October [2019] 4 All South African Law Reports (pp 1-325); 2019 (9) Butterworths Constitutional Law Reports; 2019 (10) Butterworths Constitutional Law Reports
This column discusses judgments as and when they are published in the South African Law Reports, the All South African Law Reports and the South African Criminal Law Reports. Readers should note that some reported judgments may have been overruled or overturned on appeal or have an appeal pending against them: Readers should not rely on a judgment discussed here without checking on that possibility – Editor.
Abbreviations:
CAC: Competition Appeal Court
CC: Constitutional Court
ECL: Eastern Cape Local Division, East London
EqC: Equality Court
GP: Gauteng Division, Pretoria
SCA: Supreme Court of Appeal
WCC: Western Cape Division, Cape Town
Administrative law
Power of court to review findings of a commission of inquiry: The Commission of Inquiry into the Strategic Defence Procurement Package (the Commission) found that the role players had acted with a high level of professionalism, dedication and integrity and that allegations of criminal conduct were unfounded and that there was no evidence that the contracts were tainted by fraud or corruption.
In Corruption Watch and Another v Arms Procurement Commission and Others 2019 (10) BCLR 1218 (GP); [2019] 4 All SA 53 (GP) the court considered whether it had the power to review the findings of a judicial commission of inquiry. In the absence of any reported judgment of a South African court, the court examined significant comparative material. Authority emanating from New Zealand held that a report of a commission of inquiry could be reviewed if it had exceeded its terms of reference, had breached the principles of natural justice, or was vitiated by error of law. Canadian authority had distinguished between commissions of inquiry dealing with policy matters and those where the investigation could lead to a criminal prosecution.
A commission of inquiry’s findings could be challenged on the basis that it acted beyond its terms of reference, breached principles of procedural fairness or was perceived to be biased against certain witnesses. These principles were equally applicable in South Africa because the rule of law required that the exercise of public power should not be arbitrary.
The court, per Davis JP, Leeuw JP and Mlambo JP, found that the Commission had failed to inquire fully into the issues which it was required to investigate. Witnesses before the Commission – against whom serious allegations of corruption and wrongdoing emerged from other material in the possession of the Commission – were not approached critically and their versions were not tested rigorously.
The court accepted that courts had to be cautious in exercising their power to review the proceedings of a commission of inquiry. However, in this case, where the uncontested evidence revealed so manifest a set of errors of law and a refusal to take account of documentary evidence, which contained the most serious allegations that were relevant to its inquiry, the principle of legality dictated that the findings of the Commission had to be set aside.
Constitutionality of lease agreement: In BW Bright Water Way Props (Pty) Ltd v Eastern Cape Development Corporation [2019] 4 All SA 27 (ECL) the applicant contended that the respondent failed to provide them with vacant and undisturbed possession of the property, as part of the property was occupied by a third party. The respondent also launched a counter application calling on the court to review and set aside its decision to conclude the agreement. Ex facie the agreement was signed by the respondent’s chief financial officer, whom the respondent maintained had no authority to enter into the agreement and to sign the lease. It was, therefore, contended that the lease agreement fell to be set aside as unlawful and invalid. The applicant argued that the review application was brought out of time.
The respondent relied on the exceptio non adempleti contractus, claiming that because the applicant was in breach of certain obligations in terms of the contract, it was entitled to an order setting aside the decision to lease the property to the applicant. The exceptio defence can only apply where the applicant’s performance has to precede that of the defendant or where both parties have to perform simultaneously. A lessor of property, as in the present case, must usually perform before rental may be demanded. The court, per Stretch J, found that the applicant had in fact complied with its contractual obligations.
In the claim in reconvention, the respondent applied for the review and setting aside of its own decision to conclude the lease agreement. The 180-day time limit imposed by the Promotion of Administrative Justice Act 3 of 2000 for bringing the review application did not apply as the review application was based on the principle of legality. The application nevertheless had to be brought within a reasonable period of time. The explanation advanced by the respondent was found to be inadequate, and the court held the delay to be unreasonable.
