February [2022] 1 All South African Law Reports (pp 297 – 613); February 2022 (2) Butterworths Constitutional Law Reports (pp 129 – 264)This column discusses judgments as and when they are published in the South African Law Reports, the All South African Law Reports, the South African Criminal Law Reports and the Butterworths Constitutional 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.
FB: Free State Provincial Division, Bloemfontein
CC: Constitutional Court
KZD: KwaZulu-Natal Local Division, Durban
KZP: KwaZulu-Natal Division, Pietermaritzburg
SCA: Supreme Court of Appeal
WCC: Western Cape Division, Cape Town
Application for leave to appeal: In Land and Agricultural Development Bank of South Africa and Another v Van den Berg and Others [2022] 1 All SA 457 (FB), the first to fifth defendants in the main matter between the parties, had brought an application to compel compliance by the plaintiffs with a request for discovery made in terms of r 35(3). The court dismissed the application, finding that the information and documents that were not furnished did not have any bearing on the issues in the trial, and that the application was overly broad and would lead to ineffective orders.
In terms of r 49 of the Uniform Rules of Court read with ss 16 and 17 of the Superior Courts Act 10 of 2013, leave to appeal was sought against the findings of fact and law, as well as the whole of the order and judgment of the court.
Rule 49 of the Uniform Rules of Court dictates the form and process of an application for leave to appeal and the substantive law pertaining thereto is to be found in s 17 of the Superior Courts Act. The latter Act raised the threshold for the granting of leave to appeal, so that leave may now only be granted if there is a reasonable prospect that the appeal will succeed. The possibility of another court holding a different view no longer forms part of the test. There must be a sound, rational basis for the conclusion that there are prospects of success on appeal.
Turning to the grounds of appeal, the court found them to be framed in diffuse and ambiguous sweeping terms. The court agreed with the plaintiffs’ contentions that the application was vague, ambiguous, and confusing to the extent that the plaintiffs were not properly informed of the case, which the defendants sought to make out and which the plaintiffs had to meet in opposing the application for leave to appeal. The grounds of appeal did not comply with the requirements of r 49 and were thus fatally flawed.
Among the grounds advanced, were that the trial was not fair, with allegations of bias made against the presiding officer. Not only was that issue not raised at the material time, but the onus of establishing bias was not discharged. The defendants did not specify what acts formed the basis of their complaint.
The grounds of appeal seeking to challenge the order refusing to compel discovery were also unsustainable. There was no room for interference with that order, which was not shown to be wrong.
Concluding that there were no prospects of success on appeal, the court refused leave to appeal.
Quantum of interest claimed – in duplum rule: The defendant in Body Corporate of Nautica v Mispha CC [2022] 1 All SA 399 (WCC) was the owner of two units in a sectional title scheme, with the plaintiff as the scheme’s body corporate. The defendant’s units were a residential unit with a balcony and a garage unit. In keeping with South African law, the participation quota allotted to the units in the scheme determined the contribution or liability of owners towards the incurred expenses of the scheme.
Claiming the defendant failed to pay levies for the period of March 2008 up to May 2021, the plaintiff brought the present proceedings against the defendant for payment of R 1 826 366,86 in respect of outstanding levies, electricity charges and interest on the arrear levies. While not denying not having paid levies due, the defendant denied that it was obliged to make payments as demanded by plaintiff, denied that any valid resolution was taken by trustees to adjust the participation quota, and to add compound interest at the rate of 3% per annum on all arrear levies.
It was held that the plaintiff’s claim simply arose, factually, from a failure to pay overdue levies. The defendant’s attempt to the body corporate trustees’ adopting and retracting a resolution did not assist him in any way. He provided no acceptable justification for withholding payment of his levies. Unable to identify any tenable argument raised by the defendant, the court regarded him to be merely grasping at straws.
The next question addressed was whether the plaintiff had the necessary locus standi to institute the current proceedings. There was no basis for defendant’s contention that there was nothing to indicate that the party described as the body corporate of the scheme was in fact a body corporate in terms of the Sectional Title Act 95 of 1986. Section 2(7) of the Sectional Title Schemes Management Act 8 of 2011 confers standing on the body corporate to sue. That was exactly what the plaintiff was doing in this case. There was overwhelming evidence to show that it had the necessary legal standing to institute action for money owed to it by the defendant. The locus standi objection was accordingly dismissed.
