The law reports – January/February 2019

February 1st, 2019
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Heinrich Schulze BLC LLB (UP) LLD (Unisa) is a professor of law at Unisa.

November 2018 (5) South African Law Reports (pp 1 – 332); [2018] 4 All South African Law Reports October (pp 1 – 287)

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

Civil procedure – law of evidence

Admissibility of evidence adduced by way of video-link conference: The applicant in Krivokapic v Transnet Ltd t/a Portnet [2018] 4 All SA 251 (KZD) was a resident of Yugoslavia. In May 2001, the applicant’s son (the deceased) was employed aboard a ship as an employee of the respondent (Transnet). The vehicle in which he was transported collided with a gantry crane and fell over the edge of a wharf into the bay on Transnet’s property. The applicant instituted an action for damages against Transnet, alleging that the deceased owed her a duty of support.

Transnet conceded liability and the action was settled to the extent of 70% of the applicant’s proven or agreed damages. The only outstanding issue was the determination of the quantum of damages suffered by the applicant. That led to the present application in which permission was sought for the applicant to testify from premises in Montenegro in Yugoslavia, by way of a video conference link, and giving Transnet an opportunity to appoint legal representatives to monitor and be present during the process. The applicant’s attorneys would arrange for the video conference link to be set up at the offices of a South African firm of attorneys or any other place agreed to by the court, in order for the presiding officer and the legal representatives of Transnet to be present during the process. The basis for the application was that due to old age, ill-health and impecunious state of the applicant, she was unable to travel and testify in a court in South Africa.

Two main points fell to be decided. First, whether the present matter was an admiralty one. Mbatha J held that for the following reasons, the applicant’s claim was indeed a maritime claim as defined in s 1(1) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act). First, the deceased had died as a result of an accident which occurred in connection with the employment of a ship (s (1)(f)). Secondly, it involved the employment of the deceased as an officer or seaman of a ship (s 1(1)(s)) and fell within the all-embracing provisions of s (1)(1)(f), s (1)(1)(s), s 1(1)(ee) and (ff). The application could, therefore, be entertained in line with the provisions of s 6(3) of the Act.

The second point concerned the aspect of admissibility of the applicant’s evidence by way of video-link conference. Ordinarily, in civil proceedings, oral testimony is given by the plaintiff in a court of law. However, the court acknowledged that modern technology makes it possible for direct evidence to be taken from a witness in another country and for cross-examination to take place while the witness is visible to all. The test with regard to evidence in general is that the court should consider all material, which may help it reach a proper conclusion. Although it is trite that the value of some evidence is outweighed by the problems it creates, the court is required to balance the competing considerations in exercising its discretion.

Rule 38 of the Uniform Rules of Court provides for various procedures to produce evidence for trial. The main consideration is whether evidence is placed before the court in that manner, justice is likely to be done. The court was satisfied that the nature of the evidence to be adduced by the applicant was material to the real issues in the litigation and likely to contribute significantly to their determination. Taking into account a number of factors, including old age, serious illness, costs of travelling and other incidental costs, the court concluded that the applicant would not be in a position to give oral testimony in court due to her advanced age and serious illness.

The application succeeded. The applicant was authorised and directed to adduce her evidence as sought.

Company law – minority shareholder

Approval of disposal of assets by company: The facts in Cilliers v La Concorde Holdings Ltd 2018 (6) SA 97 (WCC) were as follows: The applicant (Cilliers) was a minority shareholder in La Concorde Holdings Ltd (the holding company) that held all the shares in KWV South Africa (Pty) Ltd and a ‘significant interest’ in KWV Intellectual (Pty) Ltd. In May 2016 it was announced that KWV would dispose of all its operational assets to a third party.

The disposal by KWV also constituted a disposal of all or the greater part of the assets or undertaking of La Concorde. This was clear from a reading of the consolidated financial statements of the holding company. As a result, a meeting of shareholders of La Concorde was called to approve the disposal as required by s 115(2)(b) of the Companies Act 71 of 2008 (the Act).

Cilliers and a few other shareholders voted against the proposed transaction at the meeting. La Concorde initially held the view that appraisal rights were available to its dissenting shareholders but changed its mind after the meeting. La Concorde made an offer to the dissenting shareholders to acquire their shares but this was rejected as being inadequate. The dissenting shareholders then instituted action against the holding company for the appointment of two appraisers to determine the fair value of their shares in terms of s 164.

Papier J held that s 115(2)(b) of the Act requires approval by shareholders of the holding company because the disposal of all or the greater part of its assets or undertaking by a subsidiary constitutes such a disposal by the holding company. The parties agreed to apply to court in terms of r 6(5)(d)(iii) of the Uniform Rules of Court for determination, as a question of law, whether appraisal rights are established in favour of dissenting minority shareholders of a holding company where s 115(2)(b) applies.

The arguments that La Concorde itself did not dispose of any assets and that reference to the votes of shareholders in s 112 only refer to votes of shareholders in the subsidiary company that sold the assets, were rejected.

Section 112 is subject to s 115, which contains the requirement that the shareholders of the holding company should also vote to approve a disposal by the subsidiary if it constitutes a disposal of all or the greater part of the holding company’s assets or undertaking. It is also in s 115(8) that the appraisal remedy in terms of s 164 is made available to the holder of any voting rights in a company and must, therefore, be taken to include the shareholders of the holding company.

The protection of minority shareholders is one of the important stated aims of the Act and the appraisal rights provided by s 164 are important in providing minority shareholders with an exit from the company where they cannot influence company direction and decisions effectively.

The appraisal remedy does not dilute or negate the power of majority shareholders, but merely provides minority shareholders with equitable protection and fairness. For these reasons, a minority shareholder in a holding company is entitled to the protection of the appraisal rights in terms of s 164 where s 115(2)(b) applies.

The application was thus allowed with costs.

Competition law

Enforcement of restraint of trade agreement pending application for leave to appeal: The facts which led to the appeal in Swart and Another v Cash Crusaders Southern Africa (Pty) Ltd 2018 (6) SA 287 (GP) were as follows: On 17 January 2018 Kollapen J granted an order enforcing a restraint of trade agreement concluded between the respondent (Cash Crusaders) in the present appeal and its erstwhile national general manager (Swart), who was the appellant in the present proceedings. The order granted interdicted Swart from, inter alia, being employed by the second appellant (Cash Converters) at any time until 7 April 2019. Cash Converters is a direct competitor of Cash Crusaders. On 24 January 2018 Swart and Cash Converters gave notice of their intention to apply for leave to appeal. Leave to appeal was refused. Swart and Cash Converters subsequently lodged an application for leave to appeal to the Supreme Court of Appeal. The relevant affidavits that have been lodged and the outcome of the application are awaited. On receiving the Swart/Cash Converters’ notice of intention to apply for leave to appeal, Cash Crusaders brought an application in terms of the provisions of s 18 of the Superior Courts Act 10 of 2013, seeking an order directing that, pending the outcome of any appeal process instituted, the interdict granted on 17 January 2018 would operate. This application was granted on 27 February 2018. Section 18(4) of the Superior Courts Act grants to a party aggrieved by such an order an automatic right of appeal to the next-highest court, and states that such an appeal must be dealt with ‘as a matter of extreme urgency’. The present appeal was lodged in terms of s 18(4) of the Superior Courts Act and served before a Full Bench of the High Court.