That raised the second question as to whether the court should not, in any event, in the exercise of its discretion overlook the delay. The respondents placed reliance on the imperatives set out in s 217 of the Constitution. The section specifies that procurement must be in accordance with a system which is fair, equitable, transparent, competitive and cost-effective. The court held that once it was found that the agreement entered into between the parties was not transparent and competitive, the agreement could not be regarded as constitutionally valid. The main application was dismissed, and the counter application succeeded only to the extent that the lease agreement was declared constitutionally invalid.
Business rescue
Property development: In Mouton v Park 2000 Development 11 (Pty) Ltd and Others and a related matter [2019] 4 All SA 133 (WCC), Park 2000 (formerly the owner of two properties) offered debentures, which were linked to proposed erven for the purpose of raising finance for a development. Mouton, a subscriber for the debentures sought to redeem the debentures and failed. He obtained default judgment against Park 2000 and then a writ of execution for the attachment and sale of the company’s immovable properties. It was subsequently discovered that a third party had applied for the liquidation and winding-up of Park 2000. Park 2000 had on the same day, made application to be placed under business rescue.
The court, per Sher J, held that the principal questions for determination were whether or not the business rescue proceedings were defective because they were launched at a time when liquidation proceedings had already been initiated against Park 2000, or whether the resolution by means of which the business rescue proceedings were launched was null and void because it was not taken by the requisite majority.
The court concluded that the liquidation proceedings against Park 2000 were initiated when the resolution to launch them was taken, and not when the liquidation application was filed with the court. That occurred before the subsequent resolution, which was adopted to place the company under business rescue. Consequently, the business rescue resolution was adopted in breach of the provisions of s 129(2)(a) of the Companies Act 71 of 2008. Section 129(1) provides that the voluntary placement of a company under business rescue ‘begins’ when its board takes a resolution to such effect, if it has reasonable grounds to believe that the company is financially distressed and there appears to be a reasonable prospect of rescuing it. But in terms of s 129(2)(a) such a resolution may not be adopted if liquidation proceedings have (already) been ‘initiated’. Mouton was thus entitled to an order setting the resolution aside.
Competition
Predatory pricing: Predatory pricing is prohibited in two provisions contained in the Competition Act 89 of 1998. Section 8(d)(iv) creates a specific prohibition against pricing below two specific cost standards. It prohibits a dominant firm from engaging in an exclusionary act of ‘selling goods or services below their marginal or average variable cost’ unless it can show technological, efficiency or other pro-competitive gains, which outweigh the anti-competitive effect of that act. Section 8(c) contains a general prohibition against anti-competitive behaviour. It provides that: ‘It is prohibited for a dominant firm to engage in an exclusionary act, other than an act listed in paragraph (d), if the anti-competitive effect of that act outweighs its technological, efficiency or other pro-competitive, gain’.
In Competition Commission of South Africa v Media 24 (Pty) Limited 2019 (9) BCLR 1049 (CC), the Competition Tribunal found Media 24 guilty of predatory pricing in terms of s 8(c). Media 24 appealed to the CAC, which held that it could not be established that Media 24 had violated s 8(d)(iv) or 8(c). The Competition Commission sought leave to appeal to the CC against the CAC’s judgment.
There are different cost standards that can be used to determine whether prices are predatory. What the appropriate standard would be in a particular case was an issue both in the court a quo and in the CC hearing.
Four different judgments were written by members of the CC. The effect of the four judgments was that six members of the court considered that the application raised an arguable point of law of general public importance within the court’s jurisdiction and that leave to appeal against the judgment and order of the CAC should be granted; and six members of the court did not consider that the appeal should be upheld. There was thus effectively a majority decision that leave to appeal should be granted and that the appeal must be dismissed with costs.
Predatory pricing: In National Energy Regulator of South Africa and Another v PG Group (Pty) Limited and Others 2019 (10) BCLR 1185 (CC), the facts were as follows: One of the objects of the Gas Act 48 of 2001 is to promote the development of competitive markets for gas and gas services. The National Energy Regulator (NERSA) must regulate prices, monitor and approve, and if necessary regulate, transmission and storage tariffs.
