The Law Reports – July 2021

July 1st, 2021
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May 2021 (3) South African Law Reports (pp 1 – 321); May 2021 (1) South African Criminal Law Reports (pp 463 – 578)

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

GP: Gauteng Division, Pretoria

SCA: Supreme Court of Appeal

WCC: Western Cape Division, Cape Town

Administrative review

Delay by a municipality in bringing a review of its own decision – was it reasonable, and if not, nonetheless excusable? In Altech Radio Holdings (Pty) Ltd and Others v Tshwane City 2021 (3) SA 25 (SCA), the Tshwane City Municipality (the City) sought a legality review of its own decision. The facts were as follows: In June 2015 the City, then under the rule of the African National Congress, awarded a tender to the first appellant (Altech) for the construction of a fibre Internet network for the City. Pursuant thereto, the City incorporated the second appellant company (Thobela), which would contract with Altech to perform the construction, and which would afterwards operate the network. To this end, the City, in May 2016 concluded an agreement with Thobela for the construction and operation of the network. Thereafter, in August 2016, an agreement was entered into between the City, Absa Bank Ltd and Thobela under which Absa would loan sums of money to Thobela to meet its obligations to the City under its build-and-operate agreement with the City.

Meanwhile, in parallel to the conclusion of the loan agreement, municipal elections brought the City under the control of the Democratic Alliance, which in August 2017 instituted proceedings for the review of its decisions to award the tender to Altech and to conclude the operations and loan agreements.

That review was heard in May 2018, and in July 2019 the GP set aside the decisions and declared the operations and loan agreements unenforceable. In September 2019 the GP granted leave to appeal to the SCA. The issue before the court was whether the City’s delay in bringing the review was unreasonable and, if so, whether it could be condoned.

The SCA, per Ponnan JA (Wallis JA, Dambuza JA, Molemela JA and Sutherland AJA concurring), began by alluding to the recent emergence of state self-review as a subspecies of review and pointing out that its use in public procurement cases was particularly worrisome. These were invariably legality reviews, so that the time constraints imposed by the reviews under the Promotion of Administrative Justice Act 3 of 2000 (PAJA) did not apply. Either way, the objective of self-review should be the promotion of accountable government, not the evasion of constitutional obligations. Here, the City had apparently invoked an administrative-law remedy to strike a better bargain for itself. It wanted to use the review to evade, rather than assert, its constitutional obligations.

The SCA found that the City’s delay in bringing the review – ten months from the time it knew all the facts supporting review and proceeding with it – was indeed unreasonable. In the light of this, the City’s explanation that it needed time to investigate the tender rang hollow. In addition, the prejudice flowing from the delay was substantial as Altech and Thobela had incurred R 610 million in costs by January 2018 and by the time the review was heard in May 2018, 34% of the network had already been built, after which the project was frozen. The City’s conduct left the appellants financially exposed. Its failure to warn them of the irregularities in the process and the likelihood that the transactions would be impugned, was unconscionable. There was no escape from the facts: The delay was stark and the City’s egregious conduct even starker. Much of this was ignored by the GP, which had been far too receptive to the City’s case and lost sight of the fact that it was engaged in a multi-factor and context-sensitive inquiry in which a wide range of factors had to be weighed before it exercised its discretion. It should not have condoned the delay. The appeal was upheld with costs.

Appeals: Execution

Whether an order granting leave to execute is always suspended on lodging of an urgent appeal against such execution order: The SCA, before hearing the matter of Knoop NO and Another v Gupta and Another 2021 (3) SA 88 (SCA) (see ‘companies’ law report  below), was required to hear an appeal in related interlocutory proceedings: The GP, when granting the business practitioners leave to appeal, also granted the respondent, Gupta, leave in terms of s 18(1) and (3) of the Superior Courts Act 10 of 2013 (the Act), to immediately execute (execution order) the order removing the business practitioners. The business practitioners (as appellants) were prompted to lodge an extremely urgent appeal to the SCA against such execution order, which they were entitled to do by virtue of s 18(4)(ii) and (iii) of the Act. The judgment in that matter, referred to here, was cited as Knoop NO and Another v Gupta (Execution) 2021 (3) SA 135 (SCA).

Of significance was the following: In terms of s 18(4)(iv) of the Act, the operation of an execution order itself is suspended pending the outcome of an urgent appeal against that order. This should have meant that the lodging of the appeal under s 18(4)(ii) in effect suspended the original removal order. However, here, the directors of Islandsite and Confident Concept in fact removed the appellants as business rescue practitioners and appointed new ones, who purported to subsequently terminate business rescue proceedings. Justification for such conduct was sought in the execution order granted by the High Court. That order expressly (in a so-called ‘suspension order’) provided that ‘[a]ny present or future appeals, applications and petitions by any party relating to this judgment shall not suspend the operation’ of the original removal order.

