The law reports – June 2017

June 1st, 2017
x
Bookmark

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.

April 2017 (2) South African Law Reports (pp 337 – 684); November [2016] 4 All South African Law Reports (pp 299 – 664); January [2017] All South African Law Reports (pp 1 – 312); March [2017] 1 All South African Law Reports (pp 669 – 973); January 2017 (1) Butterworths Constitutional Law Reports (pp 1 – 129)

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

ECG: Eastern Cape Division, Grahamstown

GJ: Gauteng Local Division, Johannesburg

GP: Gauteng Division, Pretoria

SCA: Supreme Court of Appeal

WCC: Western Cape Division, Cape Town

Administrative law

Administrative action setting aside own decision: The facts in Department of Transport and Others v Tasima (Pty) Ltd 2017 (2) SA 622 (CC); 2017 (1) BCLR 1 (CC) were that in December 2001 the first applicant, the Department of Transport (the Department), entered into a turnkey agreement in terms of which the respondent, Tasima, provided services in relation to the electronic National Information System (eNaTIS). The contract was for five years and came into effect in June 2002 and was to end in May 2007. It further provided that disputes would be referred to arbitration and that at its end the parties would negotiate its transfer to the Department. The contract was not renewed and accordingly came to an end after five years. However, since the Department needed the service – which the respondent provided – the contract was continued on a monthly basis. Thereafter, in 2010 the Department’s Director-General (DG) simply extended the contract for another five years. That extension was in flagrant violation of procurement rules as no tenders were invited. Allegedly because of the obstructive behaviour of the DG no proceedings were launched to set aside extension of the contract. When the Department refused to make payment, the respondent approached the GP for an interim order enforcing payment and compliance with the extended contract pending final determination by the arbitrator of disputes between the parties. The interim order was granted and later made final by Mabuse J. As a result of the order a number of contempt of court orders were to later follow. In 2015 the respondent approached the High Court, once again, seeking a contempt of court order. On that occasion the Department launched a counter-application seeking an order setting aside extension of the contract. The counter-application was granted by Hughes J but set aside on appeal to the SCA.

In a further appeal the CC granted leave to appeal, set aside the order of the SCA and upheld the Department’s counter-application. Contempt of court findings of the SCA, for the period before the counter-application succeeded were upheld, but were held to lapse thereafter. Each party was ordered to pay own costs.

The majority judgment was delivered by Khampepe J (Froneman, Madlanga, Mhlantla and Nkabinde J concurring), while Jafta J (Mogoeng CJ, Bosielo AJ and Zondo J concurring) read the minority judgment. Two additional separate judgments were also given in this case, namely, Froneman J who concurred with the majority judgment of Khampepe J and Zondo J who concerred with the minority judgment of Jafta J.

Khampepe J held that state functionaries were entitled to challenge the exercise of public power, including their own. It was both a logical and pragmatic consequence of the development in South African jurisprudence to allow state organs to challenge the lawfulness of exercises of public power by way of reactive (counter) challenges in appropriate circumstances. Accordingly, the SCA was incorrect to find that the Department was barred from bringing a reactive challenge to the extension of the contract solely because it was a state functionary.

The Constitution conferred on the courts the role of arbiter of legality. Therefore, until a court was appropriately approached and an allegedly unlawful exercise of public power was adjudicated on, it had the binding effect merely because of its factual existence. In the interests of certainty and the rule of law, an allegedly unlawful exercise of public power retained the fascia of legal authority until the decision was set aside by a court. Therefore, an administrative act remained legally effective despite the fact that it could be objectively invalid.

It was a feature of the rule of law that undue delay in enforcing rights should not be tolerated. However, the flouting of ordinary procurement and tender procedures by the DG, when extending the contract, was blatant. His decision to override the decision of the previous DG was telling. The merits of the Department’s challenge were nonetheless compelling as a web of maladministration surrounded the granting of the extension. Moreover, the respondent had been significantly enriched on the basis of the unlawful extension. The effect of the extension on state resources could not be overlooked as substantial expenditure had occurred as a result. Therefore, in the unusual context of the case, the Department’s undue delay of some five years in bringing the counter-application had to be overlooked (condoned) and the reactive challenge succeed.

  • See law reports ‘contact law’ 2016 (May) DR 34 for the SCA judgment.

