The law reports – April 2020

April 1st, 2020
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February [2020] 1 All South African Law Reports (pp 303 – 611); 2020 (13) Butterworths Constitutional Law Reports (pp 125 – 243)

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

CC: Constitutional Court

GJ: Gauteng Local Division, Johannesburg

KZP: KwaZulu-Natal Division, Pietermaritzburg

SCA: Supreme Court of Appeal

WCC: Western Cape Division, Cape Town

Civil procedure

Video evidence from abroad: In Randgold and Exploration Company Ltd and Another v Goldfields Operations Ltd and Others, In re: Randgold and Exploration Company Ltd and Another v Goldfields Operations Ltd and Others [2020] 1 All SA 491 (GJ) the applicants sought an order authorising the issue by the court of the letters of request directed at obtaining evidence from foreign witnesses by video-link. The applicants sought the court’s approval to permit testimony to be given abroad and to be relayed to the court through the use of video-link technology. They asked that the court invoke the assistance of, and the tools of compulsion, available to the foreign judicial authorities in question, to compel the witnesses to testify abroad and to provide documents to the applicants.

The court, per Opperman J, held that the South African Foreign Courts Evidence Act 80 of 1962 does not empower a South African court to provide to a foreign court ‘the assistance’ or any commitments that the applicants sought the court, reciprocally, to request from the foreign judicial authorities. The South African Foreign Courts Evidence Act, the Protection of Business Act 99 of 1978 and s 40(1) of the Superior Courts Act 10 of 2013 empower a South African court to assist a foreign court to obtain evidence from a witness in South Africa (SA). None of those statutes empowers a South African court to require a foreign court to assist it to obtain evidence from a witness who is outside SA. On the contrary, the court was prohibited from extending reciprocity to a foreign court in the form requested.

The court considered the position in each of the four foreign jurisdictions cited by the applicants and found that compulsion-based requests was not competent within any of these jurisdictions.

The right to procure examination by interrogatories is expressly catered for in the Superior Courts Act. The Uniform Rules of Court, which derive their validity from s 30 of the Superior Courts Act, provides for the right to procure evidence by commission de bene esse. The applicants opted not to use that option, stating that this was exceptionally
costly. The application was dismissed.

Company law

Liquidators: In the case of Van der Merwe NO and Others v Moodliar NO and Another and Related Matters [2020] 1 All SA 558 (WCC), the facts were as follows: In September 2014, a bank obtained an order for the provisional winding-up of Zonnekus Mansion (Pty) Ltd (the company) on the basis that it was unable to pay its debts. The bank was a secured creditor of the company. The provisional order was confirmed and a final order for the winding-up of the company was granted and final liquidators were appointed.

Various business rescue applications were then brought, having the effect of suspending the liquidation proceedings.

Three applications were subsequently brought, and were before the court, namely –

  • the first was for the removal of the liquidators;
  • the second was for the re-opening of the first liquidation and distribution account and the institution of an inquiry into the conduct of the liquidators; and
  • the third was for reconsideration of an order granted more than four years earlier extending the powers of the liquidators under s 386(5) of the Companies Act 61 of 1973.

It was held that the order extending the powers of the liquidators was followed by a series of acts by the liquidators, which could not be easily undone. No basis for reconsideration had been established and the application was an abuse of process on the part of those interests. The application was dismissed with a punitive costs order.

The application for the re-opening of the first liquidation and distribution account and the institution of an inquiry into the conduct of the liquidators was based on allegations of fraud and theft, which were vaguely pleaded. The court was unimpressed with the allegations levelled against the liquidators and refused the relief, again with a punitive costs order.

The court, per Gamble J, found that no basis whatsoever had been established for the removal of the liquidators. The removal application was also brought at an advanced stage of the liquidation and it would not be in the interests of the general body of creditors (none of whom had lodged any complaints about the liquidators’ conduct) to order a removal and reappointment of new liquidators at this stage. The application was dismissed.