Regarding the claim for interest, the court stated that the plaintiff, over and above the owed debt on arrear levies, was also entitled to the interest borne by the debt. Interest charges on arrear amounts are intended to mitigate the depreciation or decline in value of the currency, which is ordinarily occasioned by inflation. The parties in this case were in dispute regarding the quantum of interest charged in respect of the outstanding levies. The court confirmed that the plaintiff was entitled to levy compound interest on arrears. In respect of the claim for mora interest, it is established that the in duplum rule permits interest to run anew from the date that the judgment debt is due and payable. Interest runs on – and is limited to an amount equal to – the whole of the judgment debt, including the portion which consists of previously accrued interest.
The defendant was ordered to pay the capital amount plus interest at the rate of 9,5 % per annum from date of judgment to date of payment, limited to the amount of the capital debt.
Business rescue practitioners: In Shiva Uranium (Pty) Limited (In Business Rescue) and Another v Tayob and Others 2022 (2) BCLR 197 (CC), the board of directors of Shiva resolved to place it in business rescue in terms of s 129 of the Companies Act 71 of 2008 (the Act). The board appointed Messrs Klopper and Knoop as Shiva’s business rescue practitioners. The Industrial Development Corporation, a major creditor of Shiva, brought an application in terms of s 130(1)(b) of the Act to remove Klopper and Knoop as the business rescue practitioners and to replace them with one Mr Murray in terms of
s 130(6)(b) of the Act. When the application was due to be heard, Klopper and Knoop resigned. An order was made by consent, which recorded the resignation of Klopper and Knoop, appointed Mr Murray as the new business rescue practitioner and directed the Companies and Intellectual Property Commission (the CIPC) to appoint an additional business rescue practitioner to assist Mr Murray. Second applicant, Mr Monyela, was then appointed by the CIPC as an additional business rescue practitioner. Later Mr Murray resigned. Prior to his resignation, Mr Murray and Mr Monyela passed a resolution to appoint third respondent, one Mr Damons, as Mr Murray’s replacement. This resulted in a dispute. Shiva’s board passed a resolution resolving to appoint first and second respondents, Mahomed Tayob and Eugene Januarie, as the company’s business rescue practitioners. Mr Monyela, on his own behalf and purportedly on behalf of Shiva, brought proceedings in the Companies Tribunal (the Tribunal) to compel the CIPC to accept the filing of Mr Damons’ appointment and to remove the filing of Messrs Tayob and Januarie’s appointments. The Tribunal decided the case in Mr Monyela’s favour. Messrs Tayob and Januarie approached the High Court seeking to interdict the CIPC from implementing the Tribunal’s ruling. The High Court dismissed the application, holding that following a resignation by a business rescue practitioner, in casu Mr Murray, the board could only appoint Messrs Tayob and Januarie as business rescue practitioners with the authorisation of Mr Monyela in accordance with s 137(2) of the Act. Messrs Tayob and Januarie appealed against this decision to the SCA.
The SCA held that the powers and duties of the practitioner related to the ‘management’ of the company, namely running the company on a day-to-day basis. A decision taken by directors on behalf of the company to appoint a substitute practitioner in terms of s 139(3) was an act of governance falling outside the ambit of the practitioner’s ‘management’ of the company. Accordingly, the board had not required the approval of the company’s business rescue practitioners in order to appoint Messrs Tayob and Januarie. The SCA held that if a company enters business rescue voluntarily in terms of s 129, the power to appoint a substitute, if the practitioner resigns, remains with the company. Conversely, if a company enters business rescue compulsorily, the power to appoint a substitute, if the practitioner resigns, remains with the affected person who brought the original application for business rescue.
Applicants approached the CC seeking leave to appeal against the judgment of the SCA. In a unanimous judgment (per Rogers AJ with Madlanga, Majiedt, Mhlantla, Theron, Tshiqi JJ, Madondo, Pillay and Tlaletsi AJJ concurring) the court dismissed the application for leave to appeal. The court found that it would have jurisdiction to hear the appeal because the question that arose was one of public importance. However, the fact that the matter engaged the court’s jurisdiction did not mean, without more, that it was in the interests of justice to hear the appeal. The court observed that the question that arose was the following: Where, in the case of a voluntary business rescue initiated in terms of s 129 of the Act, a business rescue practitioner appointed by a court in terms of s 130(6)(a) in place of the company-appointed practitioner resigns, who has the power to appoint the court-appointed practitioner’s replacement? The answer to that question depended on the proper interpretation of s 139(3).
