The law reports – March 2012

March 1st, 2012

Heinrich Shulze BLC LLB (UP) LLD (Unisa) is a professor of law at Unisa.

January 2012 (1) The South African Law Reports (pp 1 – 318); [2011] 4 The All South African Law Reports December no 1 (pp 445 – 572); and no 2 (pp 573 – 646)


CC: Constitutional Court

SCA: Supreme Court of Appeal

Administrative law

Access to information: The decision in De Lange and Another v Eskom Holdings Ltd and Others 2012 (1) SA 280 (GSJ) elicited a fair amount of media attention, not least of all because the applicants were a journalist and his newspaper employer respectively.

The applicants requested the first respondent, Eskom, to furnish them with documentation relating to the pricing formulas contained in long-term bulk-purchase agreements concluded between Eskom and the second respondent, Billiton, for the supply of electricity to two smelters operated by Billiton. The applicants also wanted access to documents revealing the identities of the signatories to the relevant agreements. The requests were made and opposed under the Promotion of Access to Information Act 2 of 2000 (the Act). In particular, Eskom relied on ss 36 and 37 of the Act, which provided for the mandatory protection of commercial or confidential information of a third party. The applicants relied on s 46, which contained a public interest override where a disclosure prohibited under s 36 or s 37 would, inter alia, reveal an imminent threat to public safety or the environment.

Kgomo J held that it was clear that Billiton had established reasonable grounds to show a probability that disclosure of its production costs as required by the applicants would cause it commercial harm and entail a revelation of trade secrets, and that it could therefore rely on ss 36 and 37 to resist the applicants’ request for disclosure. However, it was nevertheless equally clear that the instant matter concerned issues of considerable public interest. Eskom bore the burden of proving that secrecy was justified, and the s 46 public interest override would only apply once it appeared that the records requested would reveal ‘an imminent and serious public or environmental risk’ that outweighed the probable harm caused by disclosure of the information requested. Since the Billiton smelters consumed more than 5,6% of Eskom’s total base-load capacity at a time when the general public was being exposed to persistent tariff increases, as well as electricity blackouts with their concomitant public safety and environmental risks, there was the required public interest in the disclosure of the records in question. The applicants had made out a case for access to the information sought.

Eskom was accordingly ordered to furnish the applicants with certain specific information listed by the court.

Attorney’s practice

Ambit of law society’s powers to inspect affairs of an attorney: At stake in Mda v Law Society of the Cape of Good Hope 2012 (1) SA 15 (SCA) was the powers of a provincial law society to make certain inspections of documents and accounting records kept by attorneys.

The facts that led to the present appeal were as follows. Mda was a practising attorney with an unhappy relationship with the respondent, the Cape Law Society (CLS). He had, on 15 occasions, been found guilty of unprofessional conduct pursuant to internal disciplinary proceedings conducted in terms of r 15 of the rules of the CLS. The law society considered instituting disciplinary proceedings against Mda for five other matters. One of these related to a complaint arising from a claim that Mda was instructed to pursue on behalf of a client against the Road Accident Fund (RAF) in about 1996. In 2005 the client lodged a complaint with the law society against Mda regarding his claim. This was after the client had learnt that the RAF had paid his claim to Mda three years earlier, in 2002, and Mda could not account for the money. The law society’s attempts to obtain an explanation from Mda about what had happened to the client’s money were met with countless empty promises by him. In the court a quo the law society applied successfully for an order against Mda to make his attorney’s practice available for inspection by the CLS.

On appeal before Cachalia JA, Mda argued that the law society was only allowed to demand information concerning the five complaints mentioned above. It could not conduct a general forensic audit of his practice. He further argued that ss 70(1) and 78(5) of the Attorneys Act 53 of 1979 (the Act), on which the CLS purported to rely to conduct a wide-ranging investigation into the affairs of his practice, did not authorise this. In short, the present appeal turned on the ambit of the powers of inspection given to the law society by the provisions contained in ss 70(1) and 78(5).

The court held that the purpose of the law society’s powers under s 70(1) read with s 78(5) of the Act to inspect prescribed documentation and accounting records kept by attorneys was to put the society in a position to decide whether to hold a s 71 inquiry into allegations of misconduct by the attorney. The powers were widely framed and were not limited to an inspection of documentation pertaining to the specific complaint against the attorney.

