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.
CC: Constitutional Court
GP: Gauteng Division, Pretoria
KZD: KwaZulu-Natal Local Division, Durban
LAC: Labour Appeal Court
LC: Labour Court
SCA: Supreme Court of Appeal
Whether practitioner may commence retrenchment process under LRA before conclusion of business rescue process: In South African Airways SOC Ltd (In Business Rescue) and Others v National Union of Metalworkers and Others 2021 (2) SA 260 (LAC), the appellant, South African Airways (SAA), went into business rescue. Before the business rescue practitioners (the second and third appellants) finalised the business rescue plan, they issued notice under s 189(3) of the Labour Relations Act 66 of 1995 (LRA) informing employees that they could be dismissed for operational requirements (retrenched) and that they should enter into consultations with SAA on, inter alia, ways to avoid retrenchment. The business practitioners also offered voluntary separation packages that were accepted by some employees.
Under s 189 of the LRA retrenchments are prohibited during the 60-day consultation process. The unions argued that moratorium on retrenchments during business rescue proceedings also prevented practitioners from seeking to secure voluntary retrenchments. The first respondent, Numsa, together with other unions representing SAA’s employees (the unions), refused to take part in the consultation process and applied to the Labour Court (LC) for a ruling that the s 189 notices were premature and unlawful because they were issued before the production of a business rescue plan. The unions asked that the consultation process be halted pending the execution of the plan. The LC ruled in favour of the unions. The judgment hinged on the interpretation of s 136(1) of the Companies Act 71 of 2008, which states that employees retain their jobs during business rescue and that any retrenchment ‘contemplated in the . . . business rescue plan is subject to [LRA] section 189 and 189A’. The LC ruled that s 136 of the Companies Act offered complete protection against dismissal during business rescue proceedings. It found, however, that nothing prevented practitioners from offering a voluntary severance package to avoid retrenchment.
SAA appealed to the LAC and the unions counter-appealed, attacking the LC’s ruling on voluntary severance. The LAC (per Phatshoane ADJP, with Davis JA and Musi J concurring) ruled that s 136 of the Companies Act had to be interpreted in light of the business rescue procedure’s aim to rescue the whole company, not just its business or parts of it, and thus to retain jobs. The words ‘any retrenchment of any such employees contemplated in the . . . business rescue plan’ in s 136(1)(b) of the Companies Act signified a plan that would conceptualise the commercial rationale for retrenchments. The raison d’être for the enactment of s 136(1)(b) was to safeguard employees from being subjected to retrenchment without a business rescue plan. And
s 150 of the Companies Act made it plain that the rescue plan, which under subs (2) had to explain its effect on the number of employees, had to precede any retrenchment. This, the LAC held, put paid to any suggestion that the retrenchment process could begin without one. Therefore, the LAC concluded that the LC’s ruling in the issuing of the LRA s 189 notice by the practitioners – absent a business rescue plan – was premature and unfair and had to be withdrawn. It accordingly dismissed the appeal.
As to the counter-appeal, the LAC held that the LC did not make any appealable order regarding the offer of voluntary retrenchment packages, and in any event, no reason why the practitioners could not unilaterally offer voluntary severance packages to the employees. Therefore, it concluded that the cross-appeal had no merit and would be dismissed.
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Freedom of religion, property rights and the call to prayer: Can a homeowner successfully sue to silence Muslim calls to prayer coming from a neighbouring property? This was the question posed in Ellaurie v Madrasah Taleemuddeen Islamic Institute and Another 2021 (2) SA 163 (KZD). The applicant, Mr Ellaurie, from Isipingo Beach, Durban, lived opposite the first respondent, a Madrasah (an institute for Islamic studies). The second respondent was the eThekwini Municipality, a local authority, which did not participate in the litigation.
The Madrasah, which had around 340 students and housed a mosque and accommodation for staff and students, was separated from Mr Ellaurie’s property by about 20 metres. The properties were in a residential suburb in the jurisdictional area of the Municipality, which had granted the Madrasah an approval for a cluster residential development.
Mr Ellaurie, a Hindu, unabashedly opposed to the Islamic faith propagated by the Madrasah. Citing Hindu scripture, he believed that Islam discriminated against non-Muslims, promoted cultural racism, did not uphold the divinity of man, and lacked commitment to the truth and the pursuit of truth. In his view, Islam was not protected under the Constitution because everything it stood for was unconstitutional.
Mr Ellaurie stated that his family moved to Isipingo Beach in 1966 and that the Madrasah, having acquired a neighbouring property in 1999, had, in collusion with the Municipality, continuously developed the property in clear violation of its residential status. He argued that Isipingo Beach was a diverse, quiet residential suburb but that the Madrasah was turning it into a Muslim enclave.