The SCA, per Wallis JA (Mbha JA, Mocumie JA, Eksteen AJA and Mabindla-Boqwana AJA concurring), before addressing the merits of the appeal, saw it fit to address the validity of the GP’s above ‘suspension order’. It held that it was invalid in the face of s 18(4)(iv), whose wording was explicit and allowed for no misunderstanding. The court held ‘the operation of an execution order was suspended pending the outcome of an urgent appeal against that order’. That, the SCA stressed, was the statutory position and a court could no more grant an order contrary to a statute than it could order a party to perform an illegal act. The SCA added that the inherent power of a court to regulate its own procedure could not be used to override the provisions of a statute directly governing the issue in question. The SCA went on to hold that, following from the fact of the nullity of the suspension order, the execution order was suspended pending this appeal, and the removal order was not yet effective. In turn, the appointment of the new business rescue practitioners, and the latter’s termination of business rescue proceedings, were also invalid.

On the merits, the SCA found there were no exceptional circumstances present justifying the granting of leave to execute. When dealing with someone’s removal from an office such as that of a business rescue practitioner, the mere fact that the court rules that they should no longer fill that office does not in itself constitute an exceptional circumstance. There had to be something more in the circumstances of the case that made the immediate implementation of the removal order necessary. The SCA consequently upheld the urgent appeal.

Companies

Grounds for removal of directors: Knoop NO and Another v Gupta and Another 2021 (3) SA 88 (SCA) dealt with some of the business affairs of the infamous Gupta clan currently under investigation by the Zondo Commission of Inquiry into Allegations of State Capture. Because of the myriad allegations made against the Guptas, companies run by them became ‘unbanked’ because banks were not prepared to deal with them. Two of these companies, Islandsite and Confident Concept, bankrupted by this turn of events, were placed under supervision, and went into voluntary business rescue. The appellants, Messrs Knoop and Klopper, were appointed as their business rescue practitioners. As such, they were obliged to conduct themselves as officers of the court and company directors under s 140(3) of the Companies Act 71 of 2008 and were subject to removal for various forms of misconduct under s 139(2) of the same Act.

The respondent, Ms Chetali Gupta and her husband Mr Atul Gupta were, together with other members of the Gupta family, the shareholders in the companies. After the appointment of Knoop and Klopper, Ms Gupta applied for their removal under s 139(2) on various grounds. These included –

  • their staff were incompetent;
  • they ignored and undermined the business rescue plans;
  • they ignored offers for assets; and
  • they insisted on sales by auction rather than private agreement.

She made a string of other allegations against them, inter alia that they failed to pay value added tax (VAT), were mala fide, careless and conflicted, and did not conduct themselves like officers of the court or company directors.

The GP upheld the application, ordered the practitioners removed, and granted them leave to appeal to the SCA.

In upholding the appeal, the SCA, per Wallis JA (Mbha JA, Mocumie JA, Eksteen AJA and Mabindla-Boqwana AJA concurring), pointed out that the allegations against Knoop and Klopper had to be substantiated by evidence. They had to know what they were being charged with and how their conduct of the business rescue operations was said to be deficient. However, the judgment of the GP contained no analysis of the case made by Ms Gupta, nor did it make any factual findings about her allegations. To remedy this, the SCA launched its own analysis of the facts. The SCA ruled that the facts failed to support the competence, business rescue plan, competitive offer or VAT complaints. The SCA found that the GP had, by relying on irrelevant considerations and issues not raised in the papers, erred in failing to examine whether the evidence supported Ms Gupta’s case. Every ground advanced by the GP in support of its conclusion that Knoop and Klopper should be removed was unfounded. In view of this the SCA upheld the appeal and replaced the GP’s order with one dismissing Ms Gupta’s application.

During the course of its judgment, the SCA investigated –

  • the discretion of a court to remove a business rescue practitioner when one of the grounds in s 139(2) of the Companies Act was established;
  • the general principles applying to removal of business rescue practitioners;
  • the grounds of incompetence or failure to perform their duties (s 139(2)(e));
  • failure to exercise proper care (s 139(2)(b));
  • engagement in illegal acts (s 139(2)(c));
  • conflict of interest and lack of independence (s 139(2)(e));
  • the implications of a business rescue practitioner being an officer of the court (s 140(3)(a)); and
  • subject to the duties of a director (s 140(3)(b)).
Competition law

Prohibited practice complaint in the removals business: strict time bar incapable of condonation? In Competition Commission of South Africa v Pickfords Removals SA (Pty) Ltd 2021 (3) SA 1 (CC) the CC investigated the nature of the time bar in s 67(1) of the Competition Act 89 of 1998 (the Act) in order to decide whether it was a prescription provision or a procedural bar, and what event had triggered it. Section 67(1) provides that a complaint may not be referred to the Companies Tribunal (the Tribunal) if it was initiated more than three years after the alleged anti-competitive conduct had ceased.

