The Law Reports – November 2024

November 1st, 2024
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September 2024 (5) South African Law Reports (pp 1–334); September 2024 (2) South African Criminal Law Reports (pp 227–330)
Abbreviations

CC: Constitutional Court

ECMk: Eastern Cape Division, Makhanda

GJ: Gauteng Local Division, Johannesburg

GP: Gauteng Division, Pretoria

KZD: KwaZulu-Natal Local Division, Durban

LCC: Land Claims Court

MM: Mpumalanga Division, Mbombela

SCA: Supreme Court of Appeal
WCC: Western Cape Division, Cape Town

Administrative law

The consequences of a failure to consider just and equitable relief: In Minister of Mineral Resources and Energy and Others v Sustaining the Wild Coast NPC and Others 2024 (5) SA 38 (SCA), the SCA reviewed a decision of the ECMk that had set aside administrative decisions made in 2013 granting Shell the right to explore for offshore oil and gas along the Wild Coast. The High Court found the decisions to be procedurally unfair because of inadequate consultation with the affected communities.

The SCA dismissed the appeal, agreeing with the ECMk on procedural unfairness. But the SCA criticised the ECMk for failing to consider a just and equitable remedy as required under s 172(1)(b) of the Constitution. The SCA was particularly critical of the EMCK’s finding that the authorisation of new oil and gas exploration was not consistent with South Africa’s climate change commitments, which the SCA said had an unwarranted sterilising effect it could not endorse.

The SCA proceeded itself to weigh up the factors relevant to a s 172(1)(b) remedy, including the eight-year delay between the granting of the exploration right and its setting-aside, and the financial expenditure incurred in the interim by Shell and others. The SCA pointed out that it could temper the negative effects of the setting aside by directing that a new public participation process be conducted as part of a recently launched renewal application in respect of the original exploration right. It, therefore, suspended the ECMk’s setting-aside orders pending the completion of the new public participation process.

Children

Surrogacy quandary: does a child born from a surrogacy agreement have a right to a genetically linked sibling? The facts in KB and Another v Minister of Social Development 2024 (5) SA 30 (SCA) were that a married man and woman, A and B, wanted a child. Unable to produce the required sperm and eggs (gametes), they turned to donors. Eggs from donor C were fertilised by sperm from donor D, resulting in the development of several embryos. One of them was implanted into B by embryo transfer, resulting in pregnancy and the birth of a child, E. A and B wanted a second child, and to this end a second embryo was transferred into B, which again resulted in pregnancy. However, a medical emergency resulted in the loss of the foetus and the removal of B’s uterus. Still desiring a second child, A and B agreed with S that she would be implanted with one of the remaining embryos to bear proposed child F. To this end a surrogate motherhood agreement was entered into between A, B and S. All that was required for the implantation process to begin was confirmation of the agreement by the High Court. Section 296(1)(a) of the Children’s Act 38 of 2005 provides in this regard that:

‘No artificial fertilisation of the surrogate mother may take place –

(a) before the surrogate motherhood agreement is confirmed by the court’.

The obstacle, though, was s 294 of the Act, which required, as a prerequisite for the validity of a surrogate motherhood agreement, that ‘the conception of the child contemplated in the agreement is to be effected by the use of … the gamete of at least one of the commissioning parents’. Since the embryos proposed to be used were the product of donors C and D’s eggs and sperm, this requirement was not satisfied.

A and B decided to approach the MM for a declarator that s 294 was unconstitutional because it violated the rights of their already-born child E because it violated in E’s right to have a sibling he was genetically linked to. To solve this, a remedial reading-in into s 294 was proposed. The MM dismissed the claim but granted leave to appeal to the SCA.

In dismissing the appeal, the SCA (per Mokgohloa JA) ruled that the object of s 294 was to protect the interests of F (the child to be born), not those of E, and that there was no source for E’s alleged right to a genetically linked sibling. The SCA emphasised, moreover, that it could not read the wording suggested by the appellants into s 294 without offending the doctrine of separation of powers or violating CC precedent.

Companies

A shareholder’s right to withdraw from a company if the relationship between shareholders has broken down: Technology Corporate Management (Pty) Ltd and Others v De Sousa and Others 2024 (5) SA 57 (SCA) concerned a complaint under s 252 of the Companies Act 61 of 1973 by the minority shareholders of a company that the company’s affairs were being conducted in a manner that was unfairly prejudicial to them. The company in question was the first appellant, Technology Corporate Management (TCM), an information technology company founded in 1987 by then close friends Messrs Luis de Sousa (the first respondent) and Andrea Cornelli (the second appellant). Initially, TCM was run by both de Sousa and Cornelli as a partnership-type company, with de Sousa focusing on the technical and accounting side and Cornelli acting as Chief Executive Officer.