Criminal law – jurisdiction

Appeals under the Superior Courts Act: In the wake of the hacking of the network of a leading mobile cellular company (Cell C), the appellant was charged in the Specialised Commercial Crimes Court (the SCCC) with various contraventions of s 86 of the Electronic Communications and Transactions Act 25 of 2002. Almost ten years later, he was convicted on two charges. It was found that he had contravened s 86(1) by having unlawfully accessed Cell C’s computer network without permission, and he was convicted of having contravened s 86(5) by unlawfully causing data on Cell C’s system to be altered or rendered ineffective, which resulted in a partial network failure to the legitimate users of the system. On 17 August 2015, the appellant was sentenced to a fine or 12 months’ imprisonment on the first count and to three years’ imprisonment on the second count.

He appealed against his conviction and sentence to the High Court, which dismissed the appeal. He then applied to the SCA for special leave to appeal against his conviction and sentence. Two issues arose in Salzmann v S [2020] 1 All SA 361 (SCA) – whether leave to appeal to the SCA was properly granted; and whether the appeal against conviction and sentence should be granted.

The appellant’s trial in the SCCC was still proceeding when the Superior Courts Act 10 of 2013 came into operation. Up until then, a High Court hearing an appeal from a lower court (such as the SCCC) was competent to grant leave to appeal further to the SCA if it dismissed the appeal – and if it refused such leave, the appellant could then apply to the SCA for leave. However, s 52 of the Superior Courts Act provides that proceedings pending in any court at the commencement of the Act, must be continued and concluded as if the Act had not been passed. Proceedings must, for the purposes of the section, be deemed to be pending if, at the commencement of the Superior Courts Act, a summons had been issued but judgment had not been passed. The High Court did not have the jurisdiction to grant special leave to appeal to the present court. The proceedings pending when the Superior Courts Act came into effect was the appellant’s trial itself. Those proceedings terminated when the appellant was convicted and sentenced. The deeming provision in s 52(2) of the Superior Courts Act, therefore, had no relevance to the appellant’s subsequent appeal to this court following the dismissal of his appeal in the High Court. The latter accordingly had no jurisdiction to grant leave to appeal to this court. Without this court giving leave, the appeal was not properly before it and the court had no jurisdiction to hear it.

Having determined that leave to appeal was required and accepting that the failure to apply in time to the present court for leave was to be condoned, the court turned to consider whether leave should be granted. The Superior Courts Act applied, and s 16(1)(b) thereof prescribes that an appeal against a decision of a Division of the High Court heard on appeal, lies to this court with its special leave. What is meant by special leave requires more than merely the reasonable prospect of success on appeal. The party applying for such leave has already enjoyed, albeit unsuccessfully, a right of appeal to the High Court, and so must show special circumstances which merit a further appeal. Finding no special circumstances demanding the matter be heard, the court struck the appeal from the roll.

Evidence

Parol evidence rule: In Mike Ness Agencies CC t/a Promech Boreholes v Lourensford Fruit Company (Pty) Ltd [2020] 1 All SA 314 (SCA) the appellant undertook to drill a borehole for the respondent on a farm and guaranteed that if no water was found at 70m it would drill from 70m to 100m, free of charge. That led to the appellant drilling a borehole on the respondent’s farm, to a depth of a little more than 70m. The borehole yielded approximately 4 000 litres of water per hour. When the respondent refused to pay the appellant for its services, the latter successfully sued in the magistrate’s court.

On appeal, however, the High Court found for the respondent, stating that the appellant had not discharged the onus of proving it had provided sufficient water to comply with its contractual obligations and was, therefore, not entitled to receive any payment at all. The appeal against that decision was with the special leave of the present court.

The respondent’s case changed during the course of the proceedings. It finally contended that the appellant had guaranteed to provide a minimum water supply of 10 000 litres and that, as it had not done so, the respondent was excused from paying any sum at all. It was held this was not borne out by the evidence and to find so would breach the parol evidence rule. The trial court was correct in concluding that the respondent’s defence to the appellant’s claim, namely that the appellant had guaranteed a yield of 10 000 litres per hour, could safely be dismissed. The High Court’s decision was clearly wrong, and it had no reason to interfere with the trial magistrate’s careful analysis of the evidence and the conclusion that the court reached. The appeal was upheld, with costs.

