The law reports – January/February 2014

February 1st, 2014
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Heinrich Schulze BLC LLB (UP) LLD (Unisa) is a professor of law at Unisa.

November 2013 (6) The South African Law Reports (pp 1 – 317); [2013] 3 The All South African Law Reports October no 1 (pp 1 – 116); and no 2 (pp 117 – 252)

ABBREVIATIONS

ECP: Eastern Cape High Court, Port Elizabeth

GNP: Gauteng North High Court, Pretoria

GSJ: South Gauteng High Court, Johannesburg

KZD: KwaZulu-Natal High Court, Durban

KZP: KwaZulu-Natal High Court, Pietermartizburg

SCA: Supreme Court of Appeal

WCC: Western Cape High Court

Attorneys

Duty of confidentiality to client: In Wishart and Others v Blieden NO and Others 2013 (6) SA 59 (KZP) the three applicants were summoned to appear before the first respondent in July 2011 in an inquiry convened under s 417 of the now repealed Companies Act 61 of 1973. The inquiry related to a company called Avstar Aviation.

The second and third respondents are advocates prac­tising at the Johannesburg Bar. The fourth respondent is an attorney. The applicants did not want to be examined at the inquiry by the second, third and fourth respondents and did not attend the inquiry. Their attorney of record appeared instead. He submitted that the first respondent should not allow the second to fourth respondents to represent the fifth respondent (Billiton) in the inquiry. The first respondent declined to make such a ruling. This led to the present application in terms of which the applicants attempted to interdict the second, third and fourth respondents from examining the applicants.

The gist of the application turned on an alleged conflict of interest on the part of the respondents. The applicants allege that they disclosed certain privileged information to the respondents during consultations they had with the respondents.

Gorven J pointed out that once the attorney-client relationship has come to an end, the only basis on which any legal duty can remain is if an implied term of the contract provides for this or Aquilian principles impose it. In the present case the legal duty at stake was to respect the confidentiality of information imparted or received in confidence and to refrain from using or disclosing such information otherwise than as permitted by law or contract.

The court held that, in order to obtain an interdict preventing a legal practitioner representing a client against a former client, the former client would need to prove three elements. First, that confidential information was imparted or received in confidence as a result of the attorney-client relationship and the information remains confidential. Secondly, that it is relevant to the matter at hand; and finally, that the interests of the present client are adverse to those of the former client.

The court decided that there is no ongoing fiduciary relationship or duty of loyalty owed by the legal practitioner to the former client at however residual a level. Any legal duty to the former client is limited to respecting confidential information acquired during the course of the attorney-client relationship. Thus, where the former client fails to establish any of these requirements, an application for an interdict preventing the legal practitioner representing the later client against the former client must fail.

In the present case the applicants had failed to prove the clear right required for an interdict. They had also not proved any injury actually committed or reasonably apprehended. Two of the three requisites for the granting of an interdict were therefore not present.

The application was dismissed with costs.

Champerty

Validity of champerty: The decision in Price Waterhouse Coopers Inc and Others v IMF (Australia) Ltd and Another 2013 (6) SA 216 (GNP) concerned an application to join the first respondent (IMF) as a third party in proceedings between the applicant and the second respondent. The second respondent received funding from IMF in its (ie, the second respondent’s) litigation against the applicant.

It is common cause that the arrangement between the second respondent and IMF amounted to a champertous agreement. A champertous agreement is one between a party to litigation and an outsider whereby the latter agrees to pay for the action and thereby shares in any proceeds recovered. Champertous agreements were, but are no longer unlawful under South African law.

The applicants have proved that there is a real possibility that, if they obtain an order for costs, the security furnished by the second respondent will not be sufficient to defray such costs.

The applicants argued that although there is no South African precedent for making costs orders against persons who fund litigation, the principle has been well established in common-law countries. The court was specifically asked to develop the common law so as to make a direct order for costs against a funder possible.

Botha J held that there is no reason why such relief should not be available. It is already possible to obtain direct orders for costs de bonis propriis against non-parties such as legal representatives and public officials. To enable the applicants in the present case to join the first respondent would be a logical progression from the principle laid down in Price Waterhouse Coopers Inc and Others v National Potato Co-Operative Ltd 2004 (6) SA 66 (SCA) where the court held that champertous agreements were not unlawful. To allow litigants like the applicants to hold funders directly liable for costs could also be considered to be one of the measures that the courts could adopt to counter any possible abuses arising from the recognition of the validity of champertous contracts.

The applicant was thus entitled to relief in the form of an order joining the funder to the litigations (here: IMF) so that a direct order for costs could be obtained against it.

Company law

Business rescue: The facts in Taboo Trading 232 (Pty) Ltd v Pro Wreck Scrap Metal CC and Others 2013 (6) SA 141 (KZP) concerned two applications by two different applicants. A liquidation application was enrolled for hearing, but then postponed because the court was informed that an application for a business rescue of the same close corporation would also be made. The court decided both applications together.