The appeal was thus dismissed with costs.

Constitutional law

Development of principles of common law: In Everfresh Market Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd 2012 (1) SA 256 (CC) the court considered, without deciding the matter, the vexed question whether parties can agree on an option to renew a lease on rental to be agreed. The facts that led to the present appeal were that Everfresh had entered into a lease agreement with the former owner of a shopping centre. Clause 3 of the lease agreement gave Everfresh an option to renew the lease on its expiry, subject to agreement being reached on the rental. Sometime after Shoprite became the new owner of the centre it sought a High Court order evicting Everfresh. Everfresh contended that Shoprite was barred from doing so because it was under an obligation in terms of clause 3 to make efforts in good faith to reach an agreement on rental, which it could not frustrate by refusing to participate in. Shoprite, in turn, contended that clause 3 did not constitute a binding right of renewal. The High Court concurred with Shoprite’s submission and held that an option to renew a lease on rental to be agreed on was unenforceable. The High Court further held that even if there had been an agreement to negotiate in good faith, the obligation was too uncertain to enforce, and granted the eviction order. When its application for leave to appeal to the SCA was refused, Everfresh approached the Constitutional Court for further leave to appeal, raising for the first time the constitutional question as to whether the common law of contract had to be refashioned by the importation of a requirement of good faith.

The issue before the CC was whether it was in the interests of justice for it to entertain the matter where it had been raised for the first time at such a late stage.

In a majority judgment, Moseneke DCJ held that Everfresh’s case had mutated over time without it having advanced sufficient reasons to show why it was suddenly in the interests of justice for the court to develop the law of contract as requested, particularly in view of the prejudice that Shoprite would suffer if it were required to meet a brand new case at an appellate stage.

It further held that had the case been properly pleaded, a highly desirable and necessary infusion of constitutional values into the law of contract – in particular into the principles relating to a promise to agree or negotiate – might have taken place. In particular, the applicability of principles of good faith in contract law, pacta sunt servanda and ubuntu might have persuaded the court to entertain the appeal. However, this was not, in view of the powerful factors pointing away from allowing the ventilation of these issues at such a late stage, sufficient to tilt the balance in Everfresh’s favour.

Application for leave to appeal was thus dismissed.


Apology must address full width of defamation: In Mthimunye v RCP Media and Another 2012 (1) SA 199 (T) the plaintiff instituted an action for damages for defamation arising out of the publication in the defendants’ newspaper of an article concerning the plaintiff, a municipal manager with the Dr JS Moroka Municipality in Siyabuswa. The article dealt with a sexual harassment civil action that M, also a municipal employee, had instituted against the plaintiff.

The court held that the article was defamatory in several respects, namely by:

  • stating that the plaintiff had been found guilty of sexually harassing M;
  • stating that the plaintiff was lecherous;
  • implying that the plaintiff was implicated in the improper use of taxpayers’ money in his defence against the charges; and
  • stating that the municipality failed to take the complaints seriously.

In their plea, the defendants admitted that the article was ‘in a single respect incorrect in that it was inadvertently reported’ that the plaintiff had been found guilty of sexually harassing a married woman who worked as a secretary for the municipality. Apart from that, the article was not defamatory. The defendants further pleaded that they had caused a correction and an apology to be published that vindicated and/or restored the reputation of the plaintiff.

Du Plessis J held that the apology was inadequate because it did not address the full width of the defamation. The plaintiff had accordingly succeeded in proving that he was entitled to damages for defamation.

The court further held as to the quantum of damages to be awarded, that, although the defendants’ apology went some way to correct the facts and to limit the harm done to the plaintiff’s reputation, it did not go far enough. It left uncorrected the allegations that the plaintiff was lecherous and that taxpayers’ money was improperly or injudiciously used. As for the implication that the municipality did not adequately take note of and react to M’s complaints, the answers that the plaintiff gave in cross-examination indicated that the criticism was not entirely without foundation.

The court pointed out that an award in defamation cases did not serve a punitive function and was generally not generous. In the present circumstances, it awarded an amount of R 35 000 to the plaintiff.


Claim for damages: In Alves v LOM Business Solutions (Pty) Ltd and Another [2011] 4 All SA 490 (GSJ) the plaintiff, Alves, was convicted of attempted murder. Leave to appeal was granted and on appeal the conviction and sentence were set aside.