Hate speech

Promotion of Equality and Prevention of Unfair Discrimination Act: The appellant penned an article directed against the gay community, which was published in a newspaper. The South African Human Rights Commission (the HRC) instituted proceedings against the owner of the newspaper (Media24) and the appellant in the Equality Court, alleging that the article contravened s 10(1) of the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000 (the Act). Media24 and the appellant launched an application in the High Court seeking to have s 10(1), read with ss 12 and 1 and 11 of the Act declared unconstitutional for being inconsistent with the provisions of s 16 of the Constitution. The proceedings in the High Court and the Equality Court were consolidated. The court upheld the complaint against the appellant, finding that the offending statements against homosexuals were hurtful, incited harm and propagated hatred, and that they accordingly amounted to hate speech for purposes of s 10(1). The present appeal was then brought.

The SCA in Qwelane v South African Human Rights Commission and Another (Freedom of Expression Institute and Another as amici curiae) [2020] 1 All SA 325 (SCA) held that s 10(1) states that no person may publish, propagate, advocate or communicate words based on one or more of the prohibited grounds, against any person, that could reasonably be construed to demonstrate a clear intention to be hurtful; be harmful or to incite harm; or promote or propagate hatred. In examining the scope of s 10(1), the court found that the legislature sought to provide protection as broadly as possible, by imposing liability for expressions in any of the forms set out in the lead-in part of s 10(1). While the provisions certainly restricted the right to freedom of expression (guaranteed in s 16 of the Constitution), the question was whether they extended beyond the provisions of s 16(2)(c) of the Constitution and, if so, whether they were justifiable. The court held that s 10(1) was indeed a limitation of the freedom of expression wider than s 16(2)(c) of the Constitution, and that it could not be saved by any interpretive exercise. The appeal was upheld with costs.

Section 10 of the Act was declared to be inconsistent with the provisions of s 16 of the Constitution and, therefore, unconstitutional and invalid. The order was referred to the CC for confirmation of the order of constitutional invalidity.

Intellectual property

Plant breeders’ rights: In Special New Fruit Licensing Limited and Others v Colors Fruit (South Africa) (Pty) Limited and Others [2020] 1 All SA 523 (WCC) the plaintiffs claimed ownership and plant breeders’ rights in respect of certain plant materials, which they contended belonged to a company (Vitis) registered in the United Kingdom and subsequently liquidated. The first plaintiff (SNFL) acquired the rights to the disputed plant materials from Vitis in terms of an asset sale agreement concluded with the second and third plaintiffs, the liquidators of Vitis.

According to the defendants, the disputed plant materials were not created in terms of an agreement between Vitis and first defendant (Colors SA) but were created by Colors SA for its own account and benefit since the service agreement with Vitis was non-exclusive and was varied during January 2011.

The court, per Hendricks AJ, held that the issues for determination were whether the disputed plant materials were produced in terms of a Vitis breeding programme and for the benefit of Vitis or whether it was produced for Colors SA’s own account and benefit with the knowledge of Vitis and SNFL; and secondly, the ownership of the disputed plant materials and all intellectual property rights attached to it.

Vitis and Colors SA concluded a sub-licence agreement in terms of which Colors SA would render table-grape breeding and related services to Vitis. In terms of the agreement Colors SA conducted breeding projects for the benefit of Vitis. In evaluating the main witnesses, the court found that the defendant’s witness struggled to reconcile his evidence with the pleaded case, leading him to give contradictory and highly unsatisfactory evidence.

The plaintiffs’ case was that a tacit agreement existed between Vitis and Colors SA in terms of which Colors SA agreed to carry out breeding and related services in South Africa on behalf of Vitis. In the event of the tacit agreement’s termination or of Colors SA no longer providing services to Vitis for the purposes of the South African breeding programme, Colors SA would return all the South African plant materials and breeding records to Vitis. The test to be applied in determining the existence of a tacit contract is whether the party alleging the existence of the tacit contract has shown on a balance of probabilities unequivocal conduct on the part of the other party that proves that it intended to enter into a contract with it. The court found that the plaintiffs had shown, on a balance of probabilities, unequivocal conduct on the part Colors SA proving the existence of a contract on the terms and conditions pleaded by plaintiffs.

