Heinrich Schulze BLC LLB (UP) LLD (Unisa) is a professor of law at Unisa.
November 2014 (6) South African Law Reports (pp 1 – 312); [2014] 4 All South African Law Reports October no 1 (pp 1 – 146); and no 2 (pp 147 – 278); and [2013] 3 All South African Law Reports no 2 (pp 135)
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:
ECP: Eastern Cape Local Division, Port Elizabeth
GJ: Gauteng Local Division, Johannesburg
GP: Gauteng Division, Pretoria
LP: Limpopo Division, Polokwane
SCA: Supreme Court of Appeal
Class action
Requirement of a ‘triable issue’: In Pretorius and Another v Transnet Second Defined Benefit Fund and Others 2014 (6) SA 77 (GP) the applicant, Pretorius, sought leave to institute a class action pursuant to the provisions of s 38(c) of the Constitution.
Pretorius was a representative of the members of the Transnet Second Defined Benefit Fund and the Transport Pension Fund (the funds). Pretorius sought in the proposed class action to compel the fourth respondent, Transnet, and the fifth and sixth respondents, the state, to pay a ‘legacy debt’ of R80 billion dating from the establishment of Transnet, to the funds in accordance with their obligations. Pretorius contended that these amounts were assets of the funds, the object of which was to provide benefits to pensioners, special pensioners and beneficiaries and the failure to redeem the debt had materially and adversely affected their rights and those of the members of the class.
The issue for determination was whether, on the evidence or facts and/or legal submissions set out in Pretorius’s founding papers and the draft particulars of claim, Pretorius has made out a case for the certification of a class action against any one or more of the respondents, including the question whether it was in the interest of justice to certify such a class action.
The court held that a class action is available where a constitutional or non-constitutional right is involved. Section 38(c) of the Constitution provides that ‘anyone … has the right to approach a … court … [including someone]
(c) anyone acting as a member of or in the interest of a group or class of persons’.
The court held that s 38(c) of the Constitution must be interpreted generously and expansively. In Children’s Resource Centre Trust and Others v Pioneer Food (Pty) Ltd 2013 (2) SA 213 (SCA) the court held further that a court faced with the application for certification of a class action must satisfy itself of a number of factors, including the existence of a class that is identifiable by objective criteria; and a cause of action ‘raising a triable issue’. With regard to the requirement of a triable issue, the court held that the applicant must show a cause of action with a basis in law and proof before the court. The claim must be legally tenable and evidence of a prima facie case needs to be submitted.
The court held that the situation in the present case was pattern-made for class proceedings. The class which Pretorius represents is drawn from the poorest within our society (that is, elderly pensioners) who are in need of statutory social assistance. As individuals they are unable to finance a legal action. What they have in common is that they are victims of alleged official excess and bureaucratic misdirection and administration.
With regard to the requirement of a ‘triable issue’ the funds argued that Pretorius had failed to establish any cause of action and that the court should find that there existed no triable issue between Pretorius and the funds.
The funds’ main defence was that the concept of ‘reasonable pension benefit expectation’ only applied to procedural requirements for fair administrative action and did not create substantive rights.
The court held that South African case law does not prohibit an extension of the doctrine of ‘substantive reasonable pension benefit expectation’ to also cover the substantive protection of a legitimate expectation. The defence raised by the funds regarding the concept of ‘reasonable pension benefit expectation’ would be better argued or deliberated on more fully at the trial of the action contemplated by Pretorius.
The court accordingly held that there was indeed a ‘triable issue’ between Pretorius and the funds and Pretorius was granted leave to institute a class action against the funds and Transnet.
It needs to be emphasised that the court merely ruled that Pretorius has provided prima facie proof of a ‘triable issue’. Should it later appear that the proposed class action does not disclose a cause of action, the funds and Transnet are at liberty to file an exception at the appropriate time.
Company law
Business rescue: In Copper Sunset Trading 220 (Pty) Ltd v Spar Group Ltd and Another 2014 (6) SA 214 (LP) the business rescue practitioner of the applicant company had launched a s 153(1)(a)(ii) application pursuant to the first respondent (Spar), a secured creditor, and the second respondent (NF, a concurrent creditor), voting against the adoption of the applicant’s revised business rescue plan. In issue was whether the applicant had made out a proper case that their votes were inappropriate within the meaning of s 153(1)(a)(ii) read with s 153(7) of the Companies Act 71 of 2008.
Section 153(1)(a)(ii) provides that if at a meeting to consider a business rescue plan, the holders of voting interests or shareholders votes to reject it, the appointed business rescue practitioner may ‘advise the meeting that the company will apply to a court to set aside the result of the vote … on the grounds that it was inappropriate’.
Section 153(7) provides that in the case of a s 153(1)(a)(ii) application the court may order that the vote on a business rescue plan be set aside if it is satisfied that it is reasonable and just to do so, having regard to the following three aspects. First, the interests represented by the person or persons who voted against the proposed business rescue plan. Secondly, the provision, if any, made in the proposed business rescue plan with respect to the interests of that person or those persons. Thirdly, a fair and reasonable estimate of the return to that person, or those persons, if the company were to be liquidated.
