The law reports – May 2017

May 1st, 2017
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Heinrich Schulze BLC LLB (UP) LLD (Unisa) is a professor of law at Unisa.

March 2017 (2) South African Law Reports (pp 1 – 335); [2017] 1 All South African Law Reports December (pp 313 – 667); 2017 (4) Butterworths Constitutional Law Reports – April (pp 415 – 541)

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

GP: Gauteng Division, Pretoria

SCA: Supreme Court of Appeal

WCC: Western Cape Division, Cape Town

Administrative law

Review of an administrative action: In Babaletakis and Another v Minister of Local Government, Environmental Affairs and Development Planning (Western Cape) and Others [2017] 1 All SA 447 (WCC), the applicants were owners of two immovable properties situated on Victoria Road, Bantry Bay, Cape Town. Across the road from their properties was a property owned by the fourth respondent.

The respondent wished to renovate the old house which existed on his property, and obtained permission to do so. However, it later appeared that the structure of the building was too fragile to support the additional load. The fourth respondent, therefore, demolished the old house and erected a new structure in its place – without obtaining a demolition permit in terms of the National Heritage Resources Act 25 of 1999. An interim prohibitory interdict was obtained pending the determination of this review application, by which time the structure was at an advanced stage of completion. The structure was non-compliant with various restrictions in terms of the zoning scheme regulations and the Cape Town City’s Scenic Drive Regulations.

The applicants appealed in terms of s 44(1)(a) of the Land Use Planning Ordinance 15 of 1985 (LUPO), against the decision by the Planning and General Appeals Committee of the City of Cape Town to uphold the fourth respondent’s application to depart from the Cape Town zoning scheme regulations, as well as against the consent granted to him by the City to deviate from the restrictions applicable to development along the scenic drive.

It needs to be mentioned in passing that the appeal in the present matter was lodged in November 2013. LUPO has since been repealed in terms of s 77 of the Western Cape Land Use Planning Act 3 of 2014.

The appeal was rejected by the MEC for Local Government, Environmental Affairs and Development Planning (Western Cape). That led to the present application for review of the MEC’s decision in terms of s 6(2)(h) and (e)(iii) of the Promotion of Administrative Justice Act 3 of 2000 (PAJA).

Binns-Ward J held that s 6(2)(h) of PAJA pertains to the court’s power to judicially review an administrative action if the exercise of the power authorised by the empowering provision in pursuance of which the administrative action was purportedly taken was so unreasonable that no reasonable person could have so exercised the power.

Section 6(2)(e)(iii) of PAJA empowers a court to review an administrative action, which took irrelevant considerations into account or in which relevant considerations were not considered.

The statutory question that the decision-maker was required to answer was whether it was ‘desirable’, within the meaning of s 36 of LUPO, to grant the departures that the fourth respondent had applied for. The decision whether or not to grant applications in terms of ch II of LUPO for departures from the land use provisions involved the exercise of a discretion by the decision-maker.

Examining each of the different categories of departures granted to the fourth respondent, the court was unable to hold that the decisions to grant the fourth respondent’s application for the departures he required were decisions that a reasonable decision-maker could not have made. That finding applied equally to the decision made by the MEC on appeal.

The application for review was accordingly dismissed.

Contempt of court

Disobedience of court order: The decision in Kenton-on-Sea Ratepayers Association and Others v Ndlambe Local Municipality and Others 2017 (2) SA 86 (ECG) concerned the first respondent municipality’s (the municipality) perceived neglect of their sewage reticulation and the condition of the local sewage works, and the consequential impact on the Bushman’s River estuary.

The present application turned on two aspects. First, the applicants applied for an order that the municipality be held in contempt of court. It allegedly failed to comply with an interdict, which was obtained against them under an earlier application. In terms of this interdict the municipality was ordered to implement measures improving sewage reticulation. The municipality failed to comply with the court order. That led to the present application for an order of contempt. However, after the application was launched, but before the hearing took place, the municipality remedied its conduct.

The question before Lowe J was whether the court could make a finding of contempt where the alleged contempt was later remedied.

