This column discusses judgments as and when they are published in the South
African Law Reports, the All South African Law Reports, the South African Criminal Law Reports and the Butterworths Constitutional Law Reports. Readers should note that some reported judgments may have been overruled or overturned on appeal or have an appeal pending against them: Readers should not rely on a judgment discussed here without checking on that possibility – Editor.
CC: Constitutional Court
ECG: Eastern Cape Division, Grahamstown
GJ: Gauteng Local Division, Johannesburg
GP: Gauteng Division, Pretoria
SCA: Supreme Court of Appeal
WCC: Western Cape Division, Cape Town
Subpoena duces tecum – requirements of relevance and specificity: An outbreak of listeriosis in South Africa between January 2017 and 3 September 2018 saw several people across the country contracting an infection of the bacterium Listeria monocytogenes (L. mono) as a result of consuming contaminated ready-to-eat meat products produced by the respondents (Tiger Brands) in Deltamune (Pty) Ltd and Others v Tiger Brands Limited and Others [2022] 2 All SA 26 (SCA).
A class action was brought against the company. In response, Tiger Brands issued subpoenas, which required the recipients thereof to produce an array of documents, items and test results conducted for the L. mono. The appellants in turn brought applications in the High Court, for setting aside of the subpoenas. The grounds for the applications were that the documents were –
The court’s upholding the validity and enforceability of subpoenas led to the present appeals.
It was held that the relevance in respect of a subpoena duces tecum is not only necessary, but appropriate. The second pertinent issue was that of specificity.
Rule 18(4) of the Uniform Rules of Court requires that pleadings contain a clear and concise statement of the material facts on which the pleader relies. The particularity required in that rule relates only to the material facts of the party’s case. Thus, the pleader is only required to set out the material facts – with due regard to the distinction that should be maintained between the facts, which must be proved in order to disclose the cause of action (facta probanda) and the facts or evidence which prove the facta probanda (facta probantia). The latter should not be pleaded at all, whereas the former must be pleaded together with the necessary particularity. In the context of a class action, there is an added consideration: The certification order sets the parameters within which the issues in the pleadings should be considered. What this suggests is that even where facta probantia are pleaded, as is the case here, a court is enjoined to distil the real issues between the parties, within the confines of the certification order. This it can only do if it ignores the unnecessarily pleaded pieces of evidence and focuses on the facta probanda of the case before it.
Tiger Brands’ attempt to cast doubt on whether it was the sole source of the outbreak was not the purpose of a subpoena duces tecum. The focus of the class action was only on those whose damages resulted from consuming products from Tiger Brands’ meat processing facility at Polokwane. It was, therefore, irrelevant for purposes of the class action, whether other persons might have been harmed by the consumption of products manufactured by anyone other than Tiger Brands through its Polokwane facility. Having regard to the certification order, the reference to possible cross-contamination was extraneous to the certified class action.
The appeals were upheld.
Requirement that a deponent sign the declaration in the presence of a commissioner of oaths: In Knuttel NO and Others v Bhana and Others [2022] 2 All SA 201 (GJ) the court had to decide whether there was substantial compliance with the requirements for the commissioning of the founding affidavit, and whether the second respondent had an enrichment lien over the property. The application was for eviction of the first respondent and others from property owned by a trust in which the applicants were trustees. The deponent to the founding affidavit was infected with COVID-19 at the time, the affidavit was commissioned via a Whatsapp video call. Regulation 3(1) of the Regulations Governing the Administering of an Oath or Affirmation requires that a deponent sign the declaration in the presence of a commissioner of oaths. Non-compliance with regulations does not per se invalidate an affidavit if there was substantial compliance with the formalities in such a way as to give effect to the purpose of obtaining a deponent’s signature to an affidavit.
Based on concessions made by the first respondent after papers were filed, the matter eventually distilled to an application for eviction from the property of the first respondent, and through her the second respondent and his family, which the first and second respondents contested on the basis of a right of retention (ius retentionis) in favour of the second respondent, arising out of the alleged unjust enrichment of the applicants by the cost occasioned to the second respondent of effecting improvements to the property, and of the alleged increase in value of the property as a result of the improvements. The lease agreement between the trust and the first respondent required the latter to obtain the applicants’ consent before effecting any improvements. The second respondent attempted to avoid that requirement by claiming that the relevant contractual term did not extend to him as a non-party to the agreement of sale. He also relied on the oral consent that he alleged the trustees had given him for the improvements. The court referred to case authority stating that a third party with knowledge of the terms of a contract between two other parties (in this case, the second respondent), may be held bound by those terms. Explaining the nature of and requirements for a right of retention, the court rejected the defence of an enrichment lien. The eviction order was accordingly granted.