Makgoba J held that as a secured creditor Spar would probably be the only creditor standing to gain from a liquidation, and this rendered its opposition to business rescue self-serving and unreasonable. Spar would in any event gain at the most a R 0,45 dividend. NF’s opposition to the business rescue, in turn, was held to be irrational since absent such a plan it would receive nothing. Accordingly their conduct in rejecting the applicant’s revised business rescue plan was inappropriate.
The court ordered the proposed rescue plan to be properly adopted. The costs of the present application were reserved.
Constitutional law
Constitutional damages: In Minister of Police v Mboweni and Another 2014 (6) SA 256 (SCA); Minister of Police v Mboweni and Another [2014] 4 All SA 452 (SCA) one Mboweni (the deceased) was detained by the police and locked up in a police cell with other detainees. The deceased was assaulted by the other detainees and as a result he died. The respondents, the plaintiffs, were mothers who each had a daughter with the deceased. The plaintiffs sued the appellant, the Minister, and claimed damages on behalf of their daughters for infringement of their right to parental care in s 28(1)(b) of the Constitution. The High Court found the Minister liable to pay damages for loss of support and referred the quantum of damages to trial. It also found, on a stated case, that a child whose parent had died because of unlawful conduct of a third party, could claim constitutional damages for infringement of the right to parental care. It found the Minister liable for such damages.
In an appeal to the SCA Wallis AJ overturned the High Court’s decision. In doing so the SCA held that the High Court had made a number of crucial errors in allowing the claim. First, it failed to properly analyse the constitutional right to parental care. In this regard it held that the fact that s 28(1)(b) expressed the right it embodies in three alternatives, demanded that in the first instance there be a proper analysis of the different elements of the right and, in particular, the relationship between the right to family care and the right to parental care. The word ‘parent’ may encompass a biological, adoptive or foster parent or a parent who has become such by virtue of a surrogacy agreement. The High Court’s conclusion that parental care necessarily means care by a custodial parent is unduly restrictive.
Secondly, the SCA pointed out that facts proving loss of parental care were not placed before the High Court. This was owing to a misapplication of r 33. Faced with a special case inadequately stating the facts, the judge ought to have refused to hear it. None of the facts the High Court identified as important to the determination of whether there had been a loss of parental care had been alleged or admitted. As a result, so the SCA reasoned, the High Court was not in a position to assess whether there had in fact been any loss of parental care.
Thirdly, it failed to consider s 8(2) of the Constitution in deciding whether the right at stake applied to the policemen. It also failed to consider whether they owed a legal duty to his children to prevent an infringement of the right.
Fourthly, it did not consider whether damages for loss of support was, on its own, an adequate remedy.
Finally, the parties with an interest in the decision, especially those organs of state that discharge their responsibilities from public funds, were not given an opportunity to intervene and make submissions that would have enabled the High Court to arrive at a just conclusion.
The SCA accordingly upheld the appeal and referred the matter to the High Court for trial.
Contract law
Termination by reasonable notice: In Plaaskem (Pty) Ltd v Nippon Africa Chemicals (Pty) Ltd [2014] 4 All SA 12 (SCA) the facts were as follows. In February 2005, the parties entered into a written agreement involving the local distribution authority, in respect of imported agricultural chemicals. The appellant (the defendant in the High Court, Plaaskem) argued that the contract contained a tacit term to the effect that it was terminable by either party on reasonable notice.
The High Court found that the contract did not have a tacit or implied term that the agreement was terminable on a reasonable notice. The purported notice of cancellation of the agreement by Plaaskem with effect from 30 June 2010, was thus held to have been invalid and of no effect. Plaaskem was held to be obliged to render a statement and debatement of account to the respondent (the plaintiff in the High Court case) in respect of all sales it made in keeping with the agreement, for a stipulated period.
Hancke AJA pointed out that it has been stated by the courts that the law regarding a contract of unspecified duration is a matter of construction of the agreement according to the ordinary principles of construction. In this regard the court referred with approval to the earlier decision in Trident Sales (Pty) Ltd v AH Pillman & Son (Pty) Ltd 1984 (1) SA 433 (W).
In the present case, having regard to the wording of the contract it was clear that there was no indication that the parties intended to be bound in perpetuity. The next inquiry concerned the intention of the parties, having regard to the nature of the relationship between the parties, as well as the surrounding circumstances. The court held that the contract required the parties to form and maintain a close working relationship with regular contact and interaction between them. It also covered a wide range of existing and new products. It was, therefore, assumed that the nature of the relationship might change over time.
The practical reality strongly suggested an intention by the parties not to be and remain bound in perpetuity. Taking the surrounding circumstances into account and in view of the fact that the contract was silent as to its duration, it was necessary that a tacit term be imported. That term was that the contract could be terminated by either party by giving reasonable written notice to the other party.
The appeal was, accordingly, upheld with costs.
Education
Standards: In Dean of the Law Faculty, University of the North West and Others v Masisi 2014 (6) SA 61 (SCA) the respondent (Masisi) was registered for a LLB degree at the appellant university (UNW). Masisi wanted full credit for the courses and modules he had completed at the University of the North. However, the NWU refused to give him more than 50% credit, arguing that it was constrained to do so by its own rules and those of the Joint Statute of South African Universities, a document approved by the Minister of Education under the Universities Act 61 of 1955.
