The Law Reports – September 2022

September 1st, 2022
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July 2022 (4) South African Law Reports (pp 1–321); July 2022 (1) South African Criminal Law Reports (pp 1–121)

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

EqC: Equality Court

GJ: Gauteng Local Division, Johannesburg

GP: Gauteng Division, Pretoria

SCA: Supreme Court of Appeal

WCC: Western Cape Division, Cape Town

Advertising

Complaint about allegedly racist shampoo advert: In Baba and Others v New Clicks Group Ltd and Another 2022 (4) SA 141 (WCC) the WCC was confronted with the claim that a social media advert, which showed a picture of a black woman and the words ‘dry and damaged hair’ and ‘frizzy and dull hair’ and a picture of a white woman with the words ‘fine and flat hair’ and ‘normal hair’ was racist and unconstitutional, and specifically contravened ss 7 and 12 of the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000 (the Equality Act). The court, per Dolamo J ruled, however, that the applicants – several black women who were offended by the advert – did not establish that the advert amounted to ‘discrimination’ against them because they failed to show how they were personally disadvantaged by it. Nor did the advert show a clear intention to unfairly discriminate against black people. The WCC accordingly dismissed the application for an order declaring the advert to be racist and in breach of the Equality Act.

 

The power of Advertising Regulatory Board (ARB) to adjudicate complaints relating to advertising by non-members: In Advertising Regulatory Board NPC and Others v Bliss Brands (Pty) Ltd 2022 (4) SA 57 (SCA) the first appellant was the ARB the second and third appellants were Colgate-Palmolive (Pty) Ltd and Colgate-Palmolive Company (collectively, Colgate). The respondent was Bliss Brands (Pty) Ltd (Bliss).

Colgate and Bliss were competitors in the toiletries business. In December 2019, Colgate lodged a complaint with the ARB that Bliss had, in the manner of packaging of its Securex soap, breached the ARB’s Code by exploiting the advertising goodwill and imitating the packaging architecture of Colgate’s Protex soap. Although Bliss was not an ARB member, it did not object to its jurisdiction and participated fully in its hearings, taking the matter all the way to the ARB’s final appeal committee (the FAC), which found in favour of Colgate.

After the FAC dismissed its appeal, Bliss Brands successfully applied to the GJ to review and set aside the FAC’s decision. The GJ, having raised the constitutionality of the ARB’s powers, struck down a clause of the ARB’s memorandum of incorporation as unconstitutional because it permitted the ARB to decide complaints concerning adverts of non-members. The GJ, per Fisher J, also made several declarations, among them that the ARB had no jurisdiction over non-members in any circumstances and may not issue any rulings in relation to non-members or their advertising.

In an appeal by the ARB and Bliss the SCA found that the GJ had erred in distinguishing instead of following Advertising Standards Authority v Herbex (Pty) Ltd 2017 (6) SA 354 (SCA), binding precedent that established that the Advertising Standards Authority (the ARB’s predecessor) could issue a ruling that was not binding on non-members) regarding any advert, regardless of by whom it was published, to determine on behalf of its members whether they should accept any advert before it was published or withdraw it afterwards.

In upholding the appeal, the SCA made the following observations:

  • The right of freedom of expression entitled the ARB to refuse to publish advertising while the right to freedom of association entitled it to consider complaints about adverts by non-members.
  • Its right to self-regulation entitled it to adopt rules and standards to regulate members’ conduct in their dealings with the outside world.
  • The right of freedom of association also embraced the right to dissociate, but here Bliss’ right to do so did not give it an unfettered right to dictate to the ARB or its members how they should exercise their rights of association.
Children

An application by a non-parent for guardianship of a child who already has a guardian: The matter of RC v HC 2022 (4) SA 308 (GJ) concerned an application brought to the GJ for assignment to the applicant of joint guardianship in terms of s 24 of the Children’s Act 38 of 2005 (the Act), as well as rights of contact and care in terms of s 23 of the Act, in respect of the four-year-old child (BC) of the respondent.

