The Law Reports – March 2023

March 1st, 2023
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January 2023 (1) South African Law Reports (pp 1 – 320); January 2023 (1) South African Criminal Law Reports (pp 1 – 111)

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.

Abbreviations

CC: Constitutional Court
ECG: Eastern Cape Division, Grahamstown
FB: Free State Division, Bloemfontein
GJ: Gauteng Local Division, Johannesburg
GP: Gauteng Division, Pretoria
ML: Mpumalanga Division, Middelburg
SCA: Supreme Court of Appeal
WCC: Western Cape Division, Cape Town

Access to information

The media’s right of access to report on accounting irregularities commissioned by Steinhoff, a private body: Tiso Blackstar Group (Pty) Ltd and Others v Steinhoff International Holdings NV 2023 (1) SA 283 (WCC) concerned the right of access, under the Promotion of Access to Information Act 2 of 2000 (PAIA), of the media to a report (the Report) produced pursuant to an investigation into alleged accounting irregularities in the affairs of the respondent, Steinhoff International Holdings NV (Steinhoff), uncovered during an audit by Deloitte Accountants BV (Deloitte) of Steinhoff’s annual statements. Steinhoff’s attorneys, Werkmans, had commissioned PriceWaterhouseCoopers Advisory Services (Pty) Ltd (PwC) to produce that report shortly after it had become public knowledge that Deloitte had refused to sign off on Steinhoff’s financial statements and Steinhoff’s Chief Executive Officer, Mr Markus Jooste (Jooste), had resigned. During March 2019, PwC handed its report to Steinhoff and Werkmans. On 15 March 2019, Steinhoff published what it termed the ‘Overview of Forensic Investigation’.

The first applicant, media group Tiso Blackstar, and the third applicant, the non-profit amaBhungane Centre for Investigative Journalism, each sought access to the Report under s 53(1) of PAIA. Steinhoff refused, claiming that the Report was subject to legal privilege as intended in s 67 of PAIA. In response, the applicants sought orders in the WCC setting aside Steinhoff’s decisions to refuse access to the Report and directing Steinhoff to provide Tiso Blackstar and amaBhungane with copies of the Report.

The WCC, per Nuku J, held that to succeed, the applicants had to identify the right they sought to protect in seeking the Report and explain why it was required for the exercise or protection of that right. The applicants relied on the right to freedom of expression in s 16 of the Constitution, which included freedom of the press and the freedom to receive or impart information or ideas. The WCC confirmed that a requester could rely on the right to freedom of expression when seeking access to records, including those in possession of a private body like Steinhoff. The WCC emphasised that Steinhoff’s refusal limited the applicants’ freedom of expression and that access to information was crucial for accurate reporting and hence the communication of accurate information to the public.

The WCC then addressed the question whether the Report was subject to legal privilege under s 67 of PAIA, in which case Steinhoff would have been justified in refusing access. The WCC pointed out that this would be the case if Steinhoff were able to establish that the Report was obtained or brought into existence for the purpose of submitting it to Werksmans for legal advice, in respect of litigation which was either pending or contemplated as likely at the time. But Steinhoff failed to produce sufficient objective facts about the nature of the allegedly contemplated litigation or those against whom it was allegedly contemplated. The WCC accordingly directed Steinhoff to grant the applicants access to the Report.

Architects

The ambit of an architect’s duties of supervision: In Turn Around Investments 7 (Pty) Ltd and Others v Marcus Smit Architects CC and Another 2023 (1) SA 300 (WCC), the first and second plaintiffs contracted in writing with second defendant, a building contractor, to construct a wine cellar. The plaintiffs under a separate oral agreement employed the first defendant, an architectural firm, to render the services of an architect and principal agent. The first defendant agreed to regularly inspect the works to satisfy itself that they were being carried out in accordance with the plans. It also agreed to exercise reasonable professional skill and diligence in performing its mandate.

