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.
CC: Constitutional Court
GP: Gauteng Division, Pretoria
SCA: Supreme Court of Appeal
WCC: Western Cape Division, Cape Town
Legal duties of bank: In FirstRand Bank Limited v Spar Group Limited [2021] 2 All SA 680 (SCA) the respondent (Spar) fell into a dispute with one of its franchisees (Umtshingo). Umtshingo kept bank accounts with the appellant (FNB) for each of its outlets. Spar held a notarial bond over Umtshingo’s assets. When Umtshingo defaulted on its obligations under the franchise agreement, Spar obtained a provisional order perfecting its security. The terms of the notarial bond permitted Spar to take over the Umtshingo businesses and run them for its own account. Umtshingo’s controlling mind (Mr Paolo) agreed to that arrangement but refused to de-link the speed point credit card devices of the stores from Umtshingo’s bank accounts. Spar ran the outlets and credited the stock on hand to Umtshingo and brought in new stock. Cash receipts were deposited into a Spar account. However, the speed point credit card devices in use, which facilitated electronic deposits of revenue directly into Umtshingo’s designated accounts, remained in use. That allowed Mr Paolo to retain control over the accounts, and he effected substantial disbursements out of two of the accounts. The debit balances (in respect of Umtshingo’s overdraft liability, its debts to FNB in respect of a loan and a guarantee paid by FNB to Spar) in two of the accounts were purportedly extinguished by FNB applying set off against the credits derived from revenue generated by Spar and deposited into the accounts.
Spar contended that FNB ought not to have allowed disbursements to be made at Mr Paolo’s behest because Umtshingo had no rightful claim to the funds, and that FNB was not entitled to set off Umtshingo’s debts in respect of which Spar had a quasi-vindicatory claim. It sued FNB and Mr Paolo to recover the relevant amounts. The dismissal of the claims led to the present appeal.
In respect of the set-off issue, when the customer of a bank deposits money into their account, the money becomes the property of the bank, which enjoys a real right of ownership. The deposit usually gives rise to a credit balance in the customer’s account and a personal obligation owed by the bank to its customer to pay the credit balance. The personal obligation of the bank to pay the balance standing to the credit of the customer may be discharged by payment to the customer, payment to persons designated by the customer, or set off. Set off comes about when two parties are mutually indebted to one another, and both debts are liquidated, due and payable. Set off extinguishes a debt but does so reciprocally – one debt extinguishes another. Umtshingo had no entitlement to the funds paid into the accounts held with FNB. Those funds were the proceeds of the business conducted by Spar for its own benefit. FNB was aware of that. Umtshingo thus enjoyed no personal right against FNB to the funds credited to its accounts that derived from Spar’s deposits. Consequently, FNB could not contend that Umtshingo’s indebtedness to it was set off against FNB’s indebtedness to Umtshingo because FNB owed no such debt to Umtshingo. FNB’s defence of set off failed.
FNB was also found to have allowed Mr Paolo to wrongly withdraw money from the accounts, knowing that such funds did not belong to Umtshingo. That amounted to breach of a legal duty by the bank. The court held that the bank was a joint wrongdoer owing a legal duty to Spar. The appeal was thus dismissed.
Role of amicus curiae: The first respondent (Mr McBride) in Helen Suzman Foundation v McBride and Others [2021] 2 All SA 727 (SCA) was the executive director of the Independent Police Investigative Directorate (IPID), appointed to that position on 1 March 2014, in terms of s 6 of the Independent Police Investigative Directorate Act 1 of 2011 (the Act). Section 6 provides for the appointment of the executive director of IPID, and for the renewal of the incumbent’s tenure after the expiry of the first five years in office. Shortly before Mr McBride’s five-year term of office ended, he engaged the minister about its renewal and was informed that his contract would not be renewed. He challenged the minister’s right to unilaterally make such a decision and demanded that the matter be referred to the Parliamentary Committee on Policing (the PCP) for its decision.
