The law reports – November 2019

November 1st, 2019
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September 2019 (5) South African Law Reports (pp 1 – 323); September 2019 (2) South African Criminal Law Reports (pp 243 – 354)

This column discusses judgments as and when they are published in the South African Law Reports, the All South African Law Reports and the South African Criminal Law Reports. Readers should note that some reported judgments may have been overruled or overturned on appeal or have an appeal pending against them: Readers should not rely on a judgment discussed here without checking on that possibility – Editor.

Abbreviations

CC: Constitutional Court

GJ: Gauteng Local Division, Johannesburg

GP: Gauteng Division, Pretoria

LCC: Land Claims Court

MN: Mpumalanga Division, Nelspruit

NCK: Northern Cape Division, Kimberley

SCA: Supreme Court of Appeal

WCC: Western Cape Division, Cape Town

Advocates

Requirements for readmission: In 1997 one Edeling, the respondent in Johannesburg Society of Advocates v Edeling 2019 (5) SA 79 (SCA) applied for readmission after he was struck from the advocates’ roll for dishonesty. The application was first heard in the GJ, which found that it could readmit him ‘if in its discretion, it finds that he has once again become a fit and proper person to be readmitted and re-enrolled as an advocate’. The GJ granted Edeling’s application.

In an appeal by the Johannesburg Society of Advocates, the SCA set out the nature of a court’s power to readmit or enrol an advocate, and the requirements a person seeking readmission would have to meet. The SCA held that the GJ had proceeded on the misplaced assumption that its decision was discretionary. The SCA held that whether a person who had been struck from the roll of advocates should be readmitted was a question of fact, the only issue being whether the applicant had discharged the onus of proving that he or she was a fit and proper person to be readmitted. If it was discharged, the court had no discretion to refuse readmission. If it was not, the court had no discretion to overlook that failure and admit the applicant.

While Edeling, therefore, only had to show that he was a fit and proper person to be admitted, he had to do so against the background of his past misconduct, which had exposed a serious lack of integrity. The SCA pointed out that where applicants were struck from the roll for serious dishonesty, they had to prove genuine, complete and permanent reformation. The SCA found that Edeling had failed to discharge the onus resting on him and upheld the appeal.

Companies

Jurisdiction of Gauteng Division in winding-up applications clarified: In Wild & Marr (Pty) Ltd v Intratek Properties (Pty) Ltd 2019 (5) SA 310 (GJ) the court had to decide whether an application for the winding-up of Intratek was correctly served at its principal place of business in Johannesburg. Intratek argued that since its registered office was in the jurisdictional area of another court (MN), only that court had jurisdiction. Intratek contended that this was so because s 23(3) of the Companies Act 71 of 2008 (the Act) abolished the dual-jurisdiction regime instituted by s 12(1) of the Companies Act of 61 of 1973 (the 1973 Act).

Intratek’s proposition was that, because the Act requires the main place of business to be the same as the registered address, applications for liquidation must be launched exclusively in the court exercising territorial jurisdiction over the registered address. In other words, the Act extinguished the right to serve on one of two addresses that existed under the 1973 Act.

The argument was not novel, having been addressed in the WCC, the NCK and Gauteng. The two Gauteng (GP and GJ) decisions on point, which were said to be against the proposition that service may be effective only at the registered address (the proposition), were binding on the court unless they were distinguishable or clearly wrong. The sole judgment in support of Intratek’s proposition, delivered in the WCC, was subsequently both followed and disapproved of in that division. There was one SCA judgment touching on the issue.

The court examined the decisions and concluded that since the SCA judgment did not expressly address the proposition, it did not dispose of the matter. The court found that the WCC decision in support of the proposition was convincingly countered in the subsequent WCC decision.

The court decided that there was no precedent binding it to the proposition that a court with jurisdiction over the registered address of a company had sole jurisdiction over its winding-up, and dismissed Intratek’s challenge to its jurisdiction and placed it under final winding-up.