The business rescue applicant argued that the liquidation application could not be heard as it had been suspended by the business rescue application, as envisaged by s 131(6) of the Companies Act 71 of 2008 (the Act). At stake was the question of when an application can be said to have been made for purposes of s 131(6) of the Act, which provides as follows:

‘If liquidation proceedings have already been commenced by or against the company at the time an application [for business rescue] is made in terms of subsection (1), the application will suspend those liquidation proceedings until –

(a) the court has adjudicated upon the application; or

(b) the business rescue proceedings end, if the court makes the order applied for.’

Hartzenberg AJ held that s 131(6) of the Act refers to an application made in terms of s 131(1). Two interpretations are possible. The first is that an application is made once it has been lodged with the registrar of the court (registrar) and is issued by the registrar. The second possibility is that an application is made only once the service and notification requirements prescribed by s 131(2) have been complied with.

The court held that the second interpretation is the correct one. A business rescue application has been properly made after it had been lodged with the registrar, the registrar had duly issued it, a copy of it had been served on the Companies and Intellectual Property Commission (CIPC), and each affected person had been notified.

Compliance with the notification requirements is an integral part of the application. Since the suspension of liquidation proceedings has significant disruptive consequences, there is a strong policy justification in favour of the second interpretation. The court held that, once affected parties have been notified, they are in a position to limit unnecessary delays of the application. Insisting on notification limits the risk that a business rescue application could be abused as a delaying tactic.

The court thus confirmed that the business rescue application had not been properly made.

In regard to the liquidation application the court held that the applicant had established that it was a creditor of the close corporation and that the close corporation was indeed unable to pay its debts as contemplated in terms of s 344 (f) of the Companies Act 61 of 1973.

A provisional winding-up order was accordingly granted.

Customary law

Administration of estate: The facts in Palesa NO and Another v Moleko and Others [2013] 4 All SA 166 (GSJ) were as follows. The first applicant was the appointed executrix of a deceased estate of one NA Moleko (the deceased). At the time of his death the deceased owned a number of assets, including three vehicles that were used as taxis in the deceased’s taxi business. The second applicant contended that the three taxis contributed approximately R 70 000 a week into the joint estate belonging to her and the deceased. At the time of the deceased’s death the vehicles were all registered in his name, but 17 days after his death they were re-registered in the name of the first respondent.

The second applicant and the first two respondents all claimed to have been married to the deceased by customary law.

The present application sought for a declaratory order confirming the first and second applicants’ appointment as representatives of the deceased estate for purposes of its finalisation. The application also sought orders directing the first three respondents to restore possession of the motor vehicles of the deceased and/or the restoration of their registration numbers or particulars to the state they were as at the date of the death of the deceased.

Kgomo J held that s 7(1)(a) of the Administration of Estates Act 66 of 1965 provides that whenever any person dies leaving any property, the surviving spouse, ‘or if there is no surviving spouse, his or her nearest relative or connection residing in the district in which the death has taken place’ shall within 14 days thereafter give a notice of death in the prescribed form, or cause such a notice to be given to the Master. Section 13 of the same Act allows only the executor to liquidate or distribute the deceased ­estate.

After the death of a property or asset owner, the assets that he or she owned cannot be transferred in any other way other than through duly issued and authorised letters of executorship issued by the Master of the High Court. None of the respondents produced any such letters of executorship. Consequently, any transfer of ownership of any of the vehicles of the deceased and the appropriate taxi licences cannot be valid or authorised.

One of the main disputes between the parties was whether the second applicant or any of the first two respondents was married to the deceased by customary law. In terms of the Marriage Act 25 of 1961 production of a civil marriage certificate by any person shall be prima facie proof of the valid existence of a marriage relationship between the parties therein mentioned. Consequently, until such time that there was cogent and acceptable and credible evidence to the contrary, the court accepted that the second applicant was married to the deceased by civil rites in community of property. Therefore, any subsequent customary union purportedly entered into after the date of that marriage, was invalid and of no legal consequence.

The second applicant was declared the duly appointed executrix of the deceased estate, and was authorised and mandated to collect and take into possession all the assets of the deceased.

Husband and wife

Divorce: The decision in MB v DB 2013 (6) SA 86 (KZD) concerned a divorce action between parties married out of community of property with the application of the accrual system. The issue was which party bore the onus of proof with regard to the nature and quantum of the assets excluded in their antenuptial contract from forming part of the accrual in the defendant’s (the husband’s) estate.

The plaintiff (wife) relied on the evidence of a chartered accountant to prove the value of the husband’s estate and, therefore, of her potential share of the accrual. The husband led no evidence to demonstrate how he had dealt with the excluded assets over time, instead contending, inter alia, that –

  • his ex-wife’s claim was premature, since the extent of the assets and liabilities could be determined only as at the date of divorce; and
  • there was no proof of the current value of his estate because the evidence that she had sought to rely on was incomplete and in any event hearsay and therefore inadmissible.