After discussions appeared to be futile, Mr McBride approached the High Court for relief. In his founding affidavit, he accepted that he had no right to be re-appointed but wished to ensure that the proper process in relation to his possible re-appointment or rejection thereof, be followed. Before the matter was heard, the appellant, the Helen Suzman Foundation (the HSF) successfully applied to the court below to be admitted as an amicus. It stated that its aim was to show that neither of the parties’ interpretation of s 6(3)(b) of the Act was correct. It sought to advance an alternative interpretation to the effect that the appointment of the Executive Director of IPID was renewable at his instance and not at the instance of either of the respondents.
After the admission of the amici, the main parties settled the matter, and the settlement agreement was made an order of court. The HSF obtained leave to appeal from the present court.
The court, per Navsa ADP and Plasket JA (Dambuza, Schippers JJA and Goosen AJA concurring), held that the central issue in the appeal was whether s 6(3) of the Act could be construed in the way that the HSF contended.
The interpretation eventually agreed on by Mr McBride, the PCP and the Minister was that the power to extend the incumbent’s tenure for a second term was vested in the PCP. However, the HSF contended that the incumbent had an unfettered option to continue in office for a second term. The foundation of the HSF’s interpretation of s 6(3) was that because the PCP had the power to renew undermined IPID’s independence, it was necessary to interpret the section in a different way that was purportedly constitutionally compatible. The court referred to a series of cases, which served to refute that premise. It held that there was no need for the HSF’s type of interpretation in order to save s 6(3) from constitutional invalidity because the PCP’s powers were not in conflict with IPID’s independence. In any event, the said interpretation was untenable and could lead to absurd results.
Commenting on the role of an amicus, the court highlighted the importance of amici playing their rightful role while their participation is kept within appropriate bounds. In this case, the HSF departed from the basis on which it had sought to be admitted and attempted to broaden the scope of the challenge to include the lack of guidelines in the processes of the PCP. That was impermissible.
The appeal was dismissed.
Special defence of res judicata: In the case Democratic Alliance v Brummer [2021] 2 All SA 818 (WCC) the respondent (Brummer) joined the appellant political party, the Democratic Alliance (the DA) in 2000. He subsequently served as a councillor for more than a decade. On 13 August 2012, the DA confirmed termination of Brummer’s membership of the party, alleging that he had failed to pay his dues to the party. The termination of membership was based on a clause in the DA’s Federal Constitution, which provided for membership to cease when a member was in default with the payment of any compulsory public representative contribution for a period of two months after having been notified in writing that he is in arrears, and still fails to make good on the arrears.
Upon Brummer’s position becoming vacant, the Independent Electoral Commission (the IEC) was statutorily required to advertise that vacancy. Following such advertisement, Brummer applied to interdict the IEC from filling the post and to procure the reinstatement of his membership. By the time the matter came before court, the vacancy had already been filled by the IEC. Brummer attempted to challenge the constitutionality of the relevant clause in the DA constitution, but the court refused to entertain the belatedly raised point. The application was dismissed in September 2012.
In 2014, Brummer commenced action proceedings against the DA for damages founded in contract, alternatively delict and in the further alternative, for constitutional damages. The basis of Brummer’s claims in the action was that the DA had unlawfully terminated his membership.
A week before the trial was due to commence, the DA sought to introduce for the first time a special plea of issue estoppel and then insisted upon that issue being determined separately and in limine at the trial. The dismissal of the special plea led to the present appeal.
Defence of issue estoppel has taken root in our law as a subsidiary of the principle of res judicata. The plea of res judicata – that the matter has already been decided – was available where the dispute was between the same parties, for the same relief or on the same cause. The requirements have been relaxed over the years and where there is not an absolute identity of the relief and the cause of action, the attenuated defence has become known as issue estoppel.