Colors SA raised further defences alleging lack of exclusivity in its relationship with Vitis and variation of the agreement so that it no longer bred on behalf of Vitis but was only co-responsible for the maintenance of the existing Vitis assets and plant material. The court rejected both submissions. An allegation that Colors SA undertook the breeding programme for its own benefit with the knowledge and approval of Vitis and SNFL was also unsustainable as no disclosure was made to the effect that Colors SA was breeding for its own account.

A further contention by Colors SA was acquisition of ownership of the plant materials through specification. That argument was neither pleaded nor substantiated by the evidence. On the facts, nothing had happened to the disputed plant material to make it difficult to identify as the plant material provided by Vitis and no evidence of a nova species was presented. Acquisition of ownership through specification, therefore, did not take place. SNFL was thus held to be the lawful owner of all the plant materials. A counterclaim by Colors SA was found to be unsupported by sufficient evidence and was dismissed.

Labour law

Jurisdiction of Labour Court (LC): In Amalungelo Workers’ Union and Others v Philip Morris South Africa (Pty) Limited and Another 2020 (2) BCLR 125 (CC) the applicants were a trade union and 75 of its members who were employed by the first and second respondents. They alleged that the respondents had been in contravention of s 34 of the Basic Conditions of Employment Act 75 of 1997 (the BCEA) as they had deducted from the salaries of the employee applicants amounts of tax in respect of company cars. They instituted proceedings in the LC for an order compelling the respondents to refund the amounts so deducted, and for an order restraining the respondents from continuing to make such deductions in the future. The LC held that it lacked jurisdiction. The LC reasoned that it lacked competence to directly enforce provisions of the BCEA in the absence of an assertion that those provisions formed part of contractual terms contemplated by s 77(3) of the BCEA.

The LC dismissed an application for leave to appeal against its order. A petition to the Labour Appeal Court (LAC) also failed. The applicants then approached the CC seeking leave to appeal.

The CC, in a unanimous judgment, per Jafta J, granted leave to appeal and upheld the appeal. It set aside the order of the LC in respect of the claims in question and remitted the matter to the LC.

The court observed that s 77 of the BCEA was designed to promote access to the LC in relation to claims based on the BCEA. Because s 77 facilitates access to the LC, it must be construed in a manner that complies with s 39(2) of the Constitution, which requires courts to interpret legislation through the prism of the Constitution. A proper interpretation of s 77 reveals that the LC has exclusive jurisdiction over matters arising from the BCEA. The only exception is in respect of situations where the BCEA itself provides otherwise. All claims to which the BCEA applies fall within the exclusive jurisdiction of the LC. Section 77(1) confers jurisdiction on the LC in the widest of terms. It declares that the LC has jurisdiction ‘in respect of all matters’ arising from the BCEA. Section 77(3) expands the LC’s jurisdiction to cover disputes arising from contracts of employment even if they are not regulated by the Act. But in that event, the jurisdiction is not exclusive. It is shared with the civil courts.

A question had arisen as to whether, barring claims based on contracts, jurisdiction under the BCEA is deferred until a matter has been resolved by a labour inspector appointed in terms of s 63 of the BCEA. The court pointed out that there was no provision in the BCEA expressly requiring that disputes be submitted first to labour inspectors before the LC can entertain them. At the time when the claim in question arose, none of the functions of labour inspectors covered dispute resolution. Although the BCEA has since been amended and now authorises labour inspectors to refer disputes to the Commission for Conciliation, Mediation and Arbitration, that amendment came into effect only recently and did not apply to the present case. Litigants are not obliged to submit their disputes to labour inspectors before they may approach the LC.

Maritime law

Jurisdiction of magistrate’s court: In World Net Logistics (Pty) Ltd v Donsantel 133 CC and Another [2020] 1 All SA 593 (KZP), the appellant and first respondent concluded a service agreement for freight forwarding services. At the same time, the second respondent bound himself as surety and co-principal debtor for all debts due by the first respondent to the appellant. The service agreement contained the consent by the first respondent to the jurisdiction of the magistrates’ courts.