Civil procedure

Appeal against order for execution pending appeal: Section 18(1) of the Superior Courts Act 10 of 2013 (the Act) provides among others that: ‘[U]nless the court under exceptional circumstances orders otherwise, the operation and execution of a decision which is the subject of an application for leave to appeal or of an appeal, is suspended pending the decision of the application or appeal.’ This is the default position and briefly provides that lodgement of application for leave to appeal or of the appeal itself, suspends operation of the order being challenged. To reverse the default position, the successful litigant is required to apply to court for an order directing that notwithstanding the application for leave to appeal or the appeal itself, the affected judgment shall be executed. To secure an order authorising execution of judgment notwithstanding lodgement of application for leave to appeal or the appeal itself, the applicant is required by s 18(3) to show –

  • exceptional circumstances;
  • that he or she will suffer irreparable harm if the court does not so order; and
  • that the other party will not suffer irreparable harm if the court so orders.

The application of the above provisions was dealt with in MEC for Co-operative Governance and Others v Mogalakwena Municipality and Another 2017 (2) SA 464 (GP) where the second respondent, Kekana, a municipal manager of the first respondent, Mogalakwena Municipality (Potgietersrus), alleged that he had been unlawfully ousted from his position. As a result he obtained a High Court order reinstating him. The appellants, the MEC and others, appealed to the SCA against the reinstatement order, which appeal suspended execution of that order. Alleging that there were exceptional circumstances, namely that by the time of the hearing of the appeal by the SCA his term of office as municipal manager would have lapsed, Kekana applied for an order of execution, that is, resumption of his duties. The execution order was granted. The appellants responded by appealing to the SCA against the execution order, in respect of which s 18(4)(ii) of the Act gave them an automatic right of appeal, which did not require leave to do so. Thereafter, Kekana’s attorneys wrote a letter to the registrar of the SCA, indicating that the appeal against the execution order was defective as it should have been lodged with the full Bench of the High Court and not the SCA. As a result the Acting President of the SCA directed that the matter should be heard by the ‘full Court’ of the High Court, which agreed it would hear it.

The High Court upheld with costs the appeal against the execution order. Ranchod J (Louw and Fabricius JJ concurring) held that subss 18(1) and (3) of the Act in essence provided for a twofold inquiry in that the following requirements should be met before an order appealed against can be put into operation pending outcome of the appeal, namely:

  • Exceptional circumstances must exist.
  • Proof, on a balance of probabilities, by the applicant that –

– the applicant 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 in operation.

Kekana satisfied the requirement of exceptional circumstances in that since his term of office was likely to lapse pending determination of the appeal, he was left in a predicament with no relief. However, he would not suffer irreparable harm since he had an action for damages if his ouster were to be found by the SCA to have been unlawful. Furthermore, he had not shown that the first respondent would not suffer irreparable harm. If the SCA were to find against him the probabilities were that the first respondent would not be able to recover any money paid to him from the time of his reinstatement as municipal manager.

The court also dealt with the question of the ‘next highest court’ to which an appeal lies, holding that the primary court of appeal from the decision of a single judge of the High Court was the ‘full Court’ unless questions of law or fact or other considerations involved dictated that the matter should be decided by the SCA, thus allowing for a deviation from the norm. In the event of an order in terms of s 18(1) being made by a court consisting of more than one judge, an automatic right of appeal lay to the SCA, being the ‘next highest court’.

On the question of the difference between ‘full Bench’ and ‘full Court’, which phrases were often used interchangeably, the court held obiter that ‘full Bench’, in relation to any division of the High Court, meant a court consisting of two judges while ‘full Court’ referred to a court consisting of three judges.

Company law

Court order declaring a director delinquent cannot be sought by way of derivative action: Section 162(2) of the Companies Act 71 of 2008 (the Act) provides among others that a company, shareholder or director of a company may apply to a court for an order declaring a person delinquent. The various grounds on which a delinquency order may be sought are specified in subs 162 (5). The issue in Lewis Group Ltd v Woollam and Others 2017 (2) SA 547 (WCC); [2017] 1 All SA 192 (WCC) was whether, given that the section specifically grants a shareholder the right to seek a delinquency order, it was permissible for a shareholder to seek such an order through derivative action proceedings, taking the s 165 route, instead of just proceeding directly in terms of s 162. That was after the first respondent, Woollam, served a demand on the applicant, Lewis Group Ltd, requiring it to institute proceedings for an order declaring four of its directors to be delinquent. The present application was launched by the applicant to set aside the demand, on the ground that it was frivolous, vexatious or without merit, as it was entitled to do so in terms of s 165(3). The setting aside order was granted with costs.