The application was brought in two parts: In the part A before the court, the applicant sought to obtain a report of a clinical psychologist to determine whether it was in the interests of BC that the care, contact and guardianship be granted to him, and that he be awarded interim contact pending the determination of the substantive relief sought in part B. The applicant, a 52-year-old divorced chartered accountant, was not BC’s father. Having met on Tinder, the parties were involved in a romantic relationship from 2017 to 2021. During this time the applicant developed a very close relationship with BC. He sought to continue contact with BC and with the respondent’s other child, 11-year-old DC, after the termination of his relationship with the respondent. The respondent initially allowed the applicant contact but later changed her mind, believing that it was in the best interests of her family that the applicant not be present in her children’s lives. She considered his relationship with BC to be ‘obsessive’ and was worried that it was alienating her from BC, and BC from DC.

The applicant, in response to the respondent’s decision, and prompted by his purported concern that a separation from BC would harm their relationship and BC’s psyche, launched the GJ proceedings.

Fisher J dismissed the application on the basis that the applicant did not have locus standi. The GJ remarked that the existence of a loving relationship between an older person and a child, which had parental hallmarks did not mean that the former automatically had the ‘interest’ in the child required by ss 23 and 24 of the Act. If a child was properly cared for by a primary caregiver like the respondent, there would need to be compelling motivation as to why another person should be accorded legal rights to the child. And in the case of an application under s 24(3) of the Act for guardianship of a child that already had a guardian, the aspiring guardian would have to show why the child’s present guardian was unsuitable: On a purposive interpretation, the provisions of s 24(3) meant that, if the child had an available and capable guardian, there was no reason to appoint another. The applicant failed to satisfy either of these requirements and, therefore, lacked locus standi. The GJ found that it would in any event have refused the applicant’s case, as far as care and contact rights were concerned, on the merits. The application was accordingly dismissed.

Companies

The reinstitution of business rescue after a final liquidation order: In Mintails South Africa (Pty) Ltd v Mintails Mining SA (Pty) Ltd and Others 2022 (4) SA 238 (GJ) concerned an application under s 131 of the Companies Act 71 of 2008 (the Act) for an order returning a company in liquidation (the first respondent, ‘the company’) to business rescue. The applicant was an ‘affected party’ as envisaged in s 128(1)(a) of the Act, being both the company’s controlling shareholder (96%) and major creditor (R 1,3 billion). The company, represented by its provisional liquidators, filed a counter-application for an extension of their powers as envisaged in s 386(5) of the Companies Act 61 of 1973 (the 1973 Act) to enable them to secure the sale of the company’s remaining assets (shares and claims on loan account held in one of its subsidiaries). This provision allows the court ‘to grant leave to a liquidator to raise money on the security of the assets of the company concerned or to do any other thing which the court may consider necessary for winding up the affairs of the company and distributing its assets’.

The company – a miner of gold-bearing tailings – had been in business rescue between 2015 and 2018. But in 2018 the business rescue practitioner, fining himself unable to resolve a dispute about the company’s substantial environmental rehabilitation liability to the Department of Mineral Resources (DMR), ruled that there was no reasonable prospect of rescue. This resulted in a final liquidation order being granted in September 2018.

By the time of the application under consideration, the company had been in final liquidation for more than three years. Its movable assets consisted of shares and claims on loan account in its subsidiaries, but the liquidators’ powers were severely curtailed by statutory constraints on their ability to realise them. At the same time, the subsidiaries’ own properties were being menaced by criminal elements (the so-called ‘Zama Zamas’). The need for the liquidators to obtain an extension of their statutory powers to sell these assets became urgent when they received an offer for their purchase from Pan African Resources PLC (Pan African). Pan African’s alleged willingness to assume the company’s R 400 million liability to the DMR intensified the urgency. But the Master’s four-month delay in granting the extension application resulted in further erosion in the value of the company’s movable assets thanks to the ongoing depredations of the Zama Zamas.

The deponent to the applicant’s papers, one Moolman, was a director of both the applicant and the company (before its liquidation). He contended on behalf of the applicant that business rescue was appropriate because the liquidation was at a ‘stalemate’, with the provisional liquidators being unable to wind up the affairs of the company due, inter alia, to statutory limitations on their powers and their alleged maladministration, delay, and ineptitude. The creditors would be in a better position in business rescue because the winding-down process would be quicker. The business rescue practitioners would have access to finance provided by the applicant and would be better equipped deal with the Pan African deal and the complexities of the company’s structure, operations and assets than the liquidators. Defending their conduct, the liquidators stated that they had worked themselves ragged in a challenging liquidation to try and preserve value and a suitable return to the general body of creditors under trying circumstances.