Mr Ellaurie’s principal complaint, however, was about the calls to prayer that emanated from the Madrasah five times every day, against which he sought an interdict. More drastically, he also wanted an order banning the Madrasah from the area and directing that its property be sold to the state or a non-Muslim entity.
Mr Ellaurie argued that the call to prayer, which was electronically amplified, was a foreign sound that bore down on him, invading his private space, depriving him of the enjoyment of his property and disturbing his peace of mind. It disrupted his sleep and interfered with his enjoyment of music and his ability to meditate. The call to prayer, he said, gave the suburb a distinctly Muslim atmosphere, attracted people of the Islamic faith and kept non-Muslims away.
Mr Ellaurie claimed that, in seeking to ban the Madrasah from the area, he was acting on his own behalf, as well as in the public interest. The Madrasah, which did not deny that the call to prayer was meant for the neighbourhood, objected in principle to being interdicted from issuing it.
Approached to mediate between the parties, the South African Human Rights Commission recommended, among other things, that the Madrasah decrease the amplification of the call to prayer to make it less intrusive. The Muslim parties to the mediation had found the recommendation to be reasonable but the matter nevertheless proceeded to trial.
In its judgment the KZD, per Mngadi J, pointed out, in the first place, that since Mr Ellaurie had presented no evidence as to which members of the public shared his sentiments on Islam, his averment that he was acting in the public interest could not be sustained. The KZD ruled in this regard that no individual could claim to act on behalf of the public on an issue on which the public was likely divided.
The KZD also ruled Mr Ellaurie’s attempt to portray Islam as a false religion was misguided. The Constitution guaranteed freedom of religion and there could be no doubt that Islam was a religion. In addition, the KZD was in no position to analyse scripture to decide whether Islam was a false religion. Courts should in any event refrain from getting involved in disputes of this nature. The KZD concluded this facet of its judgment ruling that Mr Ellaurie’s attempt to have the Madrasah banned on religious doctrinal grounds was doomed to failure.
As to the matter of the alleged intrusiveness of the call to prayer, the KZD held that, while the Constitution in s 15(1) guaranteed freedom of religion, it did not guarantee freedom of practice or manifestations of religion. The call to prayer, while a manifestation of Islam, was not Islam itself. Mr Ellaurie had the right to enjoy the use of his home and others were obliged to respect it. Since the Madrasah never argued that it was essential to the practice of its religion that the call to prayer be made in such a way that it interfered with Mr Ellaurie’s right to the use and enjoyment of his private space, or that the current interference interfered least with it, Mr Ellaurie only had to prove interference. Moreover, an order that the Madrasah ensure that its calls to prayer were not audible inside Mr Ellaurie’s house would not negatively affect the manner in which it practiced its religion.
The KZD concluded that, while an interdict should never be lightly granted, Mr Ellaurie had established a clear right to the enjoyment of his property and interference with it by the Madrasah’s call to prayer. For Mr Ellaurie to instead move to another area was too extreme a measure to amount to a realistic alternative remedy to the situation. Accordingly, Mr Ellaurie was entitled to an interdict directing the Madrasah to ensure that its calls to prayer were not audible within the buildings on his property.
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A further exception to principle of autonomy of a performance guarantee from underlying contract? Performance guarantees are generally considered in South African law to be autonomous from the underlying contract to which they relate, so that performance under the guarantee is independent of compliance with the underlying contract. In Joint Venture Aveng (Africa) (Pty) Ltd/Strabag International GmbH v South African National Roads Agency SOC Ltd 2021 (2) SA 137 (SCA), it was argued that South African law should be developed to recognise an exception to this ‘autonomy principle’ so that, where the underlying contract restricted or qualified a beneficiary’s right to call up the guarantee, the contractor would be entitled to interdict a beneficiary from doing so until the conditions in the underlying agreement were met.
The facts were that the first respondent (Sanral), as employer, and the appellant (the JV), as contractor, were parties to a civil engineering contract (the underlying contract). The second respondent, as guarantor, had issued a performance guarantee in favour of Sanral, as beneficiary, in respect of this contract. However, the work to be performed was disrupted by violent civil unrest, prompting the JV to give Sanral notice to terminate the underlying contract on the basis of force majeure. Sanral denied force majeure, and so insisted the JV return to site. When the latter refused to do so, Sanral too purported to terminate the contract. The question of whether the civil unrest amounted to force majeure was referred to arbitration. Pending determination thereof, JV sought Sanral’s assurance that it would not call up the performance guarantee. Sanral refused to comply with this request. This prompted the JV to institute proceedings in the GP to interdict Sanral acting on the guarantee, on the ground that to do so would be unlawful as Sanral had not met certain conditions in the underlying contract limiting its right to call up the guarantee, namely proof that it was entitled to an amount under the contract through the application of certain clauses, and that it was in a position to cancel the contract. The High Court, per Makhuvele J, dismissed the application purely on the basis that the JV had failed to make out a prima facie case that the disruption of the project amounted to force majeure. The JV appealed to the SCA, which, unlike the High Court, addressed the question of the development of the law in the manner favoured by the JV.