In the present action Alves claimed damages from the defendants, alleging that they were negligent in preparing the transcript for his appeal hearing, resulting in his having to spend a further, unnecessary period of incarceration. The first defendant was the official court transcriber for the whole of the Gauteng province. The second defendant was the Department of Justice and Constitutional Development. Alves claimed R 3,65 million as general damages and R 153 800 for loss of income.

Willis J pointed out that this was probably the first case of its kind. The court held that the evidence showed that the first defendant could not be held responsible for any delays in transcribing the record. As a matter of fact, the record should have been ready during the time when the first defendant’s predecessor (Sneller Verbatim) was employed by the second defendant. Some of the delays were attributable to the tracking down of missing documentary exhibits. The first defendant had been diligent in attempting to track down such documents.

The second defendant began its case by arguing that the first defendant’s predecessor had not been joined in the case. The court dismissed the non-joinder objection on the ground that it was raised late and that the party sought to be joined did not have a substantial interest in the matter.

On the merits, the second defendant conceded that it owed a duty to appellants in the position of the plaintiff (ie, someone convicted of a crime) to ensure that records were prepared for the hearing of an appeal within a reasonable time.

In terms of s 34 of the Constitution, everyone has a right to access to the courts; and in terms of s 35 the right to challenge the lawfulness of one’s detention and a right of appeal. These constitutional rights cannot be rendered nugatory by unreasonable delays in the offices for which the second defendant is responsible.

To found a claim of damages, there must be a causal connection between the unlawful and negligent conduct complained of, and the harm that is alleged to have ensued. The element of causation involves two distinct inquiries. First, in regard to the issue of factual causation, it must be determined whether or not the postulated cause can be identified as the sine qua non of the loss in question. Secondly, if factual causation has been established, it must be determined whether the wrongful act is linked sufficiently closely to the loss concerned for liability to ensue.

The failure of the Justice Department to ensure that the plaintiff’s record of proceedings was prepared within a reasonable time for the appeal hearing to have taken place was indeed causally connected to the harm suffered by the plaintiff. An amount of R 350 000 plus interest was awarded to him.

Claim for damages caused by members of trade union: The decision in SA Transport and Allied Workers Union v Garvis and Others [2011] 4 All SA 475 (SCA) was an appeal of the decision of Hlophe JP in Garvis and Others v SATAWU (Minister of Safety and Security as a third party) [2011] 2 All SA 86 (WCC). The facts were that the plaintiffs in the court a quo sued the defendant (the trade union) in terms of s 11 of the Regulation of Gatherings Act 205 of 1993 (the Act). The claim arose from damage to the plaintiff’s’ property during a protracted strike organised by the trade union in Cape Town in 2006.

Section 11(2) of the Act provides a defence to such a claim, where the act complained of did not fall within the scope of the objectives of the demonstration and ‘was not reasonably foreseeable’. The present dispute turned on this phrase. Alternatively, the defendant sought to challenge the constitutionality of the words ‘was not reasonably foreseeable’.

The plaintiffs, in turn, argued that s 17 of the Constitution had no application to gatherings that result in riot damage. They further argued that the rights set out in s 17 (and relied on by the defendant) were conditional on the gathering being ‘peaceful’. The court a quo held that the right guaranteed in s 17 of the Constitution is the right to demonstrate peacefully. The words complained of in s 11(2) of the Act did not infringe on that right (see also 2011 (Jul) DR 40).

On appeal, Navsa JA held that s 11(1) of the Act creates statutory liability on the part of organisations under whose auspices a gathering or demonstration was held where such gathering degenerated into a riot causing damage to others. Section 11(2) sets out three factors that a defendant (here the trade union) to such an action has to prove in order to escape liability. It must prove that it did not permit or connive at the act or omission that caused the damage in question; that the act or omission in question did not fall within the scope of the objectives of the gathering or demonstration in question and was not reasonably foreseeable; and that it took all reasonable steps within its power to prevent the act or omission in question.

If a trade union persisted in organising an event where it was reasonably foreseeable that no measure or means could be employed to prevent it from degenerating into a riot, then when that eventuality occurred the trade union could not escape liability for the harm caused to persons or property. A reasonable trade union would not persist in organising and proceeding with a march in the volatile circumstances described by the court in this case.