In 2012 NERSA determined that there was inadequate competition in the piped-gas market. Sasol Gas (Pty) Ltd applied for a determination of its maximum gas prices (Maximum Price Application) and also for the determination of its transmission tariffs (Tariff Application). NERSA approved these applications. As a result, the seven respondents, all large-scale consumers of piped gas, experienced a substantial increase in the prices they had to pay. The respondents brought an application in the High Court to review and set aside NERSA’s maximum gas price and tariff decisions on the basis that both decisions were irrational and unreasonable. They also sought an order reviewing and setting aside the Maximum Pricing Methodology, or alternatively, an order declaring the methodology to be invalid for the purposes of NERSA’s consideration of Sasol’s Maximum Price Application. The review was brought in terms s 6 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA), or alternatively, the principle of legality. The High Court declined to entertain the review because it considered that it was brought outside the 180-day limit provided for by s 7 of PAJA. The High Court identified the determination of the method as the decision to be reviewed and, therefore, found that the review had been instituted out of time.
On appeal, the SCA overturned the order of the High Court and substituted it with an order reviewing and setting aside the Maximum Price Decision and the Tariff Decision. The SCA held that the High Court had erred in not recognising that the administrative action, which fell to be reviewed, was NERSA’s decision on Sasol’s applications and not the underlying methodology. Accordingly, the review application was timeously brought. The SCA held that NERSA’s Maximum Price Decision was irrational and unreasonable and fell to be set aside. As the Tariff Decision was inextricably linked with the Maximum Price Decision, the Tariff Decision also fell to be set aside.
NERSA and Sasol then approached the CC seeking leave to appeal against the judgment of the SCA.
Two judgments were written: A main judgment (per Khampepe J concurred by all the other judges of the CC) and a separate concurring judgment of Jafta J.
The main judgment held that the Maximum Price Decision was an independent instance of administrative action separate from the methodology employed. Accordingly, the review application had been brought within the time period required by PAJA. In determining the rationality of a decision, the process involved in making the decision could not be ignored. The relevant question was whether the means (including the process of making a decision) were linked to the purpose or ends. A rationality scrutiny had to include an evaluation of the process. The court set out reasons for finding that NERSA’s decision on Sasol’s maximum prices was irrational and had to be set aside. The Tariff Decision was, however, independent of the Maximum Price Decision. The appeal had to be upheld in so far as it related to the Tariff Decision. In the result, leave to appeal was granted and the appeal was upheld in part.
Constitutional practice
Urgency: In New Nation Movement NPC and Others v President of the Republic of South Africa and Others 2019 (9) BCLR 1104 (CC) applicants, involved with the rights of the Khoi and San people, approached the High Court seeking orders declaring s 57A of and sch 1A to the Electoral Act 73 of 1998 to be unconstitutional and invalid for omitting to allow independent candidates to contest the elections. South Africans could thus become members of Parliament only if they belonged to a particular party. This, they argued, violated s 19(3)(b) of the Constitution: ‘Every citizen has the right to stand for public office and, if elected, to hold office’.
The High Court dismissed the application and the applicants brought an urgent application for direct leave to appeal to the CC.
The applicants contended that if the relief they sought was not granted, it may result in an application to review the 2019 national and provincial elections after they had been held. The court pointed out that this was not a reason justifying an urgent decision. The existence of alternative relief demonstrated that a refusal by the CC to determine the matter on an urgent basis would be remediable. The parties would still be able to challenge the elections and if they succeeded, they could ensure that the electoral system could be appropriately amended ‘as soon as possible’.
Before the CC, the applicants asked for new ballot papers (to include independent candidates) to be printed for the elections. They submitted that should this printing not be possible before the scheduled date for the 2019 elections, then the elections would have had to be postponed. In terms of s 49(3) of the Constitution, if the CC were to set aside an election, another election would have to be held within 90 days.
The CC concluded that applicants had failed to make out a case for an urgent hearing. The instant application raised the issue of whether the Electoral Act was unconstitutional to the extent that it prohibited South African citizens from contesting elections and holding national or provincial public office as independent candidates. This issue was not one that could be considered hurriedly or superficially.