Notice of birth by unmarried father: In Centre for Child Law v Director-General: Department of Home Affairs and Others 2020 (8) BCLR 1015 (2020 (6) SA 199) (ECG) the Full Court of the ECG in Grahamstown, declared s 10 of the Births and Deaths Registration Act 51 of 1992 (the Act) invalid and inconsistent with the Constitution to the extent that it prohibits an unmarried father from giving notice of the birth of his child under his surname, in the absence of the child’s mother or without her consent. Section 9(1) of the Act provides for the notification of the birth of any child ‘born alive’. Section 9(2) provides that this notification is ‘subject to the provisions of s 10’. Section 10 deals with the notification of the birth of a child born out of wedlock and made the exercise by an unmarried father of his right under s 9(1) contingent on either the mother’s presence or her consent.
The third respondent met the fourth respondent, a foreign national, while he was doing military service in the Democratic Republic of Congo (DRC). The couple were married in the DRC according to local traditions. The marriage was not registered, and no marriage certificate was issued. Customary marriages are apparently not registered in the DRC and the marriage is also not recognised by the South African authorities. Two children were born of the couple’s relationship. The third respondent returned to South Africa (SA) and the fourth respondent followed him on a three-month visitor’s visa. When her visa expired, she was heavily pregnant and was unable to travel back to the DRC and not able to apply for a new visa. She gave birth to a third child in SA. The couple applied to have the birth of their third child registered but the Department of Home Affairs refused to register the child on the basis that fourth respondent lacked a valid visa and could not comply with certain regulations made in terms of the Registration of Births and Deaths Act.
The third and fourth respondents approached the High Court for relief. The Centre for Child Law was admitted as an intervening party and sought orders declaring ss 9 and 10 of the Act unconstitutional to the extent that they do not allow unmarried fathers to register the births of their children in the absence of the mothers. The High Court refused to declare ss 9 and 10 of the Act unconstitutional but declared sub-regulations (3)(f) and (i), and sub-regulation (5) of Regulations 3, 4 and 5, and sub-regulation (1) to Regulation 12 as constitutionally invalid. The High Court ordered the reading in of certain words in order to cure the defects in the sub-regulations.
The Centre for Child Law appealed to the Full Court. The Full Court found that the High Court’s interpretation of s 9 failed to consider that the notification of any child born alive is subject to the provisions of s 10. The Full Court found that, even though s 9 empowers an unmarried father to give notice of his child’s birth, the exercise by an unmarried father of his right under s 9(1) is contingent on either the mother’s presence or her consent, in terms of s 10. The Full Court declared s 10 to be invalid and inconsistent with the Constitution, and it suspended the declaration of invalidity and ordered that in the interim certain words were to be read into the section.
In Centre for Child Law v Director General: Department of Home Affairs and Others 2022 (4) BCLR 478 (CC), the CC by a majority (per Victor AJ with Jafta, Khampepe, Madlanga, Majiedt, Mhlantla, Theron and Tshiqi JJ concurring) sets out reasons for finding that s 10 differentiated unjustifiably between married and unmarried fathers in relation to registration of the birth of a child in the surname of the father, which amounted to unfair discrimination. The retention of s 10 of the Act would undermine the unmarried father’s right to dignity. It implied that an unmarried father was not entitled to be treated as worthy of registering the birth of his child with his surname in the mother’s absence merely because he and the child’s mother were not married. Section 10 was manifestly inconsistent with the rights to equality, dignity and the best interests of the child and had to be severed in its entirety. Because s 9(2) stated that it was ‘subject to the provisions of s 10’, that proviso had similarly to be severed. An order was made that the declaration of invalidity would take effect from the date of the order.
A dissenting judgment (per Mogoeng CJ with Mathopo AJ concurring) set out reasons for finding that the differentiation by s 10 was reasonable and justifiable and that ss 9 and 10 of the Act were capable of being read in a constitutionally compliant manner.
Effect on settlement agreements and court orders flowing from invalid contingency fee agreement: Schindlers Attorneys represented the plaintiffs in several litigious matters on a contingency basis. Settlement agreements in some of the matters were made orders of court. The plaintiffs in Theodosiou and Others v Schindlers Attorneys and Others [2022] 2 All SA 256 (GJ) sought the setting aside of two court orders, one incorporating the two settlement agreements and the other a consent to a money judgment, due to non-compliance with the Contingency Fees Act 66 of 1997. They contended that as the contingency fee agreement was illegal and void due to the said non-compliance, all agreements and orders flowing from that agreement were also void. That led to the second and third defendants raising an exception to the claim on the basis that it lacked the necessary averments to sustain a cause of action.
