September 2021 (5) South African Law Reports (pp 1–325); September 2021 (2) South African Criminal Law Reports (pp 225–331)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.
GJ: Gauteng Division, Johannesburg
GP: Gauteng Division, Pretoria
KZD: KwaZulu-Natal Division, Durban
NCK: Northern Cape Division, Kimberley
NWM: North-West Division, Mahikeng
SCA: Supreme Court of Appeal
WCC: Western Cape Division, Cape Town
Do an arbitrator’s notes form part of the r 53 record? In Zamani Marketing and Management Consultants (Pty) Ltd and Another v HCI Invest 15 Holdco (Pty) Ltd and Others 2021 (5) SA 315 (GJ) the applicants and first to sixth respondents had been involved in a dispute, which had gone to arbitration. The respondents obtained an award in their favour. The applicants later instituted a review of the arbitrators’ award and called on the arbitrators to dispatch to the registrar, under r 53(1)(b) of the Uniform Rules of Court, the record of the arbitration proceedings. The arbitrators, all retired judges, were the seventh to ninth respondents in the present matter. They sent on the requested documents save for those containing their handwritten notes. Unhappy with the omission, the applicants issued an r 30A notice requesting despatch of the annotated documents. The arbitrators refused and the applicants instituted interlocutory proceedings to compel their production. The arbitrators’ reasons for refusing to hand over their notes were that r 53(1)(b) did not apply to reviews of awards brought under s 33 of the Arbitration Act 42 of 1965 and that in any event their notes were not part of the record.
The GJ, per Unterhalter J, held that r 53 applied in s 33 reviews of arbitration awards. This appeared from the language of the rule, case law, and the rule’s utility in making for fair review proceedings. The GJ found in addition that the arbitrators’ notes did not form part of the record and that their production could, therefore, not be compelled under r 53. This was because the notes might be fragmentary, provisional, exploratory, or subject to revision or discard, and because their relationship to the award’s reasoning was uncertain. Moreover, the notes, as the ‘raw material’ of reflection, should be produced under conditions of utmost freedom, and this might be curtailed if their production could be compelled. The GJ, therefore, dismissed the application.
Guardianship and contingency fee agreements in RAF claims: The facts in Bouwer obo MG v Road Accident Fund 2021 (5) SA 233 (GP) were that Mr Bouwer had been appointed curator ad litem to pursue a claim for damages in the GP against the Road Accident Fund (RAF) on behalf of MG, a seven-year-old girl who was injured when a car driven by her great-grandmother, Ms G, was involved in an accident.
The Fund conceded liability and counsel for the plaintiff prepared a draft order. The GP, per Van der Westhuizen J, however, mero motu raised the issue of the validity of contingency fee agreements (CFEs) Ms G had concluded on behalf of MG. The curator indicated that he had ratified the CFEs because MG was represented by Ms G, her ‘de facto’ guardian. MG had resided with Ms G at the time of the accident and when she concluded the CFEs, and only later went back to live with her biological mother, who did not participate in the proceedings.
Counsel for the plaintiff argued that Ms G, as de facto guardian, was legally qualified to sign the CFEs on behalf of MG. He further argued that a broad interpretation should be afforded to the word ‘guardianship’ in the Children’s Act 38 of 2005 to include de facto guardianship of the kind Ms G had provided to MG. He contended that the phrase ‘other person who act as guardian of a child’ in s 18(3) of the Act, which stipulates the duties of a guardian, included persons who were none of the types of guardians recognised by South African law. These were natural (parents), testamentary (appointed in the testament of the last surviving parent) and assigned (appointed by the court).
The GP ruled that the definition of the word ‘guardian’ in s 1 of the Act was clear and unambiguous and had to be understood within the ambit of the existing South African law on guardianship. The words ‘other person who acts as guardian of a child’ did not create a new kind of guardian, a ‘de facto’ guardian. At best, a de facto guardian would be the person contemplated in s 23 of the Act, in terms of which a High Court may assign ‘contact and care’ of a child to a person with an interest in the care, well-being or development of that child. However, no true guardianship was awarded to such a person, only the specific responsibilities and rights awarded by the High Court in question. The true status of Ms G was that contemplated by s 32 of the Act, which regulated care of a child by a person who did not hold parental responsibilities and rights. But that section in specific terms did not grant guardianship. Therefore, at the time the CFEs were concluded, Ms G had no authority or court-awarded rights to act on behalf of MG. In particular, she could not usurp the rights contemplated in s 18(3)(b) of the Act, namely the right to assist or represent the child in legal matters.
The GP held that there was another reason why Ms G could not have concluded the CFEs, and that was that a CFE was in the best interests of the legal practitioner representing the child, not the child itself. With CFEs, the risks involved in potential litigation was crucial; where the risk was minimal, or so far removed that the necessity of concluding one was questionable, it might not pass the limitations imposed by the Contingency Fees Act 66 of 1997. Since MG was barely seven-years-old and a passenger in a motor vehicle involved in a collision, no contributory negligence could befall her. There was thus no risk in claiming damages from the defendant. No CFE was therefore necessary. The CFEs were voidable transactions, if not void, and the mere fact that the curator ratified them was of no consequence. There was no valid agreement to ratify, and it was not in MG’s best interest to slice away a sizable portion of the award to be allowed.
