David Matlala BProc (University of the North) LLB (Wits) LLM (UCT) LLM (Harvard) HDip Tax Law (Wits) is an adjunct professor of law at the University of Fort Hare.
February 2014 (1) The South African Law Reports (pp 323 – 640); [2014] 1 The All South African Law Reports January no 1 (pp 1 – 124) and no 2 (pp 125 – 248)
ABBREVIATIONS
CC: Constitutional Court
GNP: North Gauteng High Court
GSJ: South Gauteng High Court
SCA: Supreme Court of Appeal
WCC: Western Cape High Court
Children
Adoption and its effect: Section 230(3) of Children’s Act 38 of 2005 (the Act) provides, among others, that a child is adoptable if:
On the other hand, s 242(1)(a) of the Act provides that, except when provided otherwise in the order or in a post-adoption agreement that has been confirmed by the court, an adoption order terminates all parental responsibilities and rights that any person – including a parent, step-parent or partner in a domestic life partnership – had in respect of the child immediately before the adoption. These sections were interpreted by officials in the Children’s Court to mean that a child having one guardian could not be adopted by a spouse or life partner of that guardian as such a child was not abandoned and that, if a step-parent adopted a child, the rights and obligations of that biological child’s parents automatically terminated in all instances.
To overcome the above problems in Centre for Child Law v Minister of Social Development 2014 (1) SA 468 (GNP) the applicant, the Centre for Child Law, sought a declaratory order to the effect that s 230(3) of the Act did not preclude a child from being adoptable in instances where the child had a guardian and the person seeking to adopt the child was the spouse or permanent domestic life-partner of that guardian.
An order was also sought declaring that s 242 did not automatically terminate all the parental responsibilities and rights of the guardian of a child when an adoption order was granted in favour of the spouse or permanent domestic life-partner of that guardian, having regard to the discretion that s 242 afforded the court to order otherwise. Both orders were granted. As a result it was no longer necessary to consider the constitutional invalidity of the two sections.
Louw J held that where a non-custodian parent had consented to an adoption of his or her child, such parent would be taken to have abandoned the child as contemplated in s 230(3)(c) and, accordingly, render the child adoptable. A child was also taken to have been abandoned where, for no apparent reason, he or she had no contact with the parent, guardian or caregiver for a period of at least three months. The definition of ‘abandonment’ in s 1 of the Act did not require that the child should have no contact with both parents for the said period before qualifying as an abandoned child. It was also not required that ‘the whereabouts of the non-custodian parent cannot be established’.
Section 231(1)(c), which expressly permitted the adoption of a child by a step-parent did not contain a limitation that a step-parent could only adopt a child if the non-custodian parent was no longer alive. It was therefore in order for a step-parent to adopt a child if the non-custodian parent had consented to the adoption of the child or if the child had, for no apparent reason, no contact with the non-custodian parent for at least three months or if the whereabouts of the non-custodian parent could not be established.
Therefore, s 230(3) did not preclude a child from being adoptable merely because the child had a parent or guardian who took care of the child and the person seeking to adopt the child was the spouse or permanent domestic life-partner of the child’s parent or guardian.
In terms of s 242 adoption of a child automatically terminated all rights and responsibilities of the parent in respect of the child, except when otherwise provided for in the adoption order or in a post-adoption agreement that had since been confirmed by the court. Therefore, the court had discretion to order that the rights and responsibilities of the child’s parent or guardian would not terminate on the granting of an adoption order in favour of the step-parent. Save in exceptional circumstances, it would clearly be in the best interests of the child that such an order be made.
Protection of funds awarded to children:
In Dube NO v Road Accident Fund 2014 (1) SA 577 (GSJ) the plaintiff, Dube, was the father and sole guardian of a minor child aged 11 years, the mother having died. The minor was seriously injured in a motor vehicle collision, and a claim for damages against the defendant, the Road Accident Fund, was settled in an amount of over R 3 million and a draft order was prepared.
However, the court picked up on a number of deficiencies in the draft order, particularly as no mechanism was devised to ensure that the proceeds could not be released from the envisaged trust at any time and used for purposes other than advancing the interests of the minor. As a result the court directed the plaintiff to prepare a revised draft order, which the court amended, and whose highlights included the –
The draft order also provided that the minor would be the sole beneficiary of the trust income and capital and also had other features relating to protection of the funds.