Fabricius J confirmed that under s 18 two requirements had to be met before an order appealed against can be put into operation pending the outcome of the appeal –

  • exceptional circumstances must exist; and
  • proof, on a balance of probabilities, that the applicant seeking execution will suffer irreparable harm if the order is not put into operation and the other party will not suffer irreparable harm if the order is put into operation.

Cash Crusaders did not, when it applied for execution, deal with the position of Cash Converters at all, having alleged only that Swart would not suffer irreparable harm if the order were put into operation.

The court held that it was clear from the affidavits before the court a quo that it did not deal with the effects his preclusion from being employed by a competitor would have on Swart after the period of restraint, and that the scope of its inquiry under
s 18(3) was, therefore, limited. However, Cash Crusaders’ failure to deal, in its s 18(1) application, with the position of Cash Converters, went to the heart of the matter. Both Swart and Converters brought an application for leave to appeal against the order of 27 February. Consequently, Cash Crusaders was required to make out a case of absence of irreparable harm in regard to both Swart and Cash Converters. Its failure to do so was a fatal omission to its application, and it ought on that basis alone to have been dismissed with costs by the court a quo.

The appeal was upheld with costs. The order of the court a quo was set aside and replaced with the following order: ‘The application is dismissed with costs’.

Corruption – minimum sentence

Acceptance of gratification in unlawful exercise of duties: The crisp facts in Scholtz and Others v S [2018] 4 All SA 14 (SCA) were as follows: The first appellant and accused in the court a quo (Scholtz) was a shareholder in the Trifecta Group of companies (Trifecta), of which one Breda was a director and shareholder. Breda was a historically disadvantaged individual and businessman of the Northern Cape. Breda had Black Economic Empowerment (BEE) credentials.

In late 2004, or early 2005, Scholtz learned that the Northern Cape lacked the necessary infrastructure and housing to accommodate provincial government departments. Leasing suitable accommodation to the state was a potentially lucrative source of income, particularly for an entrepreneur having BEE credentials. He envisaged a business model of acquiring largely rundown buildings, renovating and refurbishing them, and then leasing them to provincial government departments. It was decided that Breda would identify people or entities as potential BEE participants in the venture.

Breda would then introduce such property to the provincial government, mostly before the formality of an advertisement calling for bids for accommodation having been published. He would then negotiate the terms of the lease for such property. In the event of such negotiations being successful and a lease either having been concluded or likely to be agreed, he would then acquire the property using one of the Trifecta group of companies. The conclusion of the leases was riddled with irregularities.

Various charges were brought against the accused relating to these irregularly concluded lease agreements. Suffice it to mention here that the court a quo convicted Scholtz and Block and each was sentenced to an effective 15 years’ imprisonment.

The remainder of the present discussion will be restricted to Scholtz’ and Blocks’ appeal against their sentence of imprisonment.

On appeal Leach JA pointed out that the appeal in respect of sentence was limited to the charges of corruption on which Scholtz and Block were convicted. Each count involved an amount far in excess of R 500 000. Consequently, Part II of the Second Schedule to the Criminal Law Amendment Act 105 of 1997 applied, in terms of which a minimum sentence of 15 years’ imprisonment was prescribed unless there were substantial and compelling reasons justifying a lesser sentence. While the courts have a residual discretion to decline to pass the prescribed minimum sentence, they should only do so where there are circumstances present which provide truly convincing reasons for a lesser sentence. The court a quo determined that there were no such circumstances in the case of either Scholtz or Block and, accordingly, imposed the prescribed minimum of 15 years’ imprisonment. In considering the appeal, the SCA emphasised the seriousness of the offences, and found no mitigating circumstances weighty enough to depart from the prescribed minimum sentences.

The two appeals against sentence were thus dismissed.

Costs

Counsel fees – wasted costs: The facts in Trollip v Taxing Mistress 2018 (6) SA 292 (ECG) were as follows: The Taxing Mistress of the Grahamstown High Court reduced the fees of the counsel for the applicant by half where a case was postponed on the day of the trial at the request of the defendant, who had applied for a postponement and offered to pay wasted cost.

Counsel charged a full day’s fee for the day of the trial he had set aside to attend court. The order for postponement was granted at 10:45 am.

Plasket J held that taxation ensures that ‘the party who is condemned to pay the costs does not pay excessive, and the successful party does not receive insufficient costs in respect of the litigation which resulted in the order for costs in terms of Rule 70 of the Uniform Rules of Court.’

In Thusi v Minister of Home Affairs and Another and 71 Other Cases 2011 (2) SA 561 (KZP) Wallis J held that the indemnity principle is of general application in the field of costs, and that it has not become outdated.

The discretion vested in the Taxing Master is to allow (all) costs, charges and expenses as appear to them to have been necessary or proper. Their opinion must relate to all costs reasonably incurred by the litigant, which imports a value judgment as to what is reasonable.

The Taxing Master has the discretion to allow, reduce or reject items in a bill of costs. This discretion must be exercised judicially in the sense that they must act reasonably, justly, and on sound principles with due regard to all the circumstances of the case.

The Taxing Master’s discretion is wide, but not unfettered. In exercising it, the Taxing Master must properly consider and assess all the relevant facts and circumstances relating to the particular item concerned. While a Taxing Master may not ignore evidence that may show that work that has been charged for has, in fact, not been done, this does not mean that there is a duty on practitioners to ‘prove their claims’.

A Taxing Officer is entitled to take counsel’s fee list at face value as constituting a record of the work that has been done. The honesty and professional ethics of counsel ought not to be lightly questioned.

The suggestion that an advocate, when rendering a fee for a full first day trial fee in respect of a matter which has settled or postponed, must necessarily demonstrate that they had turned away work and have no other work, is erroneous. A Taxing Master’s starting point should be that, in the absence of evidence to the contrary, advocates as members of an honourable profession, render fees honestly and behave ethically.

An advocate may charge a full day’s fee if they ‘[have] been left with no other income for the day’. ‘No other income’ means income derived from appearance work, and not chamber work, as this is consistent with the case law.

The Taxing Mistress was guided in her decision by the Guidelines to Taxation of Bills of Costs – Eastern Cape High Courts. However, the guidelines in respect of settled matters conflict with established case law.

The court concluded that the Taxing Mistress erred in reducing counsel’s fees and she did not exercise her discretion in accordance with established case law and principles.