Masisi approached the Equality Court with a complaint of unfair discrimination. The Equality Court struck down the relevant provisions of the university’s rules and of the Joint Statute.
In an appeal to the SCA, the court, in a joint judgment, held that the issue of giving credit by one university to modules passed at another university, was of vital importance to tertiary education in South Africa. It further held that the Equality Court should have given the Minister of Education, other universities and their collective voice, Higher Education South Africa (which appeared as amicus curiae in the present appeal), the opportunity to deal with the issues raised by Masisi’s complaint, including the question of the Equality Court’s competence to make an order setting aside legislation.
The SCA accordingly ordered that the matter be remitted to the Equality Court with the instruction that all interested parties be informed of the relief being sought against them. The costs of the proceedings in the Equality Court and in the SCA court shall be costs in the cause.
Insolvency law
Effect on property of solvent spouse: In Motala and Another NNO v Moller and Others 2014 (6) SA 223 (GJ) the court was asked to pronounce on the legal effect of the sequestration of one spouse’s estate, on the estate of the solvent spouse.
The crisp facts were as follows. Ms Stein was the owner of an immovable property. She was married to one Mr Segal. After a time Segal was sequestrated and thereafter Stein sold and transferred her property to Moller. Moller was unaware that Segal had been sequestrated and acted in good faith, paying the fair market price. Segal’s trustees then applied for an order declaring the transfer void. The trustees based their application on s 21(1) of the Insolvency Act 24 of 1936 (the Act).
Section 21 of the Act provides that the alienation of property by a solvent spouse whose spouse’s estate has been sequestrated, remains effective and valid unless and until it is assailed and set aside by the trustee of the insolvent spouse’s estate.
Section 25 of the Act provides that if an insolvent person unlawfully disposes of immovable property or a right to immovable property, which forms part of his insolvent estate, the trustee may recover the value of the property or right so disposed of from the insolvent; or from any person who, knowing such property or right to be part of the insolvent estate, acquired such property or right from the insolvent without giving sufficient value in return.
Three issues were at stake. First, the effect of s 21(1) of the Act on a solvent spouse’s transfer of her property to a third party. Secondly, the nature of a vesting of a solvent spouse’s property in a trustee, which is effected by s 21(1) as well as its consequences. Thirdly, the relation between s 21(1) and s 25(4) of the Act, and more specifically whether a trustee may choose which of these two subsections he will proceed under.
Myburgh AJ held as to the first issue, that s 21(1) rendered such a transfer voidable at the instance of the trustee. That is, the transfer was valid until set aside by the trustee.
Regarding the second issue, the court held that s 21(1) vests the insolvent spouse’s property in the trustee ‘as if it were property of the sequestrated estate’. It followed that the trustee had the same powers in respect of the solvent spouse’s property as he had in regard to the insolvent’s property.
In respect of the third issue, the court confirmed that a trustee’s remedies regarding disposal of immovable property by an insolvent or his spouse, are confined to those in s 25(4). In such a case a trustee cannot elect to proceed by way of a general provision such as s 21(1).
Because none of s 25(4)’s requirements for relief were met, the court dismissed the application with costs.
Marriage
Property rights: The application in JA v DA 2014 (6) SA 233 (GJ) arose from the divorce of the applicant and plaintiff. The divorce was granted on 30 August 2012. The parties were married subject to the accrual system provided for in ss 3 and 4 of the Matrimonial Property Act 88 of 1984 (the Act). It was ordered that a determination of the parties’ respective estates be made by a referee. The referee’s report, in turn, would result in payment to one or other spouse of any sum due in terms of s 3(2) of the Act.
The parties were at loggerheads about the question whether the contents and values of the estates of spouses married under the accrual system were to be determined on the date that the divorce was granted or when the pleadings in the divorce proceedings closed.
Sutherland J held that the date of dissolution of the marriage was the only relevant date on which to determine the content and to calculate the value of the respective estates.
The court rejected the argument that a distinction exists between procedure and substance that can change the moment for ‘assessment’ of the estates from the date of dissolution to the date of litis contestatio and that any transaction after this moment is to be left out of account. In this regard it remarked that litis contestatio is an archaic label for a banal event: The moment when no more pleadings may be filed. A trial or an argument is then possible.
Property rights: The decision in RP v DP and Others 2014 (6) SA 243 (ECP) concerned the question whether a court may take the value of the assets in a trust into account in determining the accrual of one of the spouses’ property where the trust was allegedly a sham.
In a counterclaim in a divorce action, the wife claimed half the net accrual of the husband’s estate in terms of s 3(1) of the Matrimonial Property Act 88 of 1984 (the Act). The husband filed a plea to the counterclaim disputing that his estate had shown a greater accrual. She then launched the present application seeking to amend her counterclaim, inter alia, to the effect that the value of the assets of a trust established during their marriage, should be taken into account in determining his accrual. She contended that he had been in de facto control of its assets since its inception and that the trust was a sham and that he had abused the trust form to acquire personal wealth and failed to keep the trust assets separate from his personal estate.
The husband, in turn, argued that the court was not permitted to exercise discretion to include the trust assets in the accrual as this offended against the wording of ss 3 and 4 of the Act, which excluded trust assets in the calculation of accrual, and would therefore render the counterclaim excipiable.