In an obiter dictum, nothing being contested, Fisher AJ held that it was generally accepted by the courts in the carrying out of their function as upper guardian of minors that, while it had to be acknowledged that the guardian of a child had the power and obligation to manage the child’s financial affairs, it would not be a proper approach simply to order that substantial funds be paid to a guardian without regard first being had to the circumstances under which the funds were likely to be administered and applied.
It was the court’s function, in cases where relatively significant sums of money were awarded to minors, to inquire into the circumstances relating to the person or persons to whom payment was sought to be released for the purpose of satisfying itself that the order served the best interests of the minor in relation to payment and subsequent administration of the funds. This included assessing the motivations, qualifications and ability of the guardian to properly administer the funds to be paid in the event that it was sought that payment be made to such guardian.
Customs and excise
Unconstitutionality of the search without warrant provisions of the Customs and Excise Act 91 of 1964: Section 4(4) of the Customs and Excise Act (the Act) had extensive provisions giving South African Revenue Service (SARS) officials power to enter any premises, business or residential, in order to inspect, search and remove items if they had suspicion that there was a contravention of the Act. The biggest problem though was that such entry, inspection, search or seizure could be done at any time and in any place without a search warrant. To effect search and seizure, SARS officials were given power to use force, for example, they were allowed to break any window, door, floor, ceiling or wall and effect forceful opening in any manner, of any room, place, safe, chest, box, etcetera, if it was locked and the keys were not produced on demand.
In Gaertner and Others v Minister of Finance and Others 2014 (1) SA 442 (CC) SARS officials made such an entry, inspection, search and seizure at the business premises, offices and private dwellings of the applicants, who were directors of a company. In this case the WCC granted an order declaring the impugned sections of the Act unconstitutional and ordered a return of items seized. The order of invalidity was suspended for a period of 18 months and was not retrospective. The court also did extensive rewriting (reading-in) of the section.
The order of invalidity was confirmed by the CC that reduced the period of suspension of invalidity to six months as parliament had already made good progress in attending to the defects in the section. Once again the order of invalidity was not retrospective. There was also less extensive reading-in into the provisions of the section that required entry, inspection, search and seizure to be authorised by a magistrate or judge except in urgent cases. The applicants were granted the costs of the application.
Delivering the unanimous judgment of the CC, Madlanga J held that the wording of the section was so broad that it brought within its sweep not only the places of business and houses of people who were players in the customs and excise industry, but also the homes of their clients, associates, service providers, employees and their relatives. Quite conceivably the premises, business or home, of any person who could be linked to a player in the customs and excise industry could be the subject of a search in terms of the impugned provisions.
The provisions were therefore broad as to the manner of conducting the searches, which searches could be conducted in private dwellings at any time, and officials could not only break in at the dwellings as, once inside, they could even break floors. To do all this SARS officials did not need a warrant. That power, unlimited as to time, the scope of the search and the type of premises, was extremely intrusive and unjustified.
The achievement of the basic purposes of the Act did not require that inspectors be allowed to enter private homes and inspect documents and possessions at will. The fact that the Act was manifestly in the public interest in no way diminished the need to protect and uphold the privacy, and indeed the dignity, of individuals where, as in the case of private dwellings, those rights were by no means attenuated. Less restrictive means to achieve the purpose of the Act were available; for example, there was no cogent reason for not providing for warrants in respect of searches of people’s homes.
Government procurement
Broad-based black economic empowerment credentials as a mandatory and material consideration for a tender: The facts in AllPay Consolidated Investment Holdings (Pty) Ltd and Others v Chief Executive Officer, South African Social Security Agency, and Others 2014 (1) SA 604 (CC) were that in April 2011, the South African Social Security Agency (SASSA) published an invitation to tender (a request for proposals) calling on bidders to present proposals to pay social grants on SASSA’s behalf. The proposals were to be assessed in two stages. The first stage was divided into two sessions, each of which required a minimum score of 70% to proceed to the next session or stage.
The first session consisted of technical assessment of the proposal while the second was on oral presentation. Any bid scoring a minimum of 70% in the second session of oral presentation was to proceed to the second and final phase of finance and black empowerment preference points assessment.
