INDEX1

EDITORIAL

SOUTH AFRICAN LAW REPORTS AUGUST 2014

SOUTH AFRICAN CRIMINAL LAW REPORTS AUGUST 2014

All SOUTH AFRICAN LAW REPORTS AUGUST 2014

EDITORIAL

The National Bar Council held its 20th AGM on 2 August 2014 and to commemorate the special day 5 members were awarded honorary membership status, namely:Mark Hawyes, Ike Tholoe, Rams Ramashae, Denton Goodford and Toney Davey.

1. Davey, Anthony “Tony”(Member exco from 1994 to 1999, honorary member 2014) He helped with the formation of the Bar and then stayed on as member up to 2014 (and hopefully now as honorary member) Although he left the activities of the Executive, his valuable input through the years and him not missing an AGM is now rewarded with the honorary status.

2. Goodford, Denton (vice chair 1997-2001, Honorary Member 2014) He served as vice chair for many years, he is the first coloured person to serve on an Executive in South Africa. He is not actively involved in litigation anymore but he was a man of zeal when he served as vice chair.

3. Hawyes, Mark (Exco member 1995-1998, Chairperson 2012,2013,2014 and vice chair 2009-2011, honorary member 2014) He helped with the formation of the Bar and then stayed on as member and later on re-joined as Executive member. He has lately lead us into a new transitional phase.

4. Ramashia, E R “Rams” (Member of Exco 1994 to 1999, honorary member 2014) He was the a pioneer who started the NBCSA with Mattie in 1994, he was also present when the Honourable Minister of Justice Mr Dullah Omar congratulated us on the forming of a new Bar at the Congress for Access to Justice in 1994!

1 A reminder that these Legal Notes are my summaries of all reported cases as are set out in the Index. In other words where I refer to the June 2012 SACR , you will find summaries of all the cases in that book. It is for private use only. It is only an indication as to what was reported, a tool to help you to see if there is a case that you can use!

LEGAL NOTES VOL 9/2014

Compiled by: Adv Matthew Klein

5. Tholoe Ike (Vice chair 1994-1998, honorary member NBCSA 2014) He was the FIRST person of colour to be on a Bar Association’s executive in South Africa and served faithfully through the founding years!

SALR AUGUST 2014

ROSHCON (PTY) LTD v ANCHOR AUTO BODY BUILDERS CC AND OTHERS 2014 (4) SA 319 (SCA) Contract — Consensus — Simulation — Supplier and floor-plan agreements reserving bank's ownership of property subject to finance agreement — Such agreements serving entirely legitimate commercial purpose of securing finance house's interests — Structuring agreements in such way  not constituting simulation.Contract — Consensus — Simulation — Test — Supreme Court of Appeal's decision in NWK case not to be interpreted as condemning as simulated all contractual arrangements enabling parties to avoid tax or operation of  law — Whether transaction simulated remained question of its genuineness, which depended on consideration of all facts and circumstances surrounding it.Contract — Consensus — Simulation — Test — Whether parties actually intended their agreement should have effect in accordance with its terms — Supplier and floor plan agreement reserving bank's ownership of property subject to finance agreement — Contracting parties structuring their agreement for sound commercial reasons — No proof of secret understanding between them to disguise agreement — Appellant failing to prove that impugned agreements constituting disguise or simulation.The appellant (Roschcon) had purchased five trucks from a dealership which, in turn, had ordered it from the fifth respondent (the supplier). The second respondent (Wesbank) had financed the dealership's acquisition of the trucks by purchasing it from the supplier under a 'supplier agreement' and on-selling it to the dealership under a separate 'floor plan agreement'. The supplier agreement provided for delivery directly to the dealership or to 'such other person as the Dealer may from time to time direct', and both agreements reserved Wesbank's ownership of the trucks until the dealership paid it the selling price. Roschcon paid the dealership on proof of delivery of the trucks, which were delivered by the supplier directly to the first respondent (Anchor) for modifications specified by Roshcon. However, the dealership went into liquidation before paying Wesbank. The high court B decided the resulting competing ownership claims in Wesbank's favour, rejecting Roschon's contention that Wesbank's reservation of ownership in the supplier agreement and in the floor plan agreement was ineffectual since these were disguised or simulated agreements. Roschcon had argued that the agreements were in fact a loan against security of the trucks but without Wesbank having to take possession thereof, thereby securing an advantage which the law would otherwise not allow.On appeal the Supreme Court of Appeal delivered a unanimous judgment in two parts. The main judgment (per Shongwe JA) identified the 'fundamental issue' as 'whether the parties actually intended that the agreement that they had entered into should have effect in accordance with its terms'. The court agreed with the high court's reasoning that there were sound commercial reasons for the parties to have structured their transactions in the way they did: it enabled the dealer to offer the vehicle for sale to its customers; and it provided the bank with the security of vindication should the dealer dispose of the vehicle without paying the bank. It held that none of the contracting parties had a secret understanding between them, nor