A party seeking to rely on the defence of res judicata must allege and prove all the elements underlying the defence. The DA relied on the September 2012 judgment as constituting res judicata in respect of the claims for damages subsequently launched by Brummer. The court stated that the factual issue, which arose in this matter, was the termination of Brummer’s membership through the application by the DA of the clause in its constitution. That termination afforded Brummer various causes of action. However, he was denied the opportunity to place his case before the court. His having been prevented from litigating his cause of action in relation to damages to finality meant that it would be unjust and inequitable to uphold the special plea of issue estoppel. The majority of the court dismissed the appeal.
Vote of no confidence against the President: The applicant in African Transformation Movement v Speaker of the National Assembly and Others [2021] 2 All SA 757 (WCC) sought to review and set aside a decision of the first respondent, the Speaker of the National Assembly, in declining the applicant’s request to hold voting by secret ballot in a motion of no confidence against the South African President.
Raising a preliminary point, the Speaker contended that the present court lacked jurisdiction to hear the application. It was argued that the Speaker’s mandate is constitutional, and that the decision not to hold a vote by secret ballot involved a constitutional obligation to allow members of Parliament to vote in a certain way. The contention, therefore, was that it was the CC, which had exclusive jurisdiction in the matter in terms of s 167(4)(e) of the Constitution.
Jurisdiction is determined on the basis of pleadings and not the substantive merits of the case. The pleadings contain the legal basis under which the applicant has chosen to invoke the court’s competence. A determination of whether the present court had jurisdiction to consider the matter lay in a proper interpretation of ss 102(2) and 167(4)(e) of the Constitution. Section 102 deals with a vote of no confidence in the President by the National Assembly.
It is incumbent upon a party invoking the jurisdictional exclusivity in terms of s 167(4)(e) to establish that there was a failure by parliament to fulfil a constitutional obligation. The applicant’s cause of complaint related to the procedural path to the vote and did not involve the President’s constitutional obligations.
Similarly, s 102(2) does not clothe a member of Parliament with a constitutional obligation envisaged in s 167(4)(e) to perform a specific act or function that would trigger the CC’s exclusive jurisdiction. Instead, it confers power on the assembly to pass a motion of no confidence in the president if the majority of members support the motion. It was concluded that the present court had jurisdiction to grant orders in terms of s 102(2).
The court then turned to consider whether the Speaker’s decision was unlawful and fell to be reviewed and set aside. The decision whether to vote by open or secret ballot lay with the Speaker. The courts can only interfere if the Speaker did not apply her mind to her decision. The court found the Speaker’s decision to have been based on sound reasons. Finding the decision to have been unimpeachable, the court dismissed the application for review.
Evidence and the role of indictments: The accused in S v Makayi [2021] 2 All SA 907 (ECB) was charged with having raped a 6-year-old girl and pleaded not guilty. The indictment referred to his having intentionally committed an act of sexual penetration with the complainant by inserting his penis into her vagina and anus without her consent.
The complainant’s testimony did not include an allegation of penetration or sexual intercourse. The accused flatly denied the allegations against him. After their evidence had been adduced, the court invited argument on the question of intent. The prosecution pressed for a conviction on the main count, contending that the complainant’s honest and reliable description of the manner in which the accused had placed her on top of him and the manner in which he had moved, was sufficient to prove that the accused had the requisite intent to rape, and the evidence was sufficient for a conviction of rape on the basis of dolus eventualis.
It was held, by Stretch J, that s 144(3)(a) of the Criminal Procedure Act 51 of 1977 states that an indictment shall be accompanied by a summary of the substantial facts of the case that, in the opinion of the Director of Public Prosecutions (the DPP), are necessary to inform the accused of the allegations against him. The purpose of the summary is to fill out the picture presented by the indictment. While the prosecution is not bound by the summary of substantial facts, where the evidence, which the state intends to lead is so vastly different from that reflected in the summary of substantial facts, it is expected from the prosecution to either supplement the summary, and/or present an opening address. Prosecutors should decide on and draw up charges based on available evidence which will, inter alia, adequately reflect the nature, extent and seriousness of the criminal conduct and which can reasonably be expected to result in a conviction, provide the court with an appropriate basis for the sentence requested, and enable the case to be presented in a clear and simple way. The Prosecution Policy of the National Director of Public Prosecutions, in Item 7, states that prosecutors should fairly present the facts of a case to a court, disclosing information favourable to the defence even though it may be averse to the prosecution case. The summary of substantial facts in this case was misleading in its particularity. An opening outline by the prosecutor, indicating that the state’s case would be that the accused made movements up against the complainant’s body while the two of them remained fully clothed, would have solved that problem.
