The Law Reports – September 2023

September 1st, 2023
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July 2023 (4) South African Law Reports (pp 1–323); May 2023 (2) South African Criminal Law Reports (pp 1–112)

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

GJ: Gauteng Local Division, Johannesburg

MM: Mpumalanga Division, Mbombela

NCK: Northen Cape Division, Kimberley

SCA: Supreme Court of Appeal

WCC: Western Cape Division, Cape Town

Appeals

When an application (petition) for leave to appeal to the SCA is ‘lodged’: In Varnardo Investments (Pty) Ltd and Another v K2012150042 (Pty) Ltd 2023 (4) SA 314 (WCC) the WCC had to determine whether a judgment had been suspended pending its appeal to the SCA and when exactly an application for leave to appeal was ‘lodged’ under the SCA Rules. Grobbelaar AJ for the WCC found that an application was ‘lodged’ when it was presented to the registrar of the SCA, thereby simultaneously suspending the judgment appealed against even where the registrar had at the time declined to stamp the application. The WCC ruled that even an application that was ‘incomplete’ in the sense that the judgment of the court a quo refusing leave to appeal was not attached to it could be lodged in this manner. In the premises the WCC made an order for the restoration of the status quo ante where the respondent had, by the time the application for leave to appeal was handed to the recalcitrant registrar, already executed on the judgment appealed against.

Arbitration

Arbitrators’ powers: Can arbitrators decide only on the issues set out in the parties’ pleadings? In Close-Up Mining and Others v Boruchowitz NO and Another 2023 (4) SA 38 (SCA) the second respondent (the Lutzkie Group) brought a dispute with first to third appellants (Close-Up Mining) before an arbitrator (the first respondent). During the proceedings Close-Up raised a defence that it had not pleaded. The arbitrator’s response declined to hear it based on his understanding that arbitrators lacked competence to consider unpleaded matters. Close-Up sought review in the GP, arguing that the arbitrator failed to appreciate that he had a discretion to consider unpleaded matters.

The GP, however, agreed with the arbitrator and dismissed Close-Up’s application. It did, however, grant leave to appeal to the SCA, which (per Unterhalter AJA) found that there was no fixed rule that an arbitrator may decide only issues delineated in the parties’ pleadings, and that its admissibility depended on what the parties had agreed. They could either confer a discretion like the one contended for by Close-Up or, instead, confine the arbitrator’s competence to the issues pleaded. Unterhalter AJA then considered whether the arbitration agreement in question gave the arbitrator the power to decide matters that had not been pleaded. He pointed out that the agreement stipulated that disputes would be determined under the rules of the Arbitration Foundation of Southern Africa (AFSA), therefore, narrowing the issue to whether those rules granted an arbitrator the discretion concerned. In the event Unterhalter AJA found that the AFSA rules did not do so and dismissed the appeal.

Companies

The court’s discretion to convert a member’s voluntary winding-up into a compulsory winding-up: In Van den Heever NO and Others v World Marine Energy (Pty) Ltd (in Liq) and Another and a Related Matter 2023 (4) SA 296 (WCC) the court had to decide whether to convert the respondent’s members’ voluntary winding-up into a compulsory winding-up on application by the liquidators of one of the respondent’s former creditors. (According to precedent the existence of a voluntary members’ winding-up was no bar to the granting of a compulsory creditors’ winding-up under s 354(1) of the Companies Act 61 of 1973). The liquidators argued that the respondent was unable to repay the
R 16 million it owed them. The WCC, per Sher J, pointed out that ‘commercial morality’ and the ‘public interest’ were important considerations in the exercise of its discretion to order the conversion applied for. Bearing this in mind, Sher J held that the respondent’s conduct militated in favour of a conversion. It had, among other things, implemented the voluntary winding-up to avoid management exposure at a potential insolvency inquiry in circumstances where its management had been guilty of the commission of numerous material irregularities. In addition, conversion would allow the liquidators to challenge several voidable dispositions made by the respondent after its voluntary winding-up. Sher J, having refused an application for direct liquidation, made an order for the provisional winding-up of the respondent.