The court held that the SCA had correctly concluded that on Mr Murray’s resignation the right to appoint his replacement vested in Shiva’s board of directors and that Messrs Tayob and Januarie had thus been validly appointed. It followed that there were no prospects that applicants’ contentions would succeed. It was not in the interests of justice to hear the appeal. The application for leave to appeal fell to be dismissed.
Piercing the corporate veil: In Department of Agriculture, Forestry and Fisheries and Another v B Xulu and Partners Incorporated and Others [2022] 1 All SA 434 (WCC), the first respondent (BXI) was a firm of attorneys, whose principal member was the fifth respondent (BX). Protracted litigation between the applicants and BXI resulted in a judgment in which BXI and BX were held jointly liable to repay over R 20 million to the applicants, from whose bank accounts the money had been taken. In the wake of that judgment, BX contested his liability to pay the money jointly and severally with BXI.
The fact that BX was the sole director of BXI did not inevitably lead to a piercing of the corporate veil and holding him jointly and severally liable. Lifting the corporate veil entails ignoring the distinction between the company and the natural person behind it and will happen where it is shown that the natural person has abused the corporate personality of the corporate entity. Section 20(9) of the Companies Act 71 of 2008 is the statutory basis for piercing the corporate veil, requiring an unconscionable abuse of the company’s juristic personality. It broadens the basis on which relief may be granted, so courts will now resort to the remedy where justice requires it and not just where there is no alternative remedy.
Case law shows that where controllers of companies use the companies for improper purpose, and in that process, treat the entity such that there is no distinction between the separate juristic personality of the entity and those controlling it, that would constitute the required unconscionable abuse.
Applying the above principles to the facts of the case at hand, the court found the conduct of BX to satisfy all the requirements for piercing the corporate veil and holding him jointly and severally liable with BXI. The facts showed that he had, under guise of settling BXI’s liabilities, appropriated funds from BXI, channelling it to himself, friends, family and entities under his control. In application of the alter ego doctrine, the court found that BX acted not as an agent of BXI, but as the company’s actual persona. A proper case had thus been made for piercing the corporate veil and for holding BX jointly and severally liable with BXI or repayment of the funds. The court found further that BX acted wrongfully, with the requisite dolus, to warrant being held personally liable with BXI under the actio ad exhibendum.
Setting out the principles applicable to applications for joinder, the court also ordered that the sixth to ninth respondents be joined as parties to the proceedings. The fifth to seventh respondents were held jointly and severally liable with BXI for payment of the money to the second applicant.
Appointment of magistrates: The respondent (Mr Lawrence), an acting magistrate, applied for the position of a permanent magistrate in response to advertisements for such positions in the magisterial districts of Bloemfontein, Botshabelo and Petrusburg. He was not shortlisted for any of the posts. He approached the High Court for relief, and the shortlisting proceedings were declared unlawful and unconstitutional. That led to an appeal by the Magistrates Commission in Magistrates’ Commission and Others v Lawrence and Another (Helen Suzman Foundation as amicus curiae) [2022] 1 All SA 321 (SCA).
The court first considered two ancillary issues. First, the respondent contended that in terms of s 5(2), read with s 6(7), of the Magistrates Act 90 of 1993 (the Act), the Appointments Committee (the Committee) was not quorate when candidates were shortlisted for appointment to Bloemfontein. Second, the appellants contended, in limine, that, as all the other shortlisted candidates had a direct and substantial interest in the outcome of the proceedings, the respondent’s failure to join them precluded the court from granting the relief sought by the respondent until they had been joined as parties to the proceedings. However, the non-joinder point was later abandoned.
The Committee was not quorate with the result that the decisions taken at that meeting, including the shortlisting of candidates for Bloemfontein, could not stand and accordingly had to be set aside.
On the merits, the court set out the provisions of ss 174(1) and 174(2) of the Constitution regarding the appointment of judicial officers. The qualifications, experience, and suitability of Mr Lawrence for the post could not be faulted. The Committee nevertheless appeared to adopt a targeted exclusion of white candidates and was consequently not prepared to consider any of the other criteria in relation to Mr Lawrence. Rather than considering race as but one of factors, albeit an important one, the Committee set out to exclude candidates, including the respondent, based on their race. There should not have been any fixed order or sequence of prioritisation of the listed criteria, but rather a consideration of all the relevant criteria and, where necessary a balancing of the one against the other. Insofar as the process was rigid, inflexible, and quota-driven, it was fundamentally flawed. The Committee’s rigid approach was inconsistent with a proper interpretation and application of s 174 of the Constitution. The appeal was dismissed with costs.