As it turned out, the works were not properly carried out, the structures being replete with material defects. The plaintiffs decided to sue the first and second defendants out of the WCC for breach of agreement and their resultant damages. The issue in respect of the first defendant was whether it had breached its obligations as architect and principal agent.

The WCC, per Bremridge AJ, emphasised that it was an accepted legal principle there was a common-law duty on an architect, as principal agent, to supervise the works to ensure they were carried out in accordance with the governing agreement. Supervision in this context did not entail monitoring and directing the works on a day-to-day basis, but rather that the principal agent should inspect the works with sufficient frequency and care to ascertain that they were being carried out in accordance with the requirements and specifications of the agreement and then give the contractor such instructions as were necessary to ensure the works were properly carried out or rectified.

The WCC held that the first defendant’s contractual obligation to regularly inspect the works to satisfy itself that the work was being done in accordance with the plans, and to exercise reasonable professional skill and diligence in so doing, accorded with the common-law obligation of supervision described above. Had the first defendant properly supervised the works and exercised reasonable care and diligence, the first defendant would have observed that the works were not being carried out in a proper manner and would have taken steps to have the poor workmanship rectified. But the first defendant had failed to do so, thereby breaching its obligations as principal agent. The WCC accordingly upheld the plaintiffs’ claim and found the first defendant liable in damages for the costs required to remedy the defects arising from the breach of its obligations.

Companies

Multimillion rand mine plant transaction challenged: In Africa Wide Mineral Prospecting & Exploration (Pty) Ltd v Platinum Group Metals (RSA) (Pty) Ltd and Others 2023 (1) SA 98 (GJ) the plaintiff Africa Wide Mineral Prospecting and Exploration (Africa Wide) and first defendant Platinum Group Metals (PTM) were, respectively, the minority and majority shareholders of third defendant, Maseve Investments (Maseve), a mining company that owned a platinum mine near Rustenburg. When, in 2016, Maseve ran into financial difficulties it was bailed out by PTM in return for pledging its assets, including the Rustenburg mine, as security. Keen to sell either the mine or Maseve itself, PTM took steps to amend Maseve’s memorandum of incorporation (MOI)  which contained the usual minority protections  by incorporating a ‘drag-along’ clause that would oblige Africa Wide to go along with any offer to purchase Maseve’s full shareholding. The amendment was passed by special resolution in June 2017. The Africa Wide-appointed director dissented.

By this time the second defendant, Royal Bafokeng Platinum Ltd (RB Platinum), had indicated an interest in acquiring all Maseve’s assets. But its offer was rebuffed by PTM, which did not want to sell them separately from its shareholding. Eventually a two-part transaction was agreed on:

The sale of Maseve’s ore processing plant to the fourth defendant, RB Resources (a subsidiary of RB Platinum).

The disposal of the entire Maseve shareholding to RB Platinum via a ‘scheme of arrangement’ under ss 114 and 115 of the Companies Act 71 of 2008.

Although the processing plant transaction (also referred to as the Sale of Business Agreement) was purportedly self-standing, the evidence showed that the US$ 58 million/US$ 12 million splits between shares and plant was fictional and intended to enable PTM to get quick access to the larger sum (the share transfer required government approval that was notoriously slow in coming). The scheme was subsequently sanctioned by court, which made it binding on all shareholders.

Unhappy with what amounted to an expropriation of its shareholding in Maseve, Africa Wide sought to collapse the scheme by attacking the plant transaction. It claimed that the minority protections Maseve’s MOI meant that its consent was required for the plant transaction. By taking this common-law route Africa Wide sought to escape the stranglehold imposed by the statutory machinery in ss 114 and 115 which, it argued, did not expressly exclude reliance on the common law.

For their part the defendants argued that Africa Wide was unable to show that the minority protections it relied on were triggered or, even if they were, that the approval of the scheme did not in any event mean that its claim was barred by s 115. The defendants pointed out that Africa Wide’s reliance on common-law rights was contrary to the speed-driven purpose of s 115, and that the court’s imprimatur in any event meant that a scheme’s effectiveness was derived from statute and could not be altered or affected by extraneous rights.