Alkema J held that if the evidence showed that the trust in question was effectively the alter ego of one of the parties, certain or all of the trust assets ought to be included in the estate for determination of the accrual. In piercing the trust veil the court was not exercising discretion under the Act, but a power under the common law. The amendment requested by the wife was accordingly granted.
The court referred with approval to earlier case law (BC v CC and Others 2012 (5) SA 562 (ECP)) in which it was held that in cases dealing with the lifting of the trust veil it is unnecessary for a plaintiff to expressly claim or seek an order or a declarator that the trust be set aside; or that all or some of the property owned by the trustees of the trust is de facto owned by one or more of the trustees in their personal capacity; or that trust assets be transferred to the personal estate of a trustee; or be deemed to be property in the personal estate of a trustee. If it is proved that a transaction is simulated and shown in the financial records as a trust asset whereas in truth and in fact it is an asset in the personal estate of the trustee, then the court is entitled to treat such asset as an asset in the personal estate of the trustee for purposes of considering accrual.
Because those assets never became trust assets and remained assets in the personal estate of the trustee by virtue of the simulation, it will be wrong in law and in fact to claim the transfer of ‘or to deem’ such assets as assets in the personal estate of the trustee. All that is required is to make an order as claimed by the wife, namely that the value of those assets be taken into account when determining accrual because in law and in fact they are, and always have been, assets in the personal estate of the trustee.
Each case is only concerned with the facts of the transaction under attack in that case. The court is not required to necessarily set aside the entire trust as a simulated deed. It is only required to set aside those transactions which are proven to be simulated. Therefore, the order which a plaintiff (here: the wife) seeks, namely that some or all of the assets in a particular trust be taken into account in determining the claim for accrual, will only apply to assets proven to be the subject of simulated transactions.
Money
Nature of banknotes: The crisp facts which served before Malan JA in Master Currency (Pty) Ltd v Commissioner South African Revenue Service 2014 (6) SA 66 (SCA); Master Currency (Pty) Ltd v Commissioner for the South African Revenue Services [2013] 3 All SA 135 (SCA) were as follows. The appellant (the taxpayer) was a bureau de change operator in the duty-free area of what is now known as the Oliver Tambo International Airport. The taxpayer charged no value-added tax (VAT) on the fees and commissions it earned from currency-exchange transactions it concluded with departing non-residents.
The Johannesburg Tax Court upheld the commissioner’s ruling that the taxpayer’s assumption that no VAT was chargeable in duty-free areas was incorrect, and held that VAT at the standard rate applied.
The taxpayer appealed to the Supreme Court of Appeal. Two issues fell to be decided. The first issue concerned the proper construction of the provisions zero-rating services to non-residents in s 11(2)(l) of the Value-Added Tax Act 89 of 1991 (the Act). The taxpayer contended that the services concerned qualified for a zero rating under s 11(2)(l)(ii)(aa) as ‘movable property … exported to [non-residents]’. The Commissioner, in turn, argued that it was excluded from a zero rating by s 11(2)(l)(iii), having been rendered to a person who was ‘in the Republic at the time the services [were] rendered’.
The second issue concerned the contention (raised by the taxpayer in reply) that because currency was banknotes and therefore movable property, and because the incorporeal rights that attached to the banknotes were situated where it was issued, its services were ‘supplied directly in respect of … movable property situated in any export country at the time the services [were] rendered’, and were therefore zero-rated in terms of s 11(2)(g).
With regard to the first issue the court held that the word ‘or’ where it appeared after subpara (ii) in s 11(2)(l) could not be read disjunctively. The fact that a service may fall under subpara (ii)(aa) did not mean that it was not covered by subpara (iii). Subparagraphs (i) – (iii) were exceptions to the zero-rated services, in effect services that were standard-rated. No status was conferred on the services referred to in subpara (aa) or (bb); these helped to define the services referred to in the main body of para (ii). The taxpayer was not entitled to a zero rating by virtue of s 11(2)(l)(ii)(aa) of the Act.
With regard to the second issue the court held that banknotes used to contain a promise whereby the issuing bank undertook to pay the face value of the note to the bearer. However, these promises to pay to bearer that were contained in some banknotes could no longer be regarded as promissory notes embodying incorporeal rights against the issuing bank. Banknotes, with or without a promise to pay its face value on demand, could not be regarded as documents that embodied incorporeal rights that were situated, in the case of foreign notes, elsewhere. In any event, modern banknotes no longer contain such a promise. They nevertheless embody personal rights, which are situated in the country where they are issued, that is, the place where the issuing bank resides. The banknotes exchanged by the taxpayer are therefore ‘moveable property’ situated in ‘export countries’ at the time the services (that is, the exchange of currencies) are rendered. The taxpayer’s services rendered in the duty-free area were subject to VAT at the standard rate and were correctly assessed as being so by the commissioner.
The taxpayer’s appeal was dismissed with costs.
OTHER CASES
Apart from the cases and topics that were discussed or referred to above, the material under review also contained cases dealing with administrative law, business rescue, champerty, civil procedure, competition law, constitutional law (housing; local government), criminal procedure, damages, injury, labour law, land, legal representation, maintenance, motor-vehicle accidents, revenue, sectional titles and servitudes.