The appeal was accordingly dismissed, with no order as to costs.

  • See also 2011 (Dec) DR 49.
  • An appeal of this decision was heard by the CC in February. Judgment was reserved and had not been handed down at the time of going to print.


Admissibility of statement from a s 417 inquiry into affairs of a company: The facts in O’Shea NO v Van Zyl and Others NNO 2012 (1) SA 90 (SCA) were as follows. The liquidators of a company organised an inquiry under s 417 of the Companies Act 61 of 1973. They questioned O’Shea, a trustee of a trust. O’Shea stated that the company had made a loan to the trust. This statement was clearly against the interest of the trust. The liquidators later applied to sequestrate it. In issue on appeal was whether the statement made at the inquiry was admissible at the later sequestration proceedings. The court a quo held that the statement was admissible.

On appeal, Heher JA held that the statement was not admissible. There was no evidence that the co-trustees had authorised O’Shea to speak for them at the inquiry. O’Shea testified under subpoena and there was no suggestion that in doing so he was authorised to represent the trust nor was there any need for him to do so since the purpose of the inquiry was purely to establish facts that the liquidators could use to establish the position of the company and recover assets to which it was entitled. The liquidators also did not lead any evidence that directly proved his authority to speak on the trust’s behalf.

The court also pointed out that earlier case law (eg Simmons NO v Gilbert Hamer & Co Ltd 1963 (1) SA 897 (N)) was against the later admission of the statement: The speaker on oath spoke for himself and not on behalf of another.

O’Shea gave evidence because he was summoned to do so and the party against whom the statement was made had no right to be present at the inquiry and to cross-examine the deponent.

The appeal was accordingly upheld with costs.


Sale in execution of immovable property: The decision in Mkhize v Umvoti Municipality and Others 2012 (1) SA 1 (SCA); [2011] 4 All SA 460 (SCA) concerned the interpretation of the judgment and order in the earlier decisions in Jaftha v Schoeman and Others; and Van Rooyen v Stoltz and Others 2005 (2) SA 140 (CC).

In Jaftha the Constitutional Court held that s 66(1)(a) of the Magistrates’ Courts Act 32 of 1944 (the Act) was unconstitutional in some respects. The question was whether the order made in Jaftha in respect of s 66(1)(a) required judicial oversight in all cases of execution against immovable property or only in those where the debtor could establish an infringement or potential infringement of the right of access to adequate housing as protected by s 26(1) of the Constitution. In the court a quo (reported as Mkhize v Umvoti Municipality and Others 2010 (4) SA 509 (KZP)), Wallis J held that the order in Jaftha was made in a particular factual context, namely where it could be demonstrated that the sale concerned execution against people’s homes in circumstances that could impair their existing or potential access to adequate housing.

Malan JA (Lewis JA concurring and Navsa, Snyders JJA and Meer AJA concurring in a separate judgment) held that judicial oversight was required in all cases of execution against immovable property conducted under s 66(1)(a) of the Act. The sole object of such oversight was to establish whether the constitutional right to adequate housing was breached by the order granted, and was required also in the absence of formal opposition and where the debtor is in default or ignorant of his rights. Since invalidity only follows if it is found that the right to adequate housing was in fact compromised, past executions granted in the absence of judicial oversight stood until set aside.

In the present case, Malan JA agreed with the finding in the court a quo that the plaintiff’s right to adequate housing was not engaged or compromised. The stated case allowed for no other conclusion: The immovable property concerned was not the plaintiff’s home, nor was it suggested that he did not have access to adequate housing or that his right to adequate housing was compromised.

The appeal was accordingly dismissed with costs.

  • See also 2010 (Oct) DR 39.


Requirements of a universal partnership: The decision in Ponelat v Schrepfer 2012 (1) SA 206 (SCA) concerned an appeal from a judgment in a local division of the High Court in terms of which the court held that a tacit universal partnership agreement existed between the parties who lived together as man and wife. The court a quo made an order for the division of the partnership.