It was trite that the municipality, in contravention of the court order, allowed sewage to spill over the top of the conservancy tank into the coastal wetlands. The municipality’s explanation for this was inadequate. There was more than sufficient evidence on the affidavits in this matter to establish –

  • that the municipality and the municipal manager received notice and had knowledge of the court order; and
  • to reach the conclusions that the failure to comply with the order was beyond a reasonable doubt wilful and mala fide.

Once a party to any proceedings had shown that there was at any given time wilful and mala fide con-compliance with a court order, a finding of contempt of court could be made, notwithstanding the fact that the non-compliance was later rectified.

The municipality was found guilty of contempt and warned to report on affidavit to the court on the steps it plans to take in maintaining the pump station at the conservancy tank. The municipality was ordered to pay the costs of suit.

Custody

Variation of parenting plan: The facts in VN v MD and Another 2017 (2) SA 328 (ECG) were as follows: VN (the mother) and MD (the father) were the biological parents of a minor child, in respect of whom they shared parental rights and responsibilities. In February 2014 the parents agreed on a parenting plan. It had been made an order of court. However, the father was dissatisfied with his rights of access in terms of the parenting plan and he sought a review of it by the Children’s Court. The presiding magistrate ordered that a revised plan presented by the father should be made an order of court.

The mother appealed to the High Court against that decision.

Eksteen J upheld the appeal on various grounds and set aside the order granted. The court held that the record of the proceedings before the magistrate was inadequate. In particular, the court was dissatisfied with the magistrate’s reasoning and held that the evidence apparent from the record did not support the magistrate’s finding that it would be in the interest of justice to increase access to the father in the manner sought.

The court was further dissatisfied with the lack of input by a family advocate, social worker or psychologist in the preparation of the revised parenting plan. Section 33(5) of the Children’s Act 28 of 2005 (the Act) does not pertinently require those persons’ input in respect of the variation of a parenting plan. However, part 3 of ch 3 of the Act, is clear that, in pursuing any agreement in respect of the exercise of parental rights and responsibilities, the parties were required, before approaching a court, to consult the family advocate, social worker or a psychologist, who was qualified to provide guidance as to the best interests of the minor child.

Similarly, where the parenting plan was to be varied by virtue of the parties experiencing difficulty in exercising their rights and responsibilities, the parties were again required to engage the services of such a qualified person before seeking the intervention of a court. This was particularly so where a significant period had elapsed since the previous parenting plan had been endorsed and where the parties had failed to reach agreement.

The order of the magistrate was accordingly set aside and the father was ordered to pay the cost of suit.

Delict

Liability of resort where guest is raped on its premises: In Bridgman NO v Witzenberg Municipality (JL and Another as third parties) [2017] 1 All SA 466 (WCC) the facts were as follows: An 18-year-old woman (Ms L) suffering from a mild mental disability, was raped at the Pine Forest Resort outside Ceres. Ceres forms part of the defendant municipality. In his capacity as the curator ad litem of Ms L, the plaintiff sued the municipality for damages. The issue at stake was whether the rape was caused by the lack of ordinary care and diligence on the part of the municipality and its servants acting in the course and scope of their employment.

The municipality denied being liable for negligence. In the alternative, it contended that if negligence on its part did exist, the rape was caused partly through its own negligence and partly through the negligence of Ms L’s adoptive parents and guardians (Mr and Mrs L) in failing to properly supervise their daughter despite knowing that she was vulnerable due to her disability.

Donen AJ held that the test to establish wrongfulness of the omission was based on the legal convictions of the community. These convictions, in turn, were underpinned by the norms and values of our society embodied in the Constitution. Because of its constitutional duties, and because it owned, managed and controlled the resort, the failure on the part of the municipality to prevent the rape was wrongful.

The question as to whether the municipality acted negligently, the court pointed out that the rape was predated by a report on defective security at public resorts. A security expert who testified for the plaintiff was adamant that security at the resort was inadequate on the day in question.

The test for negligence, in turn, is that culpa arises for the purposes of liability is when a diligens paterfamilias in the position of the municipality would have foreseen the reasonable possibility of his conduct injuring another in his or her person or property and causing him or her patrimonial loss; and would take reasonable steps to guard against such occurrence; and the municipality failed to take such steps.