Binns-Ward J held that a shareholder’s right to seek a declaration against a director or former director in terms of s 162 did not derive from the company. The right vested directly and personally in the shareholder by the section itself. The shareholder’s right coexisted with the identical right separately vested in the company by the very same provision. The modern derivative action was effectively litigation conducted for a company by a representative litigant under the court’s authority. It was not a vehicle for a litigant to assert or protect his or her own legal interests using the company’s name and legal personality.

It would be paradoxical that a shareholder could put a company to the trouble and expense of commissioning an investigation and, thereafter, be refused leave by a court in terms of s 165(5) to proceed derivatively, only to be able to proceed personally for the relief regardless. It was not within the scheme of the Act that shareholders should ordinarily seek to proceed derivatively to obtain the remedy available in terms of s 162. There was nothing in the nature of the first respondent’s complaints or the content of his demand to indicate why he should be allowed to proceed derivatively for relief that he was able to claim personally. That was indicative that his resort to s 165 was vexatious in the circumstances.

Consumer credit agreements

Ultra vires and invalid debt rearrangement: In the case of Nedbank Ltd v Jones and Others 2017 (2) SA 473 (WCC) in 2007 the first and second respondents, Mr and Mrs Jones (the Joneses) obtained a home-loan from the applicant Nedbank in the amount of R 1,1 million. By 2010 the loan had doubled to R 2,2 million. Apart from that loan, the Joneses had other debts. The terms of repayment of the home-loan were a monthly instalment of an approximate R 10 000 repayable over a period of 336 months with interest at the rate of 10,9% per annum. As the Joneses were over-indebted they approached a debt counsellor who made application to a magistrates’ court for debt relief. The order granted by the magistrate reduced the monthly instalment to some R 4 000 at the annual interest rate of 10,4% while the repayment period was left open-ended on the basis that the instalment would be payable ‘till debt settled’.

However, the monthly instalment was less than the interest due with the result that the debt would never be settled. As a matter of fact the Joneses, without debt rearrangement, had to pay a monthly instalment of an approximate R 17 000. After a delay of over five years the applicant approached the High Court for a declaratory relief, and if considered necessary, also a review of the debt rearrangement order granted by the magistrate. The main complaint was that the magistrate was not empowered by the National Credit Act 34 of 2005 (the NCA) to vary the interest rate.

Gamble J (Hack AJ concurring) held that the order made by the magistrate was ultra vires and accordingly of no force and effect as he permanently fixed the interest rate at a level, which would render the debt incapable of ever being settled by the Joneses. To clarify the position and assist debt counsellors and magistrates, both of whom were under the impression that varying the interest rate payable under the contract between the parties was permissible during debt rearrangement, the court declared that a magistrates’ court hearing a matter regarding debt rearrangement did not enjoy jurisdiction to vary, by reduction or otherwise, a contractually agreed interest rate determined by a credit agreement. Any order containing such a provision was null and void. A rearrangement proposal that contemplated a monthly instalment that was less than the monthly interest, which accrued on the outstanding balance did not meet the purposes of the NCA. A rearrangement order incorporating such a proposal was ultra vires the NCA with the result that the magistrates’ court had no jurisdiction to grant it.

Contempt of court (spousal maintenance)

Warrant of arrest for contempt of court: In the course of protracted divorce proceedings between the parties in AG v DG 2017 (2) SA 409 (GJ) the applicant wife (AG) applied for and was granted interim maintenance for herself and two minor children. The maintenance order was subsequently varied to an amount of R 35 000 per month, exclusive of other expenses such as medical, educational and other related expenses. The respondent husband, DG, did not pay maintenance as ordered, alleging poverty and, therefore, inability to do so. However, that was not the true state of affairs as he was a multimillionaire and a director of seven companies, his lifestyle showing that he was affluent. A number of court orders were granted against him, including a contempt order, relating to his failure to pay maintenance, attachment of his immovable property, as well as that of his savings banking account. Attachment orders were not executed as he either contested them or withdrew funds from the attached accounts before execution. In the present urgent application the wife sought payment of arrear maintenance, an order holding the respondent in contempt of court and issuance of a warrant of arrest for committal to prison if arrear maintenance was not paid within twenty four hours of the granting of the order.