Costs
Test for personal liability for costs: In Democratic Alliance v Public Protector and a related matter [2019] 4 All SA 79 (GP) at para 5 Tolmay J quoted Innes CJ ‘[the] conduct in connection with the litigation in question must have been mala fide, negligent or unreasonable.’ In this judgment, costs had been reserved pending the CC’s judgment in another case Public Protector v South African Reserve Bank 2019 (9) BCLR 1113 (CC) also involving the respondent (the Public Protector). That case dealt, inter alia, with the award of a punitive costs order awarded by the High Court against the Public Protector in her official and personal capacity. The Public Protector opposed the personal costs order on the grounds –
The court held that the Public Protector is enjoined by the Constitution to observe the highest standards of conduct in litigation. The notion that the independence of her office and proper performance of her functions demanded the exclusion of the possibility of a personal costs order was rejected by the court in the previous litigation. The Public Protector’s position must be seen against the backdrop of South Africa’s constitutional dispensation, where equality of all is central, and accountability to the rule of law and the Constitution is not negotiable. It is, therefore, unthinkable that any one person, irrespective of the importance of their position, will ever be able to claim total immunity when they blatantly transgress their statutory and constitutional duties. Accordingly, de bonis propriis costs orders can be granted against public officials in their personal capacities, where their conduct showed a gross disregard for their professional responsibilities and where they acted inappropriately and in an egregious manner. The court has a discretion to grant a personal costs order against the Public Protector and must assess the gravity of the conduct complained of. Thus, an assessment must be made of the facts and the discretion must be exercised objectively.
Despite the fact that the Public Protector was not personally cited, she was made aware that a personal and punitive costs order would be sought against her from the inception of the litigation. The failures and dereliction of duty by her in the case complained of by the applicant were manifold. They related to her failure to execute her duties in terms of the Constitution and the Public Protector Act, and her conduct in the matter was far worse than that set out in the Reserve Bank case.
The court was satisfied that the requirements for a personal and punitive costs order were met and that the Public Protector should be liable personally for at least a percentage of the costs incurred.
Freedom of expression
The old flag and hate speech: In Nelson Mandela Foundation Trust and Another v AfriForum NPC and Others (Johannesburg Pride NPC and Another as amicus curiae) [2019] 4 All SA 237 (EqC); 2019 (10) BCLR 1245 (EqC) the facts were as follows: In October 2017, nationwide protests took place in South Africa, against farm murders and violent attacks against farmers. The first respondent, Afriforum, played a central role in the protests against farm attacks, during which, certain protestors displayed the old national flag of South Africa. The applicant approached the Equality Court for an order declaring that any display of the old flag not serving any genuine journalistic, academic or artistic purpose in the public interest (ie, gratuitous display) constituted, as against Black people, hate speech, unfair discrimination and harassment, under the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000 (the Equality Act).
Opposing the relief sought, Afriforum contended that displaying the old flag was constitutionally protected expression under s 16(1) of the Constitution.
The court, per Mojapelo DJP, found that to the majority of South Africans, and undoubtedly, to the majority of Black South Africans, a gratuitous display of the old flag has, as its dominant meaning, an endorsement of the system of Apartheid, which has been declared a crime against humanity.
Section 10(1) of the Equality Act prohibits hate speech and the court found reasonable to interpret ‘words’ in s 10(1) of the Equality Act to include non-verbal expressions of ideas.
The next question was whether the gratuitous display of the old flag could reasonably be construed to demonstrate the clear intent required in s 10(1). The test is whether the speech (or display) objectively demonstrates a hurtful, harmful or hateful meaning. The court was satisfied that the displaying of the old flag, with its segregationist connotations demonstrated a clear intention to be harmful, hurtful, and to incite and propagate hateful feelings to victims of Apartheid and to our non-racial democracy. It was concluded that the gratuitous display of the old flag constitutes prohibited hate speech, unfair discrimination and harassment.
Maintenance facilitator
Third party lacks the powers to vary maintenance order: In Mrs M v Bruwer and Another [2019] 4 All SA 165 (WCC) a final divorce order incorporated a consent paper and parenting plan recording that Mr and Mrs M would remain co-holders of parental responsibilities and rights of care and contact with the children, as referred to in s 18(2)(a) and (b) of the Children’s Act 38 of 2005, subject to the provisions of the parenting plan, and, that Mr M would pay maintenance and other expenses. The plan made provision for mediation and facilitation and appointment of a facilitator.