The first special plea that was raised was that the court a quo did not have jurisdiction to entertain the suit on the basis that the claim was a maritime claim as defined in s 1 of the Admiralty Jurisdiction Regulation Act 105 of 1983 and that only the High Court exercising its admiralty jurisdiction could determine the dispute. A second special plea related to the National Credit Act 34 of 2005. The first special plea was upheld, leading to the present appeal.

It was held that the magistrates’ courts have no jurisdiction to decide maritime claims. The Magistrates’ Courts Act 32 of 1944, which prescribes the jurisdiction of the magistrates’ courts makes no express or implied provision for the exercise of admiralty jurisdiction. The court, per Lopes J, referred to the various aspects of admiralty practice, which are not available in the ordinary jurisdiction of the magistrates’ courts.

As the claim was a maritime claim, the magistrate could not have referred the matter to the admiralty court and was obliged to hear the action or dismiss the action. Once his jurisdiction was challenged, he was compelled to decide whether the matter was a maritime claim. Having found that it was, it fell to be dealt with in terms of the Admiralty Jurisdiction Regulation Act, which he could not do. The magistrates’ courts have no jurisdiction to apply the provisions of the Act, and there is no provision in the Magistrates’ Courts Act to transfer the matter to the High Court exercising its admiralty jurisdiction. The magistrate, therefore, had no option but to dismiss the action as he did.

The appeal was accordingly dismissed with costs.

National Credit Act

Motor vehicle repossession and sale in execution: After confirming the cancellation of an instalment sale agreement in respect of a motor vehicle (vehicle) and ordering the return of the vehicle purchased in terms thereof, the court a quo made an additional order requiring Wesbank, within ten business days after receiving the vehicle, to provide the respondent with a written notice in which it set out the estimated value of the vehicle, and informed the respondent that the vehicle would not be sold at a price less than an estimated value unless so sanctioned by the court, and then after a notice had been provided to the respondent. That order was the subject of the present appeal, reported as FirstRand Bank Limited t/a Wesbank v Davel (University of the Free State Law Clinic as Amicus Curiae) [2020] 1 All SA 303 (SCA). The court a quo accepted that the bank, in the face of default, was entitled to cancel the instalment sale agreement and obtain the return of the vehicle but expressed concern about the price at which the vehicle would later be resold by the bank. The SCA, per Navsa JA, found that the concerns of the court were legitimate, but the order was made without a proper appreciation of the architecture of the National Credit Act 34 of 2005 (NCA) and was not in accordance with its provisions. The NCA provides mechanisms for a consumer to challenge the estimated values and the price realised on a sale of goods after either a surrender of the goods by a consumer or the repossession of the goods after action has been taken by the credit provider. Sellers in instalment sale agreements are entitled, on default by purchasers, to claim the amount they would have received had the purchasers fulfilled their contractual obligations. The proceeds of the sale of the motor vehicles concerned would ultimately have to be brought into account in determining how much was still owing or, depending on the amount recovered, the surplus amount that accrued to the purchaser. The court a quo did not give sufficient regard to the provisions of s 128, which allows for a contestation in relation to a disputed sale of goods. That contestation can take place by direct engagement with the credit provider, after referral of the dispute to the Tribunal, or after the submission of a complaint in terms of s 136 with the National Credit Regulator. The appeal was upheld to the extent reflected in the substitution order.

Other cases

Apart from the cases and material dealt with or referred to above, the material under review also contained cases dealing with –

  • company law and the validity of special resolutions on shares;
  • costs in unopposed applications;
  • discovery and the defence of litigation privilege;
  • dispute of fact and referral for oral evidence;
  • State Attorney’s authority to settle claims;
  • the effect of a voluntary winding-up application on a compulsory winding-up; and
  • whether utterances that vilify a certain person are hate speech.

Merilyn Rowena Kader LLB (Unisa) is a Legal Editor at LexisNexis in Durban.

This article was first published in De Rebus in 2020 (April) DR 22.