The applicant, the Competition Commission, had referred a complaint regarding collusive tendering by furniture removal firm Pickfords and several of its competitors, to the Tribunal. The issue between the Commission and Pickfords arose pursuant to an exception raised by Pickfords before the Tribunal to the effect that most of the counts against it were time-barred.

The Commission alleged that Pickfords and other firms had engaged in ‘cover quoting’. This was the illegal practice – also known as ‘bid rigging’ – of producing artificially high quotes from competitors to win a contract. The Commission contended that Pickfords had requested and provided cover quotes in response to various requests for quotations from customers going as far back as 2008. The Commission alleged that the practice amounted to illegal price fixing.

Central to the case was the timeline of the complaint against Pickfords. It was as follows: In November 2010, the Commission initiated a complaint (the 2010 initiation) that cited several removal firms, indicating that they were ‘the main companies implicated’ but which did not mention Pickfords. In a further initiation in June 2011, Pickfords was added as a respondent (the 2011 initiation). The Commission then filed a prohibited practice (price fixing) complaint against Pickfords in 2015 (the referral).

Pickfords excepted to the referral on the grounds that, of the 37 counts of prohibited practices levelled against it in the 2011 initiation, 14 took place more than three years earlier, and were therefore time-barred under s 67(1) of the Act. The question was thus which referral, 2010 or 2011, had triggered the running of the three-year period. The Tribunal found in favour of Pickfords that its inclusion as a respondent in the 2011 referral was not an amendment of the 2010 referral, but rather a self-standing initiation. The Tribunal ruled that its powers of condonation did not extend to s 67(1).

In an appeal, the CAC found that while the 2011 referral was merely an amendment of the 2010 referral, Pickfords nevertheless became a named party only in 2011. The CAC held that the purpose of s 67(1) was to bar investigations into practices that had ceased and no longer endangered the public weal. It agreed with the Tribunal that the time bar in s 67(1) was absolute and incapable of condonation.

In an application for leave to appeal to the CC, Pickfords argued that permitting condonation would allow the Commission to ‘turn back the clock’, thereby defeating the purpose of s 67(1) and offending the principle of legality.

The CC, per Majiedt J (Mogoeng CJ, Jafta J, Khampepe J, Madlanga J, Mathopo AJ, Mhlantla J, Theron J, Tshiqi J and Victor AJ concurring) held, first, that it had jurisdiction over the matter because the interpretation of s 67(1), one way or the other, would have a material effect on the constitutional rights of the Commission and the public to access the courts. This was because a finding that s 67(1) was a proper prescription provision would result in an absolute bar on the initiation of a complaint when it was made more than three years after the practice had ceased.

The CC proceeded to find that the 2010 initiation was the trigger event, and that the CAC’s contrary finding that it was the 2011 initiation overlooked the Act’s emphasis on the prohibited practice over of the identities of the parties implicated in it. The 2011 initiation was merely an amendment of the 2010 initiation, which clearly stated that the investigation was ‘ongoing’. Moreover, the reference to ‘the main companies implicated’ foreshadowed the possible addition of other firms at a later stage.

The CC further held that s 67(1) is a procedural time-bar that was capable of condonation. The CAC erred in finding that s 67(1) is a limitation or expiry period and imposed an absolute, substantive time-bar. Such an absolute time-bar would subvert the Commission’s role as watchdog over transgressions of the Act and inhibit the public’s right of access to the Tribunal, the CAC and the courts in general. On the other hand, an interpretation of s 67(1) as a procedural time-bar would be more in line with the Bill of Rights, constitute a lesser infringement on the right of access to the courts, and also meet the rationality test. The CC pointed out that Pickfords’ contention that it would offend the principle of legality and defeat the purpose of the Act to permit the Commission ‘to turn back the clock’ did not, in the light of the above, bear scrutiny.

The CC accordingly upheld the appeal, setting aside the order of the CAC and replacing it with an order dismissing Pickford’s exception.