A large number of criminal incidents had occurred at the resort in the year before Ms L’s rape. As a result, so the court reasoned, the rape of a resident at the resort was reasonably foreseeable.

The court further held that that there was a complete absence of the necessary personnel at the resort at the time of the incident, facilitating the misdeeds of the perpetrators of Ms L’s rape. The municipality had thus caused the rape of Ms L through its omission. The plaintiff was, therefore, entitled to damages arising from the rape.

Finally, on the facts before the court, Ms L neither consented to sexual intercourse nor led the perpetrators to think that she had done so. It was clear that she was abducted against her will and then sexually assaulted.

The appropriate award of damages for contumelia, shock, pain, suffering, and disability in respect of Ms L’s enjoyment of amenities of life was set at R 750 000. To that was added the future medical costs of psychotherapy.

The municipality was ordered to pay the plaintiff an amount of R 780 780 plus interest and costs of the suit.

Insolvency

Appointment of insolvency practitioners: The appeal in Minister of Justice and Constitutional Development and Another v South African Restructuring and Insolvency Practitioners Association and Others [2017] 1 All SA 331 (SCA) concerned the constitutionality of a policy that sought to regulate the appointment of insolvency practitioners, primarily as provisional trustees and liquidators, but also as co-trustees and co-liquidators, as well as appointments to certain other comparable positions under various statutes.

Although the policy applied to various appointments, the court dealt with it as if it applied only to appointments of trustees on insolvency. The policy was determined by the Minister of Justice and Constitutional Development pursuant to his powers in terms of s 158(2) of the Insolvency Act 24 of 1936 (the Act). The first respondent, the South African Restructuring and Insolvency Practitioners Association (SARIPA), challenged the policy by way of an application in two parts –

  • Part A being an interim interdict restraining its implementation; and
  • Part B review proceedings directed at having it set aside.

The High Court held that the policy infringed the right to equality provided for in s 9 of the Constitution; it unlawfully fettered the discretion of the Master; is ultra vires the Act; and was irrational and invalid.

On appeal Mathopo JA confirmed that affirmative action measures are designed to ensure that suitably qualified people, who were previously disadvantaged, have access to equal opportunities and are equitably represented in all occupation categories and levels. SAIPRA, however, submitted that the policy was rigid in its application and calculated to establish a barrier to the future advancement of affected people, contrary to s 9(2) of the Constitution.

The policy empowered the Master to appoint provisional trustees on a rotational basis in line with the categories set out in clauses 6 and 7, which were based on race and gender. The policy did not provide for the wishes of creditors to be taken into account in such discretionary appointments.

The court reasoned that remedial measures (such as those contained in the present policy) must operate in a progressive manner assisting those who, in the past, were deprived of the opportunity to practise in the insolvency profession. However, such remedial measures must not encroach, in an unjustifiable manner, on the human dignity of those affected by them. The policy provided for a strict allocation of appointments in accordance with race and gender. Insolvency practitioners were for that purpose divided into four groups stratified by race, gender and age. Appointments were to be made from these groups in strict order.

The rigid and unavoidable appointment process prescribed by the policy was arbitrary and capricious because it had been formulated with no reference to its impact when applied in reality.

The policy was thus held to be unconstitutional.

Intellectual property

Requirements for breach of copyright: In Media 24 Books (Pty) Ltd v Oxford University Press Southern Africa (Pty) Ltd 2017 (2) SA 1 (SCA) the court laid down important guidelines regarding the level of proof required in establishing breach of copyright.

The facts were that the appellant, Media24, alleged that the respondent, Oxford University Press (OUP), published a dictionary (the OUP dictionary), which was allegedly copied from
Media24’s own Afrikaans–English/English–Afrikaans dictionary, which had been published earlier (the Media24 dictionary). Both dictionaries were aimed at schoolchildren aged ten to 16, were small in size with no more than 4 000 – 5 000 entries in each language, and straightforward in complexity. The dictionaries, in respect of each word entry, provided short, simple sentences illustrating the use of the word in context (so-called ‘example sentences’).