Spilg J granted the application, holding that it was urgent, that the respondent was in contempt of court for non-payment of arrear maintenance as previously ordered and further that a warrant of arrest was to be issued forthwith committing the respondent to imprisonment for contempt of court for a period of five days, the warrant of arrest to be effected on the seventh day after granting of the order if by then the respondent had not made payment. Nothing was said about payment of costs.

The court held that a failure to pay maintenance entitled an applicant to issue a warrant of execution immediately or to enforce an order immediately through the maintenance court. In the present case the applicant was unable to do so because either attachments made pursuant to writs were challenged or the balance of funds located in an account were simply withdrawn by the respondent before the next writ was served. While not all applications for arrear maintenance founded on the contempt of a court order were urgent, the application became self-evidently urgent in the present case as the applicant’s assets were being depleted while the respondent was frustrating the ordinary enforcement of court orders resulting in the build-up of already significant arrears. The fact that the respondent had neglected his obligations to pay maintenance for a substantial period and that the ordinary process of execution was being frustrated were relevant to the urgency and that part of the order relating to contempt.

Contracts

Damages as surrogate for specific performance: In Basson and Others v Hanna [2017] 1 All SA 669 (SCA) the first appellant, Basson, was the sole member of a close corporation which owned immovable property. Basson entered into an oral agreement with the respondent, Hanna, and the second respondent, Dreyer, in terms of which he would develop the property by building three residential units for occupation by each of them. In return, the respondent and Dreyer, would each buy a third of a member’s interest in the close corporation, the purchase price in respect of which would be paid in instalments over a period of 20 years. In addition the respondent would also pay a third of monthly costs and operating expenses. A few years down the line relations between the respondent and Basson soured, as a result of which Basson repudiated the agreement by treating it as null and void on the ground that it did not specify whether interest to be paid by the respondent was fixed or fluctuating. Having accepted repudiation the respondent sued Basson for specific performance, that is, for delivery of a third of member’s interest in the close corporation against payment of the outstanding balance. As it turned out Basson had in the meantime, and during the course of proceedings against him, sold a third of his member’s interest in the close corporation to third parties (his brothers). For that reason the respondent amended his plea to claim in the alternative damages as a surrogate (in lieu of) for specific performance. Basson contended that a claim for damages as surrogate for specific performance was not competent in law.

The GJ per Cilliers AJ upheld the respondent’s claim for damages as surrogate for specific performance, hence the present appeal to the SCA. The appeal was dismissed with costs. Zondi JA (Shongwe, Dambuza and Mathopo JJA concurring and Willis JA dissenting in part) held that the parties’ failure to agree on the interest rate at which the amount payable under the agreement was to be calculated did not render the agreement invalid. If no rate had been agreed on, expressly or impliedly, and the rate was not governed by any other law, the rate of interest applicable was that prescribed from time to time by notice in the Gazette by the relevant minister in terms of the Prescribed Rate of Interest Act 55 of 1975.

The principle that the party who was prima facie entitled to specific performance could claim in the alternative damages as a surrogate for specific performance had been consistently followed by the courts until the majority decision in ISEP Structural Engineering & Plating (Pty) Ltd v Inland Exploration Co (Pty) Ltd [1981] 4 All SA 455 (A). However, that case was different and, therefore, distinguishable from the present one. In this case the respondent was ready to carry out his own obligation under the agreement and, therefore, had a right to demand either the literal performance or monetary value of the performance, from Basson. The respondent’s claim for damages, to the extent that he sought the monetary value of the performance, was akin to a claim for replacement value of lost property.

A creditor’s right to demand performance from the debtor could not be at the mercy of the debtor. The exercise of that right could not depend on what the debtor chose to do with the asset to which the creditor’s right related. To say that a claim for damages as a surrogate for specific performance was not recognised in law would be to deprive the creditor of that right where he or she had elected to enforce the contract, to be placed as much as possible, in the position that he or she would have been in if the performance was made in forma specifica. In this case the respondent was entitled to the relief he sought.