 

Business rescue: The validity of a sale by liquidators after liquidation proceedings have been ‘suspended’ by business rescue proceedings: In Southern Sky Hotel and Leisure (Pty) Ltd t/a Hans Merensky Hotel and Spa (in Liq) and Others v Southern Sky Food Enterprises (Pty) Ltd 2023 (4) SA 99 (SCA) creditors obtained a final liquidation order against the first appellant company in liquidation. The second to fifth applicants were appointed as liquidators. A third party then applied for an order placing the company in business rescue. While the business rescue application was still pending, the liquidators put the company’s property up for sale on auction. A sale agreement was subsequently concluded with the respondent. The agreement presumed that liquidation proceedings were interrupted by the business rescue application and made the sale conditional on its dismissal.

The respondent (the buyer) applied for an order invalidating the sale on the basis that it was concluded while liquidation was ‘suspended’ under s 131(6) of the Companies Act 71 of 2008, which provides that ‘if liquidation proceedings have already been commenced by or against the company at the time [a business rescue] is made in terms of subsection (1), the application will suspend those liquidation proceedings until [inter alia] the court has adjudicated upon the application’. The GJ granted the order but granted leave to appeal to the SCA.

The SCA (per Basson AJA), having duly interpreted s 131(6), ruled that it did not invalidate the agreement because it did not suspend the liquidators’ powers and that the agreement was, therefore, valid. The SCA, therefore, upheld the appeal against the GJ’s order and replaced it with an order dismissing respondent’s application.

 

Business rescue: Who gets to vote on a business rescue plan? If company A is a creditor of company B and both are in business rescue, do company A’s business rescue practitioners or its directors have the right to vote on company B’s business rescue plan? The issue arose in Ragavan and Others v Optimum Coal Terminal (Pty) Ltd (in Business Rescue) and Others 2023 (4) SA 78 (SCA). The fifth respondent (Tegeta) was in business rescue. The sixth and seventh respondents were its business rescue practitioners, and the appellants its directors. Tegeta was a creditor of the first respondent (Optimum), also a company in business rescue. Optimum’s business rescue practitioners published a rescue plan and notified the affected parties of a meeting to vote on it. Tegeta’s directors argued that it was their right to vote on the plan, while the business rescue practitioners argued that it was theirs. The GJ found for the business rescue practitioners, and the directors appealed to the SCA. The SCA (per Mabindla-Boqwana JA) ruled, on an interpretation s 140(1)(a) of the Companies Act 71 of 2008, that the right to vote on a debtor company’s business rescue plan vested in the business rescue practitioners of the creditor company, not the creditor company’s directors, and dismissed the appeal.

Conveyancers

The liability of a conveyancer for failing to warn a buyer that e-mail is not a secure way of transferring information: In Hawarden v Edward Nathan Sonnenbergs Inc 2023 (4) SA 152 (GJ) the plaintiff was the buyer in a property sale transaction and the defendant the conveyancer appointed by the seller. The defendant e-mailed the plaintiff its bank details for the plaintiff to pay the purchase price to the defendant; the plaintiff’s e-mail account was hacked by a third party and the third party intercepted the defendant’s e-mail and altered the bank details. After the plaintiff paid the purchase price into the nominated account, the money was misappropriated. The plaintiff instituted proceedings against the defendant, claiming damages equal to the purchase price based on what the plaintiff agued was the defendant’s negligent failure to warn it of the danger of ‘business e-mail compromise’ of the kind that had occurred. The first issue was whether the omission was wrongful, that is, whether it would be reasonable to impose liability for the failure to warn. The GP, per Mudau J, held that it would be. This was because of the determinacy of liability (confined as it was to the plaintiff and the quantum of the purchase price) and the plaintiff’s vulnerability (because of her commercial inexperience, ignorance of the risk of e-mail compromise and inability to contractually protect herself against the defendant, with whom she had no contractual link). Mudau J then had to decide whether the defendant’s omission had been negligent. He found that the defendant had been aware of the danger and had indeed created the risk by the means it employed to convey its banking details despite the simple steps it could have been taken to mitigate the danger. Since the omission was a necessary precondition for the loss, which was in turn foreseeable, the defendant was liable to the plaintiff for damages equal to the purchase price.