Credit agreements

When a settlement agreement is subject to the NCA: Ratlou v Man Financial Services SA (Pty) Ltd 2019 (5) SA 117 (SCA) dealt with the question whether a settlement agreement providing for repayment of a debt in deferred instalments, plus interest, would always constitute a credit transaction under the National Credit Act 34 of 2005 (NCA), even where the original underlying agreement did not fall under that Act.

The background was the following: Phapho Nkone Transport (PNT), as lessee, entered into various truck rental agreements with the respondent financing company MAN Financial Services (MAN). Mr Ratlou (a director of PNT) agreed to stand surety. When PNT later defaulted on its payments, MAN repossessed and sold the trucks to third parties. Ratlou, PNT and MAN subsequently entered into a settlement agreement in respect of the outstanding amount owing. However, Ratlou and PNT fell into default of the settlement agreement’s terms, and consequently MAN instituted application proceedings in the GJ, demanding payment. The GJ dismissed the claim, finding that the settlement agreement was a credit transaction subject to the NCA, and that MAN had failed to comply with notice requirements prescribed by s 129.

In its reasoning the court acknowledged that the original rental agreements fell outside the ambit of the NCA, as they were large agreements concluded with a juristic person and, therefore, so too did the suretyship. However, the settlement agreement, it held, was a compromise or transactio amounting to a new and independent agreement, which extinguished any rights and obligations emanating from the underlying contracts. As it stood, the court concluded, this agreement required compliance with the NCA (providing as it did for deferred instalment payments and interest thereon).

The SCA per Dambuza JA (Lewis ADP, Swain JA, Carelse AJA and Matojane AJA concurring), however, disagreed with the approach of the GJ. It acknowledged that on a literal interpretation of s 8(4)(f) of the NCA, the settlement agreement under question met the definition of a credit transaction. It held, however, that it was clear that the NCA, purposively interpreted, was not intended to apply to settlement agreements where the underlying agreements, such as the present ones, fell outside the ambit of the Act. The SCA stressed the absurd consequences of holding otherwise. It would mean, for example, that a settlement agreement concluded in relation to a delictual claim would immediately fall within the ambit of the NCA. Ultimately, people would be discouraged from seeking to curtail litigation and settle their disputes by entering into settlement agreements.

The SCA accordingly concluded that the settlement agreement in question did not fall within the ambit of the NCA, and that MAN had no obligation to comply with the Act’s provisions prior to enforcing the agreement’s terms. The appeal was dismissed with costs.

Criminal law

The constitutionality of s 18(2)(b) of Riotous Assemblies Act: In Economic Freedom Fighters and Another v Minister of Justice 2019 (2) SACR 297 (GP) the applicants approached the court seeking orders, inter alia, declaring that s 18(2)(b) of the Riotous Assemblies Act 17 of 1956 was unconstitutional, and that s 1(1) of the Trespass Act 6 of 1959 was not applicable to occupiers of land protected under legislation such as the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (PIE).

The matter arose out of three related charges that were laid against the second applicant, the leader of the first applicant, for inciting his followers to illegally occupy vacant land in contravention of s 1(1) of the Trespass Act.

The applicants raised various argument, including that s 18(2)(b) criminalised the exercise of free expression protected by s 16 of the Constitution, the definition of incitement was overbroad, and the limitless scope thereof provided an unjustifiable limitation of the right.

The court expressed some frustration with the abstract nature of the constitutional challenge to the section and noted that the applicants’ arguments appeared to misunderstand the crime of incitement, particularly the fault element. The court, per Ledwaba DJP, Pretorius J and Molege J, nevertheless went on to consider the nature of the offence in some detail, concluding that the mere voicing of an opinion was not enough for the offence and a clear intention to influence the mind of another to commit a crime had to be present, which was a high bar for the state to prove beyond reasonable doubt.