This article was first published in De Rebus in 2015 (Jan/Feb) DR 47.
David Matlala BProc (University of the North) LLB (Wits) LLM (UCT) LLM (Harvard) HDip Tax Law (Wits) is an adjunct professor of law at the University of Fort Hare.
December 2014 (6) South African Law Reports (pp 315 – 625); [2014] 4 All South Africa Law Reports November no 1 (pp 279 – 410); and no 2 (pp 411 – 537); 2014 (10) Butterworths Constitutional Law Reports – October (pp 1137 – 1264) and (11) November (pp 1265 – 1395)
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:
CC: Constitutional Court
GJ: Gauteng Local Division, Johannesburg
GP: Gauteng Division, Pretoria
KZD: KwaZulu-Natal Local Division, Durban
LCC: Land Claims Court
SCA: Supreme Court of Appeal
WCC: Western Cape Division, Cape Town
Attorneys
Refund of unlawfully charged and retained contingency fee: In Bitter NO obo De Pontes v Ronald Bobroff & Partners Inc 2014 (6) SA 384 (GJ) the first respondent, Ronald Bobroff and Partners Inc (RBP), was a law firm that acted for one Anthony De Pontes (Anthony) in a motor vehicle accident claim against the second respondent, the Road Accident Fund (RAF). The claim was settled in a capital amount of some R 6 mil- lion. Thereafter RBP made certain payments to Anthony but retained an amount of R 2,1 million, which was 30% of the capital amount paid by the RAF. The amount was retained as security for RBP’s attorney and own client costs as per a common-law contingency fee agreement concluded between the parties. It was retained notwithstanding the fact that RBP had in the meantime received from the RAF a further payment of some R 260 000 for costs and disbursements that included some R 83 000 for taxed party and party fees, about R 8 000 for correspondent attorney’s fees and a further R 169 000 for disbursements relating to expert reports and counsel’s fees. The applicant Bitter, who was Anthony’s curator ad litem, instituted proceedings for payment of the R 2,1 million to Anthony’s new attorneys, there to be held in trust until RBP’s fully itemised attorney and client bill of costs, reflecting reasonable attorney and client fees and disbursements, was settled by agreement or taxed by the taxing master. The order was granted with costs on attorney and client scale as a mark of disapproval of the conduct of the first respondent.
Mayat J held that in the absence of a lawful agreement relating to contingency fees within the parameters of the Contingency Fees Act 66 of 1997 (the Act), and the alleged common-law contingency fee agreement between the parties not falling within the parameters of the Act, the first respondent was only lawfully entitled to fair and reasonable costs for work actually done. Furthermore, in the absence of a lawful agreement, the first respondent’s entitlement to a fair and reasonable fee for services actually rendered could only be determined on the basis of an attorney and client bill of costs taxed by the taxing master. Accordingly, there was no legal basis for the first respondent to retain the sum of R 2,1 million as it did, particularly since the attorney and own client costs in the instant case would in all likelihood constitute a small fraction of that amount. More importantly, there was no prejudice to the first respondent if such money was paid to the trust account of the applicant’s attorneys pending agreement or taxation of the bill of costs, which was to be submitted.
Companies
Effect of restoration of registration on prospecting or mining rights that lapsed on deregistration of a company: Section 56(c) of the Mineral and Petroleum Resources Development Act 28 of 2003 (the MPRDA) provides among others that ‘[a]ny right, permit, permission or licence granted or issued in terms of this Act shall lapse, whenever … a company or close corporation is deregistered in terms of the relevant Acts and no application has been made or was made to the minister for the consent in terms of section 11 or such permission has been refused; … ’. Section 11 deals, among others, with cession, letting, subletting, disposal, assignment and alienation of a prospecting or mining right, which can be done only with the consent of the Minister. In Palala Resources (Pty) Ltd v Minister of Mineral Resources and Energy and Others 2014 (6) SA 403 (GP) the applicant company, Palala Resources, was deregistered in July 2010, at which stage the prospecting right that it held over a farm in Malamulele area in Limpopo Province, lapsed. Two months later, in September 2010, registration of the company was restored and as a result it contended that the prospecting right that it held before deregistration, had been revived. As a back-up position, the company also applied for renewal of the prospecting right. The Acting Director-General of the Department of Mineral Resources and Energy accepted the application for renewal of the prospecting right, which decision was overturned by the first respondent, the Minister. The applicant applied for review and setting aside of the Minister’s decision, which application was dismissed with costs.