Lopes J held that it was the husband, being the one in possession of all the facts relating to the assets reflected as excluded in the antenuptial contract, who bore the onus of proving which assets were to be excluded and why; to demonstrate what had happened to those assets, how they were converted from time to time, and what their present values were that fell to be excluded from the calculation of his net worth.

The operative moment when the value of the respective estates of the parties had to be assessed was at litis contestatio, (ie, close of pleadings) not when the divorce order was made.

Because the husband led no evidence to demonstrate how the excluded assets were dealt with by him from time to time, the court held that it would not be possible to determine what had happened to those excluded assets without making reasonable deductions from the discovered documents.

The court reasoned that South African courts should follow the approach to evidence adopted in a number of English cases when dealing with failure by a party to discharge his or her duty to disclose financial information in divorce proceedings. In terms of the approach followed in English law, courts were entitled to draw inferences (where they can be properly made) and to take notice of inherent probabilities in deciding whether or not assets formed part of the non-discloser’s estate.

The court accordingly ordered the division of the husband’s estate, the exact details of which fall outside the scope of the present discussion.

The husband was ordered to pay the costs of the present action.

Mandament van spolie

Defences: In Afzal v Kalim 2013 (6) SA 176 (ECP) the parties were previously married. Their divorce was acrimonious. Before the divorce Kalim (the wife) left their common home in Port Elizabeth to live and work in East London. In 2010 she moved from East London to Cape Town and lived in a house that her family bought for her and her children.

Afzal (the husband) later married someone else and lived in the house (the contested house) in Port Elizabeth where he and Kalim previously lived. In 2012 Kalim and her children returned to Port Elizabeth where she gained access to the contested house through a stratagem. She then refused to leave the house, taking over the main bedroom. Afzal, contending that he had been deprived of the peaceful and undisturbed possession of his home, approached the High Court for a mandament van spolie.

The court issued a rule nisi calling on Kalim to show cause why she should not be ordered to vacate the house immediately; and also why she should not be prohibited from interfering with Afzal’s use and enjoyment of the property.

Kalim, in response, contended that she was entitled to return to the house by virtue of an agreement between the parties. She also contended that s 4(1) of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (PIE) applied and, because Afzal did not comply with the provisions of s 4(1), his application was defective.

Plasket J held that Kalim’s claim that Afzal had agreed that she could return to the contested house in Port Elizabeth was far-fetched and untenable.

Afzal had clearly established the requirements for the mandament, so the issue was whether PIE was applicable as alleged by Kalim. Although PIE might prevent the use of the mandament to evict a person from his or her home, it could not be said that the contested house was Kalim’s home. It was, by the time of her return to Port Elizabeth, the family home of Afzal and his second family. Kalim’s own connection with the house had become tenuous. She had not, from early in 2009, occupied it regularly or with any degree of permanence. It was not her fixed residence, much less the seat of her domestic life. Since the house was not her home – even if she was its co-owner – PIE would not apply.

The rule nisi was accordingly confirmed with costs.

Prescription

Commencement of prescription: The facts in Macleod v Kweyiya 2013 (6) SA 1 (SCA) were as follows. The respondent (the plaintiff in the court a quo) was injured in a motor vehicle accident when she was three years old. The appellant (the defendant in the court a quo) is the attorney who, instructed by the plaintiff’s mother, instituted a claim against the statutory insurer on the plaintiff’s behalf, which was settled when the plaintiff was 13 years old. She became aware of the settlement amount fortuitously when, on or about 19 April 2006 and in response to a related inquiry, the defendant’s candidate attorney e-mailed certain documents to her relating to the claim.

On 8 April 2009, when she was almost 25 years old, she instituted action against the defendant, alleging that the settlement was a significant under recovery of her true damages and that, by accepting it, the defendant had acted in breach of contract and in breach of his duty of care. The plaintiff stated in her particulars of claim that she became aware of the defendant’s negligence only when she consulted her attorneys on 4 February 2009. The defendant’s special plea of prescription, which specifically relied on constructive knowledge, was dismissed by the High Court.

On appeal to the SCA, Tshiqi JA identified two interrelated issues –

  • firstly, whether the plaintiff could reasonably have known the facts from which her debt against the defendant arose before 19 April 2006; and
  • secondly, whether an adverse inference should be drawn from the plaintiff’s failure to give evidence about her state of mind, circumstances or conduct during that period.

In deciding these two issues the court referred to the provisions contained in s 12(3) of the Prescription Act 68 of 1969. The constructive knowledge contemplated in s 12(3) is established if it can be shown that the creditor could reasonably have acquired knowledge of the identity of the debtor and the facts on which the debt arises by exercising reasonable care. Courts must consider what is reasonable with reference to the particular circumstances in which the plaintiff found himself or herself.

A defendant bears the full evidentiary burden to prove a plea of prescription, including the date on which a plaintiff obtained actual or constructive knowledge of the debt. This burden shifts to the plaintiff only if the defendant has established a prima facie case.