Whether a ‘dangerous wound’ inflicted for purposes of sch 1 of the CPA to be determined objectively: The case of Mananga and Others v Minister of Police 2021 (2) SACR 225 (SCA) concerned an appeal against a decision dismissing the appellants’ claim for wrongful arrest. The SCA was required to determine whether the police officer who had carried out the arrests for assault with intent to do grievous bodily harm, without an arrest warrant, had the authority to do so in terms of s 40(1)(b) of the Criminal Procedure Act 51 of 1977 (CPA).
The complainant had been beaten by several assailants, including the appellants, and was taken to a hospital where lacerations to his head were sutured and a fractured wrist was put into a cast. He was kept in hospital for four days as he had lost a lot of blood and was dehydrated. When he received the police docket, the arresting officer interviewed the complainant and observed his wounds. He also took statements from various other witnesses before arresting the appellants and charging them with assault with intent to do grievous bodily harm.
Counsel for the appellants contended that for the police officer to have lawfully arrested the appellants he could only have done so for an offence mentioned in sch 1 to the CPA, the operative one being an assault where a ‘dangerous wound’ was inflicted, and there was simply no proof that the wounds inflicted on the complainant were indeed dangerous.
In considering this aspect, the court reasoned that since the issue of whether the suspicion of the person effecting the arrest was reasonable had to be approached objectively, the circumstances giving rise to the suspicion had to be similarly approached, that is, had to be such as would ordinarily move a reasonable person to form the suspicion that the arrestee had committed a sch 1 offence. Applying this approach, the court concluded that the information before the arresting officer in the docket, coupled with his own observations of the injuries, which were objectively proved, demonstrated an actual suspicion, founded upon reasonable grounds, that an assault in which dangerous wounds had been inflicted had been committed. The arrest, and subsequent detention, were therefore lawful and the appeal was dismissed.
Apart from the cases and material dealt with or referred to above, the material under review also contained cases dealing with –
Associated ship arrests: The practice of effecting a second arrest in anticipation of a first arrest being set aside: The dispute in MT Pretty Scene: Galsworthy Ltd v Pretty Scene Shipping SA and Another 2021 (5) SA 134 (SCA) arose out of the arrest, in 2016, of the Pretty Scene as a ship associated with the Jin Kang, which had in June 2007 been time chartered to an entity called Parakou Shipping from the appellant, Galsworthy. Delivery was due to take place in April 2009 but Parakou, which had in the meantime concluded a back-to-back time charter with an entity that went bankrupt soon afterwards, repudiated its charterparty with Galsworthy.
Dissatisfied with this, Galsworthy proceeded to London Arbitration, where it was successful, obtaining two awards totalling over US$41 million. To enforce them, Galsworthy applied ex parte to the three South African coastal High Court divisions for orders directing their registrars to issue warrants of arrest and writs of summons in respect of eight Jin Kang-associated ships, including Pretty Scene, which was duly arrested when it arrived in Durban in June 2016.
Pretty Scene’s owner, the first respondent (PSS) successfully applied in the KZD (Vahed J) to set aside the arrest. Galsworthy then effected a second arrest of the vessel. This time the application to set it aside was unsuccessful in the same court (Henriques J). Both cases went on appeal to a KZD full bench, which dismissed the appeal against Vahed J’s order but upheld the one against Henriques J’s order. In the result both arrests were set aside and a counterapplication for security for a claim of wrongful arrest granted. Pretty Scene was sold, and the proceeds distributed. Galsworthy appealed to the SCA.
The principal issue before the SCA was the legality of the second arrest of the Pretty Scene and whether the full bench correctly overturned Henriques J’s finding that the arrest was in order. Pretty Scene Shipping argued that the practice of effecting the second arrest to protect an arrestor’s position if the first arrest failed, constituted an abuse of process.
The SCA, per Wallis JA with Zondi JA, Mocumie JA, Schippers JA and Goosen AJA concurring, ruled that a second arrest of the same ship in relation to the same claim was only prohibited where security had been given for that claim. In the circumstances, the full Bench erred in upholding the appeal against the judgment of Henriques J.
Is the mandament van spolie available to remedy a denial of access to a computer server and e-mail? The facts in Blendrite (Pty) Ltd and Another v Moonisami and Another 2021 (5) SA 61 (SCA) were that Mr Moonisami (the first respondent) and Mr Palani (second appellant) were directors of Blendrite (Pty) Ltd (first appellant). Palani was in factual control of Blendrite. A dispute arose between the pair and Palani claimed Moonisami had resigned. Moonisami contested this. Ultimately Palani caused Blendrite (via instruction to Global Network Systems (Pty) Ltd (second respondent)) to terminate Moonisami’s access to Blendrite’s e-mail and server.