Keightley AJ held that generally the legal personality of a company that was lost by its deregistration was revived retrospectively. That meant that, in general terms, as regards its rights and obligations, the company would on restoration reassume them as if they had not been lost in the first place. However, the intended meaning and effect of s 56(c) of the MPRDA was different in that mining and prospecting rights held by companies which were deregistered lapsed, meaning that they became void or legally invalid, unless, prior to the deregistration, the company applied for the Minister’s written consent to cede or otherwise dispose of the right. The fact that s 56(c) expressly provided for a s 11 application to act as an exception to a right lapsing on deregistration, coupled with the fact that restoration of registration was not identified as an exception, was a strong indication that the legislature intended that only in the case of a s 11 application, and no other, would a mining or prospecting right be protected from becoming void on deregistration. It was important to appreciate that what the deeming provision in s 73(6A) of the applicable Companies Act of 1973 did was to revive legal personality of the company. The deeming provision of the section did not revive rights that had lost their legal validity and had become void. Thus, while the effect of the provision was to reinvest in the company the rights and assets it previously held, that only applied insofar as those rights and assets which still existed. The deeming provision could not have the effect of giving life to rights that, because they had lapsed, were legally dead. For that reason the applicant’s contention that the effect of the deeming provision in s 73(6A) was retrospectively to revive a prospecting right that had lapsed by operation of s 56(c) was misdirected and could not be upheld.
Delict
Abolition of action for adultery: In RH v DE 2014 (6) SA 436 (SCA) the respondent husband, DE, and Ms E were married to each other. A few years down the line a breakdown of the marriage took place and as a result Ms E left the matrimonial home never to return. In the event the respondent, citing breakdown of the marriage, sued for divorce, which was granted. However, before the marriage was dissolved Ms E had an adulterous affair with the appellant RH. For that reason the respondent sued the appellant for damages due to the commission of adultery, claiming compensation under headings contumelia (insult or injury to self-esteem) and loss of consortium (loss of comfort and company of spouse). In the GP, Vorster AJ awarded the respondent damages in a composite amount of R 75 000 covering both headings. An appeal against that judgment was upheld with costs.
Brand JA (Cachalia, Tshiqi, Majiedt and Mbha JJA concurring) held that a history of the delictual action for adultery revealed its archaic origin. On the one hand it stemmed from the concept peculiar to old English law in terms of which the husband had some proprietary interest in the person and ‘services’ of his wife. According to some earlier judgments, on the other hand, the action was influenced by the biblical notion received from canon law that both husband and wife in a marriage were entitled to the sole use of each other’s body. When those archaic notions were exposed by the changing norms of society, the law started looking for a new raison d’etre. However, the time had come for South African law to recognise, in harmony with most other legal systems, that in the light of changing mores, those reasons advanced for the continued existence of the action had now also lost their persuasive force. What was more, even if the action still performed some legitimate function, that notional advantage would be outweighed by the hurt and damage that the action too often brought about. Accordingly, in the light of changing mores of the society the delictual action of the innocent spouse based on adultery had become outdated and could no longer be sustained. Consequently, the time for its abolition had come, this meaning that the action derived from the actio injuriarum and based on adultery, which afforded the innocent spouse a claim for both contumelia and loss of consortium was no longer wrongful in the sense that it attracted liability and was therefore no longer available as part of South African law.
The court added obiter that its judgment did not touch on other actions based on actio injuriarum connected with the institution of a marriage such as abduction, enticement and harbouring of someone’s spouse. Nor did it deal with the continued existence of the claim against a third party, based on adultery, for the patrimonial harm suffered by the innocent spouse through loss of consortium of the adulterous spouse which would include, for example, loss of supervision over the household and children.
Fundamental rights
Right to dignity, privacy, freedom and security of person: In an earlier case of the City of Johannesburg Metropolitan Municipality v Blue Moonlight Properties 39 (Pty) Ltd and Another 2012 (2) SA 104 (CC), the CC ordered the city of Johannesburg (the City) to provide temporary accommodation to persons who had been evicted from private property. That process, which was supposed to last six months and could be extended to 12 months, took too long as some three years down the line the City was still working on a temporary accommodation policy. That led to the present case of Dladla and Others v City of Johannesburg and Another 2014 (6) SA 516 (GJ); Dladla and Others v City of Johannesburg Metropolitan Municipality and Another [2014] 4 All SA 51 (GP) where, because of the delay in finalising temporary accommodation policy, the City accommodated the evicted persons in a totally different accommodation arrangement, namely, an overnight accommodation facility run by the second respondent, Metropolitan Evangelical Services, a not for profit organisation. The rules and policy of the second respondent, which the first respondent City approved of, provided that residents of the overnight accommodation facility shelter would vacate during the day, during which time the gate would be locked, and come back in the evening. Moreover, when there spouses or permanent life partners were not allowed to live together. The applicants, Dladla and Others, approached the High Court for an order declaring that the shelter rules and policy violated their fundamental rights to dignity, freedom, privacy and security of person and that the respondent should be interdicted and restrained from implementing them. The order sought was granted with costs.
Wepener J held that the rules and limited gender separation policy of the respondents had humiliating consequences. They compromised and disrupted the family as a unit and created emotional distance in a relationship. The inability of spouses and partners to live as a family represented a loss to them of one another and created an additional financial burden on the couple’s limited financial resources. The most basic associative privileges connected to a marriage or permanent relationship were denied to the couples. The splitting-up of families at the overnight accommodation shelter cut to the very heart of the right to dignity and family life. As a result the applicants were entitled to a declaration that the splitting-up of families by gender at the shelter was in violation of s 10 (human dignity), s 12 (freedom and security of persons) and s 14 (privacy) of the Constitution.