Under s 128(1)(h) of the Act, ‘rescuing’ a company entails achieving either of the goals set out in the definition of business rescue in s 128(1)(b) of the Act. The primary goal was to facilitate the continued existence of the company and its recovery to a state of solvency. If this was not possible, the secondary goal was to ensure a higher return for creditors or shareholders than they would otherwise receive under liquidation. By the time the application was heard, it was not in dispute the primary goal was no longer achievable. Instead, the applicant pinned its hopes on getting a better deal for the company’s creditors and shareholders by means of the successful completion of the Pan African deal (Pan African’s offer was subsequently conditionally accepted by the liquidators). According to precedent, an applicant was required to make out its case for business rescue on either ground on a cogent evidential foundation, which the opposing parties contended was lacking in the present case. (The first respondent and an intervening party, who relied on the cession of an unpaid creditor’s claim of Black Hawk Security Solutions, an affected party in the present proceedings that had rendered security services to the company post-liquidation).

The court, per Maier-Frawley J, refused the application for conversion to business rescue on the following grounds:

  • It was not for the applicant to choose its preferred method of winding down the company’s affairs. Moolman’s opinions or reservations about the liquidators’ ability was not a proper reason for taking the company out of liquidation, particularly since any savings on the costs of the liquidation process would be subsumed by new costs incurred in the business rescue scenario.
  • The applicant’s promise to assist only in a business rescue scenario and only on its own terms and in pursuit of its own financial interests was a half-baked one that offered only cold comfort.
  • The liquidators had done their best to preserve value and negotiate the disposal of assets in a way that would optimise proceeds, as evidenced by the Pan African transaction. The delays were due to the tardiness of the Master and statutory restraints on the liquidators’ powers.
  • A conversion to business rescue would mean that the liquidators and service providers who had worked for years without remuneration would become concurrent instead of preferent creditors, and, due to the size of the applicant’s claim, receive a small or illusory dividend.
  • No objective evidence was tendered in support of the applicant’s argument that all creditors would receive a better dividend under business rescue.
  • It was not clear how a liquidator would be less successful in realising a proper market value for the sale of company property than business rescue practitioner, particularly where a fair market value for company property had already been determined by the Pan African transaction.
  • Uncertainties over pending court cases militated against business rescue, particularly over the company’s R 400 million environmental rehabilitation liability to the DMR. Litigation could also follow in respect of the Black Hawk claim in respect of security services.
  • The potential open-endedness of business rescue proceedings.
  • Liquidators had statutory powers to enquire into irregularities that business rescue practitioners lacked.
  • Business rescue practitioners would have to come to terms with a process that had been ongoing for years in order to do no more than what the liquidators were already doing.
  • It was impossible to determine whether there was a reasonable prospect that the general body of creditors would receive an enhanced dividend under business rescue.
  • The inference that the applicant was seeking, through the mechanism of business rescue, to improve its own position by depriving the liquidators of compensation for fees and administration costs.

The GJ granted the counterapplication on the following grounds: It was common cause that the company had to be wound down and its remaining assets sold. Without obtaining authorisation for an extension of their powers to enable a sale of the remaining company assets the liquidators would be hamstrung. Funds obtained from the sale of certain available assets would inure to the benefit of all creditors, including the applicant.

Constitutional law

Hate speech and recusal: The facts in South African Human Rights Commission obo South African Jewish Board of Deputies v Masuku and Another 2022 (4) SA 1 (CC) were that the first respondent (Mr Masuku), while representing the second respondent (COSATU), made certain comments on a website and at a rally, referencing inter alia ‘Zionists’, which prompted the South African Jewish Board of Deputies to complain to the applicant (the Human Rights Commission) that they were hate speech.

Concurring, the Commission instituted proceedings in the EqC under the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000 (the Equality Act). The EqC ruled that the remarks were indeed hate speech under s 10(1) of the Equality Act and that they were not protected by s 16 of the Constitution. It directed Mr Masuku and Congress of South African Trade Unions (COSATU) to apologise to the Jewish Community.