Of the 21 proposals received, only two, namely that of the appellant AllPay and the third respondent Cash Paymaster, qualified for the second session. The appellant’s proposal failed at the second session of the first stage, namely oral presentation as it received 58% and not the required minimum of 70%. That was due mainly to the appellant’s inability to offer a satisfactory biometric verification system for the identification of beneficiaries of a social grant at every pay point, which verification was required to counter fraudulent payment of grants.
The effect of the appellant’s elimination was that only the third respondent’s bid reached the second phase of the bidding process. In the absence of competition, SASSA found it unnecessary to assess the third respondent’s finances and black empowerment preferential scores and accordingly awarded the tender to it.
Alleging a number of irregularities in the tender process, the appellant approached the High Court for an order declaring the tender award unlawful and setting it aside. The GNP held that the tender process followed was illegal and invalid but declined to set aside the tender award, as doing so would disrupt the payment of social grants. As the appellant appealed to the SCA against failure to set aside the tender award, the third respondent cross-appealed against the High Court order declaring the tender award illegal and invalid.
The SCA upheld the cross-appeal, holding that there were no unlawful irregularities in the tender process, adding that public interest dictated that a procurement process should not be invalidated for minor inconsequential irregularities. After all, a fair process did not demand perfection since not every flaw was fatal.
On further appeal to the CC leave to appeal was granted and an appeal against the SCA decision was upheld with costs. The tender award to the third respondent was declared constitutionally invalid, such declaration being suspended pending determination of a just and equitable remedy. The parties and amici curiae were ordered to provide affidavits and further written submissions on the issue of a just and equitable remedy. Until that remedy was determined, the third respondent was to continue rendering the service of making payments of social grants as per the tender awarded to it.
Reading a unanimous decision of the court Froneman J held that, once a ground of review under the Promotion of Administrative Justice Act 3 of 2000 had been established, there was no room for shying away from it. Section 172(1)(a) of the Constitution required the decision to be declared unlawful. The consequences of the declaration of unlawfulness would then be dealt with in a just and equitable order under s 172(1)(b). The materiality of irregularities was determined primarily by assessing whether the purposes that the tender requirements served had been substantively achieved.
In the instant case, the handling of the tender process by SASSA made the crucial role reserved for transformation in the procurement process a nullity in that black economic empowerment points, which were to be assessed in the second stage, played no role in the decision because by that stage there was no competition.
An investigation into the propriety of empowerment credentials did not become necessary only after a complaint had been lodged. There was an obligation on SASSA to ensure that empowerment credentials of the prospective tenderers were investigated and confirmed before the award was finally made. That obligation became even more crucial when there were no other competitors left in the second stage. There was then an even greater obligation for the tender administrator to confirm the empowerment credentials of the winning bidder.
Intellectual property
Purely functional designs do not qualify for registration as aesthetic designs: The Designs Act 195 of 1993 (the Act) distinguishes between aesthetic and functional designs. The Act defines ‘aesthetic design’ to mean, among others, one having features, ‘which appeal to and are judged solely by the eye, irrespective of the aesthetic quality thereof’. On the other hand a ‘functional design’ is defined, among others, to mean one having features that are necessitated by the function that the article to which the design is applied, is to perform.
In BMW AG v Grandmark International (Pty) Ltd and Another 2014 (1) SA 323 (SCA) the appellant, BMW, sought in the main an interdict restraining the respondent, Grandmark, from importing and distributing in this country certain motor vehicle components over which it held aesthetic design rights. In separate proceedings it also sought from the respondent royalties for alleged infringement of its rights.
Since, by the time of hearing of the appeal before the SCA, the design rights in question had expired, the appellant sought a declaration of infringement of its rights so that it could proceed with its claim for royalties from the respondent. The respondent counterclaimed for revocation of registration of the designs in question, contending that they did not qualify for registration in terms of s 14 of the Act in the first place. The GNP, per Ranchod J, having upheld the revocation counterclaim of the respondent, an appeal against that decision was dismissed with costs by the SCA.
Nugent JA (Brand, Cachalia, Wallis JJA and Swain AJA concurring) held that it was evident from the definitions of aesthetic and functional designs that to qualify for registration a design did not have to be exclusively aesthetic as it could combine both aesthetic and functional features. Where it incorporated functional features, however, those features were excluded from protection by s 14(5). Moreover, s 14(6) excluded from protection of a registered functional design any features of pattern, shape or configuration of an article that was in the nature of a spare part for a machine, vehicle or equipment.