In the absence of any legislative provision there could be no justified limitation of the right of spouses, and life partners, to cohabit. Any infringement of that right was an infringement of the right to dignity and was therefore unconstitutional. The daily lockout rule also violated the residents’ right to privacy and dignity and resulted in residents being exposed to dangers inherent in street life while it also inhibited their freedom in material respects. That infringed residents’ right to freedom, security and dignity.
Lease
Cancellation of lease: In Malan v City of Cape Town 2014 (6) SA 315 (CC); Malan v City of Cape Town 2014 (11) BCLR 1265 (CC) the appellant, Malan, was a 74-year-old widow who received social grant and lived in public rental housing in respect of which she paid nominal rental. The owner of the property, the City of Cape Town, cancelled the lease after allegations of breach thereof and thereafter obtained a High Court order evicting her from the premises. It was alleged that she fell in arrear with payment of rent and that illegal activity, in the form of drug trafficking and possession of illegal ammunition, took place on the premises. Such activities were allegedly carried out by the applicant’s son and daughter as well as third parties. The WCC held per Dolamo J that the respondent was justified in seeking the applicant’s eviction. The CC granted the applicant leave to appeal but dismissed the appeal with no costs as the case raised the important constitutional right of access to housing.
The majority judgment was read by Majiedt AJ while Dambuza AJ (Froneman and Madlanga JJ concurring) and Zondo J delivered separate dissenting judgments. The court held that the respondent had lawfully and validly cancelled the lease agreement on the ground of illegal activities that took place on the property. The applicant was well aware of illegal activity that was taking place there and at no stage did she aver that she could not control the prohibited conduct. The letter delivered to her giving notice of cancellation of the lease enabled her, if she was so minded, to protest the allegation that illegal activities were taking place on the property and, if such were admitted, to take steps to bring such activities to an end. She did neither. In the face of bare, unsubstantiated denial and continuation of illegal activities beyond the date of notice of cancellation, the unavoidable conclusion was that the applicant had failed to remedy breach of the lease agreement.
Medical negligence
Negligence: In Sibisi NO v Maitin 2014 (6) SA 533 (SCA) the appellant, Mrs Sibisi, sued the respondent, Dr Maitin, for injury suffered by her baby, Y, during birth. As a result of the injury the baby became permanently paralysed in the shoulder and arm. This was due to the size of the baby at birth, it being 4,68 kg. It was alleged that the respondent had acted negligently by not establishing the weight of the baby with the result that it got stuck in the pelvis area during birth at which stage it suffered permanent shoulder paralysis and also because of the forceful manoeuvre (McRoberts manoeuvre) used to extract it. The appellant argued that in the circumstances of the case a Caesarean section should have been resorted to instead of natural birth. At the trial the parties agreed on a separation of merits from the quantum with the result that the action proceeded on merits only, the issue of quantum being postponed. The KZD (per Penzhorn AJ) dismissed the claim for lack of negligence on the part of the respondent. An appeal to the SCA was dismissed with costs.
Lewis JA (Ponnan, Pillay JJA, Dambuza and Mathopo AJJA concurring) held that foetal size was not a good predictor of shoulder dystocia (difficult childbirth). Therefore, there was no reason why the respondent would have foreseen that the baby would present with shoulder dystocia. Medical literature on the subject was clear that unless the mother was diabetic or had history of problems with shoulder dystocia a Caesarean section was not advisable. Due to risks inherent in the Caesarean section, including causing septicaemia (infection) and possible death of the mother, which was very real, the suggestion that in all cases of shoulder dystocia a Caesarean section should be performed could not be accepted. Therefore, there was no mismanagement on the part of the respondent of the appellant’s labour and certainly no negligence. A reasonable obstetrician in the respondent’s position would not have foreseen the possibility of shoulder dystocia and would have proceeded on the same basis as the respondent did. The appellant bore the onus of showing that an obstetrician with reasonable skill and diligence possessed by that branch of the profession would have foreseen the possibility of shoulder dystocia and taken steps to mitigate the risk. The appellant did not discharge that onus.
Nuisance
Liability for loss of livestock caused by spread of disease: In Oosthuizen v Van Heerden t/a Bush Africa Safaris 2014 (6) SA 423 (GP) the appellant, Oosthuizen, and the respondent, Van Heerden, were carrying on farming activities on neighbouring farms in Ellisras (now Lephalale) in Limpopo Province. The appellant kept cattle while the respondent kept blue wildebeest (wild animals). After the appellant lost six head of cattle due to ‘snotsiekte’ (bovine malignant catarrhal fever) it was common cause that the source was the wildebeest. The problem was that another farmer on a neighbouring farm, Van Vuuren, also kept blue wildebeest. It was, therefore, not known which wildebeest caused the spread of the disease. As Van Vuuren’s farm was a little further away the appellant chose to leave him alone. The magistrate dismissed the appellant’s claim against the respondent for failure to prove the cause of the disease and the quantum of damages. An appeal to the Gauteng Division, Pretoria was dismissed with costs.
