that he had already terminated the marriage by pronouncing a ‘talaq’ (divorce) and that a marriage according to Islamic law was not valid in terms of the Act.

Mokgohloa J held that it was unnecessary for the applicant in a r 43 application to prove prima facie the validity of the marriage. The entitlement to maintenance pendente lite arose from the general duty of a husband to support his wife and children. Accordingly the wife could not be precluded from obtaining relief in terms of the rule by virtue of her Muslim marriage, irrespective of whether the husband had pronounced a talaq or not.

The point in limine was dismissed and the relief sought granted. The husband was ordered, inter alia, to contribute R 15 000 to the wife’s legal costs.

Trust assets – alter ego: In YB v SB and Others NNO 2016 (1) SA 47 (WCC) YB and SB were married to each other out of community of property, but with accrual. YB had instituted an action for divorce and now applied to amend her particulars of claim. The amendment sought was that assets ostensibly held by a trust were in fact SB’s assets, and should be added to his estate for the purposes of calculating accrual in terms of ss 3 and 4 of the Matrimonial Property Act 88 of 1984.

YB asserted that transactions reflecting the trust as acquiring and holding assets were simulated, and that the assets were part of SB’s estate.

Two main issues arose for decision:

  • First, whether the relief claimed in the amended particulars was good in law.
  • Secondly, whether the trustees had been misjoined in the action.

The parties agreed that the application be decided as if on exception – if the particulars (as amended) were excipiable, the application should be refused.

Riley AJ held that, as to the first issue, that the relief claimed was competent; and as to the second issue, that it had been correct to join the trustees.

Of particular importance was the court’s decision regarding the true nature of the trust’s assets. In this regard it referred with approval to the earlier decision in RP v DP and Others 2014 (6) SA 243 (ECP) (see law reports ‘Marriage – property rights’ 2015 (Jan/Feb) DR 51) where the court held that where ‘the trust form is abused and the trustee treats the trust as his or her alter ego (or that of the founder), then the court pierces the trust veil and enquires into the separateness of the trust assets from the personal assets of the trustee or founder’. The court in YB v SB held that certain assets that were acquired and held in the name of the trust were simulated and that such assets were in truth assets, which from the outset fall within the personal estate of SB. The court, therefore, took the trust assets into account for the purposes of calculating the accrual in SB’s personal estate.

Minerals and petroleum

Site licence for fuelling station: In Snyders NO v Louistef (Pty) Ltd and Others 2016 (1) SA 123 (GP) the applicant, Snyders, was the owner of a certain immovable property in Brits. The property had a fuelling station (the site), from which the first respondent lessee, Louistef, retailed petroleum products. For this purpose the parties concluded consecutive lease agreements. In order to conduct the business, the necessary licences, including a site licence, were obtained as prescribed by s 2 of the Petroleum Products Act 120 of 1977 (the Act) and regulations thereto.

On termination of the lease, Snyders requested transfer of the site licence in order to continue with the fuelling-station business. Believing the licence to be its asset, Louistef refused. The parties then concluded a written agreement of sale for the site licence, for R 1 million. After receiving legal advice, Snyders approached the High Court for an order declaring the agreement null and void. This was on the basis that a site licence was not a res (ie, thing) capable of being sold.

Janse van Nieuwenhuizen J held that in terms of regulations 12, 30 and 38 to the Act the site licence had to be transferred to a new owner or lessee when ownership or possession of the site terminated. The licence was a statutory requirement granted to the owner or lessee of a site in order to enable the person/entity to retail petroleum products from the site. The site licence, therefore, remains the physical property of the Department of Minerals and Energy.

Taking into account the statutory framework regulating the granting of such a licence, its status could be equated with that of a liquor licence. In the premises, a site licence had no commercial value and was not a merx or res vendita. The sale agreement accordingly did not comply with the essential elements of a valid sale agreement and was null and void.