Application for bail pending appeal: After the SCA dismissed his appeal against conviction and sentence for the murder of his wife, the applicant in Rohde v S [2022] 1 All SA 504 (WCC) sought bail pending his application to the CC for special leave to appeal. Pending finalisation of his appeal, the applicant had been granted bail, but on dismissal of the appeal, he had 48 hours to hand himself over to a police station to undergo his imprisonment. In addition to the bail application, the applicant sought the recusal of the presiding judge from the hearing of the bail application and for the bail application to be postponed sine dies.
It was held by Salie-Hlophe J that the application for recusal was premised on ten grounds. The first was that the matter had been allocated to the judge in a manner, which formed the subject of a Judicial Service Commission (JSC), relating to the allocation process of the matter at inception. The court found the complaint to have been based on misleading and incorrect facts, and pointed out that after a thorough investigation, the JSC had dismissed the complaint.
Irregularities alleged to have been committed by the presiding judge during the trial had been considered by the SCA and dismissed. Significantly, irregularities form the subject of an appeal and not the basis of a recusal application. The applicant claimed to have an apprehension that the judge might make an adverse finding in a further bail application. However, an apprehension or fear of an adverse order is not the basis for recusal.
Other grounds advanced in support of recusal were equally without merit.
It was stated that the impartiality of the judiciary is assumed, which assumption is only disturbed by weighty evidence, rather than imputations and aspersions. The applicant bore the onus of shifting that assumption and rebutting it by showing a reasonable apprehension of bias. The grounds relied on by the applicant, individually or cumulatively, did not meet the threshold for recusal.
At the time of hearing of the recusal application, the order that the applicant report to undergo a 15-year period of imprisonment had been suspended. The court explained the effect of suspension of the order. The order (by agreement) was effectively an interim order without a return day. The legal effect of an interim order without a return date was considered, and the court exercised its power to order that the suspension and applicant’s bail be extended on the same terms and conditions as previously granted pending the hearing of his bail application but in line with a specified time frame. Consequently, the suspension of the notice to report was made subject to a return date specified in the present court’s order.
Sexual intercourse with underage child: Convicted of rape in contravention of s 3 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007 (the Act), the appellant in Mbhamali v S [2022] 1 All SA 488 (KZD) was sentenced to 18 years’ imprisonment. The trial court granted leave to appeal against conviction.
The complainant was a 14-year-old who was introduced to the appellant by a fellow member of his church as a prospective wife. The church member responsible for the introduction, Mrs Phakathi, was the second accused in the trial court. The complainant’s father was unaware of the situation until later. His intervention led to the arrest of the appellant.
In response to the charges against him, the appellant attempted to state that he was not aware that the complainant was underage. However, he could not convince the trial court that he could reasonably not have known that the complainant was a child.
It was held by Hadebe J (Moodley J concurring) that ss 15 and 16 of the Act create a prohibition of any act of sexual penetration or sexual violation with a child who is 12 years or older but under the age of 16 years. The fact that such child might have consented to such an act is no defence. In the context of child marriages, s 56(1) of the Act stipulates that when an accused person is charged with an offence under ss 3, 4, 5, 6 or 7, it is not a valid defence to contend that a marital or other relationship existed with the complainant. In terms of s 12(1) of the Children’s Act 38 of 2005, ‘every child has the right not to be subjected to social, cultural and religious practices which are detrimental to his or her well-being’.
The trial court, on an evaluation of the totality of the evidence, was satisfied beyond reasonable doubt that the complainant did not consent to sexual intercourse with the appellant and that there was no reasonable possibility that the appellant believed that she had consented. It also found that the evidence of the appellant that he reasonably believed that the complainant was 16 years, could not be reasonably, possibly true. On appeal, those findings by the court below could not be faulted. There being no misdirection in the trial court’s reasoning and evaluation of the evidence, its conclusion regarding the appellant’s guilt had to be confirmed. The court specifically addressed the sanction by certain churches of the practice of child marriages. It was held that the appellant’s church’s beliefs and practices could not supersede the laws and the Constitution of the country, which forbids sexual intercourse with underage girls.
The appeal against conviction accordingly failed.
Special plea in criminal trial: After both accused in S v Zuma and Another [2022] 1 All SA 533 (KZP) pleaded not guilty to an array of charges, the first accused (Mr Zuma) raised a special plea in terms of s 106(1)(h) of the Criminal Procedure Act 51 of 1977, contending that the lead prosecutor of the prosecuting team representing the state, Mr Downer, had no title to prosecute as contemplated in
s 106(1)(h), and should be removed as the prosecutor in the case.