The parents concluded a Facilitation Agreement, in terms of which Mrs Bruwer was appointed as facilitator to make recommendations in respect of any issue concerning the welfare and matters affecting the best interests of the children. It was agreed that, if Mrs Bruwer was unable to resolve any dispute by way of mediation, she could resolve the issue by issuing a directive, which would be binding on the parties unless overridden by a court.
Mr M later sought a reduction of maintenance payable and Mrs Bruwer then assumed the role of judicial officer, declaring that she would review the maintenance payable in respect of the children, which led to the present review application.
Mrs Bruwer and Mr M contended that the directive was lawfully issued and was binding, and that the variation of the High Court maintenance order was thus valid. In support of their contentions, they relied on the relevant clause of the parenting plan in terms of which the facilitator was authorised to ‘regulate, facilitate and review issues relating to the children’s maintenance’.
Section 30(3) of the Children’s Act prohibits the transfer of that parental right and responsibility to a third party. As the determination of maintenance is primarily a parental responsibility and right, the transfer of parental responsibilities and rights involving the determination of maintenance to Mrs Bruwer constituted an infringement of s 30(3). The objective effect of the directive was that the maintenance order, contained in the consent paper, was varied. The decision to vary was not taken by co-holders of parental responsibilities and rights, but by a third party (Mrs Bruwer). She acted as a judicial officer and exercised a judicial power that falls within the preserve of courts. Section 28(2) of the Constitution provides that a child’s best interests are of paramount importance in every matter concerning the child. The court, per Vos AJ, stated that it was not in the best interest of a child that a social worker be granted the judicial authority to vary a maintenance order of the High Court. By issuing the directive, Mrs Bruwer impermissibly purported to exercise judicial authority, contrary to the provisions of s 165 of the Constitution. Her conduct was unlawful and invalid, and the directive, therefore, fell to be set aside.
The invalid act of delegating judicial authority could not be cured by a High Court by ex post facto considering whether the conduct of Mrs Bruwer was right or wrong. Attempting to review conduct which is inherently invalid, involves further legal proceedings, which would be highly prejudicial to Mrs M.
Next, the court considered whether the directive stood to be set aside on the separate ground that Mrs Bruwer failed to ensure that the parties were afforded a fair hearing. In terms of s 34 of the Constitution, Mrs M was entitled to a fair hearing. The evidence clearly established that a fair hearing was not held. That constituted a further ground why the directive could not stand and had to be set aside.
The final issue for determination by the court was whether Mrs M was entitled to an order whereby Mrs Bruwer was removed as facilitator. The manner in which Mrs Bruwer handled the matter, her apparent bias, and Mrs M’s loss of confidence and trust in her justified her being removed as facilitator.
Medical negligence
Factual causation: The appellant’s baby was born with brain damage caused during labour. The High Court held that the appellant did not prove that the negligent failure to monitor her and the foetus had caused the damage. On appeal in AN obo EN v Member of the Executive Council for Health, Eastern Cape [2019] 4 All SA 1 (SCA) it was common cause that the hospital staff did not properly monitor the labour, and were in breach of their legal duty to care for mother and foetus during the birth process, rendering their conduct wrongful.
Wrongfulness should not be conflated with factual causation. The test for factual causation is whether the act or omission of the defendant has been proved to have caused or materially contributed to the harm suffered. Where the defendant has negligently breached a legal duty and the plaintiff has suffered harm, it must still be proved that the breach is what caused the harm suffered.
The critical question was whether the brain damage would have been avoided if the hospital staff had properly monitored the mother and foetus and had acted appropriately on the results. The expert witnesses agreed that a sudden interruption to the blood supply, caused by cord compression (sentinel event), had occurred. There being no warning, the issue was whether there would have been sufficient time to avoid the damage by expediting the delivery. It was not proved that there would have been sufficient time in which to deliver the baby so as to avoid damage, with the result that the appeal had to be dismissed. The court expressed its displeasure at the prevalence of sub-standard care administered to patients at hospital in the respondent’s care. In light thereof, even though the respondent had succeeded in resisting the appeal, no costs award was made against the appellant. In addition, it was directed that the present judgment be forwarded to the respondent, and the National Minister.