The GJ, per Fisher J, ruled that the true intention of the plant transaction was neither to dispose of the plant in a vacuum nor to change the nature of Maseve’s business, but to facilitate the transfer of shares in accordance with the scheme. Given plant transaction was intended to be an integral and indivisible part of the share transaction, the effect of the drag-along clause in Maseve’s MOI was that Africa Wide had to go along with all of it.

While this finding meant that it was not necessary to deal with the defendants’ special plea in terms of s 115, Fisher J nevertheless did so as it was independently dispositive of the case. The issue here was whether a scheme of arrangement could be challenged outside of the machinery prescribed by the Act or put differently, whether Africa Wide’s claim, based as it was on the common law, was barred by the Act.

Fisher J pointed out that making schemes susceptible to the vagaries of review litigation would stymie their purpose of overcoming minority resistance to attempts to save a company. Africa Wide also failed to take account of the fact that the scheme had been approved by company resolution and was thus enforceable by and against the scheme participants unless reviewed and set aside. Fisher J emphasised that if a challenge to a scheme entailed a direct or indirect attack on the resolution approving the scheme, it could only be brought under s 115, which it was not. In the event, the GJ dismissed Africa Wide’s claim.

Criminal law

The importance of proper citation of company employee in charge-sheet: In S v Lotz 2023 (1) SACR 88 (KZP) the appellant was charged in a magistrate’s court with contravening s 50(1) of the National Land Transport Act 5 of 2009 and sentenced to a fine of R 15 000 or ten months’ imprisonment, in that he had personally operated a public-transport-service vehicle on a public road without holding the necessary permit or operating licence.

The appellant had been neither the driver nor the owner of the vehicle but an employee of a company that rented out motor vehicles. The company also provided a passenger service to clients from time to time, and in this case was transporting four United Kingdom nationals from the airport in Johannesburg to a hunting lodge near Dundee in KwaZulu-Natal. The vehicle was stopped and impounded while being driven by a different employee of the company who had been instructed to undertake the journey. On the following day the driver and the appellant drove down to Dundee from Johannesburg to collect the vehicle. It was then that the appellant was arrested and convicted of ‘the offence of contravening s 50(1) read with ss 1, 124, 126 and 127 of Act 5 of 2009’. The prosecution appeared to have been conducted without any reference to the provisions of s 332 of the Criminal Procedure Act 51 of 1977 (CPA), which permitted liability to be visited on a corporate body for criminal conduct by way of citing a person as representative of the corporate body.

On appeal to the KZP, Mossop J (Koen J concurring) noted that the qualification in s 332(2)(d) of the CPA that the person in such circumstances had to be cited in the charge-sheet as a representative of the corporate body, was of singular significance. While the warm-bodied accused was dealt with as if he had personally committed the offence committed by the corporate body, any conviction that followed was the conviction of the corporate body, and not the warm-bodied accused, unless he was also charged and convicted in his personal capacity. Difficulties for the state immediately became apparent in that the appellant at no stage personally operated a vehicle in breach of the Act; he was not the owner of the business; he was not the owner of the vehicle; and neither was he the driver thereof. He was not even in the province of KwaZulu-Natal when the offence was allegedly committed. There was, therefore, no evidence to demonstrate that he personally conducted the service that the state found offensive and contrary to the law. Furthermore, since the appellant was never charged in his capacity as a representative of the company, although he ought to have been, he personally acquired a criminal conviction. Further problems included that there was no ss 124, 126 and 127 in the Act and what sections were relied on by the state were, therefore, unknown. The conviction and sentence were accordingly set aside.

Other criminal law cases

Apart from the cases summarised above, the January 2023 SACR contained cases dealing with –

  • forfeiture orders;
  • review where criminal proceedings not finalised;
  • the onus in bail applications;
  • the reservation of questions of law in appeals; and
  • warrantless searches.
Eviction

Monetary limit on jurisdiction of magistrates’ courts in eviction cases: Miya v Matleko-Seifert 2023 (1) SA 208 (GJ) concerned an appeal against a magistrates’ court eviction order to the High Court. One of the grounds of the appeal was that the magistrate court did not have jurisdiction to grant the order since the monetary value of right of occupation of the property in question exceeded the district court’s jurisdiction under s 29(1)(b) of the Magistrates’ Courts Act 32 of 1944, which was R 200 000 at the time.