Moonisami then approached the KZD, claiming his peaceful and undisturbed possession of access had been unlawfully denied him. He was successful, obtaining an order that his access be restored. Blendrite and Palani then applied for leave to appeal, but this was refused, causing them to apply for and receive such leave from the SCA.
The SCA, per Gorven AJA, upheld the appeal. It pointed out that while it was true that the mandament van spolie was available where incorporeal property was spoliated, the issue here was whether the prior access to an e-mail address and company network and server amounted to quasi-possession of an incorporeal which qualified for protection by a spoliation order. The SCA emphasised that only quasi-possession of a supply of a service that arose as an incident of possession of corporeal property was protected by the mandament. Here, however, Moonisami’s prior access was not an incident of possession of corporeal property because he did not possess any movable or immovable property in relation to his erstwhile use of the server or e-mail address. The SCA pointed out that any entitlement to use the server and e-mail address was wrapped up in the contested issue of whether the Moonsami remained a director of Blendrite and might relate to the terms of his contract of employment. It was a personal right enforceable, if at all, against Blendrite. Since Moonisami’s prior use did not amount to quasi possession of incorporeal property, it was not protectable by the mandament. The SCA, therefore, set aside the KZD’s order, replacing it with an order dismissing the application.
Is the mandament van spolie available against a threatened deprivation of possession? In Bisschoff v Welbeplan Boerderye (Pty) Ltd 2021 (5) SA 54 (SCA) the appellant had leased out several farms to the respondent. The appellants’ attorneys sent two letters to the respondent’s attorneys in which they were informed that all agreements between them were cancelled, that the respondent should not trespass on, and that should they do so an urgent High Court application would be brought against him. The respondent’s case was that the statement in the letters had deprived it of its possession. The representative of Welbeplan Boerderye and the manager of farming operations, as well as his labourers, were as a result of the letters convinced that if they entered upon the land the appellants would not hesitate to remove them and charge them with trespassing. Based solely on what was stated in the letters, the respondent, on an urgent basis, obtained a spoliation order in the NWM with costs.
Upholding the appeal in a unanimous decision, per Dlodlo JA, the SCA held that the High Court had erred. For a spoliation order to be available there must be unlawful spoliation, for example, a disturbance of possession without the consent and against the will of the possessor. A minimum threshold or degree of actual physical interference or deceit sufficiently grave to qualify as effective deprivation of possession was required, the disturbance must be substantial enough to effectively end or frustrate the complainant’s control over the property. Where the conduct complained of merely constituted threatened deprivation of possession, the mandament van spolie was not available as a remedy because it was aimed at the actual loss of possession. The mere use of ‘strong and unequivocal’ words in a letter that a person should not trespass upon land, did not constitute deprivation, let alone unlawful deprivation, of possession of the land.
Deductible input tax and financial services: In Commissioner, South African Revenue Service v Tourvest Financial Services (Pty) Ltd 2021 (5) SA 86 (SCA) the respondent taxpayer (TFS) – a vendor conducting a foreign currency-exchange business through a number of branches – attempted to claim the entire value-added tax (VAT) charge paid by it on acquiring goods and services for its branches, as deductible input tax.
TFS had charged a commission based on a percentage of the transaction value and levied VAT on the commission. A client purchasing foreign currency paid it an amount made up of the quoted rand value of the foreign currency, plus the commission and VAT; a client selling foreign currency would receive the quoted rand value of the currency, less the commission and VAT. The Commissioner argued that the goods and services had been acquired by the taxpayer for use while making both taxable and exempt supplies, and accordingly applied an apportionment in terms of s 17(1) of the Value-Added Tax Act 89 of 1991 (the Act).
This case concerned the Commissioner’s appeal after the taxpayer had successfully challenged the Commissioner’s additional assessments in the tax court. At the heart of the appeal was the effect of the proviso in s 2(1) of the Act. While ‘financial services’ as defined in the Act are exempt from value-added tax, s 2(1) provides that activities which are deemed financial services – including the exchange of currency – will not be so deemed to the extent that the consideration payable in respect thereof is ‘any fee, commission, merchant’s discount or similar charge, excluding any discount cost’.
Upholding the appeal in a unanimous decision, per Ponnan JA, the SCA held that the effect of the proviso in s 2(1) was not that the activity lost its exempt nature entirely; it remained an exempt supply for all other purposes while the taxable component carried VAT. This was so because, rather than causing the activity to lose its exempt status in its entirety, the proviso created a mixed supply out of an identified activity by adding a taxable element to what was, and at its core remained, an exempt financial service. The effect of the proviso was to turn the activity into a partly exempt and a partly taxable supply. That being so, any tax paid on goods and services acquired by TFS must be apportioned and only the part attributable to the taxable supply may be deducted as input tax.
Apart from the cases and material dealt with or referred to 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 (Nov) DR 34.