In 2004 a new corporate structure was finalised through various agreements. At about the same time, the relationship between de Sousa and Cornelli began deteriorating. Convinced that Cornelli was acting to this detriment, de Sousa unsuccessfully sought to secure a buy-out of his shares. An acrimonious meeting between de Sousa and Cornelli resulted in disciplinary proceedings against de Sousa and his dismissal from TCM’s employ.

In 2010 de Sousa, who was still a shareholder, and another shareholder and ex-employee, Mr Jose Diez (the second respondent), brought an action in the GJ under s 252 in which they contended that Cornelli was conducting the affairs of TCM in a manner that was unfairly prejudicial to them as minority shareholders. The GJ (per Boruchowitz J) ruled in favour of de Sousa and Diez, and ordered TCM to purchase their shares. The appellants were granted leave to appeal to the SCA.

In the SCA de Sousa’s key complaint concerning the way the affairs of TCM were being conducted was that he had from around 2007 been systematically excluded from daily involvement in the affairs of TCM, in circumstances in which he had a legitimate expectation to be recognised as an equal contributor to its affairs. De Sousa contended that he and Diez had, due to Cornelli’s refusal to discuss the disposal of their shares at fair value, been ‘locked into’ TCM.

The SCA (per Wallis AJA) dismissed de Sousa and Cornelli’s s 252 action. It rejected de Sousa’s claims of exclusion, ruling that he had no legitimate expectation to be retained by TCM as an executive director remunerated on the same basis as Cornelli. That, said the SCA, was clear from the 2004 agreements, which had since their conclusion regulated the relationship between TCM’s shareholders. While it was true that TCM had started out as a partnership-like entity that operated on the understanding that de Sousa and Cornelli would manage it together as equals, that understanding had fallen away, having been replaced by the agreements of 2004. The SCA also rejected de Sousa and Diez’s complaints of being locked in, noting that the shareholders’ agreement did not impose an obligation on remaining shareholders to acquire a departing shareholder’s shares. The SCA pointed out that a shareholder had no unilateral right of withdrawal when trust and confidence in the majority was lost. Nor were departing shareholders entitled to demand that the remaining shareholders negotiate their exit. For a claim under s 252, the loss of trust or confidence had to flow from the unfair conduct of the affairs of the company toward the minority, something which de Sousa and Cornelli were unable to prove. The SCA accordingly upheld TCM’s appeal against the GJ’s judgment.

Costs

Costs after the rejection of a Calderbank offer: A Calderbank offer is a secret settlement offer that the court may, if rejected, refer to only for the purposes of costs (it is also known as a ‘without prejudice save as to costs’ order). In Tekete and Others v Minister of Safety and Security 2024 (5) SA 325 (WCC) the court refused to impose a punitive costs order after a defendant who rejected a Calderbank offer was subsequently hit with a damages award that exceeded the offer.

The facts were as follows: Late in 2007, Tekete and others (the plaintiffs) instituted action against the police minister (the defendant) for damages arising out of a police shooting in October 2005 that had resulted in the death of their breadwinner. After 12 hearings on the merits and seven more on quantum, the WCC in December 2019 decided the merits in plaintiffs’ favour, holding the defendant liable for loss of support. Crucially, the issue of costs was held over. After awarding R1,436 million in damages, the WCC reverted to the issue of costs, at which point the judge’s attention was drawn to a Calderbank offer of R540 000 the plaintiffs made to the defendant in December 2022. As usual with Calderbank offers, the plaintiffs indicated that, if the defendant rejected the offer and the sum awarded by the court exceeded it, the offer would be disclosed to court with a petition for a punitive award of attorney and client costs. The plaintiffs submitted that the defendant was guilty of allowing litigation to proceed when it should not have, and that the Calderbank offer had properly placed the defendant at risk of punitive costs. The defendant asked for the award of ordinary party and party costs.

The WCC emphasised that while costs might have been curtailed had the minister accepted the plaintiffs’ offer, it had a discretion as to costs and was not obliged to award the punitive order called for by the plaintiffs. In casu, new information had come to light during the trial on quantum that was not known to the minister when the offer was made. Moreover, the minister’s conduct in rejecting the offer had not been either vexatious or unreasonable. The WCC, having stressed the duty of courts to make costs orders that were fair, just and reasonable, concluded that there was no reason in casu to sanction the minister with a punitive costs order.

 

Taxation of costs: In Fenyane v Ndengane NO and Others 2024 (5) SA 212 (GJ), the applicant, an admitted attorney without right of appearance in superior courts, sought to review a taxing master’s decision not to allow her to represent clients in the taxation of a bill of costs. The applicant argued that ‘appear’ as intended in s 25(3) of the Legal Practice Act 28 of 2014 should only apply to appearances before judges, not taxing masters, and that any admitted attorney should be able to appear before a taxing master. The GJ agreed, ruling that since taxing masters performed a quasi-judicial role, attorneys were not required to have right of appearance to appear before them.