had Roschcon shown anything of that nature. On a conspectus of all evidence,  it concluded, Roschcon had failed to prove that the floor plan agreement and the supplier agreement were a simulation or disguise. The additional judgment (per Wallis JA) specifically addressed Roshcon's reliance on an interpretation of a certain dictum in South African Revenue Services v NWK Ltd 2011 (2) SA 67 (SCA) ([2011] 2 All SA 347; [2010] ZASCA 168) to the effect that it had developed the test for simulation to condemn as simulated any and all contractual arrangements enabling parties to avoid tax or the operation of some law seen as adverse to their interests. The court held that the notion that NWK had transformed our law in relation to simulated transactions failed to consider the context of a relevant dictum and was incorrect.Whether a particular transaction was a simulated transaction was a question of its genuineness. If it were genuine the court would give effect to it and, if not, the court would give effect to the underlying transaction that it concealed. And whether it was genuine depended on a consideration of all the facts and circumstances surrounding the transaction. Nothing said  subsequently in any of the judgments of this court dealing with simulated transactions altered those original principles in any way or purported to do so. The position remained that the court examined the transaction as a whole, including all surrounding circumstances, any unusual features of the transaction and the manner in which the parties intended to implement it, before determining in any particular case whether a transaction was simulated. For so long as our law did not recognise a pledge of movables without delivery of the item pledged to the pledgee and its continued possession thereafter by the pledgee, commercial arrangements directed at finance houses securing their interests by taking ownership of the property that was the subject of a financing agreement, served an entirely legitimate commercial purpose. In the present case the reason for Wesbank and the supplier concluding the supplier agreement was to provide Wesbank with the security of being the owner of the vehicles, before providing finance to motor dealers. The contention that these were simulated transactions ignored the commercial legitimacy of a finance house seeking security for the financing transactions that it concludes.

CAPRICORN DISTRICT MUNICIPALITY AND ANOTHER v SOUTH AFRICAN NATIONAL CIVIC ORGANISATION 2014 (4) SA 335 (SCA) Constitutional law — Separation of powers — Between executive and judiciary — Judicial intrusion on executive domain — What constitutes — Court directing local authority to fix water reticulation and metering systems and to charge flat rate until this is achieved — Order constituting unwarranted intrusion on executive domain — Imposition of flat rate contrary to constitutional principles. It was common cause that the residents of Lebowakgomo Zone A, Limpopo, had experienced problems with their water supply and metering system for some time. In proceedings, brought on their behalf by SANCO, the high court I had directed the appellant municipalities to repair/replace the water pipelines and faulty meters within 12 months, and to charge consumers a flat rate for water consumption pending completion. The municipalities contested the orders on appeal, arguing that the repairs/replacements were matters falling within the legislative and executive powers of the municipalities concerned and therefore violated the doctrine of separation of powers. In either event, steps had already been taken to address the problem through the appointment of consulting engineers to undertake a comprehensive