Customary law

Appointment of a traditional leader: The facts in Ludidi v Ludidi and Others [2018] 4 All SA 1 (SCA) concerned a battle for succession as Inkosi (Chief) of the amaHlubi tribe in Qumbu in the Eastern Cape. The appellant and the first respondent were cousins vying for the position. At the time of the death of the last chief in 2012, the recognition of traditional leaders countrywide was regulated by the Traditional Leadership and Governance Framework Act 41 of 2003 (the National Act), read with the Traditional Leadership and Governance Act (Eastern Cape) 4 of 2005 (the Provincial Act).

Acting in terms of the Provincial Act, the Hlubi Royal Family identified the first respondent for recognition as the Chief of the amaHlubi by the Premier. The fifth respondent, the Mancaphayi Royal Family, identified the appellant for the same position. Unable to resolve the impasse, the Member of the Executive Council (MEC) referred the matter back to the Hlubi Royal Family for its decision. The MEC was then informed that the first respondent had been identified as the next Chief of the amaHlubi. The MEC recognised the first respondent as chief and issued a recognition certificate to that effect. However, he did not inform the House of the recognition before it was published as required by s 18(2) of the Provincial Act.

Maya P held that the issues on appeal were, first, whether the appellant’s expectation that he had an automatic right to the chieftainship of the amaHlubi on his father’s death based on the validity of the latter’s appointment under the Transkei Constitution Act as the permanent Chief of the amaHlubi – was legitimate. Secondly, whether the MEC arbitrarily recognised the first respondent as the Chief of the amaHlubi in disregard of evidence that she was identified by only one faction of the fractured royal family and the opposing faction’s recommendation. Thirdly, whether the MEC was obliged to afford the appellant a hearing before recognising the first respondent. Fourthly, whether the MEC’s failure to inform the House of the first respondent’s recognition before its publication in the Gazette nullified the recognition.

The court a quo correctly decided the various material disputes of fact on the respondents’ version and found that the Mancaphayi Royal Family was a recent splinter of the Hlubi Royal Family, formed by the latter’s erstwhile members who were not direct descendants of Chief Dyubhele and were opposed to having a female chief.

The foremost question, which arose in the dispute concerned, was who had the right to choose a Chief of the amaHlubi. Based on the relevant provisions of the National and Provincial Acts, and the respondent’s version, the court found that the Hlubi Royal Family was a royal family as envisaged in the statutory definition. It was made up of Chief Dyubhele’s direct descendants, and remained the custodian of the customs of the amaHlubi and their royal family’s lineage and was the sole repository of the right to identify the Chief of the amaHlubi. There was no evidence that the decision-maker in this case, that is, the Hlubi Royal Family, ever made any representation to the appellant that he would become the Chief of the amaHlubi when his father died.

The appeal was dismissed, with no order as to costs.

Insurance law – non-disclosure

Right to avoid liability in the case of material non-disclosure: The facts in Basson v Hollard Life Assurance Co Limited [2018] 4 All SA 77 (GJ) were as follows: The plaintiff was the beneficiary under a life insurance policy taken by her husband (the insured) before his death. The insured subsequently passed away and the plaintiff sued the defendant (as insurer) for payment of the proceeds of the policy. The defendant had rejected the claim on the grounds of the insured’s alleged misrepresentation and non-disclosure of certain facts to the defendant at the time when application was made for the policy. It was alleged that the deceased had misrepresented the truth regarding a lung mass/dot, which showed on an X-ray. The insured was also alleged to have failed to disclose that he had a number of other health issues, including a heart or circulation ailment.

The plaintiff admitted that the insured failed to disclose certain facts but stated that the manner in which the relevant questions were phrased in the policy application form was confusing and the insured acted in the honest belief that he was answering correctly. According to the plaintiff, once it was shown that the insured had acted bona fide and with an honest belief, it could not be regarded as misrepresentation. The plaintiff also pointed to the fact that the insurer had paid out a funeral benefit, as indicating that the insurer considered itself liable. On the ground that both the funeral policy and the life policy were regulated by the same agreement, the plaintiff argued that any material misrepresentations would result in forfeiture of all benefits in terms of the agreement.

Avvakoumides AJ pointed out that s 59 of the Long-Term Insurance Act 52 of 1998 deals with misrepresentation and failure to disclose material information. An insurer has the right to avoid a contract of insurance not only if the proposer has misrepresented a material fact, but also if they have failed to disclose one. The burden of proving materiality is on the party alleging the misrepresentation or non-disclosure.

It is a naturalia of the insurance contract that the applicant for insurance must disclose material facts to the insurer. For a non-disclosure or a misrepresentation to be legally relevant it must be material. The test to establish whether something is material is whether a reasonable, prudent person would consider that the information constituting the representation (or non-disclosure) should have been disclosed to the insurer so that the latter could form its own view as to the effect of such information on the assessment of the relevant risk.

The court held that the insurer’s application and proposal form was clearly worded and unambiguous. The failure to answer the relevant questions truthfully fell short of what was required to overcome the breach of the warranty pleaded by the defendant.

The court further rejected the plaintiff’s submissions regarding the payment of the funeral cover costs, thus constituting an alleged waiver by the insurer of its rights to raise the defence of non-disclosure. In this regard the court held that it was only after payment of such proceeds that the defendant established that there were material non-disclosures and misrepresentations. The payment of the funeral costs was an ex gratia payment.

The claim was dismissed with costs.

Neighbour law

Duty of lateral support to neighbouring land and property when doing excavations: In Dias v Petropulos and Another 2018 (6) SA 149 (WCC); [2018] 4 All SA 153 (WCC) Dias (the plaintiff) alleged that the excavation of the property belonging to the first and second defendants (the defendants) resulted in damage to his own property. The plaintiff’s case was that the damage to his property was caused by the mobilisation in June 2008 of the scree mountain slope on which it was located. That slope mobilisation, the plaintiff’s case proceeded, was caused through breaches by the defendants of the duty of lateral support they owed to his property. The properties in question were adjacent properties in Camps Bay, Cape Town.

The first defendant disputed that she owed the plaintiff a duty of lateral support for a number of reasons, including that the plaintiff’s property had previously been excavated and was no longer in its natural state and that the plaintiff had consented to the first defendant’s excavation and thereby waived any right of lateral support it might otherwise have had.

Bozalek J held that there was no authoritative or binding decision in our law limiting a landowner’s right of lateral support to the land in its natural state only, as was the case in English law. There were, furthermore, cases where it was held that the right extended to support to buildings on the land. However, where a property had been unduly or unreasonably loaded through the erection of disproportionately large or heavy structures, it would seem unfair that a neighbouring piece of land should attract an equivalently onerous duty of lateral support. The view that the duty of lateral support in relation to contiguous pieces of land was owed to buildings as well, was therefore, too broad a formulation of the right or duty of lateral support – particularly where the contiguous parcels of land were situated on a slope.