The crisp facts were that the plaintiff in the court a quo, Schrepfer, and the defendant, Ponelat, lived and worked together for 16 years without being married. In 1989 the defendant invited the plaintiff to move in with him permanently as his life partner. He promised to support her and look after her. He also promised to marry her after ten years, but never did. The plaintiff continued working as a beautician and contributed her income to the joint household. At a later stage she started running the defendant’s household and also assisted him with administrative tasks in his electrical business. They later retired to a farm at the coast, where the plaintiff again assisted the defendant in various business projects. The relationship came to an end in 2005 and a dispute arose as to the right of the plaintiff to a share in the defendant’s estate and to her right to receive monthly maintenance. The defendant denied that a universal partnership existed between himself and the plaintiff and that the plaintiff was entitled to maintenance. In respect of the second claim, he denied that he had promised to marry the plaintiff. He further pleaded that an agreement of engagement, as postulated in the second claim, was destructive of the first claim and the existence of a universal partnership.

On appeal, Meer AJA pointed out that according to Pothier (A Treatise on the Contract of Partnership (Tudor’s translation) 1.3.8) the essentials of a special contract of partnership are –

  • that each of the partners bring something into the partnership, whether it be money, labour or skill;
  • that the business should be carried on for the joint benefit of the parties; and
  • that the object should be to make a profit.

These essentialia of the partnership applied equally to a universal partnership. A universal partnership in which the ‘parties agree to put in common all their property, both present and future’, is known as universum bonorum.

Earlier case law confirmed that a universal partnership can exist in a marriage (eg Mühlmann v Mühlmann 1984 (3) SA 102 (A)). It does not follow then that a universal partnership cannot exist between parties who are engaged to be married.

A universal partnership exists if the necessary requirements for its existence are met, regardless of whether the parties are married, engaged or cohabiting.

The court accordingly held that a universal partnership existed between the plaintiff and the defendant and that the plaintiff had a 35% and the defendant a 65% share in such partnership. The partnership was dissolved with effect from 1 April 2005 when the relationship between the plaintiff and the defendant came to an end. The parties were ordered to agree on the net benefit accruing to the plaintiff from the partnership and the manner and date of delivery or payment of such benefit to the plaintiff. In the absence of such an agreement, a liquidator must be appointed to liquidate the partnership and preside over a debatement of the statements of assets and liabilities of the plaintiff and defendant.

The professional fee of the liquidator was to be borne by the parties in proportion to their shares in the partnership estate. The defendant was ordered to pay the plaintiff’s costs.


Right of pre-emption: The facts in Pick ’n Pay Retailers (Pty) Ltd and Others v Eayrs and Others NNO 2012 (1) SA 238 (SCA) were as follows. In terms of a franchise agreement concluded between the first appellant, Pick ’n Pay, and the third appellants, the trustees of the H Family Trust, Pick ’n Pay held a right of pre-emption to purchase the shares of the trust in the Pick ’n Pay franchise that the trust operated. In terms of the franchise agreement, the right of pre-emption had to be exercised by the first appellant within 30 days of an offer being made to it by the seller of the shares. Some time after the conclusion of the franchise agreement, the trust sold 50% of its shareholding in the franchise it operated to the D Trust, of which the first respondents were the trustees. Pick ’n Pay, however, on being offered the shares in terms of its right of pre-emption, did not exercise its right but instead concluded an addendum agreement with the H Family Trust extending the time limit for exercising the right of pre-emption. This agreement was concluded after the sale of shares agreement between the H Family Trust and the D Trust. On the application of the trustees of the D Trust, a High Court ordered the seller, the H Family Trust, and the franchise company to deliver 50% of the shareholding in the franchise company to the D Trust against payment of the purchase price. The court held that the entitlement to keep the right of pre-emption in existence beyond 30 days had not vested at the time when the sale of shares agreement was concluded with the D Trust and accordingly, on the application of the rule qui prior est tempore potior est jure, the rights acquired by the D Trust were of greater force than those subsequently acquired by the franchisor (Pick ’n Pay) in respect of the extended period.

On appeal, Malan AJ held that the new addendum agreement had been concluded after the sale of shares agreement with the D Trust. Pick ’n Pay did not exercise the right of pre-emption within the original 30-day period as it could have done. Therefore, on a strict application of the qui prior est tempore potior est jure rule, the rights of the purchaser should be preferred.

The court accordingly held that the court a quo had correctly concluded that the right acquired by the purchaser (the D Trust) became ‘unassailable in the event of [Pick ’n Pay] not exercising [its] right of pre-emption in accordance with the then existing rights’.