See also:

Criminal law

The presumption that the owner was the driver of a vehicle is not applicable to an owner of a trailer hired out to customer: In National Minister of Transport v Brackenfell Trailer Hire (Pty) Ltd and Others 2021 (1) SACR 463 (SCA) a trailer-for-hire business (the respondents), had experienced problems with the national application of the presumption in s 73(1) of the National Road Traffic Act 93 of 1996 (the Act). As owners, they were presumed in terms of the subsection to have driven the trailers in a manner that contravened the provisions of the Act, whereas the trailers in question had in fact been driven by their customers. Their frustrations had caused them to launch an application in the WCC for an order, inter alia, declaring that the presumption was not applicable to trailers. This was opposed by the National Minister of Transport (the appellant). It appeared that the traffic-enforcement agencies had experienced difficulties in establishing the owners of the motor vehicles in circumstances where their cameras were only able to pick up the registration number of the trailer, which obscured the rear registration plate of the vehicle being driven. This had led to them targeting the respondents for prosecution by virtue of being the owners of the trailers involved.

Their application was successful leading to the Minister taking the matter on appeal. The SCA, per Petse DP (Dambuza JA, Van der Merwe JA, Weiner AJA and Goosen AJA concurring), found that the word ‘drive’ was defined in the Act with reference to the meaning of the word ‘driver’ as defined, and ‘driver’ meant someone who drove or attempted to drive any vehicle and included someone who rode or attempted to ride a pedal cycle or lead any draught, pack or saddle animal or herd or flock of animals. Thus, the element of ‘driving’ in relation to a trailer in tow was lacking and it was illogical to speak of such when in fact what happened was that it was the towing vehicle that was being driven when it was propelled by manipulating its controls with the trailer in tow. A trailer, not being self-propelled, had no engine or controls to manipulate its speed and direction independently of the towing vehicle. The court further noted that it was difficult to conceive of a situation where one could truly speak of a trailer being driven on a public road and that s 73(1) could only apply to a vehicle that was itself capable of being driven. It therefore followed that s 73(1) was not applicable to a trailer. The decision of the WCC was accordingly upheld, and the appeal was dismissed with costs.

Other criminal law cases

Apart from the cases and material dealt with above, the material under review also contained cases dealing with –

  • constitutional validity of legislation;
  • function of court administrative staff;
  • imposition of prescribed minimum sentences; and
  • malicious prosecution.
Motor vehicle accidents

Road Accident Fund’s (RAF’s) liability where accident happened in underground mine: In Bangiwe v Road Accident Fund 2021 (3) SA 172 (GP) the plaintiff claimed damages from the defendant (the RAF) for injuries sustained in a motor vehicle accident, which occurred in an underground mine. (He was a passenger on the back of a bakkie, falling off when the insured driver lost control of the vehicle due to negligent driving.)

Section 17 of the Road Accident Fund Act 56 of 1996 (the Act) provides for the liability of Road Accident Fund and its agents for ‘any loss or damage … suffered as a result of any bodily injury … caused by or arising from the driving of a motor vehicle by any person at any place within the Republic’ (the court’s italics). The RAF raised as a defence that since the collision and/or accident occurred underground in a mine, it fell outside s 17’s ambit. This, it contended, was because ‘any place’ in s 17 did not mean ‘anywhere’, such as underground in a mine.

In the adjudication of this defence as a separated legal issue, Kumalo AJ held that the use of the words ‘any place within the Republic’ in s 17 was deliberate and meant just that. The Act was social legislation, aimed at the widest possible protection and compensation against loss and damages for the negligent driving of a motor vehicle. It would therefore be artificial to limit the RAF’s liability simply on the basis that the accident happened underground in a mine when the Act stated, in no uncertain terms, that accident must have happened at ‘any place within the Republic’. The GP accordingly ordered that the RAF would be liable for Mr Bangiwe’s agreed or proven damages.

 

Procedural fairness in appeal against rejection of claimant’s serious-injury-assessment form: In Van Aswegen v Health Professions Council of South Africa and Others 2021 (3) SA 238 (GP) the applicant appealed to the Road Accident Fund (RAF) Appeal Tribunal (the Tribunal) against the RAFs’ rejection of her serious-injury-assessment form in her claim for general damages. The day before the hearing of the appeal, she served additional medico-legal reports on the second respondent, the Acting Registrar of the Health Professions Council of South Africa (HPCSA). That these were not forwarded to and considered by the Tribunal when it rejected her appeal, formed the basis of her complaint in her application to review the Tribunal’s rejection of her appeal, for lack of procedural fairness under s 3 of the Promotion of Administrative Justice Act 3 of 2000 (PAJA).