The court also considered the relationship between the section in issue and s 16, finding that it did not attack the core of the right to freedom of expression. The section did criminalise conduct otherwise protected by s 16(1)(b) and, therefore, infringed the right, but only to the extent that a person was prohibited from imparting ideas and information to commit crime not otherwise excluded by s 16(2). It was not a wholesale restriction on speech, but merely prohibited the influencing of the minds of others to commit acts, which the law already considered to be unlawful.

After doing a limitations analysis, the court found that the infringement bore a rational connection to the purpose of timely law enforcement and the prevention of the commission of crimes en masse and was justifiable. The provision in s 18(2), however, that an inciter was liable to punishment as if they had committed the crime, could not be said to be rationally connected to the purpose of crime prevention, and to this limited extent the section was unconstitutional.

As to the Trespass Act, there was no immediate conflict between it and PIE and the application in that regard had to fail.

In the result, the applications were dismissed except for the declaration of constitutional invalidity of the penalty provision in s 18(2)(b), which was referred to the CC for confirmation.

Defence Force

Termination of service on sentence of imprisonment by civilian court: Maswanganyi, the respondent in Minister of Defence and Military Veterans and Others v Maswanganyi 2019 (5) SA 94 (SCA), was a member of the South African National Defence Force and was convicted of rape and sentenced to life imprisonment. This had the effect that his service was terminated under s 59(1)(d) of the Defence Act 42 of 2002, which provides that ‘[t]he service of a member of the Regular Force is terminated … if he … is sentenced to a term of imprisonment by a competent civilian court without the option of a fine’.

Maswanganyi appealed the conviction and sentence, and they were set aside. He then asked the Defence Force for his reinstatement. When this was declined, he approached, and obtained an order from the High Court, for the setting aside of the purported ‘decision’ of the Chief of the Defence Force to terminate his service under s 59(1)(d), and an order that he be reinstated.

The Minister of Defence, the Chief of the Defence Force, and the Secretary for Defence, appealed to the SCA. The SCA, per Majiedt JA (Navsa ADP, Van der Merwe JA, Molemela JA and Davis AJA concurring), considered the operation of the section and found that where the requirements of s 59(1)(d) were met, the member’s service was terminated by operation of law, so that no decision was required to be made. And if it was later found that a requirement for the operation of the section was not met, this did not have the result that the individual’s service was reinstated.

Environmental law

Prohibition on mining and prospecting activities in protected areas without ministerial consent: The manner in which the relevant ministers should exercise their discretion to allow mining and prospecting activities in protected areas, was the focus of the decision in Mining and Environmental Justice Community Network of South Africa and Others v Minister of Environmental Affairs and Others 2019 (5) 231 (GP). In terms of s 48(1)(b) of the National Environmental Management: Protected Areas Act 57 of 2003 (NEMPAA), a party proposing to conduct mining activities in a protected environment must obtain the written permission of the Minister of Environmental Affairs and the Minister of Mineral Resources; and s 48(4) of NEMPAA provides that ‘when applying this section, the Minister must take into account the interests of local communities and the environmental principles referred to in section 2 of the National Environmental Management Act [107 of 1998 (NEMA)]’.

The applicants contended that such permission should only be given in ‘exceptional circumstances’, and that these words had to be read into s 48 in order to render it functional. The court held that it was unnecessary to read such a qualification of ‘exceptional circumstances’ into s 48, and that doing so might set the bar higher than the legislative intention. Instead, it held, that to purposively give effect to the envisaged environment within and manner in which the ministers were obliged to exercise their discretions, s 48(1)(b) and 48(4) of NEMPAA should be interpreted to mean the following: Despite the fact that a person may have obtained all the necessary authorisations required in terms of all other applicable statutory provisions in order to lawfully conduct mining activities on a certain portion of land, should that land fall within a protected environment as contemplated in NEMPAA, then such a person would, in addition, need to obtain the written permission of both the ministers of environmental affairs and mineral resources to do so. In considering a request for such permission, the ministers shall act as custodians of such protected environment and with a strict measure of scrutiny take into account the interests of local communities and the environmental principles referred to in s 2 of NEMA.