Criminal law

Common purpose and premeditation in murder cases: In the murder case of S v Ratau 2023 (2) SACR 40 (MM), one Ratau and the deceased had been detained by the police and were being transported in a police bus when the prisoners simultaneously attempted to rob their police guards of their service pistols. The deceased’s intended victim managed to resist the attack and, in so doing, shot and killed the deceased. Relying on the doctrine of common purpose, the state charged Ratau with attempted robbery and the premeditated murder of the deceased. The MM (per Roelofse AJ), having found that Ratau and the deceased had persisted in their attack while subjectively foreseeing that their attempt to rob the police officers of their weapons might lead to their discharge and the death of one or more of the occupants of the bus, convicted Ratau of premeditated murder based on common purpose and dolus eventualis.

Execution

Compliance with r 46A of the Uniform Rules of Court and the right to housing: Bestbier and Others NNO v Nedbank Ltd 2023 (4) SA 25 (SCA) concerned an appeal to the SCA, against a High Court judgment in favour of the respondent, Nedbank Ltd. The judgment was against the first to fourth appellants, in their official capacities as trustees of Goede Hoop Trust (the trust) for payment of an undisputed debt, settled by agreement, inter alia, consenting to judgment.

The High Court also declared Goede Hoop Wine Estate (the property) executable and entered judgment directly against the first appellant, Mr Bestbier, in his personal capacity based on a suretyship agreement. In declaring the property executable, it held that the appellants’ rights to adequate housing were not engaged or compromised, so that r 46A – which requires judicial oversight and consideration by a court of various factors when a creditor seeks to execute against ‘the residential immovable property of a judgment debtor’ – was not applicable.

The main issue before the SCA was the applicability of r 46A (and Practice Directive 33A of the High Court), in circumstances where the property sought to be declared executable was owned by a trust and was a primary residence of the trust beneficiaries, as well as the trust employees and their families (the farmworkers).

The SCA (per Molefe AJA) held that s 26(1) of the Constitution was not compromised in every case where execution was levied against immovable property. The sole purpose of judicial oversight in all cases of execution against immovable property was to ensure that the orders being granted did not violate s 26(1) of the Constitution, that the judgment debtor was not likely to be left homeless because of the execution.

The only way to determine whether the right to adequate housing had been compromised was to require judicial oversight in all cases of execution against the immovable property on a case-by-case basis. Due regard must be had to the impact that the sale in execution is likely to have on vulnerable and poor beneficiaries who were occupying the immovable property owned by the judgment debtor, who were at risk of losing their only homes. Where that has been established, r 46A was applicable, despite the judgment debtor being a trust, and would have to be followed (and, therefore, also rule 33 of the Practice Directive).

Molefe AJA concluded that the appellants had failed to show how their constitutional rights to adequate housing might be impacted: They did not show that as a result of indigence, the beneficiaries would be left vulnerable to homelessness if the farm in question was sold in execution. There was nothing to show that if r 46A was applied, default judgment and an order declaring the immovable property especially executable would not have been granted. The appeal was accordingly dismissed.

Hate speech

Displaying the old South African flag: In a demonstration organised by civil rights group AfriForum, participants had waved the old South African flag around, prompting another rights group, the Nelson Mandela Foundation, to seek an order from the Equality Court (the GJ sitting as such) declaring the gratuitous display of the old flag to be prohibited hate speech, unfair discrimination and harassment as intended in the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000 (the Act). The GJ granted the order and AfriForum appealed to the SCA, which in AfriForum NPC v Nelson Mandela Foundation Trust and Others 2023 (4) SA 1 (SCA) found, per Schippers JA, that the GJ’s order was unassailable. Schippers JA pointed out that such a display was not only calculated to be harmful but actively propagated hatred. The SCA, however, excluded display for artistic, academic, or journalistic purposes from the prohibition.