Our law in regard to the right of lateral support was squarely located within the law of neighbours in which one of the guiding principles was reasonableness. There was, therefore, no bar to the concept of reasonableness playing a role in determining the scope of the duty of lateral support, more particularly in determining whether a duty of lateral support extending to buildings could be limited where the property damaged by a breach of this duty had been unreasonably loaded by artificial constructions. Therefore, the appropriate approach was to hold that the scope of duty of lateral support extended not only to land but also to buildings, save where such land had been unreasonably loaded so as to place a disproportionate or unreasonable burden on the neighbouring land. On the evidence, there was no basis to find that the plaintiff had unreasonably loaded his property.

On the evidence, plaintiff’s dwelling was properly constructed, and in excellent condition, structurally and otherwise. This changed soon after the excavations started in 2008. Soon thereafter the plaintiff’s property started showing serious defects. First, furrows started appearing in the plaintiff’s lawn. Secondly, the plaintiff’s pool began to detach itself from the house. Thirdly, large cracks appeared in the plaintiff’s newly built garage floor. The plaintiff then evacuated his property. From this point on extensive damage began to manifest in the plaintiff’s property in the form of cracked tiles, cracks in concrete slabs, shifting doorframes, cracks in the wall, and windows being twisted out of place. The lounge had 100 cracks and the dining room 52. On the expert evidence and on the probabilities, it was the excavations done by the defendant which resulted in the damages to the plaintiff’s property.

The plaintiff’s claim thus succeeded with costs and the court confirmed the defendant’s duty to provide lateral support to the plaintiff’s property. The amount of the plaintiff’s damages was reserved for determination by the trial court.

Finally, the court also made a ruling on the question whether the plaintiff was allowed to unilaterally withdraw his claim against one defendant. The outcome of this falls outside the scope of the present discussion.

Set-off

Requirement of reciprocity of debts: The parties in Bannister’s Print (Pty) Ltd v D&A Calendars CC and Another 2018 (6) SA 77 (GJ) were involved in complicated and protracted litigation. It resulted in a large costs order being granted against Bannister’s Print (the applicant) in favour of D&A Calendars (D&A) and Darryl Bannister (Darryl) who were the joint respondents in the matters.

The respondents obtained a writ of execution against the applicant for payment of the costs orders. The writ was executed by the Sheriff who attached the applicant’s business machinery. The applicant brought an application to have the writ of execution stayed pending an action that it (the applicant) has instituted against the respondents.

The applicant argued that the costs order debt was extinguished by set-off of the claims it had against D&A and/or Darryl.

Meyer J held that the facts of the present case did not establish grounds of justice and fairness on which the court could have exercised its wide discretion to stay the execution of the costs orders in favour of the respondents. The applicant was responsible for its own misfortune.

There was no explanation before court as to why the applicant has not satisfied the writs of execution by payment.

The four conditions for set-off to operate are that both debts must be –

  • of the same nature;
  • liquidated;
  • fully due; and
  • payable by and to the same persons in the same capacities.

In the present case the three debts were all of the same nature or kind, money. It was also trite that any kind of debt, including a judgment debt, may be extinguished by way of set-off. A party may thus rely on set-off against a judgment debt and, if necessary, apply to stay execution on it.

However, the obstacle to the applicant’s claim to set-off is the requirement that for set-off to occur there must be reciprocity of debts (both debts must be ‘payable by and to the same persons in the same capacities’).

The loan debt in question was a debt which, according to the applicant’s particulars of claim, was only due and owing by Darryl in his personal capacity. However, the taxed costs constituted a claim which D&A and Darryl (the respondents) indivisible co-creditors had against the applicant.

The respondents had a ‘simple joint entitlement’ to an ‘indivisible performance’ by the applicant. They were solidary co-creditors. They were together entitled to the whole performance; one on its or his own was not entitled to demand that the applicant performed to it or to him.

Furthermore, the court was in doubt on the scant facts before it whether the applicant’s debt was liquidated in the sense that it was capable of speedy and easy proof.

The application was thus dismissed with costs.

Water law

Use of groundwater: The dispute in Witzenberg Properties (Pty) Ltd v Bokveldskloof Boerdery (Pty) Ltd and Another 2018 (6) SA 307 (WCC) was between neighbouring commercial farming enterprises in a winter rainfall area in the Prince Alfred Hamlet. The applicant (Witzenberg) sought an interdict against the first respondent (Bokveldskloof) to prevent the latter from taking water from three boreholes on Bokveldskloof’s property, which are situated in close proximity to one of Witzenberg’s dams, for any purpose other than the uses permissible under sch 1 of the National Water Act 36 of 1998 (the NWA).

During argument the Minister of Water Affairs and Sanitation (the second respondent) came out with a ruling that caused Witzenberg to narrow down the relief sought to an interdict directing Bokveldskloof to stop abstracting groundwater except as permitted under the NWA. The minister’s ruling made under s 35 of the NWA, limited Bokveldskloof’s groundwater use to 161 400 cubic metres per year.

Bokveldskloof appealed the minister’s ruling to the Water Tribunal, which had the effect of suspending it pending the tribunal’s decision. Witzenberg argued that the borehole issue was distinct from the issue of the validity of the minister’s ruling and should be separately decided by the present court.

Cloete J pointed out that under the NWA water users were allowed to continue with the ‘existing lawful use’ of water that had occurred during the two years prior to its commencement (on 1 October 1998). In Bokveldskloof’s case the minister determined such use to be the abovementioned 161 400 cubic metres per year. Witzenberg’s argument was that Bokveldskloof was already extracting far more than this from the three boreholes. Bokveldskloof, in turn, argued that the limit determined by the minister had been calculated on the wrong basis.

The parties agreed that the NWA introduced a fundamental reform of water law by shifting away from the riparian principle of preferential and hierarchical water use rights to an administered system that operated in the interests of all water users. The NWA removed traditional water law from the domain of private law to that of public law.

The court then considered Witzenberg’s standing. It held that the NWA was enacted for the benefit of the general public and not in the interests of a particular person or class of persons and, therefore, the harm required for Witzenberg’s standing was not presumed. Witzenberg would have to show, as own-interest litigant, on a balance of probabilities, that it sustained or apprehended actual harm as a result of a breach of the NWA. Since it was not resolved that Bokveldskloof had acted unlawfully at all, the court’s putative duty to uphold the doctrine of legality did not arise.

All Witzenberg had shown was a theoretical possibility that the three boreholes were syphoning water from the dam, not that it sustained or apprehended actual harm. Surface water and groundwater were always linked, and the mere fact of connectivity between the dam and the boreholes was of little, if any, assistance in this regard.

The application was dismissed with costs.