The SCA, per Makgoka JA (Navsa JA, Saldulker JA, Goosen AJA and Unterhalter AJA concurring), stated that there was room in South African law to follow the approach taken in Australia and England, such that, if the underlying contract clearly and expressly prevented the beneficiary from making a demand under a guarantee, it could be restrained by the court from doing so. The SCA, however, stressed the need for a caveat to this exception: That it would only apply if the contractor could show that the other party would breach a term of the underlying contract by having recourse to the performance guarantee. The terms of the underlying contract could not readily be interpreted as conferring the right.
The SCA, however, ruled that the guarantee in question, based on its terms and those of the underlying contract, was unconditional. The second respondent was obliged to pay on receipt of a written demand from Sanral, which demand could be made if, in Sanral’s opinion and sole discretion, the JV had for any reason failed to complete the services in accordance with the conditions of the contract. The JV’s failure to complete the project, be it due to force majeure or otherwise, fell into this category. The reason for such failure was irrelevant, and Sanral was entitled to payment before any underlying dispute between it and the JV was determined.
The SCA accordingly dismissed the appeal.
The process under r 57 for obtaining a declaration that someone is of unsound mind and incapable of managing his affairs: In Scott and Others v Scott and Another 2021 (2) SA 274 (KZD) involved on the one hand the son, three daughters and brother of 91-year-old Mr Scott, and on the other Mr Scott and his wife. Mr Scott had amassed a fortune through his involvement in the footwear industry and the establishment of a leading shoe store in Durban in the 1970s, and was also the co-owner with his brother of a highly successful thoroughbred stud farm in the Nottingham Road area of the Natal Midlands. Apart from his interests in horse racing at a local level, Mr Scott owned valuable racehorses in Ireland, as well as valuable paintings, antiques and investments in the United Kingdom and South Africa worth several hundred million rand. What the applicants, who suspected their father had Alzheimer’s disease, sought was appointment of a curator ad litem under r 57 of the Uniform Rules of Court, an order compelling Mr Scott to undergo medical examinations for purposes of the curator ad litem’s report, and an interdict on Mr Scott’s wife bringing him home from hospital to a place under her control. Mr Scott, who insisted that he was of perfectly sound mind, found the applicants’ attitude perplexing and upsetting. In dismissing the application, the KZD, per Chetty J pointed out that the onus was on the applicants to prove that the appointment of a curator was a necessary step. The KZD remarked on a ‘significant undercurrent’ to the applicants’ case which suggested a concern to ensure that Mr Scott’s financial affairs did not come under the control of his wife, whom they disliked and had vilified in the papers. The KZD emphasised that a court should not grant orders for the appointment of a curator ad litem for the purpose of investigating or digging up medical evidence to show that Mr Scott was incapable of managing his affairs, and that even if it accepted that Mr Scott had Alzheimer’s, this was insufficient to conclude that he was incapable of managing his own affairs, of which there was no evidence. After issuing a warning about the scope for abuse of the r 57 procedure, the KZD ruled that, all things considered, the applicants failed to make out a case for the relief sought, and dismissed the application.
Rescission of judgment declaring an immovable property especially executable where property already sold in execution and transferred to purchaser and circumstances in which the court could reinstate the judgment debtor’s ownership: In Absa Bank Ltd v Mare and Others 2021 (2) SA 151 (GP), the Full Bench of the GP were faced with the situation of an application for rescission of a judgment declaring an immovable property specially executable, where such property had subsequent to the granting of the default judgment been sold in execution and transferred to a bona fide purchaser who had had no knowledge of the claim of the owner at the time of registration of transfer of ownership into their name. The main question to be addressed was, should the GP, if deciding to grant rescission, also reinstate the judgment debtor’s registered ownership of the property? The background was as follows: In terms of a loan agreement entered into between them, the first respondent, Ms Mare, had borrowed a sum of money from the applicant, Absa Bank Ltd, which sum was secured with a mortgage bond over a property she owned. She fell in arrears with her payments, as a result of which, Absa launched summons preceded by a s 129 notice. The Sheriff served the summons by fixing it to the grass of Ms Mare’s property – her chosen domicilium citandi et executandi – a smallholding with a residence. Absa ultimately obtained default judgment ordering Ms Mare to pay the loan sum, as well as declaring the property to be specially executable. The property was subsequently sold in execution to, and registered in the name of, the second respondent. Ms Mare alleged that she only learnt of what had happened when the second respondent visited the property. She was prompted to bring an application for rescission to the GP. The GP, per Kubushi J, rescinded the default judgment. It also declared to be null and void and set aside the attachment and sale, and directed the registrar of deeds, the fourth respondent, to re-register the property in her name. In respect of these latter decisions the GP granted Absa leave to appeal to the Full Bench.