In opposition the respondents raised a point in limine, that she failed to apply for condonation for the late filing of the medico-legal reports. This, it was argued, amounted to non-compliance with the requirements of reg 3(4) of the regulations to the Act, which provides for a condonation procedure regarding a dispute as to the rejection of the serious injury assessment form by the RAF.

The GP, per Kubushi J, held that the purpose of reg 3(4) was to achieve the timeous lodging of a dispute regarding serious injury assessments; not to prevent, on pain of having to apply for condonation, the advancement of further submissions, medical reports, and opinions in support of the grounds on which the HPCSA’s rejection was being attacked. Also, noted the GP, there was no procedure in the regulations by which further reports, or submissions could be presented to the HPCSA. Without such a procedure in place, it could not be said that an applicant who desired to place further evidence before the Tribunal, may not do so or should be prevented from doing so. Accordingly, the HPCSA’s decision not to present the additional medico-legal reports to the RAF in the absence of a condonation application, was wrong in law. It was also procedurally unfair in that the audi alteram rule and the provisions of s 3 of PAJA were ignored or not applied in a fair and flexible manner. The court, therefore, concluded that HPCSA’s approach, on its own, was procedurally unfair and rendered the Tribunal’s decision invalid and subject to be reviewed and set aside. In addition, the conduct of the Tribunal – in failing to consider the additional medico-legal reports, which the applicant had made available – was procedurally unfair. The decisions were accordingly held to be invalid and set aside.

Practice: Summary judgment

Whether an application for summary judgment can be granted in terms of the amended r 32 where the defendant amends the initial plea after the application for summary judgment had already commenced: The matter cited, Belrex 95 CC v Barday 2021 (3) SA 178 (WCC), concerned an application for summary judgment brought under the recently amended r 32 of the Uniform Rules of Court, which now required a plaintiff to wait for a plea before applying for summary judgment. In the application, heard in the WCC before Henney J, the plaintiff had sought from the defendant, an attorney whom it had mandated to sell an immovable property, payment of what it believed was owing out of the purchase price (which following the sale of the property was paid directly into the defendant’s trust account), as well as a detailed statement of account. The plaintiff applied for summary judgment on 9 July 2020, after having received the defendant’s plea. Later, on 4 August 2020, the defendant filed a notice of intention to amend his plea and introduce a special plea, and then on 7 August 2020, filed his opposing affidavit, based on such amended plea and special plea. The matter was heard 13 August 2020.

The WCC found that it could not grant an order in respect of the summary judgment application, holding that the amended plea was not yet ripe for adjudication given non-compliance with r 28(2). However, the WCC went on to add that, even were the amended plea properly before it, it would decline to deal with the matter under r 32, owing to a lacuna in the amended rules to adequately address the situation presented here, where the defendant had elected after the commencement of the application for summary judgment, to amend its plea and base its opposing affidavit on such amended plea. In explanation, the WCC held that, on the one hand, to proceed to summary judgment would place the plaintiff at a disadvantage since the rules confined the plaintiff to what they had presented in the founding affidavit and did not allow them to present further evidence, to explain why the defences as pleaded in the amended plea did not raise any issue for trial. On the other hand, the court could not simply ignore the amended plea and opposing affidavit: To do so would defeat the purpose of the amended rule, which required that the nature and grounds of the defence and the material facts relied on in the affidavit be in harmony with the allegations in the plea; furthermore, a defendant was entitled to amend its plea any time before judgment.

The WCC’s solution was to rule that the defendant’s notice of amendment should take effect in terms of r 28(2) as of the date of the judgment, for the plaintiff to exercise its rights in terms of the rule. The WCC granted the plaintiff leave to bring a fresh application on the amended plea, should such an application for amendment be allowed.

Other cases

Apart from the cases dealt with above, the material under review also contained cases dealing with –

  • asset forfeiture and the freezing of third-party assets;
  • contracts contrary to statute and the obligation of the court to raise the issue of legality;
  • judicial case management in the Gauteng Local Division, Johannesburg;
  • the constitutionality of legislation concerning the interception of telecommunications;
  • the date of dissolution of a company being wound up;
  • the obligation to pay interest on value-added tax; and
  • the supply of electricity to a defaulting municipality.

Gideon Pienaar BA LLB (Stell) is a Senior Editor, Joshua Mendelsohn BA LLB (UCT) LLM (Cornell), Johan Botha BA LLB (Stell) and Simon Pietersen BBusSc LLB (UCT) are editors at Juta and Company in Cape Town.

This article was first published in De Rebus in 2021 (July) DR 29.

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