Aesthetic designs were those that invited customer selection and consumer discrimination between articles, solely by their visual appeal. In the instant case, while the appellant spent considerable money, time and expertise in designing the appearance of its motor vehicles, it did not follow that because the designs of its vehicles qualified as aesthetic designs, the designs of its components would qualify as such.
The design of individual components had to be judged independently of the design of the built-up vehicles. The articles embodying the design of the components were not selected by customers for their appeal to the eye: They were selected solely for the function they performed, which was to replace components so as to restore the vehicle to its original form. The design of the components was therefore purely functional and did not qualify for registration as aesthetic designs.
Labour law
Constitutionality of limitation of right to legal representation in CCMA arbitration proceedings: Rule 25(1)(c) of the rules for the conduct of proceedings before the Commission for Conciliation, Mediation and Arbitration (CCMA) provides that, if the dispute arbitrated is about the fairness of dismissal and a party has alleged that the reason for the dismissal relates to the employee’s conduct or capacity, the parties are not entitled to be represented by a legal practitioner in the proceedings. Nevertheless, the rule allows legal representation if the commissioner and all the parties consent or if the commissioner concludes that it would be unreasonable to expect a party to deal with the dispute without legal representation after considering the nature of the questions of law raised by the dispute, the complexity of the dispute, public interest and the comparative ability of the opposing parties or their representatives to deal with the dispute.
In the Commission for Conciliation, Mediation and Arbitration and Others v Law Society of the Northern Provinces (Incorporated as the Law Society of the Transvaal) [2014] 1 All SA 125 (SCA) the respondent Law Society of the Northern Provinces (LSNP) sought and was granted an order by the GNP, per Tuchten J, declaring the rule inconsistent with the Constitution and therefore invalid. The contention of the respondent was that the rule –
An appeal against the High Court order was upheld with costs by the SCA. Malan JA (Nugent, Wallis JJA and Swain and Van der Merwe AJJA concurring) held that the right to legal representation existed for the benefit and protection of litigants. In the instant case the LSNP did not purport to be pursuing the interests of those who used the services of the CCMA. In essence, the complaint of the respondent was that the rule denied work to its members.
In the run-up to the establishment of the CCMA it was decided that, in the interest of efficacy and expeditious resolution of disputes before it, legal representation would not be permitted in less complex matters. The courts had consistently denied entitlement to legal representation as of right in fora other than courts of law. The CCMA was not a court.
Moreover, the rule and other provisions of the Labour Relations Act 66 of 1995 were sufficiently flexible to allow for legal representation in deserving cases. It impacted only on a litigant’s right to be represented in a particular forum. It therefore met the rationality standard.
Unfair dismissal – clash of cultures:
Kievits Kroon Country Estate (Pty) Ltd v Mmoledi and Others 2014 (1) SA 585 (SCA) the respondent, Ms Mmoledi, was an employee of the appellant, Kievits Kroon. After allegedly seeing visions of ancestors, the respondent understood the visions to mean that she had to undergo a traditional healing course of five weeks so that she could become a traditional healer. Her traditional healer trainer, one Mrs M, prepared a certificate (a written note) explaining the importance of that training as, failing to heed the ancestral call, could result in the respondent’s misfortune, including serious illness or death.
The appellant was prepared to allow the respondent to be absent for one week and not five as requested. In the event the respondent attended the training and was absent from work without leave and contrary to the instruction of the employer to report for duty. An internal disciplinary hearing found her guilty of misconduct and recommended her dismissal, which was done.
At the Commission for Conciliation, Mediation and Arbitration (CCMA) hearing it was held that the respondent’s dismissal was substantially unfair as she was absent from work due to circumstances beyond her control, namely the call of her ancestors. She was accordingly reinstated but without retrospective payment. A review application to the Labour Court was dismissed. So was an appeal to the Labour Appeal Court before Tlaletsi, Ndlovu JJA and Murphy AJA.