Wills

Outdated will cannot revive where testatrix gave clear instruction to destroy it: In Roos v Saaiman NO and Others 2018 (6) SA 279 (GP) the testatrix, per signed letter dated 5 December 2011 instructed her bank, which had a will of hers under safeguard, to cancel and destroy it. The letter stated that the ‘outdated’ will had already been cancelled back in 1999, but that the bank’s records failed to reflect this. The bank, acting in accordance with internal policy, did not destroy the will but returned it to the testatrix. The testatrix passed away following a motor-vehicle accident on 4 December 2015. The applicant, the testatrix’s spouse, sought an order declaring that the will was not the testatrix’s final will and testament, and that she had in fact died intestate. The second respondent, the testatrix’s mother and a potential beneficiary under the contested will, opposed the application.

Section 2A(c) of the Wills Act 7 of 1953 (the Act) provides that ‘[i]f a court is satisfied that a testator has … drafted another document … by which he intended to revoke his will … the court shall declare the will … to be revoked’.

While the second respondent accepted that s 2A(c) of the Act (which was inserted in the Act in 1992) did away with the requirement that the intention to revoke a will had to be embodied in a testamentary instrument, she argued that an act of destruction was nevertheless required for revocation by way of destruction.

Teffo J held that while the bank’s policy not to cancel or destroy a will on a testator’s instruction but to return it could not be faulted, this did not detract from the instruction contained in the deceased’s letter. The letter contained a clear animus revocandi. Whether it has been destroyed or cancelled, that does not take away the instruction in the letter dated 5 December 2011.

The will was already outdated in 1999, and the keeping of an outdated will could not revive it where there had been a clear written instruction to cancel or destroy it. The deceased’s intention with the letter of 5 December 2011 was merely to get the bank to update its records to reflect an earlier cancellation. The absence of destruction was immaterial, given that the letter constituted a valid revocation under s 2A(c) of the Wills Act.

The testator thus died intestate. The application was granted 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: Administrative law, civil procedure, constitutional law, estoppel, housing, immigration, international law, judges, labour law, local authorities, minerals, pension funds, personal injury, trusts, vicarious liability and witnesses.

This article was first published in De Rebus in 2019 (JanFeb) DR 33.

 


 

David Matlala BProc (University of the North) LLB (Wits) LLM (UCT) LLM (Harvard) LLD (Fort Hare)HDip Tax Law (Wits) is an adjunct professor of law at the University of Fort Hare.

December 2018 (6) South African Law Reports (pp 335 – 664); November [2018] 4 All South African Law Reports (pp 289 – 614); 2018 (10) Butterworths Constitutional Law Reports – October (pp 1179 – 1308); 2018 (11) Butterworths Constitutional Law Reports – November (pp 1309 – 1449)

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

GP: Gauteng Division, Pretoria

LAC: Labour Appeal Court

LC: Labour Court

SCA: Supreme Court of Appeal

WCC: Western Cape Division, Cape Town

Administrative law

Where PAJA is applicable, it should be the basis on which to review and set aside administrative action: In Minister of Defence and Another v Xulu 2018 (6) SA 460 (SCA) the respondent Xulu was a member of the Regular Force of the South African National Defence Force (SANDF) serving on a renewable fixed term contract of two years. The review board of the SANDF renewed the contract on three occasions but declined to do so on the fourth occasion. As a result, the respondent took the matter to the High Court for a review and setting aside of the decision of the review board, relying on the Promotion of Administrative Justice Act 3 of 2000 (PAJA). The GP, per Lephoko AJ, held that PAJA was not applicable and dismissed the application. On appeal to the Full Court Tolmay J (Raulinga and Khumalo JJ concurring) upheld the appeal, holding that it was not necessary to consider if PAJA applied as the matter could be disposed of on the legality principle in that in declining to renew the contract the review board did not follow the applicable Policy of the Department of Defence issued on 27 January 2010.

On further appeal the SCA granted the appellants, the Minister of Defence and the Chief of the SANDF, special leave to appeal, but dismissed the appeal itself. The order of the Full Court was changed from renewal of the contract from 2011 until July 2017 to compensation as that period had come and gone by the time of the SCA decision. The amount of compensation was to be as agreed between the parties, failing which to be determined by an arbiter to be appointed by the Chairperson of the Pretoria Bar.

Wallis JA (Lewis, Saldulker, Mocumie JJA and Pillay AJA concurring) held that the Full Court arrived at a correct decision for the wrong reasons. The decision not to renew the respondent’s fixed-term contract as a member of the SANDF constituted an administrative action and, was therefore, subject to review in terms of s 6 of PAJA. The approach of the Full Court, in avoiding the question whether the case dealt with administrative action and by disposing of it on the basis of the principle of legality, was in principle incorrect and thus to be discouraged. The right to a just administrative action was the primary source of the power of courts to review the actions of the executive and the administration. Litigants and courts should not circumvent PAJA and the issues it raised by proceeding directly to questions of legality.

If action by the executive and administration constituted administrative action, the jurisdiction of the CC was clear in saying that such was the path that the litigation had to follow. The role of the principle of legality as developed and explained by the CC in Pharmaceutical Manufacturers Association of SA and Another: In re Ex parte President of the Republic of South Africa and Others 2000 (2) SA 674 (CC); 2000 (3) BCLR 241 (CC), was to provide a control over exercises of public power that did constitute administrative action.

When dealing with the conduct of the executive and administrative arms of government, the starting point was whether the conduct in question constituted administrative action. If it was the principle of subsidiarity demanded that it be dealt with under PAJA. If it fell outside PAJA then the principle of legality could come into play, bearing in mind that such was a threshold requirement and that the concept of rationality that it invoked was a narrow one and not necessarily the same as that applied in a review under s 6(2)(f)(ii) of PAJA. The development of a coherent administrative law demanded that litigants and courts should start with PAJA and only when it did not apply, could they look to the principle of legality and any other permissible grounds of review lying outside PAJA.

Civil procedure

Mortgage bond foreclosure: During April 2018 a number of mortgage bond foreclosure matters served in the GJ before Van der Linde J by way of application. Because of several judgments in various divisions of the High Court, including the instant division, in Absa Bank Ltd v Mokebe and Related Matters 2018 (6) SA 492 (GJ); [2018] 4 All SA 306 (GJ), Van der Linde J referred the matters to the Full Court for adjudication as provided for in s 14(1)(a) of the Superior Courts Act 10 of 2013. Subsequent thereto, the Judge President of the Division issued a directive setting out the issues that required determination. The main issues to be determined included, among others, whether the court had a discretion to grant a money judgment order while postponing the granting of the order for execution of the property involved; the circumstances under which the court should set a reserve price and how such price were to be determined; revival of the agreement after default by the debtor, as well as the contents of a document initiating proceedings.