Media24’s allegation of breach of copyright turned on the numerous ‘correspondences’ between the example sentences appearing in the two dictionaries. The compilers of the OUP dictionary attested in affidavits on behalf of OUP as to the methods they used in compiling their dictionary and denied copying from the Media24 dictionary.

As to the similarities between the dictionaries’ example sentences, OUP provided the following explanation for this, through affidavits attested to by its expert witnesses. First, both dictionaries were elementary and of limited scope. As a result, so OUP argued, the required basic illustration of meanings by way of example sentences resulted in the use of well-known common concepts. The dictionaries were thus likely to show strong similarity. Secondly, OUP’s experts set out possible scenarios in which copying could have taken place and why each was improbable. Media24’s response to OUP’s evidence was simply to insist that the correspondences were so blatant, and the possibility of their having occurred in the ordinary course of compilation of a dictionary of this type so far-fetched, that the evidence could be rejected on the papers. Importantly, Media24 failed to provide a clear indication as to how the alleged copying occurred.

The court a quo decided against Media24.

On appeal to the SCA, Wallis JA held Media24 had established that OUP had access to the Media24 dictionary and that there were sufficiently substantial similarities between the example sentences to raise a prima facie case of copying.  It was then for OUP to show how its dictionary was produced without copying. A mere denial of having copied was unlikely to displace the inference arising from proof of similarity and access to Media24’s dictionary. OUP had to provide an explanation of the process adopted by it in producing its dictionary that plausibly explained the reasons for the similarity between the two dictionaries. But the onus of proof was not thereby shifted to OUP. It remained for Media24 to establish copying on the ordinary standard of proof, namely on a balance of probabilities.

The court reasoned that Media24 adopted an incorrect approach in insisting that the correspondences between the two dictionaries were so extensive as to rebut any evidence or any probability pointing towards an explanation that excluded copying. Media24 fell into the trap of being misled by what the court referred to as ‘similarity by excision’. In order to establish breach of copyright all evidence had to be examined, not only that which pointed in the direction of copying. In order to deal with the contention that the correspondences alone sufficed to carry the day in favour of copying, the court had to look at the evidence which was adduced on behalf of OUP that its dictionary was compiled without copying. Only then could the merits of the argument that OUP’s evidence had to be rejected, based on the correspondences alone, be assessed.

Media24 had approached the court on motion. As a result, so the court reasoned, it (the court) had to be convinced of three matters before finding in Media24’s favour. First, that the correspondences alone were inexplicable unless copying had occurred. Secondly, it argued that the compilers of the OUP dictionary be disbelieved. And thirdly, that OUP’s explanation
for the existence of the correspondences be excluded as a credible possibility.

The court decided that on the evidence produced by OUP showing that copying had not occurred, as well as OUP’s explanation for the similarities between the example sentences, that the correspondences alone – and without the advantages of a trial in which OUP’s witnesses could be tested – was not sufficient for it to reject OUP’s evidence as far-fetched.

The task that Media24 set for itself in trying to discharge the onus of proving copying on the papers without oral evidence was an onerous one. And one in which it failed.

The appeal was accordingly dismissed with costs.

Law of succession

Intestate succession by partners in permanent same-sex life partnership: In Laubscher NO v Duplan and Others 2017 (2) SA 264 (CC); 2017 (4) BCLR 415 (CC) the late Cornelius Laubscher (the deceased) and Eric Duplan (the first respondent) were permanent same-sex life partners. They undertook reciprocal duties of support, but neglected to solemnise and register their partnership under the Civil Union Act 17 of 2006. The deceased died intestate. He had no descendant or surviving parent. He did though have a brother, Dr Rasmus Laubscher, the applicant, who was the executor of his estate, and who in that capacity appears to have instituted proceedings in the High Court for a determination of whether he in his personal capacity or Duplan was entitled to inherit.