A further appeal to the SCA was dismissed with costs. Cachalia JA (Brand, Leach, Willis JJA and Zondi AJA concurring), noting that the CCMA considered the case to present a ‘cultural chasm’ between the parties, held that the fact that belief systems in deeply held cultural convictions existed and were part of the culture of customs, ideas and social behaviour of significant sections of the country’s people was beyond doubt and had since been acknowledged by the courts. Also beyond dispute was the fact that, as part of those belief systems, people resorted to traditional healers for their physical, spiritual and emotional wellbeing.
Courts were familiar with and equipped to deal with disputes arising from conventional medicine, which were governed by objective standards, whereas questions regarding religious doctrine or cultural practice were not so governed. Courts were therefore unable and not permitted to evaluate the acceptability, logic, consistency or comprehensibility of the belief. They were concerned only with the sincerity of the adherent’s belief, and whether it was being invoked for an ulterior purpose.
It was well established that where an employee absented himself or herself from work without permission, and in the face of his or her employer’s lawful and reasonable instruction, a court was entitled to grant relief to the employee if the failure to obey the order was justified or reasonable.
In the instant case it was significant that evidence showed that the respondent would not have been dismissed if she produced a certificate from a medical practitioner, instead of a traditional healer, as proof of her illness, the certificate from a traditional healer being considered meaningless and thus rejected as proof of illness.
The court added obiter that an employer was not expected to tolerate an employee’s prolonged absence from work for incapacity due to ill health as it could, if that was fair in the circumstances, exercise an election to end the employment relationship.
Motor vehicle accidents
No compensation for loss of illegal earnings: In Heese NO v Road Accident Fund 2014 (1) SA 357 (WCC) the claimant, Peters, a German national, was seriously injured in a motor vehicle collision in South Africa as a result of which his curatrix ad litem, Heese, claimed compensation on his behalf from the respondent, the Road Accident Fund. The claim was settled on general damages and medical expenses, the only remaining issue being compensation for loss of earning capacity.
The problem was that, although he was a businessman, his earnings were made illegally under a massive fraudulent tax evasion scheme. Not only was he under-declaring his earnings but he was also inflating his expenses by, among others, deducting fictitious expenses from his income. The WCC held, per Blignault J, that the claimant was not entitled to compensation for loss of illegal earnings. An appeal to the Full Bench was dismissed with costs.
Rogers J (Veldhuizen and Schippers JJ concurring) held that, if it appeared from evidence that a claimant’s earning capacity would as likely as not have been sterilised and rendered worthless by some or other event over the future period covered by the claim, the court could properly conclude that a claim of diminution in earning capacity had not been established on a balance of probability. The future event could, in the instant case, in principle be lengthy imprisonment. It was a factual question whether the earning capacity would have been rendered worthless or diminished in value by a future event such as imprisonment.
On grounds of public policy a South African court would not make an award for diminution in earning capacity if the only way in which the earning capacity could remain productive was by a failure on the part of the claimant post-accident to comply with his or her legal duties to the tax authorities. Payment of tax was an inevitable part of conducting business. The lawful conduct of business required, among others, compliance with fiscal legislation. A court would, on grounds of public policy, only award such amount as was consistent with compliance by the claimant with his or her duty of disclosure of his or her tax affairs.
Public policy did not permit one to award damages where the exploitation of the earning capacity was dependent on illegality. If disclosure of tax evasion would have sterilised the claimant’s earning capacity because of harsh criminal sanctions, the court could properly decline to make an award for diminution in earning capacity.
Payment
Risk of loss of cheque sent through post: In Stabilpave (Pty) Ltd v South African Revenue Service 2014 (1) SA 350 (SCA) the respondent, the South African Revenue Service (SARS), owed the appellant, Stabilpave, a tax refund in an amount of over R 700 000. The tax assessment form had a provision to the effect that if banking details provided by the appellant were not valid, payment of a refund would be effected by sending a cheque using the postal service. As the appellant did not provide banking details at all, a tax refund cheque was duly posted but it never reached its destination as it was intercepted and the proceeds misappropriated by a thief.
As a result the appellant sued the respondent for payment, which claim was dismissed by the GNP, per Ismail AJ. An appeal against the decision of the court of first instance was dismissed by a majority of the Full Bench comprising, Mavundla and Mothle JJ, with Fabricius J dissenting. An appeal against the decision of the Full Bench was upheld with costs by the SCA.