Meyer J (with whom Mia J and Moosa AJ concurred) noted the principle that, as a general rule, a property sold at a sale in execution in terms of an existing judgment could not be vindicated from a bona fide purchaser once the property had been transferred to the purchaser. The rescission of the judgment did not in itself provide a ground for vindication. The principle, however, only applied where a valid judgment was in existence at the time of the execution sale and where a valid execution sale complying with the essential applicable rules of GP and statutory measures had taken place. Where there was no judgment, or where the judgment was void ab initio, or where the essential statutory formalities pertaining to the sale of an immovable property had not been complied with, the immovable property in question could in principle be vindicated even from a bona fide purchaser who had taken transfer of the property.
The GP went on to provide that a default judgment would be considered a nullity ab initio in circumstances in which there was no power to grant the judgment in the first place. And this would be the case, the GP held, where service of the process commencing GP proceedings did not occur in accordance with the rules of the GP. The GP found that to be the case on the facts, rendering the judgment void ab initio, and the subsequent sale and transfer of the property invalid. Uniform Rule 4(1)(a)(iv) allowed for service where ‘the person so to be served has chosen a domicilium citandi, by delivering or leaving a copy thereof at the domicilium so chosen’. A further requirement for proper ‘delivery’ was that delivery should take place in a way such that in the ordinary course the notice or process would come to the attention and be received by the intended recipient. The Sheriff’s leaving the summons on the grass, where it could be blown away, taken away or be invisible, was not an appropriate manner of delivery. The GP suggested that proper delivery would have been achieved by handing the summons to Ms Mare personally, by giving it to her employee, slipping it under or fixing it to the front door, or depositing it in the post box.
The GP found that it was open to Ms Mare to vindicate the property; and that the order of reinstatement of ownership should stand. The GP then dismissed the appeal.
Constitutionality of exclusion of domestic workers from statutory protection: In Mahlangu and Another v Minister of Labour and Others 2021 (2) SA 54 (CC) the CC considered the confirmation application of the GP’s declaration that s 1(xix)(d)(v) of the Compensation for Occupational Injuries and Diseases Act 130 of 1993 (COIDA) was constitutionally invalid. This insofar as it excluded domestic workers employed in private households from the definition of ‘employee’, thereby denying them compensation in the event of injury, disablement or death in the workplace.
The majority judgment of the CC (per Victor AJ, with Mogoeng CJ, Khampepe J, Madlanga J, Majiedt J, Theron J and Tshiqi J concurring), while agreeing with the GP’s declaration, differed on the constitutional rights infringed. The majority held that COIDA must be read and understood within the constitutional framework of s 27 and its objective of achieving substantive equality, so that social security assistance in terms of COIDA was a subset of the right of access to social security under s 27(1)(c) of the Constitution. Furthermore, the obligation under s 27(2) to take reasonable legislative and other measures, within available resources, included the obligation to extend COIDA to domestic workers. The failure to have done so in the face of the state respondent’s admitted available resources, constituted a direct infringement of s 27(1)(c), read with s 27(2) of the Constitution.
The majority further held that the differentiation between domestic workers and other categories of workers was arbitrary and inconsistent with the right to equal protection and benefit of the law under s 9(1); and – applying the concept of ‘intersectionality’ – it also amounted to indirect discrimination, under s 9(3). Domestic workers have endured the indignity of multiple intersecting forms of discrimination. The exclusion of domestic workers from benefits under COIDA also had an egregious discriminatory and deleterious effect on their inherent dignity (s 10).
The first minority judgment (per Jafta J with Mathopo J concurring) found no infringement of ss 9(3), 10 or 27, and would have disposed of the matter on the basis of an s 9(1) infringement alone.
The second minority judgment agreed with the main judgment, except in respect of the s 27 infringement (where it agreed with the first minority judgment).
In the second minority judgment Mhlantla J concurred with the majority but underscored the historical significance of the case and its intersectional nature. The judge set out the historical role and plight of the domestic worker and the reasons for their past exclusion from COIDA. Mhlantla J concluded her judgment by pointing out that while domestic workers were still being exploited, they were no longer invisible or powerless but had a voice.
The CC accordingly confirmed the GP’s declaration of s 1(xix)(d)(v) constitutional invalidity, with immediate and retroactive effect from 27 April 1994.
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Apart from the cases and material dealt with above, the material under review also contained cases dealing with –
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 (May) DR 30.
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