Referring to the general principles of pleading in the context of exceptions, the court turned to consider the effect the invalid contingency fee agreement had on the underlying settlement agreements. Non-compliance with the Act rendered the contingency fee agreement invalid and void, and the condictio ob turpem vel iniustam causam was an available cause of action to pursue against Schindlers Attorneys. Section 4(1) of the Act gives the court a discretion to inquire into the merits of the settlement agreement and make it an order of court. However, its power to enter the merits of the settlement interferes with the parties’ right to agree to their bargain freely and is, therefore, limited to prevent extortion of a plaintiff through an illegal contingency fee agreement or fraud on a defendant. Concluding that particulars of claim failed to disclose a cause of action for the relief sought in six of the prayers, the court upheld the exception and struck out the offending paragraphs.
Liability for loss caused by fraudulent acts committed by company director: In Gore NO and Another v Ward and Another [2022] 2 All SA 178 (WCC) as joint liquidators of a company (Brandstock), the applicants sought the setting aside, in terms of s 26 of the Insolvency Act 24 of 1936 read with s 340 of the Companies Act 61 of 1973, of payments of R 250 000 made to each of the respondents; alternatively, for a declaration that the payments were made sine causa. Orders were also sought directing the respondents to repay the amounts to the applicants, either pursuant to the relief granted in terms of s 26, or on the grounds of their alleged unjust enrichment at the company’s expense.
Opposing the application, the respondents contended that the payments were made not by Brandstock but rather by its sole shareholder and director one, Philp, using funds stolen by him from a third party (Louw). The payments had been made to the respondents in satisfaction of a long-standing debt owed to them by Philp and were made immediately after Philp had secured over R 2 million from Louw as financing for a sale transaction. Louw had paid the money into Brandstock’s account at Philp’s request.
The respondents contended that the funds used to make the payments had not become the property of Brandstock, and that the company’s banking account had been used as a conduit for the purpose of fraudulently receiving and disposing of the money that Philp had stolen. In other words, the respondents denied that Brandstock had made dispositions to them within the meaning of that word in s 26 of the Insolvency Act. They also denied that they were enriched by the payments.
It was held that a company has no mind of its own, and is, therefore, capable of acting only through a human agency. The law treats the company as the principal in relation to the actions undertaken in its name and on its behalf and the persons acting for it as its agents. A company is, therefore, bound only by the actions of persons who have authority to represent it. The court acknowledged the possibility of persons acting, or purporting to act, on behalf of a company, to misuse the opportunity for fraudulent purposes, and to do so entirely for their own dishonest ends to the prejudice of those with whom they purported to transact in the name of the company, and often at the same time also to the prejudice of their supposed principal. That leads to the question of where the resultant loss should fall.
The ultimate control of a company’s affairs is vested in its board of directors. Philp, as Brandstock’s sole director, fell to be regarded as its authorised agent. His authority was actual, not apparent or ostensible. Actual authority arises from the legal or consensual relationship in place between the principal and the agent and exists quite independently of the third party’s understanding of the facts. Brandstock was thus accountable to Louw for the money that was stolen by Philp.
The court rejected the respondents’ seeking to resort to the directing mind doctrine to displace the law of agency where those are applicable and available to determine a company’s liability in a contractual context.
In the circumstances of this case, the funds received from Louw became Brandstock’s property when it received the payment. By disposing of the funds credited to its account because of Louw’s payments, Brandstock exercised the personal right it had acquired against its banker in consequence of the payments.
There being no suggestion by the respondents that the dispositions were for value, the court set aside the payments as dispositions without value.
Competing requests for extradition: In Forum de Monitoria do Orçamento v Chang [2022] 2 All SA 157 (GJ). The first respondent, Mr Chang, was a public official of Mozambique who had occupied the position of Minister of Finance for ten years. He was implicated in the ‘Mozambican secret debt scandal’ and was accused of grand corruption involving plundering public resources. After being charged in both the United States (US) and Mozambique for corruption and fraud, he was arrested in South Africa at the request of American authorities. The Minister of Justice then received competing requests by both Mozambique and the US to extradite Mr Chang to their respective countries.
The applicant, Forum de Monitoria do Orçamento (FMO), being committed to fighting corruption, sought review of the Minister’s decision to extradite Mr Chang to Mozambique, after having first decided to extradite him to the US.