Criminal law

Sexual offences: does Amendment Act of 2007 operate retrospectively? The appellants in Lategan and Another v Director of Public Prosecutions, Western Cape and Another 2024 (2) SACR 227 (SCA) were charged under the common law for sexual offences committed between 1974 and 1979. In issue was the applicability of ss 58 – 60 of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007, considering the common-law presumption against the retrospective operation of statutes (the offences having been committed before the promulgation of the Act). The presiding officer in the regional court proceedings considered the provisions incorrectly added to the charge-sheet, as there was no indication that they could operate retrospectively and ordered them removed. Unhappy with the decision, the Director of Public Prosecutions took the matter on review to the WCC, where the provisions were found to operate retrospectively. In a further appeal by the appellants to the SCA, Hughes JA, writing for a unanimous court, emphasised the importance of whether any of the appellants’ existing rights had been adversely affected in resolving the issue. As to the provisions introduced by the Act, the essence of its ss 58 and 59 was to clearly stipulate that no adverse inferences could be drawn solely from the absence of a previous consistent statement made by the complainant in a sexual offence and from the length of the delay between the commission of that offence and the reporting thereof. In such circumstances, the retrospectivity was in fact ‘weak’, relating only to procedural rules of evidence, and no unfairness would result in respect of any defence that the appellants might wish to mount during the criminal proceedings. The SCA, therefore, upheld the decision of the WCC.

Extradition

Does the authority to request extradition lie with the Minister of Justice or the National Prosecuting Authority? The appellant in Schultz v Minister of Justice and Correctional Services and Others 2024 (2) SACR 294 (SCA) disputed the validity of the request for his extradition from the United States (US) to South Africa for a criminal matter. At issue was which authority was to authorise the extradition request. The request had been initiated by a prosecutor, and then processed through several channels before arriving at the Minister of Justice and Correctional Services, who passed it on to the Department of International Relations and Cooperation. The GP concluded that, although the Minister, through the Department, had some role to play in requests for extradition to the Republic, this was a limited administrative function, and authority lay with the National Prosecution Authority. In a further appeal to the SCA, Mabindla-Boqwana AJA and Keightley AJA came to the opposite conclusion. They considered the process flawed because conduct implicating foreign relations clearly fell within the ambit of the executive, which meant that the authority to make such a request resided with the Minister of Justice and Correctional Services. The SCA accordingly set aside the order of the GP, replacing it with an appropriate declaration.

Delict

The duty of attorneys to warn clients of cybercrime: In May 2019 an elderly divorced pensioner, Ms Hawarden, bought a house for R 6 million. She was required to pay a deposit of R 500 000 into the estate agents’ trust account per electronic funds transfer (EFT). In their correspondence with Ms Hawarden, the estate agents warned her about the risk of cybercrime, and advised her to confirm the account details before paying. She did and all went well with the payment of the deposit.

Later, when paying the balance, again per EFT, to the seller’s attorneys, ENS, she fell victim to a business e-mail compromise (BEC) scam and sent R 5,5 million to a fake account. It appeared that the e-mail soliciting payment was not from ENS, but from a scammer, and that, during their e-mail communications leading up to the payment, ENS and Hawarden were both deceived by the hacker into believing that they were communicating with each other, when in fact they were both communicating with the hacker, enabling the latter to steal the money.

Ms Hawarden sued ENS out of the GJ for pure economic loss, basing her claim on ENS’s alleged negligence in failing to warn her about cybercrime risks like the estate agents did. While it was common cause that Ms Hawarden’s e-mail account was the one that was hacked, she pleaded that it was reasonable to impose a duty to warn her on ENS in the light of its relative size and sophistication. She argued that ENS could, instead of an unprotected e-mail attachment, used a secure payment method.

In January 2023 the GJ (per Mudau J) ruled in Ms Hawarden’s favour, holding ENS liable for the loss and ordering it to refund her the R 5,5 million (the case was reported as Hawarden v Edward Nathan Sonnenbergs Inc 2023 (4) SA 152 (GJ)). The GJ found that ENS had a duty to protect purchasers from BEC scams, and that their failure, as experienced conveyances, to warn Ms Hawarden rendered them liable in delict. ENS appealed the GJ’s decision to the SCA.