The court also rejected the prosecutor’s attempt to rely on intention to rape in the form of dolus eventualis.
The final issue was that of the competent verdict of sexual assault. The testimony of the complainant, who was a single witness, was less than satisfactory. The medical evidence also did not corroborate her version.
Finding that the prosecution had failed to prove its case beyond a reasonable doubt, the court acquitted the accused.
Proprietary rights in black marriages: In Sithole and Another v Sithole and Another 2021 (6) BCLR 597 (CC), the High Court made an order declaring s 21(2)(a) of the Matrimonial Property Act 88 of 1984 unconstitutional and invalid to the extent that its provisions maintain and perpetuate the discrimination brought about by s 22(6) of the Black Administration Act 38 of 1927, which provided that marriages of black couples concluded under the Black Administration Act before 1988, would automatically be out of community of property. The High Court declared that all marriages of black persons concluded out of community of property under s 22(6) before 1988 were marriages in community of property. A spouse in a marriage so declared to be a marriage in community of property was, however, given leave to apply to the High Court for an order that the marriage would remain one out of community of property, notwithstanding the High Court’s order. The High Court referred its order to the CC for confirmation.
The first applicant, a black woman married to the first respondent since 1972, had brought the application in the High Court, together with the second applicant, the Commission for Gender Equality. The first applicant had contributed financially throughout the years of the marriage. She and her husband bought an immovable property, which became the family home. When the marriage relationship between them deteriorated, the first applicant was faced with the possibility of losing the value of her share of an estate, which she had helped to build up. For religious reasons she was unwilling to have the marriage dissolved by divorce and, therefore, would not be able to utilise the remedy provided by s 7(3) to (5) of the Divorce Act 70 of 1979 to secure an equitable distribution of the couple’s assets.
The second respondent was the Minister of Justice and Correctional Services, cited in his capacity as the cabinet member responsible for the administration of the Matrimonial Property Act, and as the representative of the government.
The CC in a unanimous judgment confirmed the High Court’s declaration of invalidity.
The judgment observed that s 22(6) of the Black Administration Act created the default position that black couples were married out of community of property. They were permitted to marry in community of property if, in the month prior to their marriage, they jointly declared to a magistrate, commissioner or marriage officer that they intended their marriage to be a marriage in community of property and of profit and loss. Section 22(6) applied only to marriages of Black people and not to marriages of other races.
Section 22(6) of the Black Administration Act was repealed by the Marriage and Matrimonial Property Law Amendment Act 3 of 1988. The Amendment Act deleted s 22(6) of the Black Administration Act and inserted ss 21(2)(a) and 25(3) into the Matrimonial Property Act. The effect of the repeal for Black couples was that those who were married out of community of property under s 22(6) of the Black Administration Act had the opportunity to change their matrimonial regimes within two years from 2 December 1988. Couples were required to do so by executing and registering a notarial contract to that effect. Section 21(2)(a) of the Matrimonial Property Act permitted couples to make the accrual system provided for in Chapter I of the Matrimonial Property Act applicable to their marriages. It provided, inter alia, that ‘spouses to a marriage out of community of property entered into before the commencement of the Marriage and Matrimonial Property Law Amendment Act 3 of 1988, in terms of s 22(6) of the Black Administration Act … may cause the provisions of Chapter I of this Act to apply in respect of their marriage by the execution and registration … of a notarial contract to that effect.’