The relevant legal principles and case law at the time the present matter was heard in the CC were as follows:

  • Section 1(1)(a) of the Intestate Succession Act 81 of 1987 (the Intestate Succession Act) provides that: ‘If … a person … dies intestate … and is survived by a spouse, but not by a descendant, such spouse shall inherit the intestate estate …’.
  • In Gory v Kolver NO and Others (Starke and Others Intervening) 2007 (4) SA 97 (CC) the court held that the words ‘or partner’ had to be read in after the word ‘spouse’ in the definition contained in s 1(1)(a).
  • Section 1 of the Civil Union Act provides that: ‘“Civil union” means the voluntary union of two persons who are both 18 years of age or older, which is solemnised and registered by way of either a marriage or a civil partnership, in accordance with the procedures prescribed in this Act, to the exclusion, while it lasts, of all others’.
  • Section 1 of the same Act provides that: ‘“Civil union partner” means a spouse in a marriage or a partner in a civil partnership, as the case may be, concluded in terms of this Act’; while s 13(2)(b) provides that: ‘… [A]ny reference to … spouse in any other law, including the common law, includes a civil union partner’.

The applicant’s contention in the High Court was that only civil union partners could inherit; while Duplan asserted that the decision in Gory entitled him to inherit. The High Court held that it was bound by Gory, and ordered that Duplan was the intestate heir.

The applicant then applied to the CC for leave to appeal, where the issues were as follows:

  • First, whether the Gory order was of interim or indefinite duration.
  • Secondly, whether, under the cessante ratione rule (ie, ‘when the reason for a law ceases, the law ceases to exist’) the Gory order had ceased to exist.
  • Thirdly, whether the Civil Union Act had impliedly repealed the Gory order. 
  • Fourthly, whether the decision in Volks NO v Robinson 2005 (5) BCLR 446 (CC) was distinguishable.

The majority per Mbha AJ answered these four questions as follows:

  • First, on interpretation of Gory the court held that the ‘reading-in’ would stand until Parliament amended or repealed it.
  • Secondly, it held that the Gory order had not ceased to exist, in that its reason endured. That was to allow all same-sex permanent partners to inherit intestate (ie, those in civil unions, as well as those who were not). The principle laid down in the Gory case was confined to remedying the unconstitutionality in s 1(1) of the Intestate Succession Act, and that permanent same-sex life partners were barred from marrying. The Gory case did not address the situation of partners who, after removal of the barrier, did not get married.
  • Thirdly, it held that the Civil Union Act had not impliedly repealed the Gory The Civil Union Act and the Gory order were in any event reconcilable; and Parliament had not intended such a repeal.
  • Fourthly, the court held that the decision in Volks was distinguishable. It concerned a benefit under another Act; the deceased there had made a will; and it was an equality challenge, rather than an interpretation of an order as here. Further, the Volks case contained the principle that it was legitimate for the law to give benefits to married people that it did not give to unmarried people. The consequence of this would be that
    s 13(2)(b) of the Civil Union Act legitimately excluded unmarried people from benefiting under the Intestate Succession Act.

Without the incorrect decision in Volks, unmarried same- and opposite-sex partners with reciprocal duties of support were entitled to inherit from their deceased partner’s intestate estate. Duplan fell within this category and thus should inherit.

The appeal was accordingly dismissed and each party was ordered to pay its own costs.

Prescription

It commences when ‘the debt is due’: In Fluxmans Incorporated v Levenson [2017] 1 All SA 313 (SCA) the facts were as follows: The respondent, Levenson, had concluded a contingency fee agreement with the appellant attorneys’ firm, Fluxmans, in dealing with a delictual claim. Fluxmans duly deducted the contingency fee when Levenson’s claim was successfully settled. Unbeknown to Levenson, and relying on the expertise of Fluxmans, the agreement was void as it was not in writing and signed by the parties as required by the Contingency Fees Act 66 of 1997 (the Act). The contingency fee claimed was also in excess of the fee allowable.

Five years after payment of the fee Levenson became aware that the agreement was void as a result of the decision in Ronald Bobroff & Partners Inc v De La Guerre 2014 (3) SA 134) (CC) where it was held that any contingency fee agreement outside the Act is invalid, null and void.

Leveson’s claim against Fluxmans for repayment of the full fee was met with the defence that the claim had prescribed. The court a quo held that although the Levenson’s enrichment claim became due immediately after payment, prescription only began to run when he became aware that the agreement was void as this was one of the facts that had to be known.

On appeal Mpati AP held that the agreement was void as it did not comply with the Act. Section 12(3) of the Act determines that a debt must not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises: Provided that a creditor must be deemed to have such knowledge if he could have acquired it by exercising reasonable care.