Mr Masuku and COSATU appealed to the SCA, which set aside the EqC’s order and replaced it with one dismissing the Commission’s complaint. The SCA approached the matter by way of testing whether remarks were hate speech under s 16(2) of the Constitution. The SCA disavowed reliance on s 10(1) Equality Act because in its view the Commission had abandoned reliance on it and because
s 10(1) might in addition be unconstitutional. The SCA reasoned that the statements implicated Zionism rather than Judaism, and that since Zionism was neither ethnic nor religious, the statements fell outside s 16(2). They were accordingly not hate speech. The Commission applied to the CC for leave to appeal the SCA’s judgment while Mr Masuku and COSATU sought leave to cross-appeal the EqC’s costs order against them.

The CC, per Khampepe J in a unanimous judgment, turned first to an application by Mr Masuku and COSATU for Chief Justice Mogoeng’s recusal because he had in a webinar hosted by an Israeli newspaper professed his love of Israel.

The CC found that, viewed in context, the Chief Justice’s statements did not give rise to a reasonable apprehension of bias.

The CC granted leave to appeal on the grounds that the matter implicated the interaction of ss 9, 10 and 16 of the Constitution, the interpretation of constitutionally mandated legislation, and the subsidiarity principle. It also implicated the important issue of the bounds of free expression.

The CC found that the SCA had erred in employing s 16(2) of the Constitution rather than s 10(1) of the Equality Act. Since the latter was promulgated to elaborate on s 16, subsidiarity applied. The SCA’s conclusion that s 16(2) prohibited hate speech was also wrong: It simply delineated what was not protected by s 16(1), leaving it to the legislature to proscribe or not proscribe what s 16(2) deemed unprotected.

The CC noted that certain points pertaining to s 10 of the Equality Act had recently been clarified, these were that –

  • s 10(1) required an objective test;
  • subss (a) – (c) were conjunctive; and
  • subsection (a) was impermissibly vague and hence unconstitutional.

This raised the question of how to decide whether the impugned words were hate speech. The test was whether the words, heard in their proper context by a reasonable person, would lead that person to conclude that they were based on a prohibited ground and intended to incite harm or propagate hatred. Given that the test was objective, the speaker and listener’s understanding of the meaning of the words were irrelevant. A caveat, though, was that testimony of a member of the targeted group on the impact of the statements was relevant to the determination of a proper remedy.

The CC agreed with the EqC’s findings that the first of Mr Masuku’s statements referenced ethnicity (Judaism) and that a reasonable reader would have taken him to have clearly intended to incite harm and propagate hatred. The EqC’s finding that s 10(1) was contravened, was therefore, unimpeachable. Correctly viewed, the statements did not implicate Jewish ethnicity or religion, thus rendering the EqC’s findings unsupportable.

This left the cross appeal of the EqC’s award of costs against Mr Masuku and COSATU. The CC ruled that it had to be upheld because they had raised a constitutional defence (the statements were political speech) and consequently the standard rule in constitutional litigation between the state and a private party applied: Each party was to bear their own costs.

In the result, the CC ordered that the SCA’s order had to be set aside and substituted to the effect that the appeal against the EqC’s order was dismissed, and the EqC’s order amended to declare Mr Masuku’s first statement alone to be a contravention of s 10(1). The CC also ordered Mr Masuku and COSATU to apologise for the statement.

Criminal law

Requisites for proper enquiry in terms of ss 77, 78 and 79 of Criminal Procedure Act 51 of 1977 (CPA): Mafe v Acting Director of Public Prosecutions, Western Cape and Another 2022 (2) SACR 54 (WCC) concerns an urgent application brought by the applicant for his release on bail pending further criminal proceedings, in which he also sought the review of the proceedings leading to his referral for psychiatric observation at the Valkenberg psychiatric facility for a period of 30 days.