Victor J held that:
The Minister’s decision must be rationally related to the purpose for which the power was conferred. If it is not, then the exercise of the power would be arbitrary and at odds with the Constitution. Thus, in exercising his power, the Minister must take into consideration all the relevant facts when weighing up a matter pertaining to extradition. The process in leading up to that decision must also be rational.
When a court is faced with an executive decision where certain factors were ignored, it must consider –
One of the primary considerations, which illustrated that the Minister’s decision, was not rationally related to the purpose was that of immunity. Extradition to a state where the person enjoys immunity from prosecution is contraindicated. The question of Mr Chang’s immunity from prosecution was uncertain, and the Minister’s ignoring that aspect rendered his decision irrational. Further relevant concerns which the Minister did not consider or failed to give sufficient weight to were highlighted by the court.
Post hoc reasons for the Minister’s decision did not have sufficient probative value to justify a rational decision.
The extradition decision was reviewed and set aside, and the court ordered Mr Chang to be extradited to the US.
Release of prisoner on medical parole: In Democratic Alliance v National Commissioner of Correctional Services and Others [2022] 2 All SA 134 (GP). Urgent applications were brought by the Democratic Alliance (DA) and the Helen Suzman Foundation (HSF) for a declaration of unlawfulness against the decision of the then National Commissioner of Correctional Services, Mr Arthur Fraser, to grant the third respondent (Mr Zuma) medical parole under s 75(5) of the Correctional Services Act 111 of 1998 (the Act). The parole decision followed the CC’s sentencing Mr Zuma to 15 months’ imprisonment for contempt of court after he failed to comply with an order of that court, requiring him to appear before a Commission of Enquiry. Although the Medical Parole Advisory Board decided not to recommend medical parole, the Commissioner took the decision to place Mr Zuma on medical parole, without considering the grounds listed in ss 79(1)(b) and (c) of the Act.
The DA and HSF sought to have the medical parole decision reviewed and set aside and replaced with a decision refusing medical parole and requiring Mr Zuma to return to prison to serve out the remainder of his sentence. According to the applicants, Mr Zuma did not satisfy the requirement for medical parole as set out in s 79(1) of the Act.
It was held that the alleged abuse of power in the present proceedings, if proven, would impact the rule of law, and the matter was accordingly urgent.
The placement on medical parole extends to physically incapacitated offenders and those suffering from an illness that severely limits their daily activity or self-care. The Medical Parole Advisory Board, an independent expert body, must impartially and independently make a medical determination whether an offender is terminally ill or is suffering from an illness that severely limits his daily activity or self-care. It is the Board, and not the doctors treating the offender, which decides if an offender is terminally ill or severely incapacitated. If its recommendation is positive, the Commissioner must then decide whether s 79(1)(b) and (c) are satisfied. The recommendations of the Board are ordinarily decisive and binding on the Commissioner, who does not have the medical expertise to overrule the recommendation of the Board.
The Commissioner’s decision to grant Mr Zuma medical parole was an administrative exercise of public power and, therefore, had to be lawful, rational, reasonable, and procedurally fair. In its expert assessment, the Board had already considered medical reports, which the Commissioner then reconsidered and relied on to overturn the recommendation of the Board. In so doing, the Commissioner impermissibly usurped the statutory functions of the Board, and his conduct was irrational, unlawful and unconstitutional. The reasons given by the Commissioner to release Mr Zuma on medical parole were not connected with the requirements for medical parole and were not authorised by the empowering provision.
The effect of the Commissioner’s decision was to unlawfully mitigate the punishment imposed by the CC, thereby rendering the Constitutional order ineffective, which undermined respect for the courts, the rule of law and the Constitution itself.
In the premises, the impugned decision was reviewed, declared unlawful, and set aside and Mr Zuma was required to return to prison to serve out the remainder of his sentence.
School payment owed to creditor – liability of the state: The respondent, Komani Stationers, in Member of the Executive Council, Department of Education, Eastern Cape v Komani School and Office Suppliers CC t/a Komani Stationers [2022] 2 All SA 44 (SCA) had supplied school stationery to a public school. The Stationers did not receive payment and it sued the school’s governing body and principal. Default judgment was obtained, but the District Director instituted interpleader summons seeking an order releasing the goods concerned from attachment on the ground that the goods were owned by the Eastern Cape Department of Education (the Department) who were not cited nor indebted to Komani Stationers. The latter then sued appellant (the MEC) for payment. As s 58A(4) of the South African Schools Act 84 of 1996 prevents attachment, in satisfaction of a judgment debt, of assets of a public school, the question in the present appeal was whether s 60(1) of the Schools Act encompasses claims for specific performance in respect of payment of money owed to a creditor by a public school because of the prohibition contained in s 58A(4). A subsidiary issue was whether Komani Stationers’s claim against the MEC had prescribed.