 

Enforcement of environmental legislation by way of private prosecution: Section 33 of National Environmental Management Act 107 of 1998 (NEMA) provides that ‘[a]ny person may … in the public interest; or … in the interest of the protection of the environment, institute and conduct a [private criminal] prosecution in respect of any breach of any duty … concerned with the protection of the environment’.

In Uzani Environmental Advocacy CC v BP South Africa (Pty) Ltd 2019 (5) SA 275 (GP), an environmental advocacy group (Uzani) had obtained the High Court’s leave to institute a private prosecution as contemplated in s 33 of NEMA against BP Southern Africa (BPSA). Uzani charged the BPSA with commencing or continuing of the construction of 21 filling stations without environmental authorisation, as required by s 22 of the Environmental Conservation Act 73 of 1989 (the ECA).

BPSA pleaded not guilty, and also denied Uzani’s entitlement to prosecute. In the latter regard, one of the grounds BPSA advanced was that private prosecution was precluded by BPSA’s application under s 24G of NEMA for rectification of the unlawful commencement or continuation of a listed activity.

The court dismissed this contention, holding that s 24G did not impact on a right to prosecute. As to whether Uzani had proven the offences, it was held that Uzani only had to rely on the lack of authorisation by the minister or the competent authority (aside from proving the construction or upgrading of the filling stations referred to in the indictment and the date of its commencement); and that in making an application under s 24G of NEMA, BPSA admitted that it had commenced with a listed or specified activity without an environmental authorisation in contravention of s 24F(1).

BPSA was accordingly convicted on all counts, except those in respect of which the records created sufficient doubt.

Land restitution

Land Claims Court slates state’s failure to return land to District Six claimants, labels it violation of their constitutional rights: In District Six Committee and Others v Minister of Rural Development and Land Reform and Others 2019 (5) SA 164 (LCC) former residents of District Six attempted to resolve their 20-year-old claims for restitution of property confiscated from them during Apartheid era forced removals.

In the aftermath of the promulgation of the Restitution of Land Rights Act 22 of 1994, over 2 700 District Six claimants had lodged restitution claims. Of them, approximately 1 200 opted for restoration (that is, a house), while 969 claimants were still waiting at the time of the judgment.

The applicants contended that the respondents’ inaction was a breach of their constitutional and legal obligations. They sought a declaratory order to this effect, highlighting the injunction in s 237 of the Constitution that constitutional obligations had to be performed diligently and without delay. The respondents consented to a structural interdict but stressed that the concession did not imply an acknowledgment that they were in breach of their legal and constitutional obligations to the applicants.

The LCC pointed out that s 237 obliged the court to ensure that the imperatives of diligence and non-delay were complied with. The consolidation of South Africa’s young and fragile democracy required that the letter and spirit of the Constitution be absorbed by the state and the rest of society. Such internalisation was absent from the respondents’ approach in the present matter. The mere fact that nearly 80% of the claimants who had opted for a house were still without one, meant that there was merit in the granting of a declaratory order to clarify the legal and constitutional obligations owed by the respondents to the applicants. The state’s failure to deliver was magnified when viewed against the history of the applicants’ dispossession and the imperative to make good on the constitutional promise of redress.

The LCC declared that the respondents’ failure to provide restitution to the District Six claimants was a violation of their rights and a breach of the respondents’ obligations under s 7(2), s 25(7) and s 237 of the Constitution, as well as of the Restitution of Land Rights Act.

Pension funds

Time for determination of ‘dependants’ for purposes of distribution of death benefits – s 37C(1)(a) of the Pension Funds Act 24 of 1956: In Fundsatwork Umbrella Pension Fund v Guarnieri and Others 2019 (5) SA 68 (SCA) the facts were as follows: A member of a pension fund had died and was survived by his wife and children and his mother. Some months later the member’s mother also died. Very shortly thereafter, and apparently in ignorance of this, the fund made its decision as to how the member’s death benefit should be distributed to his dependants. It allocated portions of the benefit, respectively, to the member’s now-deceased mother, his wife, and each child.