As to the first issue, the court held that the question was not whether the plaintiff could or could not have obtained the documents from her mother or the defendant, but rather whether she was negligent or innocent in failing to do so. The court concluded that it was reasonable for the plaintiff to have trusted that her mother and the defendant were acting in her best interests, and that there was no conceivable reason why that belief would change merely because she had attained majority. It was accordingly held that there was no basis to arrive at a conclusion that the plaintiff was negligent.

As to the second issue, it was held that the factors that the defendant had suggested cumulatively required the plaintiff to explain the delay were neutral and established no basis for the contention that she should have appreciated earlier that she had a claim against the defendant. The court concluded that there was nothing in the plaintiff’s evidence that she needed to rebut, and equally no adverse inference could be drawn from her failure to testify. The appeal was dismissed with costs.

Property

Registration pursuant to fraud: The facts in Nedbank Ltd v Mendelow and Another NNO 2013 (6) SA 130 (SCA) were that Mrs Valente (the deceased) owned certain immovable property. She had two sons, Evan and Riccardo.

In 2001 the property was sold to a company in liquidation after Riccardo had forged the deceased’s signature. He also forged his brother Evan’s signature on a document entitled ‘consent to sale’ that was used to induce the Master of the High Court to sign a certificate that there was no objection to the sale by any beneficiary of the deceased’s estate.

A bond was registered over the property in favour of Nedbank. The respondents (the executors of the deceased estate) successfully applied in the court a quo for an order setting aside the purported transfer of the property to the company, and the registration of the bond in favour of Nedbank.

The basis of the executors’ cause of action was a review in terms of ss 6 and 7 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). The court a quo set the master’s certificate aside and the registrar of deeds was ordered to transfer the property to the estate and to cancel the bond.

On appeal Nedbank argued that PAJA did not provide for vindicatory relief.

Lewis JA held that the provisions of PAJA do not apply to the present case and that the matter must be decided on general principles of law. Where registration of a transfer of immovable property is effected pursuant to fraud or a forged document, ownership of the property does not pass. Because Riccardo forged his mother’s signature on the deed of sale of property and the signature of a beneficiary of her will, Evan did not intend to transfer ownership of the property.

The court further held that the power of attorney signed by the Master to permit the registration of transfer was vitiated by Riccardo’s fraud and the ownership of the property did not pass to the company. The bond registered in favour of Nedbank was accordingly not valid.

The court pointed out that not every act of an official amounts to administrative action that is reviewable under PAJA. Where a functionary performs acts that are purely clerical and which the functionary are required to do in terms of the statute that empowers him or her, he or she is not performing administrative acts within the definition of PAJA, or even under the common law.

In this regard the court drew a distinction between discretionary powers and mechanical powers. A mechanical power (as was performed in the present case by the Master and the registrar) involves no choice on the part of the functionary and is therefore not reviewable. Whether there may be situations where a functionary will be required to make a genuine decision involving the performance of a duty or not, the court did not decide in the present case. Because the requirements for the registration of the property had been met, the registrar had no choice but to register the property in the company’s name.

As a result, so the court reasoned, only discretionary powers (as opposed to mechanical powers) can be taken on review, either under PAJA or the common law. The court accordingly ordered that the property has to be registered in the name of the deceased estate.

The appeal was dismissed with costs.

Sale of land

Section 2(1) of the Alienation of Land Act: In Osborne and Another v West Dunes Properties 176 (Pty) Ltd and Others 2013 (6) SA 105 (WCC) the court was asked to interpret s 2(1) of the Alienation of Land Act 68 of 1981 (the Act). More specifically the court was asked to interpret the provision contained in s 2(1) that requires the agreement to be signed by ‘the parties thereto’.

The crisp facts were that the formal agreement between the parties purports to record an agreement between the plaintiff and the defendant. However, the plaintiff argued that the true agreement was between the plaintiff and a third party. The plaintiff claimed rectification of the deed of sale to reflect the fact that the sale was concluded between the plaintiff and the third party, and not between the plaintiff and the defendant.

Blignault J held that the phrase ‘the parties thereto’ refers to the true parties to the agreement. It would be absurd to construe the phrase as relating to the formal parties because there is no legal bond between them. It is therefore essential that the true parties be identified in the written agreement.

In the present case the formal agreement thus fails to identify the purchaser in terms of the true agreement of sale. The formal agreement of sale does not comply with the requirement of s 2(1) in that it does not identify the true parties to the agreement. The legal bond that the formal agreement purports to record in fact does not exist. For that reason it is not capable of being rectified.

The requirement contained in s 2(1) that the agreement must be ‘signed by’ the parties refer to the signatures of the true parties to the agreement. Likewise it would be absurd to interpret them as referring to the signatures of persons that do not enter into the true agreement.

In the present case the formal agreement of sale does not comply with the requirements of s 2(1), since it was not signed by the parties. The plaintiffs’ particulars of claim were accordingly set aside, but leave was granted to the plaintiffs to apply for the amendment of their particulars of claim.

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, admiralty law, children, civil procedure, company law, constitutional law, contract law, credit law, divorce, elections, health professions, labour law, land reform, marriage, motor-vehicle accidents, parliamentary rules, pension funds and property law.