Insolvency

What happens when the trustees of an insolvent estate abandon a right of action obtained before insolvency? In Thomas and Another v Thomas 2023 (4) SA 107 (SCA) the facts were that the trustees of the respondent insolvent estate had abandoned a right of action the respondent had obtained before his sequestration. When the respondent was rehabilitated some years later, he approached the NCK for an order declaring that, while the right did not form part of the insolvent estate due to its abandonment, it remained alive and could be employed by him. The NCK agreed with the respondent’s argument and granted the order prayed for. In an appeal, the SCA, per Mocumie JA, found that the respondent’s right of action had on the granting of the insolvency order vested in the trustees, and that the effect of the subsequent abandonment had been to extinguish it, leaving nothing to revive. The SCA accordingly upheld the appeal and replaced the NCK’s order with one dismissing the respondent’s application.

Intellectual property

Shape mark – trademark in a plastic bottle? Dart Industries Inc and Another v Botle Buhle Brands (Pty) Ltd and Another 2023 (4) SA 48 (SCA) dealt with a trademark and passing-off dispute between Tupperware and Buhle over the similarity of their hourglass-shaped plastic water bottles. Tupperware Brands Corporation, a United States of America (Tupperware USA) entity, was the registered owner of the Eco Bottle shape/container mark in South Africa. The GJ, having concluded that the Eco Bottle mark was neither inherently distinctive nor had acquired distinctiveness from prior use, dismissed Tupperware’s application and granted Buhle’s counterapplication for cancellation. Tupperware USA and its South African affiliate appealed to the SCA, which held, per Makgoka JA in a unanimous judgment, that the two bottles were too similar for Tupperware’s Eco Bottle to fulfil a trademark function. In particular, the Eco Bottle lacked an inherently distinctive character: The average consumer would see it as nothing more than a fancy water bottle and would not distinguish it from other water bottles in the trademark sense. The SCA pointed out that the acquisition of distinctiveness through prior use involved an investigation into whether an inherently non-distinctive shape mark had acquired sufficient distinctiveness to function as a trademark. In the case of the Eco Bottle, its apparent popularity was likely more due to its being part of the well-known Tupperware range of goods than its shape. The SCA concluded, in the light of these findings, that the GJ had correctly cancelled the Eco Bottle mark.

Refugees

An application of the constitutional principle of non-refoulement: Under s 22(12) and (13) of the Refugees Act 130 of 1998 (read with reg 9 and Form 3 of the Refugee Regulations), asylum seekers who failed to renew their visas within one month of expiry were considered to have ‘abandoned’ their visa applications, thereby exposing them to deportation (the so-called ‘abandonment rule’). In Scalabrini Centre and Another v Minister of Home Affairs and Others 2023 (4) SA 249 (WCC) the applicants contended that the provisions in question were unlawful because they offended the principle of non-refoulement (the practice of not forcing refugees or asylum seekers to return to a country in which they are liable to be subjected to persecution), which had been incorporated into the Constitution by virtue of various international treaties to which South Africa was party. The state, represented by the respondents, argued that the provisions served the legitimate government purpose of addressing the backlog of inactive asylum applications by incentivising to complete their applications. The WCC, per Goliath DJP, pointed out that the Refugees Act was aimed specifically at giving effect to the country’s international obligations to refugees, in particular the right to non-refoulement, which was given exceptionally strong protection. The WCC emphasised that it was evident that, in violation of this, the impugned provisions severely limited asylum seekers’ right to non-refoulement and completely deprived them of the protections of the asylum system. The WCC concluded that the impugned provisions were, therefore, unconstitutional, and invalid, and directed the state to amend them without delay. The declaration of invalidity was referred to the CC for confirmation.

Revenue

Forfeiture orders: The consequences where one was made after a winding-up: In South African Reserve Bank and Another v Maddocks NO and Another 2023 (4) SA 85 (SCA), the issue before the SCA was validity of three forfeiture orders, issued by the appellant (the Reserve Bank) under reg 22B of the Exchange Control Regulations, against two companies in liquidation, pursuant to obtaining blocking orders against them before they were wound up. The two respondents were the joint liquidators of the companies. The subject-matter of the appeal was a High Court order obtained by the respondents, declaring the forfeiture orders null and void and directing the National Revenue Fund to pay the forfeited moneys into the liquidators’ bank account.