Meyer AJA (Brand, Lewis, Bosielo and Theron JJA concurring) held that any ‘agreement about the particular mode of performance’ or ‘as to the manner of payment’ was reached only if the creditor stipulated, requested or authorised a particular mode of payment and the debtor acceded to the request. The decisive question was whether the notice contained in the tax assessment form gave the appellant a choice as to the mode of payment and, if it did, whether the choice was made by the appellant, expressly or by necessary implication, that the respondent should effect payment by sending a cheque through the post.
In the instant case the clear implication of the notice of assessment was an advice from the respondent that the tax record of the appellant reflected no banking details and that payment would therefore be effected by means of a cheque through the post. No choice was afforded to the appellant. The method of payment was dictated by the respondent.
The mere fact that the appellant knew or expected to be paid by cheque through the post or that it did not raise an objection did not itself give rise to an implied request or election to be paid in such manner.
Accordingly, the risk of loss of the cheque was not assumed by the appellant and remained with the respondent that did not discharge its indebtedness by posting a cheque for the amount of the refund that was due to the appellant.
Summary judgment
An officer of a corporate entity may rely on data messages for his or her personal knowledge in deposing to affidavit: Rule 32(2) of the uniform rules of court provides, among others, that the plaintiff shall within 15 days after the date of delivery of notice of intention to defend, deliver notice of application for summary judgment, together with an affidavit made by himself or herself or by any other person who can swear positively to the facts verifying the cause of action and the amount, if any, claimed and stating that in his or her opinion there is no bona fide defence and that the notice of intention to defend has been delivered solely for the purpose of delay.
In Absa Bank Ltd v Le Roux and Others 2014 (1) SA 475 (WCC) an application for summary judgment was resisted on the ground that the deponent to the supporting affidavit did not have personal knowledge of the facts contained therein. In the affidavit the deponent alleged that he was a manager of the plaintiff, Absa Bank, that all the data and records relating to the action were under his control and that he had acquainted himself therewith. The deponent further alleged that he had verified the indebtedness of the defendants to the plaintiff as stated in the summons.
However, as it turned out the indebtedness of the first and second defendants, who were directors of the company and its sureties, and whose indebtedness arose out of suretyship contracts, was different from the amount stated in the summons. The affidavit did not deal with the discrepancy.
Binns-Ward J dismissed the application for summary judgment, granted the defendants leave to defend and ordered the costs to be costs in the cause of the action. The court held that the supporting affidavit fell short of what r 32(2) required. The only facts set out in the affidavit were the defendant’s position in the plaintiff’s employ, his being based in Johannesburg, his control of and reference to the data and records relating to the action that pertained to an account that was opened and operated at Hermanus in the Western Cape. That by itself that was not good enough.
Sufficient compliance by the plaintiff with the requirements of r 32(2) on the papers considered as a whole was a sine qua non to the court’s ability to entertain the application. Unless it appeared from a consideration of the papers as a whole that the deponent to the supporting affidavit probably did have sufficient direct knowledge of the salient facts to be able to swear positively to them and verify the cause of action, the application for summary judgment was fatally defective with the result that the court could not even reach the question whether the defendant had made out a bona fide defence.
If the deponent to a supporting affidavit in summary judgment proceedings were able to aver that he was –
The court added that it would be salutary for the deponent to any such affidavit also to explain why the evidence was not being adduced by means of the affidavit of someone with direct personal knowledge of the facts.
Others cases
Apart from the cases and material dealt with or referred to above the material under review also contained cases dealing with an administrative action review application being brought within reasonable time, appeal against conviction and sentence, appealability of a court order, collateral challenge to the validity of administrative action, compulsory acquisition of minority shares, consent of a spouse to the sale of communal property, convening a meeting of a municipal council, granting and refusal of rezoning applications, levying of different municipal rates for different categories of property, liability for fraudulent misrepresentation, limitation on the right to obtain legal assistance at state expense, motor vehicle accident litigation, party relying on rei vindicatio need not tender restitution, payment of purchase price to a conveyancer, reinstatement of the registration of a company, restitution of land rights, right to state-funded legal representation before a commission of inquiry, termination of business rescue proceedings and unfairly prejudicial, unjust, inequitable or oppressive conduct in the running of a close corporation.
This article was first published in De Rebus in 2014 (April) DR 39.