This article was first published in De Rebus in 2014 (Jan/Feb) DR 42.


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

December 2013 (6) The South African Law Reports (pp 319 – 634); [2013] 4 The All South African Law Reports November no 1  (pp 253 – 383) and no 2 (pp 385 – 508)

ABBREVIATIONS

GNP: Gauteng North High Court, Pretoria

GSJ: South Gauteng High Court, Johannesburg

SCA: Supreme Court of Appeal

WCC: Western Cape High Court

LCC: Land Claims Court

Actio ad exhibendum

Requirements: In Rossouw NO and Another v Land and Agricultural Development Bank of South Africa [2013] 4 All SA 318 (SCA) the respondent, Land Bank, bought certain irrigation equipment from a supplier (Andrag), which included pivots. The purpose of buying the equipment was to sell it to SJP Trust (the trust). Before it could pay the purchase price to the supplier the respondent required written declarations, one provided by the trust and the other by the supplier, confirming that the equipment had ten pivots that had actually been delivered, installed and were functional.

The declarations were duly provided. However, it subsequently transpired that the declarations were false as only six instead of ten pivots had been delivered and that the price had been inflated in terms of collusive conduct between the trust and the supplier. After completing financing of the equipment, the respondent entered into an instalment sale agreement with the trust in terms of which it reserved ownership of the pivots until the trust had paid the price in full.

The trust failed to pay the instalments as required and the respondent approached the GNP for an interdict restraining the trust, represented by the appellant trustee Rossouw, from disposing of the pivots, a mandamus for a return of the pivots and alternatively, and only if the pivots had already been disposed of, payment of their value (actio ad exhibendum). As it became common cause that the pivots had been disposed of, the application proceeded on the actio ad exhibendum and succeeded. Hiemstra AJ granted the respondent judgment for payment of the value of ten pivots, even though only six had been delivered to the trust and had subsequently been disposed of.

An appeal against the decision of the High Court succeeded on the amount of the value of the pivots, the SCA holding that such amount had to be limited to the six pivots delivered to the trust and disposed of by it. The value of each pivot disposed of was the market value at the date of alienation to a third party. The appellant’s costs were limited to the employment of one and not two counsel.

Majiedt JA (Brand, Leach JJA and Meyer, Van der Merwe AJJA concurring), noting that the appeal concerned a vindicatory claim and, in the alternative, a claim in terms of the actio ad exhibendum, held that in order to succeed with the actio ad exhibendum the respondent had to prove the following requirements, namely that –

  • it was the owner of the pivots at the time of their disposal by the trust;
  • the trust had been in possession of the pivots when it disposed of them;
  • the trust acted intentionally in that it had knowledge of the respondent’s ownership or its claim to ownership when it parted with possession of the pivots; and
  • the respondent would be entitled to delictual damages as well as the extent thereof (taking into account, among others, the value of the pivots when the trust sold them to a third party).

Appeals

Appeal against a costs order: Rule 16A(1) of the uniform rules of court provides that any person raising a constitutional issue in an application or action shall give notice thereof to the registrar at the time of filing the relevant affidavit or pleading and that such notice shall contain a clear and succinct description of the constitutional issue concerned. The rule continues to provide that the registrar shall, on receipt of such notice, forthwith place it on a notice board designated for that purpose, which notice shall be stamped by the registrar to indicate the date on which it was placed on the notice board and shall remain there for a period of 20 days.

The main issue in Phillips v SA Reserve Bank and Others 2013 (6) SA 450 (SCA) was whether there had been compliance with the rule and what was to be done if that was not the case. The appellant, Phillips, sought a High Court order setting aside the decision of the first respondent, the South African Reserve Bank, not to return foreign currency seized from him at the airport. He also sought an order declaring some regulations of the Exchange Control Regulations, promulgated in Government Notice R1111 of 1 December 1961, unconstitutional. However, he did not specify the grounds on which they were alleged to be unconstitutional.

The GNP held, per Makgoba J, that the appellant had not complied with r 16A(1) and therefore had to proceed without pursuing the unconstitutionality of the regulations concerned or seek postponement in order to comply with the rule, in which case he would have to pay wasted costs occasioned by the postponement. In the event, postponement was granted and the appellant was ordered to pay the costs occasioned by it. The appellant appealed against the costs order. The issue before the SCA was whether such an order was appealable. The appeal was upheld with costs.

Farlam JA (Mthiyane DP concurring and Majiedt JA, in whose judgment Petse and Ndita AJJA concurred, reading a separate concurring judgment) held that the costs order made by the High Court would stand, unless it was upset on appeal, until at the earliest the main case was dealt with on appeal. As the High Court order was wrongly made, it gave rise to considerable inconvenience and prejudice and also impeded the attainment of justice in cases involving constitutional issues where argument arose as to whether r 16A(1) had been complied with. That in itself afforded sufficient reason to allow an appeal at that stage.