Stock exchange

Insider trading: In Zietsman and Another v Directorate of Market Abuse and Another 2016 (1) SA 218 (GP) the facts were as follows: During 2011 the two appellants (the traders) traded in the shares of African Cellular Towers (ACT). The traders had information that ACT would be getting a R 99 million loan from the Industrial Development Corporation (IDC). At the time when the share trading took place the granting of the loan to ACT was not public knowledge.

After the shares had been bought the share price increased by 54,5%. However, shortly thereafter, and while the traders were still in possession of the shares, ACT went into liquidation. The traders lost the entire value of their holding and thus never realised a profit from the trade.

The trade came to the attention of the Financial Services Board (FSB) and it was forwarded to their Enforcement Committee, which found the traders guilty of insider trading in terms of s 73(1)(a) and s 73(2)(a) of the Securities Services Act 36 of 2004 (SSA).

The FSB imposed an administrative penalty, jointly and severally, in terms of s 77(1) – (2), read with s 77(5) of the SSA, of R 1 million plus costs.

On appeal the traders argued that –

  • the information regarding the IDC loan was vague, imprecise and not ‘likely to have a material effect’ on the price or value of the ACT shares;
  • there was no material difference between the information available to them at the time of the trades in question and information that had already been ‘made public’ prior to them acquiring the shares;
  • they consequently did not believe or ‘know’ that they had inside information as required by s 73 and 77 of the SSA; and
  • because ACT was liquidated before they could sell the shares, they made no profit on the trade and by implication did not benefit from it.

Avvakoumides AJ pointed out before the Insider Trading Act 135 of 1998 came into force, the insider trading offence fell under the Companies Act 61 of 1973, which contained a criminal sanction only. Because of the burden of proof in criminal cases (that is, proof beyond reasonable doubt) successful prosecutions on the charge of insider trading were rare.

Reforms regarding insider trading were brought about due to a history of non-prosecution of the criminal offence under the Companies Act. The Insider Trading Act introduced a civil action in respect of insider trading. This required a lesser burden of proof (that is, proof on a balance of probabilities). When the Insider Trading Act was repealed by the SSA, Ch VIII of the SSA introduced administrative sanctions in respect of capital market contraventions in addition to existing civil and criminal sanctions.

The court held that the Enforcement Committee of the FSB is an administrative tribunal and as such is entitled to make rulings and impose penalties as they had done in the present proceedings. The information pertaining to the amount of the IDC loan was specific and precise and constituted inside information in terms of s 72 of the SSA.

The court held that just because the traders genuinely believed that the information they had did not constitute inside information is not in itself a defence. There must be reasonable grounds for their belief. The fact that the traders did not sell the shares and lost the entire value of their holding is irrelevant.

The court referred with approval to foreign case law (The Insider Dealing Tribunal v Shek Mei Ling [1999] 2 HKCFAR 205), in which it was held that the correct approach was ‘to treat the relevant profit as gained by the insider dealer [here: the third party] when the information was made public … [a]t that date, the amount of the inside dealer’s profit, whether realised or not, was fixed once and for all. Subsequent changes in market prices are irrelevant.’

The appeal was accordingly 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 administration of estates, administrative law, attorneys, aviation, civil procedure, companies, contract, criminal procedure, education, evidence, human rights, labour law, land, mining, mortgages and practice.

Additional note: In the company law report in the law reports column (2016 (Jan/Feb) DR 43), the author referred to other judgments which were delivered. The references for the said judgments are:

  • Boost Sports Africa (Pty) Ltd v South African Breweries (Pty) Ltd 2014 (4) SA 343 (GP) (see 2014 (Oct) DR 44) and 2015 (5) SA 38 (SCA) (see 2015 (Nov) DR 36); and
  • Biochlor (Pty) Ltd v GE Betz South Africa (Pty) Ltd (GP) (unreported case no A710/2013, 12-2-2014) (Mothle J).

This article was first published in De Rebus in 2016 (March) DR 28.