A debt is due when the creditor acquires a complete cause of action for the recovery of the debt, that is, when the entire set of facts which the creditor must prove in order to succeed with his or her claim against the debtor is in place or, in other words, when everything has happened which would entitle the creditor to institute action and to pursue his or her claim.

The court referred with approval to Claasen v Bester 2012 (2) SA 404 (SCA) where it was stated that knowledge of legal conclusions was not required before prescription started to run. Levenson had knowledge of all the facts necessary to sustain his claim immediately after payment of the contingency fee, even though he did not appreciate the legal implications of such facts, that is, he did not know that the agreement was invalid.

The court concluded that the running of prescription was not postponed until the creditor became aware of the full extent of his or her rights, or until he or she had evidence that would have proven a case ‘comfortably’.

The court further confirmed that the invalidity of contingency fee agreements did not arise with the Bobroff case, but has been firmly established since the decision eight years earlier in Price Waterhouse Coopers Inc v National Potato Co-operative Ltd [2004] 3 All SA 20; 2004 (6)  SA 66 (SCA).

The majority of court held that the claim had become prescribed and the appeal was allowed with costs.

 

Requirements for prescription: The facts in Nuance Investments (Pty) Ltd v Maghilda Investments (Pty) Ltd and Others [2017] 1 All SA 401 (SCA) were as follows: A proposed development of agricultural land gave rise to three agreements. The first was a sale agreement in terms of which the appellant (Nuance) purchased certain immovable property. The second was a development agreement in terms of which it was agreed that Nuance would undertake the proposed development in keeping with an agreed development structure. The third agreement was a lease agreement between Nuance and the first respondent (Maghilda).

Three of the portions of land were transferred into Nuance’s name in May 2008 after payment of R 60 million by Nuance to Maghilda and the second to fourth respondents (Sanjont). It was common cause that there was no compliance with the provisions of s 3 of the Subdivision of Agricultural Land Act 70 of 1970 before the sale and lease agreements were concluded in that the written ministerial consent prescribed in ss 3(d) and (e) had not been obtained.

In May 2009, Maghilda and Sanjont accused Nuance of breach of the agreements in several respects and demanded that Nuance remedy the respective breaches. Nuance argued that due to their non-compliance, the agreements (which were part of a single transaction) were null and void. It issued summons against Maghilda and Sanjont. In their plea, Maghilda and Sanjont averred that the sale agreement was both illegal and invalid, and simultaneously raised a special plea of prescription in terms of s 11(d) read with s 12(3) of the Prescription Act 68 of 1969.

For space considerations the remainder of this discussion will focus on the aspect of prescription.

The High Court upheld the plea of prescription and dismissed Nuance’s claim for repayment. It also ordered rectification of the Deeds of Transfer. The effect of the order was that Maghilda and Sanjont would retain the amount of R 60 million and that the land would also be re-registered in their name. That decision led to the present appeal.

Tshiqi JA held that Maghilda and Sanjont bore the onus in proving that the claim had prescribed. Section 12(3) of the Prescription Act provides that a debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises. A creditor shall be deemed to have such knowledge if it could have acquired it by exercising reasonable care.

In order to meet the requirements of s 12(3) of the Prescription Act, Maghilda and Sanjont had to show the facts that Nuance was required to have knowledge before prescription could commence running. They also had to prove that Nuance knew those facts before the date on which prescription was alleged to have commenced running. The facts that must have been known were those that were material to the debt. There was no evidence at all that Nuance knew that Maghilda and Sanjont had failed to obtain the ministerial consent. Time begins to run against the creditor when it has the minimum facts that are necessary to institute action. The running of prescription is not postponed until a creditor becomes aware of the full extent of its legal rights. Knowledge is not confined to the mental state of awareness of facts that is produced by personally witnessing or participating in events, or by being the direct recipient of first-hand evidence about them.

Conversely, mere suspicion not amounting to conviction or belief justifiably inferred from attendant circumstances does not amount to knowledge. It was thus accepted that until the lack of the ministerial consent for the sale was mentioned for the first time in a letter dated 23 June 2009 from Nuance’s attorneys all the parties were under the impression that the agreements were valid.