The applicant was arrested on charges relating to the fire, which destroyed the National House of Assembly on 2 January 2022. He presented as a homeless person and the arrest took place within the parliamentary precinct within a short period of the blaze. A district surgeon compiled a report on the following day and concluded that the applicant suffered from paranoid schizophrenia. The applicant appeared in the magistrates’ court for the first time the day after that, but this report was not made available to the court or to the applicant’s legal team. The applicant did indicate that he wished to apply for his release on bail and the matter was then postponed to 11 January 2022, but without any reference or inquiry into the applicant’s ability to follow the proceedings. On that date, further charges were added, which placed the offences within the ambit of sch 6 to the CPA. The state also produced the single-page report of 3 January 2022 and requested that the applicant be referred for psychiatric observation at the Valkenberg psychiatric facility for a period of 30 days. This was the first time that the applicant and his counsel were made aware of the district surgeon’s report. Counsel objected to the referral and persisted with the bail application. No ruling was, however, recorded by the magistrate in response to this application. The court also summarily accepted the medical assessment without granting the applicant the opportunity to present evidence in rebuttal and made a ruling that the state had produced prima facie evidence in terms of s 78 of the CPA, and accordingly referred the applicant for observation in terms of that section.

Wathen-Falken AJ (Hlophe JP concurring) examined the relevant provision of the CPA and concluded that s 78 required a court to make an assessment based on all the available facts which would be in the interests of justice, and which was aligned with the essence of s 35 of the Constitution. This was an evidential and factual determination, which was in some instances based on the adjudicator’s own observations or in other instances based on medical evidence presented by either or both parties before court. It, therefore, followed that all evidence and facts had to be placed before the court for evaluation, and the magistrate had an obligation in terms of s 77 to record and note his observations of the applicant, which would best inform him whether the applicant was able to appreciate the nature of the court proceedings. This would best have been done through some degree of interaction with the applicant. The magistrate nevertheless forewent the opportunity to apprise himself of all the evidence before making the blanket referral. The order was accordingly not done in accordance with justice and was substantively and procedurally flawed. It resulted in a gross irregularity and had to be set aside.

The court further concluded that the record reflected that the magistrate did not at any stage respond to the applicant’s plea to be heard on bail, thereby negatively affecting his rights entrenched in the Constitution. The applicant was entitled to apply for bail in the circumstances, and there was nothing preventing the magistrate from proceeding with such an application.

Other criminal law cases

Apart from the cases and material dealt with or referred to above, the material under review also contained cases dealing with –

  • appeal by Director of Public Prosecutions against too lenient sentence;
  • culpable homicide sentence;
  • dealing in sentence for drugs;
  • nature of harassment;
  • imposition of sentence higher than prescribed minimum sentence;
  • recusal of presiding officer due to inference of bias;
  • lost, destroyed or incomplete records and the reconstruction of the same; and
  • validity of arrest without warrant.
Revenue

The effect of statutory appeal under s 47(9)(e) of the Customs and Excise Act 91 of 1964 on High Court’s review jurisdiction: In Cell C (Pty) Ltd v Commissioner, South African Revenue Service 2022 (4) SA 183 (GP), the applicant (Cell C), in its main application, sought to appeal a tariff determination under s 47(9)(e) of the Customs and Excise Act 91 of 1964, which provides that ‘an appeal against any [tariff] determination shall lie to the division of the High Court of South Africa having jurisdiction’. In its main application Cell C also sought the tariff determination’s review, setting aside and variation retrospectively. This judgment concerned an interim application for an order in terms of r 30A of the Uniform Rules of Court to compel the Commissioner to dispatch a record in respect of the tariff determination sought to be reviewed under r 53.

Tolmay J held that s 47(9)(e) confined a taxpayer challenging a tariff determination to the wide-appeal remedy it provided – precluding an appellant bringing a wide appeal from instituting review proceedings. This was so because a wide appeal called for a total re-hearing which was not confined in any sense, providing an applicant with full access to justice. The need for review fell away when such an appeal was available and availing oneself of it excluded the possibility of a review. Since r 53 did not apply, the applicant’s motion fell to be dismissed on the ground that there was no basis on which to compel the Commissioner to produce a record.

Other cases

Apart from the cases and material dealt with or referred to above, the material under review also contained cases dealing with –

  • a bank’s rights in respect of moneys fraudulently deposited into a bank account;
  • anti-harassment orders:
  • municipalities in default to Eskom;
  • the appointment of liquidators;
  • the constitutionality of building regulations;
  • the effects of business rescue on company directors;
  • the powers of a curator bonis; and
  • the transmissibility of a claim for general damages.

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 2022 (September) DR 22.

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