Fundamental rights

Right to receive tertiary education in the official language of one’s choice where reasonably practicable: When the Pretoria branch of the Transvaal University College, which was to later become the University of Pretoria (UP), commenced its activities in the year 1908, English was its only medium of instruction. In 1917, UP started bilingual medium instruction and offered subjects in English and Afrikaans where such was warranted and/or requested. In 1932 the Council of UP resolved that Afrikaans would be the only medium of instruction. That arrangement continued up until 1994 when UP adopted a bilingual language policy offering instruction in English and Afrikaans. In 2010 the policy was amended with the result that while the practice of bilingualism continued, UP recognised Sepedi as a third language of communication, although not of instruction. The circle was completed in June 2016 when the Senate and Council of UP resolved to change the language policy to provide for English as the main (not the only) language of learning and teaching. However, in practice the ‘main language’ translated into the ‘only language’ of instruction. The language policy change was motivated by changing demographics in student population. While in the years before 1994 UP was essentially a white university with Afrikaans as the only medium of instruction, 88% of its students were Afrikaans-speaking. However, the demographics in student population changed drastically with the result that by 2016, Afrikaans-speaking students constituted 25% of the total enrolment.

The change in language policy was challenged by the applicants in Afriforum and Another v Chairperson of the Council of the University of Pretoria and Others [2017] 1 All SA 832 (GP) on the grounds that it was in violation of s 29(2) of the Constitution which provides that: ‘Everyone has the right to receive education in the official language or languages of their choice in public educational institutions where that education is reasonably practicable.’

The applicants alleged that –

  • in the case of UP it was reasonably practicable to offer tuition in Afrikaans;
  • the changed language policy discriminated against Afrikaans-speaking students on the basis of language; and
  • the policy constituted a withdrawal of extant rights of students currently seeking instruction in Afrikaans and those who might wish to do so in the future.

For the above reasons the applicants sought a court order reviewing and setting aside the decision of UP to introduce the new language policy. The application was dismissed with costs.

Kollapen J (Baqwa and Mabuse JJ concurring) held that both Senate and Council of UP applied their minds to a number of relevant and often competing considerations and properly considered what was before them. The weight that they afforded to different considerations that were before them was not a matter for the court to prescribe. The conclusion that providing tuition in Afrikaans was not reasonably practicable was supported by data and unassailable. In the light of available data collected by UP, the position was that it would not be practicable and sustainable in the medium to long term to provide tuition in Afrikaans. That conclusion was buttressed by data that indicated a steady decline in the demand for Afrikaans as a language of tuition, as well as a steady decline in the number of white students at UP. The data suggested that the decline was likely to continue and under such circumstances UP was justified in having regard to the medium and long term implications in its policy making and planning processes.

Income tax

Delayed deduction of expenditure incurred in the acquisition of trading stock: Section 23F(2) of the Income Tax Act 58 of 1962 (the ITA) limits the amount of deductions, which a taxpayer may take in relation to disposal of trading stock to such amount as accrues to the taxpayer during the year of assessment. The balance of the deductions is delayed to the year/s in which the income accrues to the taxpayer. The application of the section arose in Commissioner, South African Revenue Service v Marula Platinum Mines Ltd 2017 (2) SA 398 (SCA); [2016] 4 All SA 299 (SCA) where the taxpayer, Marula Platinum Mines, mined mineral-bearing ore and processed it into mineral-bearing concentrate, which it sold to a third party. The contract of sale made provision for deferred payment of five months. That had the result that any sales of the concentrate made during the last four months of the tax year only accrued in the following year and income tax paid accordingly. However, full deductions were taken in the year in which expenses were incurred and not in the following year when income accrued, that is, when payment was made. The appellant Commissioner invoked s 23F(2) to limit the deductions to income, which accrued during the tax years 2007, 2008 and 2009. The taxpayer contended that the section was not applicable as the ore and concentrate were not ‘trading stock’. Instead, the taxpayer was conducting ‘mining operation’, it was alleged.

The tax court in Gauteng, held that production of mineral-bearing ore amounted to mining operation. As a result, s 23F(2) was not applicable. However, because of the process of converting it the final product, the mineral-bearing concentrate was trading stock with the result that the section applied. An appeal to the SCA against that decision was upheld with costs and the taxpayer’s cross-appeal dismissed. The assessments for the relevant tax years were referred back to the Commissioner for determination on the basis of the section being applicable.