The Full Court per Pretorius, Tsoka and Wepener JJ held that:

  • In all matters where execution was sought against a primary residence the entire claim, including the monetary judgment, had to be adjudicated at the same time (and not piecemeal).
  • Execution against movable and immovable property was not a bar to revival of the agreement until the proceeds of the execution had been realised.
  • Any document initiating proceedings where a mortgaged property could be declared executable had to contain a statement made in a reasonably prominent manner and drawing the attention of the defendant/respondent to s 129(3) of the National Credit Act 34 of 2005 (the NCA) indicating that the debtor could pay to the credit grantor all amounts that were overdue, the credit grantor’s permitted default charges and reasonable or agreed costs of enforcing the agreement prior to the sale and transfer of the property in order to revive the credit agreement.
  • Save in exceptional circumstances, a reserve price should be set by a court, in all matters where execution was granted against immovable property, which was the primary residence of a debtor where the facts disclosed justified such an order.

Elaborating on the above principles the court held that it was both desirable and necessary for the in personam (money judgment) and in rem (execution order) claims to be heard simultaneously as envisaged in the Practice Manual of the Division. Judgments to the contrary should not be followed as failure to do so resulted in consequences detrimental to debtors, which could be avoided by the simultaneous hearing of both issues. To that end, there was a duty on banks to bring their entire case, including the money judgment, based on a mortgage bond, in one proceeding simultaneously. Should the matter require postponement for whatever reason, the entire matter fell to be postponed as piecemeal judgments were not competent.

What prevented reinstatement of the agreement in terms of s 129(4)(b) of the NCA, in the event of default by the debtor, was only the sale in execution of the immovable property and realisation of the proceeds of such sale. Prior to realisation of the proceeds of the sale the mere attachment was no hindrance to the reinstatement of the agreement. The fact that the mortgaged property had been attached pursuant to default judgment and an order declaring the property specially executable was of no consequence. It was only when the mortgaged property had been sold and the proceeds of the sale had been realised that there could be no reinstatement. That was self-evident as there was nothing to reinstate, the agreement having come to an end.

Rule 46A(8)(e) of the Uniform Rules of Court, in operation since December 2017, empowered the court to set a reserve price for the property at the sale in execution. That price applied only to those properties, which were primary homes of debtors who were individual consumers and natural persons. Setting a reserve price depended on the facts of each case. It would not be possible to set out a numerus clausus of the factors to be considered in each case as the reserve price would depend on the facts of each case. That price should be based on all the factors placed before the court by both the creditor and debtor when an order declaring the property to be specially executable is granted.

Criminal law

Unconstitutionality of statutory provisions prohibiting possession, use and cultivation of cannabis by adults for personal consumption in private: Sections 4(b) and 5(b), read together with part III of sch 2 of the Drugs and Drug Trafficking Act 140 of 1992 (the Drugs Act) make it an offence to use, possess or cultivate dependence-producing substance, such as cannabis, except for medicinal purposes. ‘Cannabis’ is commonly referred to as ‘dagga’ in South Africa (SA) and ‘marijuana’ elsewhere. In the same vein s 22A(9)(a)(i) of the Medicines and Related Substances Control Act 101 of 1965 (the Medicines Act) make it an offence to acquire, possess, use, manufacture or supply, among others, cannabis without permission of the Director-General, Department of Health. The constitutionality of the above provisions was contested in Minister of Justice and Constitutional Development and Others v Prince and Others 2018 (6) SA 393 (CC); 2018 (10) BCLR 1220 (CC), where the respondents, Prince and others, alleged that the provisions violated their right to privacy, equality, human dignity and the like in that they criminalised the use, possession and cultivation by an adult for personal consumption in a private place. The WCC per Davis J (Saldanha and Boqwana JJ concurring) declared the impugned provisions unconstitutional and accordingly invalid for violation of the respondents’ right to privacy. The operation of the order of invalidity was suspended for a period of 24 months to afford Parliament the opportunity to remedy the defect in the provisions.

The present proceedings before the CC were for confirmation of the order of the High Court. The applicant Minister of Justice and Constitutional Development applied for leave to appeal the High Court order. Such leave was granted but the appeal itself was dismissed. No order was made as to costs save payment by the minister of all disbursements and expenses incurred by the respondents. The court confirmed the order of invalidity regarding use, possession, and cultivation of cannabis by an individual for personal consumption in a private place. However, the court did not confirm the part of the High Court order which declared invalid the ‘purchase’ of cannabis. It was held that to do so would legalise the sale (dealing in) of cannabis, which was a serious problem in the country and was not permissible.

Reading a unanimous judgment of the court Zondo ACJ held that criminalisation of possession of cannabis by an adult in private for their personal consumption was quite invasive. The prohibition of the performance of any activity in connection with the use, possession and cultivation of cannabis by an adult for their personal consumption was inconsistent with the right to privacy as entrenched in the Constitution and was, therefore, invalid.

As a result of the reading-in approach followed by the court, the position was that –

  • an adult person could use or be in possession of cannabis for their personal consumption in private;
  • the use, including smoking, of cannabis in public or in the presence of children or non-consenting adult persons was not permitted;
  • the use or possession of cannabis in private other than by an adult for their personal consumption was not permissible; and
  • the cultivation of cannabis by an adult in a private place for their personal consumption in private was no longer a criminal offence.
  • See law reports ‘Constitutional law’ 2017 (Sept) DR 40 for the WCC judgment.

Fundamental rights

Non-recognition of Muslim marriages for all purposes violates the rights of women and children in those marriages: There is currently no law in South Africa, which recognises Muslim marriages, meaning marriages solemnised according to the tenets of Islamic law (Sharia law), as marriages for all purposes. What the country has are a number of court decisions and pieces of legislation, such as the Criminal Procedure Act 51 of 1977, the Civil Proceedings Evidence Act 25 of 1969, the Child Care Act 74 of 1983, to name a few, which recognise Muslim marriages for particular purposes only and no more. In Women’s Legal Centre Trust v President of the Republic of South Africa and Others (United Ulama Council of South Africa and Others as amici curiae) and two related matters [2018] 4 All SA 551 (WCC), 2018 (6) SA 598 (WCC) three related cases were consolidated and heard together. In the main case the applicant Women’s Legal Centre Trust (WLC), the primary applicant, sought a declaration that the respondents, namely the President of the country, his Cabinet and Parliament (the state), have failed to fulfil an obligation imposed on them by s 7(2) of the Constitution to protect, promote and fulfil the rights contained in various sections of the Constitution by preparing and initiating, diligently and without delay, a Bill to provide for the recognition of Muslim marriages as valid marriages for all purposes in the country and to regulate the consequences of such recognition. Furthermore, the WLC sought an order directing the respondents to fulfil their relevant obligations within a period of 12 months from the granting of the order.