study of the water provision problems. Further, the flat rate, as a basis of payment, contravened the legal framework for the imposition of tariffs and thus the principle of legality.Held: In commissioning the study — which would ultimately lead to the rehabilitation of the entire reticulation system in Zone A — the first appellant had been performing an executive function, and the order of the court below, which had the effect of fast-tracking the process, had offended against the doctrine of separation of powers and the legal framework within which the municipality had been acting. It had also erred in respect of the imposition of the flat rates which were completely out of kilter with the foundational principles of our constitutional order, as articulated by our courts, and with the applicable legislative framework. The orders were therefore incompetent and fell to be set aside. OOST SPORTS AFRICA (PTY) LTD v SOUTH AFRICAN BREWERIES LTD 2014 (4) SA 343 (GP) Company — Proceedings by and against — Security for costs — Application for furnishing of — Approach of court — New Companies Act lacking provision allowing court to order plaintiff company to furnish security for costs of opponent — Effect of omission — Not negating court's inherent power to regulate own process by compelling incola plaintiff company to provide security for costs of opponent where claim vexatious or lacking in merit.Contract — Breach — Disclosure of confidential information — Defendant used concept pitched to it by plaintiff — Damages claimed — Concept in public domain before plaintiff's pitch — Hence not objectively confidential — Concept not protected. Section 13 of Act 61 of 1973 granted the courts a discretion to require the furnishing of security by plaintiff companies if it appeared that they would be unable to pay the defendant's costs. This was a departure from the common law, which did not allow defendants to demand security from incola (resident) plaintiff companies (as opposed to natural persons). The 1973 Act was repealed by the Companies Act 71 of 2008, which contained no provision akin to s 13. The present case is one of a series in which the courts were called upon to determine the effect of this omission. SAB applied for an order directing Boost Sports to provide security for costs in its action for damages against SAB. Boost conceded that it would not be able to satisfy an adverse costs order, but argued that SAB's right to demand it was abolished by the repeal of the 1973 Act. It appeared that Boost had pitched a proposal for an interactive advertising concept to SAB. It claimed that the concept was unique and disclosed in confidence with the intent that the parties would utilise it to their mutual benefit. Instead, said Boost, it was — in breach of their agreement — copied by SAB, resulting in its incurring a loss of R12 million. SAB argued that the concept was in the public domain and hence not worthy of protection. It also denied an undertaking to maintain confidentiality and insisted that its initiative was developed independently. In deciding whether to grant the application the court had to determine, apart from the primary issue, whether the plaintiff's claim was vexatious or unmeritorious and whether ordering it to provide security for costs would infringe its constitutional right of access to the courts.Held: The repeal of the 1973 Act did not abolish the right of the court to order a resident plaintiff to provide security for the defendant's costs. This was an issue of procedure, and the court was entitled, in the exercise of its inherent power to protect its process against vexatious or meritless claims, to make an order for the provision

of security. The court's discretion in this regard had to be exercised by taking account of all relevant factors. Here, Boost's claim lacked reasonable prospects of success: the concept was in the public domain when Boost disclosed it to SAB, and hence the information was not confidential. Nor did Boost establish any undertaking of confidentiality by SAB. Hence the litigation was unsustainable and vexatious, and the plaintiff liable to furnish security for SAB's costs. Moreover, since Boost did not show as a probability that the granting of such an order would effectively terminate the litigation, its right of access to the courts was not violated. SOUTH AFRICAN INFORMAL TRADERS FORUM AND OTHERS v CITY OF JOHANNESBURG AND OTHERS 2014 (4) SA 371 (CC) 

Appeal — To Constitutional Court — Urgent application for appeal against interim order — When granted — Only as last resort — Constitutional Court will interfere only if applicant can show that high court or Supreme Court of Appeal  not providing for proper urgent procedure that would result in proposed relief.Appeal — To Constitutional Court — Application for leave to appeal against interim order — When granted — Street traders unlawfully evicted from trading locations — Livelihoods threatened — Constitutional rights implicated — Facing immediate and irreversible harm — Court allowing appeal and granting urgent interim relief. The applicants instituted applications for leave to appeal to the Constitutional Court after the Johannesburg High Court struck their applications for interim relief from the roll for lack of urgency. The high court applications were triggered by the forcible eviction of hundreds of informal traders from inner-city areas of Johannesburg. The effect of the high court order was that the matter would be re-enrolled and heard in the ordinary course, meaning a delay of several months. In the meantime the traders were, despite having gone through a verification and reregistration process, still being barred from returning to their stalls. Before the Constitutional Court the applicants contended that the interests of justice required the hearing of the appeal and the granting of interim relief: the traders were suffering serious and irreparable harm and things would get worse if they were not allowed to continue trading pending the hearing of the re-enrolled matter. The city argued that the Constitutional Court should refrain from hearing an appeal where the matter was still pending G before the high court.Held: As a general rule the Constitutional Court would grant urgent appeals against interim orders only as a last resort, and when it was shown that the high court or Supreme Court of Appeal did not provide a proper urgent procedure which could result in the proposed relief. The present was such a case. Leave to appeal on an urgent basis would be granted and an interim order interdicting the respondents from interfering with the applicants' trading activities made. The reasons for the granting of the order included the following:  •   Government should not by its disregard of the law be allowed to cause hardship to the vulnerable. •   The traders were entitled to trade from the stalls the city had allocated to them, and had been doing so for years. The city's conduct was, on the other hand, contrary to its own bylaws and plainly harmful.   •   The harm faced by the traders was imminent and irreparable. They had been rendered destitute and unable to provide for their families for over a month and

would, in the absence of an interdict, be precluded from doing so until the matter was heard in the ordinary course by the high court. The city, on the other hand, would not face irreparable harm if the interdict were granted. Nor would interim relief prejudice the main proceedings before the high court.    •   The eviction involved constitutional issues such as the traders' right to conduct their businesses and support themselves and their families — an important component of the right to human dignity — and the rights of their children to basic nutrition, shelter and basic healthcare.