Fourie AJA (Navsa, Cachalia, Tshiqi and Mathopo JJA concurring) held that s 23F(2) was an anti-avoidance provision that catered for the situation where a taxpayer had disposed of trading stock in the ordinary course of its trade during the year of assessment for a consideration, the full amount of which would not accrue to the taxpayer during that year, but in respect of which expenses incurred on the acquisition of that trading stock had in that year or in any previous year of assessment been allowed as a deduction under s 11(a) of the ITA. Any amount that would otherwise have been deductible under s 11(a) would, to the extent that it exceeded the amount received or accrued from the disposal of that trading stock, be disregarded during that year of assessment. Therefore, the purpose and function of s 23F(2) was to delay the s 11(a) deduction of the cost of trading stock until the income from the disposal of that trading stock had been included in the taxpayer’s gross income.

Income derived by the taxpayer from the sale of the concentrate (in respect of the last four months of each of the years of assessment) was excluded from its gross income, to be included in the following years when it became quantifiable. Therefore, if the taxpayer’s activities constituted the disposal of trading stock, s 23F(2) would find application and prevent the ‘mismatch’ of the deduction of the cost of the trading stock with the taxation of the income from the disposal of that trading stock, by delaying the s 11(a) deduction until the year of assessment in which the corresponding income was taxed. It was not a prerequisite that, to qualify for trading stock, what the taxpayer acquired was to be immediately saleable or realisable. It was sufficient if that which was acquired was intended to be used for the manufacture of something else, such as mineral-bearing concentrate, which would eventually be sold.

Marriage

Invalidity of antenuptial contract means that marriage is in community of property: In RM v BM 2017 (2) SA 538 (ECG) the parties RM and BM were married out of community of property with no community of profit and loss but subject to the accrual system as provided for in the antenuptial contract (the ANC). Clause 4 of the ANC specified a list of assets to be taken into account when dealing with accrual. However, clause 5 provided that the very same assets were not to be taken into account in determining the accrual value of the parties’ assets. At the time of divorce the wife (RM) sought an order declaring the ANC invalid for vagueness with the result that the marriage would be in community of property. In the alternative she sought rectification of the ANC to the effect that the listed assets were to be taken into account in the determination of the accrual values of the parties’ assets. On the other hand the husband (BM) sought rectification of the ANC to the effect that the listed assets were not to be taken into account in determining accrual values.

Plasket J dismissed the husband’s counter-claim on the basis that there was no common intention of the parties that the ANC did not capture correctly. The husband (the defendant) was ordered to pay costs. It was held that clauses 4 and 5 of the ANC were contradictory and irrevocably so and as they were material terms they were incapable of severance from the rest of the ANC. The result was that the ANC was void on account of its vagueness. As it was void at its inception that meant that the parties were in fact married in community of property.

Property law

Statutory power to lay pipeline across private land lawfulness: The facts in the case of Rand Water Board v Big Cedar 22 (Pty) Ltd [2017] 1 All SA 698 (SCA) were that the respondent, Big Cedar, became the owner of property in 2003 after buying it and taking transfer from the previous owner. At that time the respondent was not aware that the appellant, Rand Water, had constructed two pipelines across the property, one in 1971/1972 and the other in 1997. On discovery of the pipelines the respondent sought from the appellant their removal or compensation for their continued presence. Accordingly, it instituted proceedings against the appellant, raising two claims. The first claim was vindicatory in nature and required the appellant to remove the pipelines or alternatively that it register a servitude in respect of the affected portion of the property or take transfer thereof against payment of the amount of R 6,6 million. In the second claim the respondent sought an order for payment of a reasonable rental, alternatively compensation in the amount of R 38 500. In a further alternative the respondent sought payment of that amount by way of constitutional damages.

The GJ per Tsoka J upheld the first claim on the alternative basis and ordered the appellant to register a servitude over the property, as well as pay the respondent an amount of R 32,8 million as fair, just and equitable compensation for the servitude. An appeal against the High Court order was upheld with costs by the SCA.

On appeal, Wallis JA (Cachalia, Pillay, Seriti JJA and Schippers AJA concurring) held that if in terms of s 84(6) of the Water Services Act 108 of 1997 (the 1997 Act) laying the two pipelines was lawful at the time it was done, it remained lawful after the 1997 Act came into operation, provided that it was something that could be done under the 1997 Act. There could be no doubt that the appellant still had power to lay pipelines pursuant to its obligation to supply water services to water services institutions in terms of the 1997 Act. The appellant was entitled to do under the 1997 Act what it was entitled to do in 1971/1972 and 1997 under the Rand Water Board Statutes (Private) Act 17 of 1950 (the 1950 Act). Section 84(6) of the 1997 Act served to preserve the validity of anything done under the repealed 1950 Act that was ‘capable of being done’ under the 1997 Act. Provided that the appellant’s original actions (of laying the two pipelines) were lawful their validity was preserved by s 84(6). That view was reinforced by s 79(1) of the 1997 Act, which protected its ownership of the two pipelines. The conclusion that the appellant acted lawfully put paid to the claim for removal of the pipelines and also disposed of the cross-appeal regarding the High Court’s refusal to order removal of the pipelines and rejection of the claim for constitutional damages.