Subject to some amendments the orders sought were granted with costs. The court held that in the event that the contemplated legislation was not enacted within 24 months, and until that was done, the default position would be that:

  • A union validly concluded as a marriage in terms of Sharia law and, which subsisted at the time of the order would, even after its dissolution in terms of Sharia law, would be dissolved in accordance with the Divorce Act 70 of 1979, all the provisions of which would apply to such a union.
  • In the case of a husband who was a spouse in more than one Muslim marriage, the court would –
    • take into consideration all relevant factors including any contract or agreement and should make any equitable order that was deemed just; and
    • any person who, in the opinion of the court, had a sufficient interest in the matter could be joined in the proceedings.
  • If administrative or practical problems arose in the implementation of the court order, any interested person could approach for a variation of the order.

Boqwana J (Desai and Salie-Hlophe JJ concurring) held that the continued non-recognition of marriages solemnised according to Islamic tenets infringed the rights to equality and dignity of women and children in those marriages. The right to have any dispute that could be resolved by the application of law decided in a fair public hearing before a court, as well as a child’s right to have their interest treated as of paramount importance in every matter concerning the child, were also infringed by non-recognition. The absence of legislation to protect the rights of women and children in Muslim marriages amounted to a breach of a constitutional duty by the relevant arms of the state. Case-by-case and incremental development of the law was not entirely effective. Comprehensive legislation was required because it would provide effective protection of marriages concluded in terms of the tenets of Islamic law, while giving expression to Muslim persons’ rights to freedom of religion.

Income tax

Damages for breach of contract is not deductible expenditure, especially if not paid in the production of the taxpayer’s income: Section 11(a) of the Income Tax Act 58 of 1962, which deals with the general deduction formula, provides among others that: ‘For the purpose of determining the taxable income derived by any person from carrying on any trade, there shall be allowed as deductions from the income of such person so derived – (a) expenditure and losses actually incurred in the production of the income, provided such expenditure and losses are not of a capital nature.’

In Kangra Group (Pty) Ltd v Commission for the South African Revenue Service [2018] 4 All SA 383 (WCC) the taxpayer, the appellant Kangra Group, had two contracts with AMCI, an American coal trader, to which it supplied coal at the rate of US$ 27,50 per metric ton. When the price of coal escalated to US$ 40,00 per metric ton on the open market the taxpayer was disadvantaged as it had to supply AMCI at the agreed low contract price. For that reason, the taxpayer stopped supplying coal to AMCI in order to sell it on the open market and fetch a better price. The dispute between the parties was referred to arbitration where the taxpayer was ordered to pay R 90 million to AMCI as compensation for breach of contract. Thereafter, the taxpayer sought to deduct the R 90 million in terms of s 11(a) as an expenditure incurred in the production of income. The respondent South African Revenue Service assessed the taxpayer for tax on the basis that the amount of R90 million was not deductible. The Tax Court dismissed the appeal against the assessment. A further appeal to the High Court was also dismissed but the respondent was granted only 50% of the costs as the taxpayer had achieved success on another issue, namely regarding reversal of interest charged by the respondent for late submission of tax returns.

Gamble J (Salie-Hlophe J and Thulare AJ concurring) held that the taxpayer, Kangra Group, had not established that the relevant expenditure resulted in it earning any income, either in that tax year or subsequent thereto. As a result of restructuring of the company group and diversion of coal business all income from sales of coal, after breach of contract with AMCI, accrued for the benefit of another company, namely Kangra Coal and not the taxpayer Kangra Group. It was evident, therefore, that any income associated with the alleged expenditure actually accrued for the benefit of Kangra Coal and not Kangra Group. Therefore, payment of the amount of R 90 million by the taxpayer could not be regarded as allowable expenditure under s 11(a) as it was not incurred in the production of the taxpayer’s income.

 

The cost price of goods, and not the net realisable value (NRV), is the baseline against which diminution in the value of goods is measured: Section 22(1)(a) of the Income Tax Act 58 of 1962 (the Act) provides among others that the amount which shall, in the determination of the taxable income derived by any person during any year of assessment from carrying on any trade (other than farming) be taken into account in respect of the value of trading stock held and not disposed of by him at the end of such year of assessment, shall be the cost price to such person of such trading stock, less such amount as the commissioner may think is just and reasonable as representing the amount by which the value of such trading stock has been diminished by reason of damage, deterioration, change of fashion, decrease in the market value or for any other reasons satisfactory to the commissioner.

In Commissioner for the South African Revenue Service v Volkswagen South Africa (Pty) Ltd [2018] 4 All SA 289 (SCA) for the tax years 2008, 2009 and 2010 far from using the cost price as the value of trading stock not disposed of at the end of the tax year, the respondent taxpayer, Volkswagen, used the net realisable value (NRV), this being the probable future value of the trading stock. The NRV yielded an amount less than the cost price of the trading stock, the result of which was that the taxpayer claimed as a deduction the difference between the cost price and the NRV. The amounts claimed were substantial and reflected the figures of R 72 million, R 24,7 million and R 5,2 million for the respective years. The appellant South African Revenue Service rejected the deduction and after a lengthy audit of the taxpayer’s tax affairs issued revised assessments and levied additional tax for the three years. An appeal to the Tax Court was upheld by Eksteen J and assessors who set aside the revised assessments. An appeal against the decision of the Tax Court was upheld by the SCA with costs.

Wallis JA (Mathopo, Navsa, Seriti, and Willis JJA concurring) held that the taxpayer was required to determine the value of its trading stock at a particular point in time, namely the end of the tax year. That was an exercise of looking back at what happened during the year in question. The language of s 22(1)(a) was couched in the past tense. Accordingly, the section was not concerned with what might happen to the trading stock in the future but with an inquiry as to whether a diminution in its value had occurred at the end of the tax year. All the instances expressly referred to in the section, namely damage, deterioration, change of fashion and decrease in market value, related to diminution of value occurring prior to that date. In other words, the events relied on as demonstrating a diminution in value of the trading stock should have occurred during the tax year, even though their impact could only be felt in the subsequent year.

The commissioner could only grant a just and reasonable allowance in respect of a diminution of value of the trading stock under s 22(1)(a) in two circumstances. The first was where some event had occurred in the tax year in question causing the value of the trading stock to diminish. The second was where it was known with reasonable certainty that an event would occur in the following year which would cause the value of the trading stock to diminish.

On a proper interpretation of s 22(1)(a) the cost price of goods, and not the actual or anticipated market value on their sale, was the benchmark against which any claimed diminution in value was to be measured. A claim for an allowance had to be based on events that were known at the end of the tax year for which the allowance was claimed or the events that it was known would occur in the following year.