Furthermore, in this case there were exceptional circumstances within the meaning of s 21A(3) of the Supreme Court Act 59 of 1959 so as to permit an appeal to be brought solely against a costs order. Obtaining a decision by the SCA on the interpretation of r 16A(1), as well as the other issues relating to the question as to whether the rule was complied with, satisfied the requirement of exceptional circumstances. The court held further that there had been compliance with r 16A(1) in that the appellant’s notice had identified the issue at stake as the constitutional invalidity of the Exchange Control Regulations. It was not necessary to elaborate by specifying the grounds of the constitutional challenge as the High Court held.

Constitutional law

Unconstitutionality of s 50(2)(a)(i) of Criminal Law (Sexual Offences and Related Matters) Amendment Act: Section 50(2)(a)(i) of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007 (the Act) provides that a court that has, in terms of the Act or any law, convicted a person of a sexual offence against a child or person who is mentally disabled and after sentence has been imposed by that court for such offence, in the presence of the convicted person, ‘must’ make an order that the particulars of the person be included in the National Register for Sexual Offences (the register). The purpose of the register is to keep track of offenders and deny them jobs and positions that would give them access to minors and persons with mental disability.

The section was declared to be inconsistent with the Constitution and therefore invalid in Johannes v S [2013] 4 All SA 483 (WCC) where the order of invalidity, which was not retrospective, was suspended for 18 months to give parliament the opportunity to remedy the defect. The matter was referred to the Constitutional Court for confirmation of the High Court order.

The case came to the WCC by way of automatic review in terms of s 85(1)(a) of the Child Justice Act 75 of 2008 (the CJA). That was after the accused, Johannes, who was legally represented, pleaded guilty to three charges for the rape of very young boys, two of whom were aged six years and the other seven years of age. He also pleaded guilty to a charge of grievous bodily harm to a girl aged 12 years after having stabbed her with a knife. The accused, at the time of the commission of the offences, was a 14-year old minor.

In respect of the rape convictions the accused was sentenced to compulsory residence in a child and youth care centre for five years, after completion of which he would serve three years’ imprisonment and, significantly for present purposes, the regional magistrate ordered that his name be entered in the register in terms of the section.

The review issue before the High Court was whether it was ‘competent’ for the presiding officer to order entry of the name of the offender in the register without giving him the opportunity to make representation, more so since he was a minor at the time of the commission of the offences.

It will be noted that the better word would be ‘appropriate’ rather than ‘competent’, since the Act gave the court authority and in fact required it to order that such entry be made.

Henney J (Fourie and Steyn JJ concurring) held that failure to afford an offender the right to be heard before an order was made in terms of s 50(2)(a)(i) could not be said to be a reasonable and justifiable limitation of the right of a sexual offender in order to enforce and protect the dignity, freedom and physical integrity of children, and mentally disabled persons, against sexual abuse and exploitation. The section offended against a person’s right to a fair hearing as it did not allow a court a discretion to consider whether or not an entry in the register should be made. The section should have made provision for giving the offender, as well as the prosecution, the opportunity to address the court as to whether it would be in the interest of justice that an order be made directing that the particulars of the offender be entered in the register.

Customs and excise

Lapsing of anti-dumping duties: In the Association of Meat Importers and Exporters and Others v International Trade Administration Commission and Others [2013] 4 All SA 253 (SCA) the appellant, the Association of Meat Importers and Exporters, together with other interested parties, appealed against a High Court order declaring sched 2 to the Customs and Excise Act 91 of 1964 (the Act) invalid and of no force and effect, which order gave the Minister of Finance a period of three years within which to rectify the defect.

In the schedule the Minister had given a list of imported goods that were suspect to anti-dumping duties. The list included, among others, chicken meat portions, garlic, acrylic blankets, glass, etcetera. The duties in question were imposed for a period of five years after which they were to lapse unless their operation was extended in terms of sunset review provisions.

The authorities – being the first respondent the International Trade Administration Commission (ITAC) established in terms of International Trade Administration Act 71 of 2002, the South African Revenue Service, the Minister of Finance as well as the Minister of Trade and Industry – took the view that the schedule was invalid, unaware that as it had already lapsed the issue of its invalidity was no longer live. In other words, the authorities took a matter to court regarding duties that had since ceased to exist, there being a dispute about that fact.

The GNP held, per Raulinga J, that the schedule was invalid and suspended its invalidity for a period of three years so that the Minister of Finance could attend to its defects. An appeal to the SCA against the order was upheld with costs.

Nugent JA (Lewis, Theron and Saldulker JJA concurring and Wallis JA concurring in part and dissenting in part) held that the principle underlying the World Trade Organisation Agreement 1994 (WTO agreement) was that anti-dumping duties were exceptional measures that were imposed only in an amount and for so long as they would be required to counter injury to the domestic industry. Dumping occurred when goods were exported from one country to another at an export price that was lower than the price of goods when sold for consumption in the exporting country. The practice gave imported goods an unfair advantage over those produced domestically and it was common internationally for anti-dumping duties to be levied by the importing country so as to neutralise that advantage.