Applicants contended that although various amendments made to the Matrimonial Property Act had ameliorated the discriminatory legacy of s 22(6), they did not remedy or reverse the negative impact of s 22(6) on black spouses. The default position of those marriages continued to be that they were out of community of property unless the couples had taken steps to alter their matrimonial property regime.
The court found that the impugned provisions perpetuated the existence of a special matrimonial regime for black couples who concluded their marriages before 1988. Marriages of black people were treated differently from those of other races. There was no justification for this differential treatment. The discrimination complained of was on one of the grounds listed in s 9(3) of the Constitution. In terms of s 9(5) of the Constitution, discrimination on one or more of the grounds listed in s 9(3) is presumed to be unfair unless proven otherwise. It was open to respondents to attempt to show that the discrimination was fair. They had not done so. It was in any event clear that they would not have been able to do so.
The provisions of s 21(2)(a) of the Matrimonial Property Act were inconsistent with the Constitution. The High Court order, therefore, had to be confirmed. Henceforth, the default position would be that all marriages which in terms of the Black Administration Act were automatically out of community of property were now marriages in community of property. Affected couples would have the option, like married couples of other races, to opt out and change their matrimonial regime to be one out of community of property, if they wished.
The court’s order would not affect the legal consequences of any act or omission existing in relation to a marriage before the court’s order was made. Nor would the order be permitted to undo completed transactions in terms of which ownership of property belonging to any of the affected spouses had since passed to third parties. A saving provision or generic order should be made in favour of a person claiming specific prejudice arising from the retrospective change of the matrimonial regime, to approach a competent court for appropriate relief.
Administrative appeals: The third respondent (Discovery) and fourth respondent (Medshield) in Cotty and Others v Registrar of the Council for Medical Schemes and Others [2021] 2 All SA 793 (GP) refused to approve applications by the relevant applicants for the funding of treatment of certain conditions. Complaints to the first respondent (the Registrar) were dismissed, and the applicants appealed against such dismissals to the Appeal Committee of the Council for Medical Schemes (the Council) in terms of s 48 of the Medical Schemes Act 131 of 1998. The Appeal Committee’s finding in favour of the applicants, led to Discovery and Medshield invoking s 50 of the Act and appealing against such rulings to the Appeal Board of the Council. The schemes then contended that the decisions of the Appeal Committee had been suspended by their appeals and they accordingly did not comply with the rulings made by the Appeal Committee.
In the present application, the question raised was whether the lodging of an appeal in terms of s 50(3) of the Act suspends the decision, which is the subject of that appeal, pending a decision by the Appeals Board.
The dispute turned on the correct interpretation, effect and application of s 50 of the Act. The court referred to case law setting out the correct approach to statutory interpretation.
In terms of the Act, where a member is not entitled to payment in terms of its rules, the medical scheme is precluded from effecting payment to that member. That remains so notwithstanding a decision by the Council in terms of s 48(8). It is only following an order by the Appeal Board in terms of s 50(16)(b) that the decision be implemented, that the medical scheme may give effect to such decision. Section 50 establishes and sets out the powers of the Appeal Board. In terms of s 50(3), any person aggrieved by a decision of either the Registrar acting with the concurrence of the Council or by a decision of the Council may within 60 days of such decision and on payment of a prescribed fee, appeal against such decision to the Appeal Board.
Section 50 does not expressly state whether the lodging of an appeal in terms of s 50(3) does, or does not, suspend the decision, which is the subject of the appeal. In the case of court orders, the effect at common law of noting an appeal is to suspend the operation of the decision appealed against. The issue in this case was whether the common law principle applies to administrative decisions. The court concluded that there was nothing in the Act that displaced the common law principle that the administrative appeal (timeously taken) suspends the decision which is the subject of the appeal. The ordinary common law principle was thus applicable and an appeal in terms of s 50(3) suspends a decision by the Council in terms of s 48(8).
The application was dismissed.
Other cases
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 2021 (Aug) DR 29.