The thrust of the liquidators’ case was that the Reserve Bank, after issuing the blocking orders in respect of the moneys standing to the credit of the companies, became their creditor and was required to participate in the concursus creditorum. It could, therefore, not validly deal with the assets of the companies in liquidation by the issue of forfeiture orders, which prejudiced other creditors.

Dismissing this argument, the SCA, per Zondi JA, held that, having regard to the context and purpose of the Currency and Exchanges Act 9 of 1933 and the Exchange Control Regulations, the operation of the blocking orders did not result in the creation of a debtor-creditor relationship between the companies and the Reserve Bank. The liquidation of the two companies did not nullify the blocking order, which was in existence at the time. It followed that the forfeiture orders issued after the liquidation of the companies were not affected by the liquidation; the money which was declared as forfeited to the state did not fall into the estates of the insolvent companies. The SCA concluded that the liquidators were, therefore, not entitled to demand that the funds be paid out to them for distribution, and that the appeal would succeed.

Telecommunications

Whether service providers may release customer information to third parties who want to institute legal proceedings against the customer in question: In Giftwrap Trading (Pty) Ltd v Vodacom (Pty) Ltd and Others 2023 (4) SA 68 (SCA), the applicant (Giftwrap), an online retailer, marketed its products through advertisements on online platforms provided by a third party, this for a fee calculated on the basis of the number of visits – or ‘clicks’ – the advertisement received. Giftwrap had for some years been the victim of click fraud, a species of fraud in which a wrongdoer repeatedly clicks on an advertisement with the intention of driving up the costs of the advertisement for the advertiser. Giftwrap had come into possession of Internet protocol (IP) addresses of devices used by the wrongdoer, as well as the identity of the Internet service provider used by each device. The service providers were the respondents. Giftwrap had then requested the customer information associated with each IP address to enable it to take legal action against the customers concerned. But the respondents refused to provide it. In view of this, Giftwrap applied to the GP for the disclosure of the information’s disclosure based on s 42(1)(c) of the Regulation of Interception of Communications and Provision of Communication-Related Information Act 70 of 2002, which prohibited the disclosure of ‘information … obtained in the … performance of … duties in terms of the Act, except … information which is required … as evidence in any court of law’. Service providers such as the respondents are obliged under the Act to obtain and store prescribed customer information.

The GP dismissed the application, reasoning that the Act did not permit disclosure of customer information to requesting parties, in order for those parties to identify wrongdoers. Giftwrap appealed to the SCA. The question the court had to answer, ruled Van der Merwe JA in a unanimous judgment, was whether s 42(1)(c) of the Act permitted service providers to disclose to third parties information they required in order to identify wrongdoers in order to instituted legal proceedings against them (as opposed to providing information which was required as evidence in pending legal proceedings). Van der Merwe JA found that, properly interpreted, the provision did not permit the disclosure of such information and dismissed the appeal.

The Public Protector

Whether a decision declaring conduct of the President to be constitutionally invalid was immediately executable: Section 18(1) and (3) of the Superior Courts Act 10 of 2013 provides that a party may apply to have a decision by a High Court put into immediate operation pending appeal. In Public Protector of South Africa v Speaker, National Assembly and Others 2023 (4) SA 205 (WCC) the decision in question, granted at the instance of the Public Protector, ordered that ‘the decision of the President to suspend the [Public Protector be] declared invalid’, and that ‘[t]he suspension … [be] set aside … from the date of this order’. The respondents immediately filed notice to appeal directly to the CC, which prompted the Public Protector to seek the immediate putting into operation of the WCC’s above-quoted order in her favour. A full bench of the WCC (Nuku J, Francis J and Lekhuleni J) ruled that the order was not capable of being immediately executed under the Act because it dealt with unconstitutional conduct and hence had no force until it was confirmed by the CC. Before this, there was nothing on which execution could be levied. The WCC added that it made no difference that appeals to the CC had in fact been lodged: They could not render final and binding a decision that, by operation of law, was not. The WCC accordingly dismissed the Public Protector’s application.

Other cases

Apart from the cases discussed above, the material under review also contained criminal cases dealing with –

  • appeals against decisions of the Community Schemes Ombud Service;
  • registration of births; and
  • effect of divorce on a provision in a will.

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 (Sept) DR 25.

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