When a court made a declaration, it was declaring the existence of a state of affairs. The state of affairs that existed before a law was declared invalid was that it purported to have force of law but that in truth it did not. For so long as it purported to have the force of law it commanded obedience but, on being declared invalid, it no longer purported to have the force of law and could be ignored with impunity. When a declaration of invalidity was made, and then suspended, the state of affairs remained as it was before the declaration, that law purporting to have the force of law and commanding obedience. When there was nothing purporting to have the force of law in the first place, a court could declare that state of affairs, but such declaration did not bring about any change. Before the declaration there was nothing purporting to have the force of law and after the declaration there was also nothing purporting to have the force of law. Suspending the declaration had no effect on the position because no change in the state of affairs was brought about by the declaration.

In the instant case whether the anti-dumping duties came to an end by operation of art 11.3 of the WTO agreement or reg 53.1 of sched 2, the fact remained that, by the time of the granting of the High Court order, they had ceased to exist with the result that there was nothing that purported to command obedience. That being the state of affairs, a declaration of invalidity was not competent. Therefore, the High Court ought not to have declared the anti-dumping duties to be invalid because that was not the state of affairs that existed. The orders of the High Court were not competent and had to be set aside.

Divorce

Separation of issues: Rule 33(4) of the uniform rules of court provides, among others, that if in any pending action it appears to the court that there is a question of law or fact that may conveniently be decided either before any evidence is led or separately from any other question, the court may make an order directing the disposal of such question in such manner as it may deem fit and may order that all further proceedings be stayed until such question has been disposed of and the court shall, on application by any party, make such order unless it appears that the question cannot conveniently be decided separately.

An application for separation of issues in terms of the rule was made by the applicant, the husband, in CC v MVC [2013] 4 All SA 327 (GSJ) but was opposed by the respondent wife, MVC. The parties were married out of community of property, profit and loss without accrual sharing. As the parties were married before the enactment of the Matrimonial Property Act 88 of 1984 (the Act), maintenance and patrimonial issues arising from the marriage were governed by s 7(2) and (3) of the Act.

When the applicant sued for divorce, citing the irretrievable breakdown of the marriage relation as the parties had not lived together as husband and wife for some seven years, the respondent opposed the action, contending that there was no irretrievable breakdown of the marriage. In a counterclaim she alleged that if there was irretrievable breakdown of the marriage, it was due to the applicant’s extra-marital affair with one K. She sought maintenance and redistribution of patrimonial assets in terms of s 7(2) and (3) of the Act.

The problem was, however, the determination of the size of the applicant’s estate as, after making donations of cash and shares to his sons, D and P, he wanted to have those donations set aside by the court because of the trouble that D and P were causing him. Litigation to set aside the donations was expected to drag on for years with the further risk of appeal. As a result the applicant applied for separation of the issue of granting a decree of divorce from the maintenance and distribution of patrimonial assets. The respondent opposed the application, contending that the issues were inextricably linked and should therefore not be decided separately.

Mokgoatlheng J ordered separation of the issues as sought by the applicant, the costs being costs in the cause. The court held that, in applying the provisions of r 33(4), it would consider whether questions of law or fact could be decided separately before others or whether the issues sought to be separated could be conveniently separated. In considering the question of convenience, a court would have regard to its convenience, the convenience of the parties and possible prejudice that either party would suffer if separation was granted. The court was obliged to order separation unless it determined that the issues could not be conveniently separated, in other words, the court was obliged to order separation except where the balance of convenience did not justify such separation.

In the instant case the balance of convenience was in favour of granting separation as it was inappropriate for a party to an apparently irretrievably broken down marriage to oppose the separation of issues in a divorce action for the sole purpose of gaining a tactical advantage in order to secure a more favourable s 7(3) patrimonial distribution award, or to use the perpetuation of what seemingly appeared to be an irretrievably broken down marriage as leverage for tactical reason to pre-empt the dissolution of such marriage for ulterior motives. If the marriage were dissolved, maintenance and patrimonial assets redistribution could be decided once litigation between the applicant and his sons, relating to the donations, was finalised.

Practice

Stay of proceedings on basis of lis alibi pendens: In Caesarstone Sdot-Yam Ltd v World of Marble and Granite 2000 CC and Others 2013 (6) SA 499 (SCA) the appellant, Caesarstone, had an agency agreement with the first respondent, World of Marble and Granite (WOMAG), and the Sachs family, in terms of which WOMAG and the Sachs family would act as its agents to sell its product, namely quartz panels, in South Africa. In return for services rendered, the respondents were to receive commission. The Sachs family consisted of Oren Sachs, his father and three brothers.

Thereafter, alleging that WOMAG and Oren Sachs had failed to meet their agency agreement obligations, the appellant cancelled the agreement and instituted legal proceedings in Israel for confirmation of cancellation of the contract and return of commission already paid. While proceedings in Israel were still underway, the respondents instituted proceedings against the appellant in the WCC in which they sought damages for breach of contract that allegedly occurred when the appellant repudiated the agency agreement, which repudiation they had since accepted.