The appellant’s contended for right to occupy arose from her claimed right to ownership of the property, the capital value of which rendered the value of disputed right of occupation more than R 200 000. The respondent argued that Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (PIE Act) nonetheless conferred jurisdiction on a magistrates’ court to grant an eviction order, even if otherwise beyond the jurisdiction established by s 29(1)(b) of the Magistrates’ Courts Act.

The GJ (Gilbert AJ (Manoim J concurring)) held that s 9 of PIE Act expanded the magistrates’ court’s jurisdiction by expressly providing that: ‘Notwithstanding any provision of any other law, a magistrate’s court has jurisdiction to issue any order … authorised by the provisions of [the PIE] Act’. A magistrates’ court would, therefore, have jurisdiction to grant an eviction order in terms of s 4 of the PIE Act regardless of the value of the disputed right of occupation, provided that the property was in its area of jurisdiction and the eviction sought fell within the ambit of the PIE Act.

Evidence

Reliance by an expert witness on scientific literature: The facts in MF v Road Accident Fund 2023 (1) SA 52 (SCA) were that the appellant was involved in a motor vehicle accident in which he sustained an injury to the soft tissue of his neck. Then, ten months later, he developed a disorder called dystonia, which manifests in involuntary muscle contractions. The appellant sued the Road Accident Fund out of the GP for the damages flowing from his injury. The narrow issue before the GP was whether the soft tissue injury was the factual cause of the dystonia. From there the issue was further narrowed to whether the dystonia was anatomically related to the site of the injury, a diagnostic criterion for the post-traumatic variant of the disorder. The GP found that such a relationship had not been established, and accordingly that factual causation was not proved. It granted leave to appeal to the SCA.

The SCA, per Mabindla-Boqwana JA in a unanimous judgment, examined the evidence of the appellant’s expert, and specifically whether there was a logical basis for his opinion that the anatomical-link criterion had been established. The SCA affirmed that an expert may (as here) quite acceptably rely on medical literature, provided the expert affirmed the correctness of the statements made in the publication concerned and provided further that the publication was authored by a person of repute or experience in the field. The SCA ultimately concluded, as the GP had done, that the anatomical-relationship criterion had not been proved, and accordingly that a causal relationship of the injury to the dystonia had not been established. The SCA accordingly dismissed the appeal.

Financial institutions

The recovery of dissipated trust assets: Living Hands (Pty) Ltd and Others v Old Mutual Trust Managers Ltd 2023 (1) SA 164 (GJ) involved an attempt by Living Hands to recover the losses it suffered when fraudster J Arthur Brown, having gained control of Living Hands’ forerunner Mantadia Asset Trust Co (Matco), looted R 861 million of the R 1,2 billion it had administer on behalf of 52 000 widows and orphans of mineworkers who had died in service. Living Hands accused Old Mutual of allowing Fidentia to access the funds without performing any due diligence or exercising proper precautions.

In what appeared to be a premeditated strategy to gain access to the funds, Fidentia in October 2004 bought Matco for R 93 million and replaced its directors with Fidentia directors (Brown and his colleagues). A Fidentia-controlled entity, Fidentia Asset Management (Pty) Ltd (FAM), was then appointed as Matco’s ‘investment manager’, with full discretionary powers to deal with the Matco portfolio. As a sort of test run for what was to follow, FAM on 15 October 2004 instructed Old Mutual to pay R 150 million from the Matco portfolio into FAM’s bank account. Old Mutual refused on various grounds. But a few days later Old Mutual received and complied with an instruction by FAM to immediately liquidate Matco’s entire portfolio. The upshot was that Old Mutual had by early November 2004 paid the entire R 1,2 billion into Matco’s bank account. Old Mutual argued throughout that the service level agreement it had concluded with Matco had obliged it implement Matco’s instructions.