Unlawful competition

Actionable non-disclosure in passing-off: In De Freitas v Jonopro (Pty) Ltd and Others 2017 (2) SA 450 (GJ) the applicant, De Freitas, and the second respondent, Bettencourt, ran an adult-entertainment business called Cheeky Tiger from two premises located in separate towns, being Kempton Park and Midrand, both in Gauteng. After a fall out the two decided to part ways and agreed that the applicant would change the name of his business from Cheeky Tiger to Manhattan Nights. Soon thereafter the second respondent, together with his friend Pandazis, using their company, the first respondent, Jonopro (Pty) Ltd (Jonopro), opened a new similar business a few meters away from that of the respondent. Although the name of the business was different, namely the first respondent Jonopro, the logo and get-up were similar to those of Cheeky Tiger. As a matter of fact when the parties agreed that the applicant would change the name of his business from Cheeky Tiger to Manhattan Nights, the second respondent did not disclose that he planned to take over the logo and get-up of Cheeky Tiger.

Aggrieved by what was happening the applicant launched an urgent application for contempt of court and interim interdict preventing the respondents from passing-off the logo and get-up of the business, Cheeky Tiger, which he had established over the years. The contempt of court application failed as Spilg J held that in an earlier judgment, which the respondents were alleged to be in contempt, Georgiadis AJ granted an order preventing the respondents from using the name and style of Cheeky Tiger rather than the logo and get-up. Accordingly, the issue decided in the earlier judgment was different.

However, the court granted an interdict restraining the respondents from passing-off the logo and get-up of Cheeky Tiger, with costs limited to two-thirds of the total costs on an attorney and client scale. It was held that the second respondent obtained the applicant’s consent to convert his operation from Cheeky Tiger to Manhattan Nights without disclosing that he intended opening a similar entertainment operation (irrespective of name) that would draw on the applicant’s customer base. That was a material and actionable non-disclosure. It was reasonable to conclude, having regard to the timing, that the second respondent intended to capture the customers who frequented the applicant’s Cheeky Tiger establishment and take the applicant’s goodwill in that business, including the customer base, without compensation. As there was an agreement between the parties that the applicant would stop trading as Cheeky Tiger, the second respondent deliberately concealed from the applicant his plans to open up a Cheeky Tiger operation close to the applicant’s establishment. There was a legal duty to disclose because the second respondent knew that if he informed the applicant of his plans to open a Cheeky Tiger establishment immediately after the respondent removed the last vestige of his Cheeky Tiger operation after which he would rename and reconfigure it to a Manhattan Nights bar, his customers would go to what was familiar to them.

Under the agreement between the parties there was to be no physical-proximity competition as each Cheeky Tiger establishment (irrespective of membership composition) would have to be a significant distance from the other. It was an actionable non-disclosure not to have disclosed that the moment the applicant abandoned the trading name and get-up of Cheeky Tiger the second respondent would take them up in an establishment that would be effectively alongside the applicant’s rebranded one.

Other cases

Apart from the cases and material dealt with or referred to above the material under review also contained cases dealing with: Action for damages by shareholder against directors and fellow shareholders, asylum seeker being allowed to apply for visa under Immigration Act 13 of 2002, commencement of extinctive prescription, freedom of expression does not include protection of hate speech, general moratorium on legal proceedings against a company in business rescue, infringement of trademark, national energy supplier being empowered to contract with consumer directly – to the exclusion of municipality – for the supply of electricity, obligation of animal breeder to submit relevant data of its registered animals to national data bank, power of Judicial Service Commission to determine its own procedure to deal with complaints about judicial officers, power of public protector to investigate unfair labour complaints of employee of state, restitution of land rights, review of building plan approval, threat of criminal prosecution not constituting undue influence or being contra bonos mores and unlawfully built shacks may not be demolished without a court order.

This article was first published in De Rebus in 2017 (June) DR 45.