The appeal was dismissed with costs.


Difference between praedial and personal servitude: In Resnekov v Cohen 2012 (1) SA 314 (WCC) the applicant, Resnekov, and the respondent, Cohen, owned neighbouring properties in Sea Point, Cape Town. Resnekov applied for an urgent interdict aimed at preventing Cohen from erecting a habitable level above the level of the existing ceiling of his dwelling on the basis that doing so would be in conflict with a title deed restriction applicable to his property.

The condition in question did not purport to be registered in favour of a particular property and read that it was for the benefit of ‘[the transferor] and his successors in title’.

The dispute between the parties revolved around the question whether the restriction against the respondent’s title deed constituted a praedial or a personal servitude.

Griesel J held that it was trite that a praedial servitude is established over a servient tenement for the benefit of a dominant tenement in perpetuity, irrespective of the identity of the owner. Thus, the servitude also applied to future owners of both the servient and dominant tenements. Conversely, a personal servitude is constituted over a servient tenement in favour of a particular person and is ordinarily extinguished by the death of the holder.

In the present case there was no dominant tenement. In this context, it was also significant – but not decisive – that the servitude was not registered in the title deed to Resnekov’s property. Instead of mentioning a dominant property, the provision made specific mention of a particular person, namely a certain Kantorowitch, who was a predecessor in title of Resnekov’s property. Kantorowitch was cited simply as ‘transferor’ and not in his capacity as owner of any property. This was a powerful indication that a personal servitude was being created.

Applied to the facts of the present case, the court held that there could be no praedial servitude without a dominant tenement, and where it was uncertain in a particular case whether a particular servitude was praedial or personal, there was a presumption that the servitude was personal. While there was no direct authority for the proposition that parties could by agreement convert a personal servitude, which was ordinarily limited to the lifetime of the beneficiary, into a perpetual right, there was ample authority for the general rule, namely that the right conferred by a personal servitude was inseparably attached to the beneficiary and could not be transmitted to his heirs nor alienated.

The court accordingly held that the servitude in the present case, being personal, did not – despite the wording of the condition – survive the death of the original beneficiary.

The application was thus dismissed with costs.


Liquidation of a trust: The decision in Melville v Busane and Another 2012 (1) SA 233 (ECP) concerned an unopposed application for the winding-up of a trust in terms of the Companies Act 71 of 2008 (the 2008 Act). Under the former regime (ie, before the 2008 Act came into force) the appropriate remedy had been sequestration of the trust under the Insolvency Act 24 of 1936, since it had been determined that trusts fell within the definition of a ‘debtor’ in s 2 of that Act. Chapter 14 of the Companies Act 61 of 1973 (the 1973 Act), which was incorporated into the 2008 Act, defined a ‘company’ to include, inter alia, ‘any . . . body corporate’. The new Act defined a ‘company’ as a ‘juristic person incorporated in terms of this Act’. It was argued that since the new Act defined ‘juristic person’ to include a trust, trusts could now be placed under liquidation.

The only issue was whether it was competent in law to liquidate a trust in terms of the 2008 Act.

Schoeman J pointed out that the common law did not recognise a trust as a juristic person, except where a particular statute so provided. The court further held that that a trust could not be defined as a company, although it was a juristic person in terms of the Act. Item 9 of schedule 5 of the 2008 Act determined that ch 14 of the 1973 Act ‘continues to apply with respect to the winding-up and liquidation of companies under this Act’ (emphasis added). A trust was not covered by the definition of a company under the 1973 Act for it was not a juristic person incorporated in terms of the Act. Therefore, neither the 1973 Act nor the 2008 Act could be applied to wind-up or liquidate a trust.

If the trust had committed a deed of insolvency, or was insolvent, the appropriate remedy remained sequestration of the trust. If the trust was not insolvent, a trustee could be removed if the court was satisfied that such removal would be in the interest of the trust and its beneficiaries.

The present application was therefore dismissed.

Other cases

Apart from the cases and topics referred to above, the material under review also contained cases dealing with administrative law, appeals, company law, constitutional law, family law, gambling, government procurements, insolvency, mines and minerals, motor vehicle accidents, practise, property, shipping, trade and competition.

This article was first published in De Rebus in 2012 (March) DR 38.