Living Hands instituted an action in delict in the GJ against Old Mutual to recover the R 861 million plus interest from Old Mutual. The GJ (per Siwendu J) ruled that there were sufficient grounds to hold Old Mutual liable. She pointed out that the sheer size of the portfolio, the material risks and the detrimental consequences were foreseeable and would have been foreseen by a prudent manager, and that Living Hands had thus established factual and legal causation. In addition, public and legal policy considerations dictated that liability for the loss of the funds should be imposed on Old Mutual. She accordingly ordered Old Mutual to pay the R 854 650 643 plus R 854 650 643 in interest at the in duplum level. Old Mutual indicated that it intended to appeal the judgment.

National Credit Act

May the Registrar grant default judgments in respect of matters falling under the NCA? In Gcasamba v Mercedes-Benz Financial Services SA (Pty) Ltd and Another 2023 (1) SA 141 (FB), the FB (per Snellenburg AJ) heard an application brought by the applicant, Mr Gcasamba, for the rescission, under r 42, of a default judgment granted by the Registrar in favour of the first respondent, Mercedes-Benz. That default judgment concerned the enforcement by Mercedes-Benz of an instalment sale entered between itself and Mr Gcasamba, as purchaser, in terms of which it sold to the applicant a used Mercedes-Benz. Importantly, the agreement fell under the National Credit Act 34 of 2005 (NCA). Mr Gcasamba argued that the default judgment was erroneously granted because only the courts, not the Registrar, could grant judgments falling under the auspices of the NCA. He relied on s 130(3) of the NCA, which provided that ‘in any proceedings commenced in a court in respect of a credit agreement to which this Act applies, the court may determine the matter only if the court is satisfied that’ the conditions set out in paras (a) to (c) had been met. There was conflicting authority on the question; most recently the full court of the ML in Nedbank Ltd v Mollentze 2022 (4) SA 597 (ML), which held that the Registrar was empowered to grant default judgments in matters resorting under the NCA by virtue of having been granted the authority of a court by s 23 of the Superior Courts Act 10 of 2013.

The FB upheld Mr Gcasamba’s argument that the Registrar could not grant default judgments in matters falling under the NCA. It did so for two main reasons: Firstly, because the decision in University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice and Correctional Services and Others 2016 (6) SA 596 (CC) (2016 (12) BCLR 1535 (CC); (2016) 37 ILJ 2730 (CC)) was binding authority to the effect that, under ss 129 and 130 of the NCA, only courts could determine matters to which the NCA applied. Secondly, even ignoring CC authority, a proper interpretation of the NCA led one to the conclusion that it was only a court that could grant judgments to which the NCA applied. This was because s 130(3) of the NCA clearly demanded judicial oversight before proceedings initiated by a credit provider may be finally determined, in order to ensure that there had been compliance with the matters mentioned in the section. Furthermore, should the legislature have intended to depart from what was usually understood by ‘court’, namely, ‘a judge sitting in open court’, it would have done so in express terms, which it did not do. The FB accordingly rescinded the default judgment and order granted by the Registrar.

Revenue

Liability for assisting taxpayer in dissipation of assets: In Commissioner, South African Revenue Service v Wiese and Others 2023 (1) SA 119 (WCC) the Commissioner sought to hold the defendants liable under s 183 of Tax Administration Act 28 of 2011 (the TAA), for ‘knowingly assist[ing] in dissipating a taxpayer’s assets in order to obstruct the collection of a tax debt of the taxpayer’. Under s 183 such a person would be ‘jointly and severally liable with the taxpayer for the tax debt to the extent that the person’s assistance reduces the assets available to pay the taxpayer’s tax debt’.