The wife challenged the distribution before the adjudicator, who set the challenge aside, only for the fund to make the same distribution. This fund’s distribution was subsequently set aside by the High Court, which ordered that the part of the benefit that the fund had awarded to the mother be allocated to the wife and children.

The fund appealed the GJ’s finding to the SCA. The issue before it was when, for the purposes of a s 37C(1)(a) distribution of a death benefit to dependants, a person would be a dependant.

The SCA found that it was when the fund had completed its inquiry into who the dependants were and what their allocations should be. Here, the member’s mother was not a dependant when the fund had made its decision, with the result that its award to her was contrary to s 37C(1)(a) and invalid. Hence the GJ had correctly set it aside.

Sectional titles

Use of sections for purposes other than those designated in sectional plans: The case of Mineur v Baydunes Body Corporate 2019 (5) SA 260 (WCC) concerned owners in a sectional title scheme who had converted parts of their sections designated on the sectional plan for garaging, to living quarters.

The body corporate sought to regularise the situation and to this end adopted, with an 84% majority vote, two resolutions and a conduct rule. The first resolution purported to approve the garage conversions and the second to adopt a conduct rule creating exclusive use areas from the common property for parking.

The applicant, an owner, opposed this course and sought relief from the Community Schemes Ombud Service. The adjudicator dismissed her application and she appealed to the WCC.

The WCC applied s 13(1)(g) of the Sectional Titles Schemes Management Act 8 of 2011. It requires that the consent of all owners be obtained where –

  • an owner seeks to use his section for a purpose other than that recorded on the sectional plan; and
  • the proposed use will materially affect other owners.

The WCC found that the conversions of garages into living quarters materially affected other owners and were, absent their consent, unlawful. The resolution purporting to approve the conversions, which was not voted for by all the owners was, therefore, invalid.

 

Community Schemes Ombud Service versus High Court: Ms Hoge, the respondent in Coral Island Body Corporate v Hoge 2019 (5) SA 158 (WCC) had, without written permission, installed white plastic piping from the geyser in her garage to a point where it disgorged, in the event of overflow, into the garaging area. Ms Hoge had also, again without consent, used her garage for a purpose other than garaging.

The body corporate applied in the WCC for an order directing Ms Hoge to replace the plastic piping with copper piping, to redirect the overflow into a drain, and to refrain from using her garage as anything else. Before the hearing Ms Hoge agreed to the order but asked that she not be required to bear the body corporate’s costs.

The WCC found that, given the simple nature of the matters in dispute, it had been inappropriate for the body corporate to bring the matter in the High Court rather than to the Community Schemes Ombud Service or employ legal representatives. The WCC accordingly granted the relief asked for but declined to make an award as to costs.

Other cases

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

  • applicable accounting standards in company accounts;
  • consumer credit agreements debt enforcements;
  • consumer credit records;
  • consumer protection unregistered builder;
  • court powers to make settlement agreements orders of courts;
  • defamation on social media and damages assessment;
  • government procurement;
  • income tax;
  • insolvency – compulsory sequestration;
  • judgments and orders;
  • LCC not having jurisdiction to grant leave to appeal;
  • medical practitioner disciplinary proceedings;
  • refusal of leave to appeal by the SCA; and
  • rights to property entitling transfer to claim retransfer of land without compensation.

Gideon Pienaar BA LLB (Stell) is a Senior Editor, Joshua Mendelsohn BA LLB (UCT) LLM (Cornell), Johan Botha BA LLB (Stell) and Simon Pietersen BBusSc LLB (UCT) are editors at Juta and Company in Cape Town.

This article was first published in De Rebus in 2019 (Nov) DR 22.