Keightley AJ (Louw J concurring) held that the magistrate was correct on the causation finding. The court did not have to decide on the quantum issue as the appeal failed on two other grounds, namely negligence and wrongfulness. It was held that while it could not be gainsaid and it was common cause that blue wildebeest carried ‘snotsiekte’ virus, that in itself was insufficient to establish negligence on the part of the respondent. The risk of the cattle contracting ‘snotsiekte’ from the respondent’s blue wildebeest was very low. It could not per se be negligent for game farmers to keep blue wildebeest. Given the low risk of infection and the high cost of erecting a game fence, it was hardly credible to suggest that the respondent was negligent in failing to erect such fence. Whether a particular defendant or respondent acted wrongfully or negligently in keeping blue wildebeest in proximity to cattle-farming activities depended very much on the particular facts to hand. The mere fact that wildebeest were known to be carriers of the ‘snotsiekte’ virus did not mean that the appellant’s right to reasonable use of his farm trumped the concomitant right of the respondent. Reasonable use of property between neighbours with competing interests necessarily involved a ‘give-and-take’ on both sides. In the instant case parties could have discussed measures to accommodate both of their farming requirements but that was not done. The assumption of the appellant that if his cattle contracted the disease the law would hold the respondent liable for loss was misplaced.
Restitution of land rights
Determination of equitable compensation: In the case of Florence v Government of the Republic of South Africa 2014 (6) SA 456 (CC); Florence v Government of the Republic of South Africa 2014 (10) BCLR 1137 (CC) in 1957 the Florence brothers bought property in Rondebosch, Cape Town on which they had lived for some years. Payment was in instalments all of which were duly paid. However, the buyers could not take transfer of the property because of the Group Areas Act 77 of 1957, which classified the area as ‘white group area’ and accordingly disqualified them from becoming owners. As a result in 1970 the parties agreed to cancel the contract and an amount of R 1 350 was returned to the buyers. In 1995 a land restitution claim was instituted against the property. As subsequent development had taken place the claimant, a member of the Florence family who also claimed on behalf of the other brothers, did not seek restitution of the property. Instead, equitable redress in the form of financial compensation was sought together with erection of a memorial plaque. The claimant and owner of the property agreed that a memorial plaque would be erected on the property. Thereafter the Florence family approached the Land Claims Court (LCC) for determination of their claim, just and equitable compensation and costs of erecting the memorial plaque.
The LCC held that the market value of the property at the time of its loss in 1970 was R 31 778 plus the agreed removal cost of R 85 from which had to be deducted the refunded R 1 350 which the Florence family received at the time. Therefore the difference was R 30 513 which the family did not receive. Using the consumer price index (CPI) the R 30 513, loss suffered in 1970 was converted into the present value of R 1 498 890 which was awarded as equitable redress. The court rejected the claim that equitable redress had to be achieved using a 32-day-deposit rate-investment yield or capital-gain metric. Doing so, it was held, would result in overcompensation and thus not be equitable. The court also rejected the claim for the costs of erecting a memorial plaque, holding that the Restitution of Land Rights Act 22 of 1995 (the Restitution Act) did not give it the power to do so. On appeal to the SCA the CPI conversion rate of the LCC was confirmed. However, the appeal succeeded on the costs of erecting memorial plaque which the respondent, the government, was ordered to pay.
On further appeal to the CC the CPI conversion rate of the claim was confirmed. The cross-appeal against the costs of erecting the memorial plaque order of the SCA was upheld. No order was made as to costs. The majority judgment was read by Moseneke ACJ while Van der Westhuizen J and Zondo J read separate dissenting judgments. Khampepe J concurred in the judgment of Moseneke ACJ in the main appeal (CIP conversion rate) and that of Van der Westhuizen J in the cross-appeal (costs of memorial plaque).
Moseneke ACJ held that Parliament had adopted a conversion mechanism that was meant to ensure that compensation sounding in money should reflect changes in the value of past monetary loss. The claim against the state for equitable redress was not a civil debt. Neither was it punitive nor retributive. It was not to be likened to a delictual claim aimed at awarding damages that were capable of precise computation of loss on a ‘but-for’ basis. It was a constitutional scheme paid out of public funds in order to find equitable redress to a tragic past. Therefore, the LCC was correct in calculating the financial loss at the time of the dispossession and for the purpose of placing the Florence family in the same position they would have been immediately after the dispossession. The Restitution Act did not warrant an approach that fixed compensation, as if the loss never occurred. Nor did it warrant awarding a full replacement value of the property. Just and equitable financial compensation did not aim to restore claimants in current monetary terms to the position they would have been in had they not been dispossessed but rather the financial loss they incurred at the time of dispossession.
OTHER CASES
Apart from the cases and material dealt with or referred to above, the material under review also contained cases dealing with access to information, application for leave to appeal not suspending operation of business rescue order, appointment of judges, approval of building plans, business rescue, claim for constitutional damages, Constitutional Court decision binding on SCA even if wrong, consumer credit agreements, deduction of foster child grant from loss of support claim, detention of illegal immigrants, disciplinary action against soldiers, distribution of free residue in insolvent estate, discovery and inspection of documents, duty of court to investigate matters of concern in proceedings, duty to keep information secret, examination of persons in insolvency inquiry, infringement of patent, irregular finding of fraud against attorney, removal of outdoor advertising signs, special votes cast in by-elections, threshold requirements for winding-up of company and unconstitutionality of detention of mentally impaired accused for indefinite period.
This article was first published in De Rebus in 2015 (Jan/Feb) DR 52.