A minority judgment in the case expressed agreement with the majority finding on wrongfulness but disagreed with the reasoning and conclusion in relation to causation.
Pleadings
Main arguments not in founding affidavit: In National Council of the Society for Prevention of Cruelty to Animals v Minister of Environmental Affairs and Others [2019] 4 All SA 193 (GP), the National Council of the Society for Prevention of Cruelty to Animals (NSPCA) sought to review the minister’s decisions determining quotas for the exportation of lion bone in. The National Environmental Management: Biodiversity Act 10 of 2004 required the minister to set an annual export quota after consulting with the scientific authority established under the Act.
The applicant’s case was that the determination of the quotas fell to be reviewed in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) because relevant considerations, such as animal welfare were not taken into account. It was also contended that the exclusion of the applicant from the decision-making process was irrational.
The respondents averred mootness, because the export quotas had been operationalised, permits issued, and export processes completed. Despite the historical nature of the setting of the export quotas, the setting of quotas would continue. To that extent, the dispute giving rise to the litigation was still alive, and the court could deal with the matter.
Although the main arguments relative to animal welfare considerations, advanced in support of the relief, were not advanced in the founding affidavit but in the replying affidavit, the relief sought had not substantially changed. As the respondents had not been prejudiced and were able to deal comprehensively with the case based on animal welfare considerations, and as the issues had a significant public and constitutional interest, the court held that even though the replying affidavit introduced a new matter, it would allow the introduction of such new matter.
According to the respondents, the annual setting of the export quota constituted executive action and not administrative action and was, therefore, not subject to review under PAJA. When the minister set the quotas, she acted in terms of the provisions of the National Environmental Management: Biodiversity Act and its Regulations and was, therefore, taking administrative action.
The facts did not establish that the applicant was excluded from the determination process, so grounds of irrationality could not be sustained. Finally, the court confirmed the relevance of the welfare considerations of captive lions in the determination of an export quota. The exclusion of those considerations, which were relevant, rendered the decisions susceptible to review.
Practice
Attachment to found jurisdiction: Janse van Rensburg (Van Rensburg) did business in Equatorial Guinea with one Obiang, the eldest son of the President. The business deals went sour and that had led to Van Rensburg’s repeated arrests and detention over a period of two years, in arduous conditions, until he was able to return to South Africa.
The court a quo issued an order attaching certain immovable property of Obiang in Cape Town, to found jurisdiction for his claim for damages, because Obiang was a foreign litigant (a peregrinus) of the court, who had not consented to its jurisdiction. The present appeal reported in Obiang v Janse van Rensburg and Another [2019] 4 All SA 287 (WCC) was against the granting of the order of attachment.
In deciding whether an order is final in effect and, therefore, appealable, the nature and effect of the order must be considered. The decision must be final in effect and not susceptible of alteration by the court of first instance; it must be definitive of the rights of the parties; and it must have the effect of disposing of at least a substantial portion of the relief claimed in the main proceedings. Those requirements were met in this case, and the order was held to be appealable.
The court, per Gamble J (Allie and Boqwana JJ concurring) addressed the allegation of non-disclosure of material facts in the ex parte application and found no merit in these.
The appellant’s counsel accepted that a prima facie case had been made out establishing damages and causation. In issue was whether a case had been made out against Obiang personally and, further, whether his alleged conduct (or his alleged failure to act) was wrongful.
Van Rensburg’s evidence prima facie contained sufficient allegations to establish both acts and omissions on the part of Obiang for which, if proved, he might ultimately be held personally liable.
While confirming that the act of state doctrine is applicable in our law, which entailed immunity from attachment for Obiang’s property, the court declined to finally determine the dispute through the application of the act of state doctrine at the present stage, given that proceedings for attachment were essentially interlocutory in nature.
A case for the attachment of Obiang’s property to found jurisdiction was found to have been established and the rule nisi was correctly confirmed by the court a quo. In the circumstances, the appeal was dismissed.
Other cases
Apart from the cases and material dealt with or referred to 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 2019 (Dec) DR 23.