It was held by Koen J, that the procedure for the adjudication of the special plea had to be addressed. The interests of justice demanded that the special plea be dealt with as expeditiously as possible. It made good sense for the special plea to be tried by the exchange of affidavits. An oral hearing was not required, neither on the wording of s 106(1)(h), s 108, or the law generally.
Before dealing with the interpretation of the phrase ‘title to prosecute’, the court considered the numerous complaints raised by Mr Zuma in support of his special plea. Emphasising that a judgment must be confined to the issues properly before the court, the court confirmed that the issue for determination was the special plea that Mr Downer allegedly lacked title to prosecute, as provided in s 106(1)(h) of the Criminal Procedure Act, and nothing more.
Mr Zuma’s argument was that the word ‘title’ should be given a wider meaning than a prosecutor’s standing or authority to prosecute, to include lack of objectivity and independence, bias, and whether the prosecutor acted in a manner which might violate Mr Zuma’s rights to a fair trial.
The court endorsed case authority, by which it was in any event bound, stating that the word ‘prosecutor’ in s 106(1)(h) refers not to the state, but to the person who acts as prosecutor in the court. The court interpreted ‘title to prosecute’ as being a plea relating to the standing of the prosecutor, and nothing wider.
In adversarial criminal proceedings, such as ours, it is inevitable that prosecutors will be partisan. Their role in criminal prosecutions makes it inevitable that they will be perceived to be biased. The test in respect of the apprehension of bias of a prosecutor is not that which applies to a judicial officer. It is not a given that a perception of bias held against a prosecutor will lead to an accused not having a fair trial. If an accused believes the prosecutor assigned to his case will not exercise, carry out or perform their powers, duties, and functions in good faith, impartially and without fear, favour or prejudice, or that the prosecutor is an essential witness in the case, then the accused may bring a substantive application to the court for an order that the prosecutor be removed and replaced. What the accused cannot achieve, however, is to seek such removal by the device of entering a special plea in terms of s 106(1)(h) of the Act.
Mr Zuma having not established that Mr Downer lacked title to prosecute, the special plea was dismissed.
Business interruption indemnity: The first respondent (Ma-Afrika) operated hotels and businesses in the Western Cape, and the second respondent (the Kitchen) was a restaurant that operated on the premises of one of those hotels. In terms of insurance policies with the appellant (Santam), infectious disease indemnity cover was provided to the respondents. The policies also offered business interruption cover, and the respondents were indemnified for loss of revenue. The insurable event was the outbreak of a ‘notifiable disease’ at or within a 40km radius of each of the establishments.
On the outbreak of the COVID-19 pandemic in South Africa, the respondents claimed for business interruption losses under insurance policies. Santam upheld only one of five claims, in respect of the hotel and only for the period 15 to 27 March 2020, due to the outbreak at that establishment, causing revenue losses only for that period. The remaining claims were rejected on the basis that none of the losses claimed were caused by a notifiable disease occurring within a 40km radius of the premises. Santam contended further that the losses suffered were because of a government lockdown and general concern or fear instead of a local outbreak of the notifiable disease. The respondents sought a declaration in the High Court that the indemnity period for the loss of revenue claim was 18 months.
The High Court granted declaratory relief confirming Santam’s liability to indemnify the businesses. Santam’s appeal focused on the applicable indemnity period in relation to business interruption losses under the policies.
The issue on appeal in Santam Limited, a division of which is Hospitality and Leisure Insurance v Ma-Afrika Hotels (Pty) Ltd and Another [2022] 1 All SA 376 (SCA), required a consideration of the period during which, according to the policy, the indemnity operated.
Undertaking an interpretation of the policy and the Schedules, thereto, the court restated the approach in interpreting insurance contracts. Language, context, and purpose must be considered in a unitary exercise. A commercially sensible meaning is to be adopted. The analysis is objective and is aimed at establishing what the parties must be taken to have intended, having regard to the words they used in the light of the document as a whole and of the factual matrix within which they concluded the contract. Applying that approach, the court concluded that the indemnity period in relation to claims for loss of revenue due to business interruption was 18 months. The appeal was dismissed with costs.
Apart from the cases and material dealt with above, the material under review also contained cases dealing with –
Merilyn Rowena Kader LLB (Unisa) is a Legal Editor at LexisNexis in Durban.
This article was first published in De Rebus in 2022 (April) DR 18.