South African Revenue Service (Sars) had issued a notice in terms of s 80J(1) of the Income Tax Act 58 of 1962 (the ITA) on 16 November 2012, of its intention to make adjustments to the taxpayer’s 2007 assessment, raising a corresponding assessment on 21 August 2013. At the time of the s 80J notice the taxpayer’s only asset was a loan claim. Sars claimed that on 19 April 2013 the second defendant, on instructions of the first defendant, assisted the taxpayer in dissipating the loan claim by declaring and transferring it as a dividend in specie to its holding company.

The WCC, per Le Grange J, considered two separate issues. The first was the meaning of ‘tax debt’ for purposes of s 183 of the TAA. Sars’ case was that the dissipation was affected at a time when, to the knowledge of the defendants, the intended adjusted liability constituted debts due to Sars for the purposes and in terms of s 169 of the TAA. The defendants, relying on the impugned distribution having made on 19 April 2013, namely, before the assessment, contended that a ‘tax debt’ must be interpreted in the context of an assessment that had been raised, so that Sars was required to have issued an assessment to the taxpayer before invoking s 183.

On this issue the WCC held that a ‘tax debt’ in s 183 existed irrespective of an assessment having been made. It must be read as a reference to an amount of tax due or payable in terms of the TAA – as advanced by Sars. The defendants who arranged the declaration of the dividend in specie could, therefore, be held liable in terms of s 183 of the TAA in the absence of an assessment at the time of the dissipation.

The second separated issue was whether Sars, for the purposes of proving its claim under s 183, could rely on transcribed evidence together with documents to which reference was made during testimony of three of the defendants at an inquiry held in 2015 and 2016 in terms of s 50 the TAA. Section 56(4), under the heading ‘Confidentiality of proceedings’, provides that ‘[s]ubject to section 57(2) [which prevents its use in criminal proceedings], Sars may use evidence given by a person under oath or a solemn declaration at an inquiry in a subsequent proceeding involving the person or another person’. This issue turned on whether the word ‘proceedings’ in s 56(4) was limited to tax court proceedings; and if admissible, for what purpose.

The WCC held that attributing a meaning to the word ‘proceedings’ that excluded judicial proceedings in court, whether civil or criminal, could not be supported as it would undermine Sars ability to collect tax. It made no sense at all to read the TAA as on the one hand giving substantial powers of information gathering, investigation and inquiry and then regard that evidence so obtained at an inquiry as inadmissible in subsequent court proceedings. Accordingly, this separated issue would also be decided in favour of Sars.

Universities

Students’ right to legal representation in disciplinary proceedings: In Dyantyi v Rhodes University and Others 2023 (1) SA 32 (SCA), Ms Dyantyi was found guilty of kidnapping and other offences by the respondent university’s disciplinary committee and expelled. The question was whether she was entitled to legal representation. It appeared that the university had during the course of the proceedings postponed the matter to date on which her counsel was unavailable and refused her request for a further postponement. As a consequence of these rulings neither Ms Dyantyi nor her counsel took further part in the proceedings.

Ms Dyantyi approached the ECG, which dismissed her review application based on procedural unfairness. She appealed to the SCA, which found (per Van der Merwe JA in a unanimous judgment) that, in subjecting Ms Dyantyi to a disciplinary inquiry, the University was exercising a public power, with the result that the Promotion of Administrative Justice Act 3 of 2000 (PAJA) was applicable. The SCA pointed out that there was no general right to legal representation under PAJA unless exceptional circumstances were present. Here, these resided in the legal complexities and the potential seriousness of an adverse finding against Ms Dyantyi. The University’s failure, through its above-mentioned rulings, to allow her the services of counsel, violated her right to procedural fairness under PAJA. The SCA accordingly upheld the appeal and remitted the matter to the University for reconsideration.

Other civil cases

Apart from the cases and material dealt with above, the September SALR also contained cases dealing with –

  • irregularities in government tenders;
  • the removal of members of a municipality’s executive committee;
  • the rationality of a tariff increase for a private supplier of bulk water;
  • the registration of immovable property owned by the state;
  • the validity of legislation pertaining to artificial insemination; and
  • dispositions without value prior to insolvency.

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 2023 (March) DR 18.

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