In June 2024 the SCA (per Dawood AJA), in a judgment reported as Edward Nathan Sonnenberg Inc v Hawarden 2024 (5) SA 9 (SCA), decided ENS’s appeal on the sole issue of whether ENS had been guilty of a wrongful omission when it failed to warn Ms Hawarden. The SCA considered various factors, including –

  • the lack of a contractual relationship between Ms Hawarden and ENS;
  • Ms Hawarden’s failure to protect herself from BEC despite having been made aware of it by the estate agency; and
  • the risk of extending liability to all creditors in situations similar to ENS (indeterminate liability).

The latter factor weighed heavily with the SCA. It emphasised the ‘profound implications’ the GJ’s judgment had for all creditors who sent their bank details by e-mail to their debtors. The SCA also emphasised that Ms Hawarden could easily have protected herself by asking her bank to verify ENS’s account details.

In closing, the SCA pointed out that a warning by ENS would in any event have been futile because by that time the hacker was already embedded in Ms Hawarden’s e-mail account. The SCA accordingly upheld the appeal against the GJ’s decision.

Land reform

Occupants’ right to graze livestock: In Moladora Trust v Mereki and Others 2024 (5) SA 51 (SCA) the Moladora Trust appealed to the SCA against the LCC’s decision to dismiss their application for an order directing the respondents to remove their grazing livestock from their farm. The respondents, who were ‘occupiers’ under the Extension of Security of Tenure Act 62 of 1997 (ESTA), argued that Moladora Trust had allowed them to graze their livestock on the farm. The LCC refused an application by Moladora Trust for an order directing the respondents to remove the animals.

In an appeal, the SCA pointed out that a right to graze livestock did not flow from a right of occupation under ESTA but derived from consent by the owner. The SCA held that the LCC had based its decision on a tacit consent (acquiescence) by Moldadora Trust that was not proved but rested entirely on conjecture. The SCA accordingly ruled in favour of the Moladora Trust, upholding its appeal and directing the respondents to remove their livestock from the farm.

Marriage

Statutory protection customary marriages: In Khashane v Minister of Home Affairs and Others 2024 (5) SA 242 (GP) the applicant entered into a customary marriage before the Recognition of Customary Marriages Act 120 of 1998 commenced, but her spouse died before registration. Seeking to inherit her late husband’s estate, she sought late registration, claiming ignorance of the Act’s registration requirement. The issue before the GP was whether the husband’s death before registration invalidated the marriage. The GJ ruled that the Act should be interpreted broadly to recognise and protect customary marriages, granting them equal status with civil marriages despite registration timing. The GP accordingly directed the Department of Home Affairs to condone the applicant’s late registration.

Tax

Search and seizure under the Tax Administration Act 28 of 2011 (TAA): Tax authorities have wide powers under search and seizure warrants issued by courts under s 60 of the TAA. They may search anything on the identified premises, including a motor vehicle parked there by a third party, on suspicion that it contained material relevant to the taxpayer. This was confirmed on appeal to the SCA from GP in Bechan and Another v SARS Customs Investigations Unit and Others 2024 (5) SA 1 (SCA). The SCA ruled that the provisions of s 60 read with s 61(3) of the TAA were location- and not taxpayer-specific, and that South African Revenue Service officials could, therefore, search anything on the identified premises.

Town planning

Reconstruction of a burned-down shopping centre: fresh municipal approval required? A municipality leased some of its land to a businessman who wanted to build a shopping centre on it. The municipality approved the building plans, and the shopping centre was built in line with them. Years later, however, the shopping centre was burned down during the 2021 riots. To curtail his losses, the businessman, one Ramsunder, decided to rebuild the centre in accordance with the original plans. But while reconstruction was in progress, the municipality, which had an existing dispute with Ramsunder, brought an urgent application in the KZD for an interim interdict stopping construction. The municipality, relied on s 4(1) of the National Building Regulations and Building Standards Act 103 of 1977, which prohibited the erection of unapproved buildings, read with the definition of ‘erection’ as including ‘rebuilding’, to argue that Ramsunder should have had new plans and specifications drawn up and approved before commencing the rebuilding. For his part Ramsunder argued that the already approved plans were sufficient, provided the construction went strictly in accordance with the specifications. The KZD refused to grant the interdict.

In an appeal by the municipality, reported as Ubuhlebezwe Municipality v Ramsunder 2024 (5) SA 189 (SCA), the court (per Meyer JA), the SCA had to decide whether the municipality had established the clear-right prerequisite for the granting of a final interdict. The SCA agreed with Ramsunder, ruling that he had did not have to obtain fresh approval before proceeding with the rebuilding and that the KZD had correctly refused to grant the interdict. The SCA stressed the absurdity that would result if the same plans had to be submitted each time an event like the 2021 riots resulted in damage to a building.

Other cases

Apart from the cases referred to above, the September 2024 South African Law Reports 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 2024 (November) DR 38.

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