The appellant raised a special plea of lis alibi pendens requesting a stay of High Court proceedings until litigation between the parties in Israel was finalised. Blignault J dismissed the special plea, hence the present appeal to the SCA. The appeal was upheld with costs and the High Court proceedings stayed, save for proceedings by the respondents other than WOMAG and members of the Sachs family, that is, those respondents who were not involved in the Israeli proceedings.

Wallis JA (Mthiyane AP, Maya, Theron JJA and Van der Merwe AJA concurring) held that a plea of lis alibi pendens was based on the proposition that the dispute (lis) between the parties was being litigated in the court in which the plea was raised. The policy underlying it was that there should be a limit to the extent to which the same issue was litigated between the same parties and it was desirable that there be finality in litigation. The courts were also concerned to avoid a situation where different courts would pronounce on the same issue with the risk that they could reach differing conclusions. There were three requirements for a successful reliance on a plea of lis alibi pendens, namely:

  • The litigation was between the same parties.
  • The cause of action was the same.
  • The same relief was sought in those actions.

In the instant case, insofar as WOMAG was concerned, all the requirements for a valid plea of lis alibi pendens were satisfied, both in respect of its individual claim and in respect of the claim it was pursuing jointly with the Sachs family. The special plea could be rejected only if the court, in the exercise of its discretion, declined to grant a stay.

The position was the same regarding Oren Sachs. Neither WOMAG nor Oren Sachs had advanced adequate reasons for the High Court action not to be stayed as against them. However, that was not so with the other members of the Sachs family. The only sensible way in which to address the problem concerning other members of the Sachs family who were not involved in the Israeli legal proceedings, was for the court also to stay their High Court proceedings, not on the basis of lis alibi pendens, but in the exercise of its inherent powers to regulate its own procedures.

Restitution of land rights

When restitution is not feasible: In Baphiring Community and Others v Tshwaranani Projects CC (formerly Matthys Johannes Uys) and Others [2013] 4 All SA 292 (SCA) the facts were that in 1971 the appellant, Baphiring Community, was removed from their land that was situated in Koster, North West Province, in terms of racially discriminatory laws. In the instant case the community sought the land back, which land was owned by several commercial farmers and was to be restored to a communal property association created specifically for that purpose.

The Land Claims Court (LCC) held per Mia AJ (Gildenhuys J and Wiechers (assessor) concurring) that restoration was not feasible, with the result that the community was entitled only to equitable redress. In arriving at that conclusion the LCC took into account the fact that there was lack of financial assistance from the state, doing so after hearing extensive expert evidence on the failure of other resettlement projects where the state had not provided adequate institutional and financial support for restoration. The LCC also took into account the huge cost that would result from the state having to restore the land to the appellants. In other words, the LCC held that it would not be in the public interest, and therefore not feasible, to restore the land to the appellants, having regard to the prohibitive cost to the state.

An appeal against the decision of the LCC was upheld by the SCA with no order as to costs. The matter was remitted to the LCC to consider and determine anew the feasibility of restoring the land in question. In particular, the state was required to do a feasibility study and place evidence before the LCC to justify its assertion that it would not be able to fund the cost of the restoration.

Cachalia JA (Shongwe, Majiedt JJA, Van der Merwe and Mbha AJJA concurring) held that it was well established that a claimant for restitution of a land right was entitled to have the land lost through dispossession restored whenever feasible. A court should, therefore, restore the actual land to a claimant unless doing so was inimical to the public interest. Other forms of equitable redress in the form of a grant of alternative state land or payment of compensation could be considered only thereafter.

In the instant case the LCC was correct to consider the cost implications of the restoration because it lay at the heart of a proper assessment feasibility. Those costs would include the cost of expropriating the land from the current owners, resettling the claimants on that land and supporting a sustainable development plan for the resettled community.

The main problem, however, was that evidence presented by the state on those issues was at best inadequate, which meant that the court was hamstrung in making the assessment. After all, a claim for restoration of land was a claim against the state and not against current landowners. Therefore, the state could not adopt a supine stance, as it did in the instant case, when such claim was made. Before a court could make a non-restoration order it had to be satisfied that doing so was justified by the applicable legal principles and facts. It followed therefore that a non-restoration order granted in the absence of such evidence constituted a material irregularity and vitiated the order made by the LCC.

Other cases

Apart from the cases and material dealt with or referred to above the material under review also contained cases dealing with adoption of business rescue plan, amendment of particulars of claim, asylum application, building contract dispute resolution, business rescue application, child trafficking, conduct of arbitration proceedings, contempt of court, defamatory Facebook posting, determination of capacity of public school, effect of voluntary surrender, indirect challenge of administrative action, interest on interest, jurisdiction of court over foreign defendant, liability for omission, meaning of administrative action, nature of verifying affidavit, private nature of arbitration proceedings, referral of complaint to Competition Tribunal, restoration of registration of close corporation, review of award of tender and transparency in tender process.

This article was first published in De Rebus in 2014 (Jan/Feb) DR 46.