The High Court found against the MEC who then appealed.
The court held that it was common cause between the parties that the claim asserted by Komani Stationers was essentially one for specific performance, and that on its terms s 60(1) does not absolve public schools from liability in respect of their contractual obligations. The court considered what s 60(1) means in providing that ‘the State is liable for any delictual or contractual damage or loss caused as a result of any act or omission in connection with any school activity conducted by a public school and for which a public school would have been liable but for the provisions of this section’. The established tenets of statutory interpretation were applied.
A delict generally entails a breach of a duty imposed by the law independently of the will of the party bound. On the other hand, contractual damage or loss flows from a breach of contract and thus consists of a breach of a duty voluntarily assumed. There may well be an overlap between a claim for delictual and contractual damage where the conduct complained of constitutes both a breach of contract and satisfies the requirements of a delictual claim. In contrast, specific performance entails the right of a plaintiff to insist, subject only to the court’s discretion, that the other party to the contract performs their undertaking in terms of the contract whenever they are able to do so.
To bring a claim within the purview of s 60(1) to hold the state liable the claimant would need to establish delictual or contractual damage or loss, caused as a result of any act or omission, in connection with a school activity, conducted by a public school, for which such public school would have been liable but for the provisions of this section. The court held that s 60 is limited only to delictual or contractual damage or loss arising as a result of an act or omission in the circumstances stipulated in the section itself against a public school and does not avail a creditor who seeks to enforce a contractual claim for specific performance against the MEC concerned when a claim of that kind lies solely against a public school that is privy to the contract.
The appeal was upheld by the majority of court.
In a dissenting judgment, the point of departure was the interpretation of s 60. The minority judgment favoured a less narrow interpretation to read the section to include damages or loss flowing from the non-payment of a claim based on specific performance.
Interpretation of indemnity clause – liability for customs duty, VAT, and other charges: In Cornerstone Logistics (Pty) Ltd and Another v Zacpak Cape Town Depot (Pty) Ltd [2022] 2 All SA 13 (SCA) the respondent (Zacpak), a licensee of a customs and excise warehouse, was liable, in terms of s 19(6) of the Customs and Excise Act 91 of 1964, for customs duties and VAT on all goods stored in its warehouse. Such liability only ceases when it is proved that the goods in question have been duly entered in terms of s 20(4) of the Act, either for home consumption or export, and have been delivered or exported in terms of such entry.
The appellant (Cornerstone) had applied to Zacpak for credit facilities in respect of warehousing services and signed the application form renouncing the benefits of excussion and division. Cornerstone instructed Zacpak to store goods in its warehouse. Zacpak subsequently released the goods to a road carrier (Bridge), who was supposed to export the goods to Mozambique. Although the consignments were entered for export to Mozambique, they were impermissibly diverted, thus entering for home consumption in South Africa. When the South African Revenue Service demanded payment of duties, Zacpak successfully enforced its indemnity clauses against Cornerstone in the court a quo. That led to the present appeal.
It was held that, in interpreting the indemnity and suretyship clauses, they had to be given meaning and business-like efficacy by having regard to the language used in the light of the ordinary rules of grammar and syntax; the context in which the provision appeared; the apparent purpose to which it is directed; and the material known to those responsible for its production. Properly construed, in terms of the agreement, Cornerstone indemnified Zacpak against any loss incurred by Zacpak as a result of Zacpak complying with Cornerstone’s express or implied instructions. For the indemnity to become effective Zacpak merely had to establish, on a balance of probabilities, that it had released the goods to Bridge on Cornerstone’s instructions. Based on the evidence, the court a quo correctly found that Zacpak released the goods to Bridge on Cornerstone’s express instructions. The court also highlighted evidence of Cornerstone’s continued involvement with the goods beyond their entry into Zacpak’s warehouse. In the absence of any fault on the part of Zacpak in the wrongful release of the goods to Bridge, liability was attributed only to the appellants.
The court per Smith AJA (Gorven, Mothle, Zondi JJA and Phatshoane AJA concurring) also found against the second appellant, who in signing the agreement as surety, assumed liability accessory to that of Cornerstone.
The appeal was dismissed with costs.
Apart from the cases and material dealt with above, the material under review also contained cases dealing with –
Merilyn Rowena Kader LLB (Unisa) is a Legal Editor at LexisNexis in Durban.
This article was first published in De Rebus in 2022 (June) DR 24.