The use of NRV was inconsistent with two basic principles that underpinned the Act. The first was that taxable income was determined and taxation levied from year-to-year on the basis of events during each tax year. The commissioner was not concerned with the taxpayer’s trading prospects in later years. By contrast NRV was explicitly forward looking. It was concerned with the amount that the trader was likely to receive when the goods were realised and for that reason it took account of expenses that would be incurred in future in making the sale. The second inconsistency with principle was that using NRV had the effect that expenses incurred in a future tax year in the production of income accruing to or received by the taxpayer in that future year, became deductible in a prior year. That was inconsistent with the basic deduction provision in s 11(a) of the Act that what could be deducted in any tax year in the determination of taxable income were expenditure and losses ‘actually incurred’ in the production of the income. Allowing the taxpayer to deduct in a current year expenses that would be incurred in the following year in earning income would fly in the face of that provision.

Labour law

When reinstatement of employees found guilty of racially offensive conduct is not unreasonable: In the case of Duncanmec (Pty) Ltd v Gaylard NO and Others 2018 (6) SA 335 (CC); 2018 (11) BCLR 1335 (CC), nine employees of the applicant Duncanmec, the employer, participated in an unprotected strike in the workplace at which they sang a song, which translated into: ‘Climb on top of the roof and tell them that my mother is rejoicing when we hit the boer’. Save for singing the song and dancing, the strike was otherwise peaceful without any threat of violence. Thereafter, the employees faced two charges of misconduct, namely participating in an unprotected strike and engaging in racially offensive conduct. The chairperson of the disciplinary hearing found the employees guilty on both charges. Regarding the first charge they were given final written warnings but were dismissed on the second charge as the singing and dancing was found to amount to racism.

The dismissal penalty was reversed at the bargaining council arbitration where the arbitrator, the first respondent Garlard, held that while the song was inappropriate and could be offensive and cause hurt to those hearing it, it nevertheless did not use a racist term. Therefore, the evidence did not demonstrate that the relationship of trust between the employer and employees had broken down. For that reason the employees were reinstated to their positions.

The LC dismissed the employer’s review application and made the arbitration award and order of court. Leave to appeal was denied. Thereafter, the LAC dismissed the employer’s application for leave to appeal, hence the present application to the CC for leave to appeal. The court granted leave to appeal, but dismissed the appeal itself with no order as to costs.

Reading a unanimous judgment of the court Jafta J held that the word to which the employer objected was not an offensive racist term. The only word used which referred to race was ‘boer’. Depending on the content that word could mean [commercial] ‘farmer’ or a ‘white person’ [of Afrikaner heritage]. None of those meanings was racially offensive, a fact, which was conceded by the employer’s legal representative during arbitration hearing. As the trade union representing the employees, namely the National Union of Metal Workers of South Africa, did not take issue with the finding of the arbitrator that singing the song at the workplace was inappropriate and offensive in the circumstances, the court had to approach the matter on the footing that the employees were guilty of racially offensive conduct. However, the issue was whether the arbitration award, of reinstatement, was vitiated by unreasonableness.

The correct test was whether the award itself met the requirement of reasonableness. Even if the singing amounted to uttering racist words, dismissal of employees did not follow as a matter of course. There was no principle in South African law that required dismissal to follow automatically in the case of racism. What was required was that arbitrators and courts had to deal with racism firmly and yet treat the perpetrator fairly. The law did not support the proposition that every employee guilty of racism had to be dismissed. In the present case the arbitrator took into account the fact that while the singing of the song was inappropriate, it was nevertheless distinguishable from ‘crude racism’. The arbitrator also paid attention to the context in which the misconduct was committed, namely that the strike was peaceful and of a short duration as it was limited to one afternoon as well as the fact that all the affected employees had clean records. Therefore, the reasonableness requirement had been satisfied.

Road Accident Fund claims

Calculation of five-year prescription period: Section 23(3) of the Road Accident Fund Act 56 of 1996 (the RAF Act) provides, among others, that no claim that has been lodged with the Road Accident Fund (RAF) shall prescribe before the expiry of a period of five years from the date on which the cause of action arose.

In Road Accident Fund v Masindi 2018 (6) SA 481 (SCA) the cause of action arose on 17 June 2009 when the respondent Ms Masindi and her minor child were injured in a motor vehicle collision. That had the result that the five-year period within which the summons had to be issued and served would end on 16 June 2014. However, that fell on a public holiday, which had a result that the court was closed and summons could not be issued and served. For that reason the summons was only issued and served a day late, namely on 17 June 2014. Inevitably the appellant RAF raised the special plea of prescription of the claim.

The GJ per Mbongwe AJ dismissed the special plea of prescription, holding that the strict and literal interpretation of s 23(3) of the RAF Act did not accord with justice and that it could not have been the intention of the legislature to deprive the respondent of her full prescription period of five years. The court also relied on s 4 of the Interpretation Act 33 of 1957, which provides, among others, that when any particular number of days is prescribed for the doing of any act or for any other purpose, that period shall be reckoned exclusive of a Sunday or public holiday if such is the last day. The court further relied on reg 1 of the regulations made under the RAF Act, which provides that a ‘day’ means any day other than a Saturday, Sunday or public holiday.

The SCA dismissed with costs an appeal against the decision of the High Court, albeit for different reasons. Mocumie JA (Shongwe ADP, Majiedt, Swain JJA and Rogers AJA concurring) held that it was trite that regulations were subordinate to an Act of Parliament. As a general rule, regulations could not be used to interpret any piece of legislation where there was ambiguity. In any event, in the instant case the regulations did not regulate how a ‘day’ had to be interpreted in any setting other than as provided for in the regulations themselves. The court was not concerned with any act performed in terms of the regulation but with the interpretation of s 23(3), a section which did not even use the word ‘day’. The High Court should not have invoked s 4 of the Interpretation Act or the definition of a ‘day’ as given in reg 1 to come to the rescue of the respondent.

A strict and literal approach to interpreting the language of s 23(3) would defeat the very protection afforded by s 34 (access to courts) of the Constitution. On a proper interpretation of s 23(3), where the five-year period for bringing a claim ended on a day when the court was closed, so that a summons could not be issued and served on that day, the five-year period would end on the next working day. To hold otherwise would deprive the respondent of her right to claim, an absurdity, which the legislature could not have contemplated. The consequences would be too harsh to the respondent as opposed to the appellant.

Other cases

Apart from the cases and material dealt with or referred to above the material under review also contained cases dealing with: Adjusted variable import duty tariff, cancellation of registration of pension fund, collateral payment falling to be deducted from compensation for personal injury, condonation of failure to exhaust internal remedies before seeking review of administrative action, disgorgement of secret profits made by employee in breach of duty of good faith owed to employer, duty of motorist when overtaking a cyclist, infringement of copyright, joinder of parties, lawfulness of meeting of municipal council, non-appealability of interim interdict, requirements for interim interdict, right not to be evicted without court order, right to housing, shareholder consent before issuing shares, test for unlawful arrest and detention and universal partnership between cohabiting life partners.

This article was first published in De Rebus in 2019 (JanFeb) DR 38.

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