The next question was whether Nuance could, by the exercise of reasonable care, have known that the ministerial consent had not been obtained before the agreements were signed. The court held that Nuance could not have done anything more than it had in the circumstances. The special plea of prescription was dismissed.

The appeal was upheld with costs.

Property law

Rates clearance certificate: The matter in Jordaan and Another v The City of Tshwane Metropolitan Municipality and related matters [2017] 1 All SA 585 (GP) concerned five applications. The first two were against the City of Tshwane Metropolitan Municipality and the remaining three were against the Ekurhuleni Metropolitan Municipality (the municipalities).

The applicants sought a declaratory order relating to the municipalities’ alleged obligation to render municipal services and to open a service account under circumstances where there is a debt outstanding in respect of the property concerned beyond the two year period provided for in s 118(1) of the Local Government: Municipal Systems Act 32 of 2000 (the Act).

The applicants also attacked the constitutionality of s 118(3) of the Act. Section 118(3) provides a municipality with security for repayment of an unpaid debt in respect of a rateable property and enjoys preference over any mortgage bond registered against the property.

The first three applicants each bought immovable property at a sale in execution; while the fourth applicant bought a property from a company in liquidation. In all these cases the applicants took transfer of the immovable properties after a certificate in terms of s 118(1) of the Act had been issued by the municipality. In terms of the certificate the municipality certified that municipal service fees as well as property rates and taxes (hereafter: municipal costs) during the two years preceding the date of application for the certificate, had been fully paid.

In all the cases there were historical debts outstanding with regard to each of the properties. These were debts which had been incurred by previous owners prior to the two year period envisaged by s 118(1) of the Act.

The municipalities relied, inter alia, on their policy to demand that all historical debts in respect of a property be paid before entering with a service agreement with the new owner of the property. They regarded historical debts as ‘a charge upon the property’ as contemplated in s 118(3) and as such had survived transfer of ownership.

The main issue concerned the constitutionality of s 118(3) of the Act.

With regard to the constitutionality of s 118(3), Fourie J noted that the section enjoys preference over any mortgage bond, does not have a time limit and operates irrespective of who the present owner is. This is in contrast with s 118(1) that has a two-year time limit.

The court reasoned that in some cases s 118(3) could result in a loss of ownership (when the historic debts cannot be paid by the new owner and the property is sold in execution to recover the debt).

The court further decided that s 25(1) amounts to a deprivation. In deciding whether the deprivation was arbitrary, it followed the guidelines laid down in First National Bank of SA Limited t/a Wesbank v Commissioner for the South African Revenue Services and Another; First National Bank of SA Limited t/a Wesbank v Minister of Finance 2002 (4) SA 768) (CC). In this case the court held that in order for the deprivation not to be arbitrary there must be sufficient reason for the deprivation. Whether there were sufficient reasons for the deprivation would depend on –

  • the extent of the deprivation;
  • the relationship between the purpose for the deprivation and the person whose property was affected; as well as
  • the relevant facts of each particular case.

In applying these three factors the court in Jordaan held that the extent of the deprivation is a contextual question that nonetheless allowed for instances of total, permanent loss of ownership. This is drastic, especially in view of the fact that the new owner could not take steps to reduce his risk with regard to historic debts, while the municipality does have the means to collect outstanding debts. The deprivation is, therefore, substantial.

With regard to the purpose for the deprivation, the court commented on the fact that s 118(3) created a statutory hypothec in favour of the municipality. This form of security relates to the property and affects not only the owner incurring the debts but all successors in title. The court held that the municipality had sufficient means to recover the debt from the owner incurring the debt, without it becoming the problem of the new owner.

The court concluded that municipalities may thus not refuse municipal services to a new owner because of historical debts still outstanding with regard to the property.

The application was granted with costs.

Note: The SA citation for this matter is: Jordaan and Another v Tshwane City and Another, and Four Similar Cases 2017 (2) SA 295 (GP).

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, advocates, civil procedure, constitutional law (the right to assemble and protest), family law, interpretation of statutes, lease, practice, prescription and the public protector.

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

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