M AND OTHERS v JM 2014 (4) SA 384 (KZP) Marriage — Divorce — Proprietary rights — Accrual system — Assets held in trust — Husband having power and ability to use assets of trust for sole benefit — Whether assets to be excluded from accrual — Discretion of court — Difference between redistribution order under Divorce Act and accrual claim under Matrimonial Property Act — Court pointing out that accrual claim based on facts and numbers, not matter of discretion — Divorce Act 70 of 1979, s 7(3); Matrimonial Property Act 88 of 1984, s 3. The defendant (the wife) in her claim in reconvention — in divorce proceedings — claimed that a family trust was the alter ego of the plaintiff (her husband) and that its assets should be deemed to form part of his assets for the purpose of determining the accrual of his estate. It was not her case that the assets were his property, nor that the trust was a sham — it was simply that he had the power and the ability to use the assets for his sole benefit and that they should therefore be taken into account. In support of this contention, reliance was placed on cases where such assets had been included in redistribution orders under s 7(3) of the Divorce Act,  on the basis that it was 'just' to do so. The husband excepted on grounds, inter alia, that the claim lacked the averments necessary to sustain a cause of action.Held: There was a fundamental difference between a redistribution order in terms of s 7(3) of the Divorce Act and an accrual claim in terms of s 3 of the Matrimonial Property Act (MPA). The latter was determined on a factual and mathematical basis and was not a matter of discretion. There was, I further, no authority in the MPA to have regard to assets which did not form part of his estate on the basis that it would be 'just' to do so. Nor was there a legal basis for an order that assets which in fact did not form part of his estate should be deemed to form part of it for purposes of determining the accrual. It followed that the averments did not sustain the claim and the exception was upheld — leave granted, however, to amend the claim within 20 days of judgment. INVESTEC BANK LTD t/a INVESTEC PRIVATE BANK v RAMURUNZI 2014 (4) SA 394 (SCA) Credit agreement — Consumer credit agreement — Debt enforcement — Summons — Service of before notice of default delivered to consumer — Action instituted without prior notice valid — Service of summons before notice delivered interrupting prescription — National Credit Act 34 of 2005, ss 129(1)(a) and 130. Where, in apparent contravention of s 129(1)(b) of the National Credit Act 34 of 2005 (the NCA), a credit provider institutes action to enforce payment of a debt arising from a credit agreement prior to delivery to the consumer of a notice of default, the

action is not void but subject to the court making an order in terms of s 130(4) as to how the proceedings are to be continued. In the present case this meant that prescription of the debt concerned had been interrupted by service of the summons despite the absence of proper delivery of a s 129 notice to the consumer. DEMOCRATIC ALLIANCE v PRESIDENT OF SOUTH AFRICA AND OTHERS 2014 (4) SA 402 (WCC) Constitutional law — Parliament — Act of Parliament — Passage of Bill through parliament — Whether Bill to be enacted in terms of s 75 or s 76 of Constitution — Bill falling within functional area in sch 4 to be enacted inC terms of s 76 — Test for whether Bill falling within functional area in sch 4 — Constitution, ss 75, 76 and sch 4. In issue was whether the Transport Laws and Related Matters Amendment Act 3 of 2013 ought to have been enacted in terms of s 75 or s 76 of the Constitution. Parliament enacted it in terms of s 75, but the Democratic Alliance (the DA) contended it ought to have been enacted in terms of s 76, and that it was thus invalid — this where a Bill must be enacted in terms of s 76 if it 'falls within a functional area listed in Schedule 4' to the Constitution. The test developed by the Constitutional Court for whether a bill falls within a functional area in sch 4 is whether the Bill's provisions 'in substantial measure' fall within such an area. Held: The test was concerned with the extent to which the instrument legislated on an area in sch 4. An instrument that to a substantial extent regulated an area in sch 4 had to follow the s 76 procedure. Here the Act did not regulate any area in sch 4 and it had accordingly not required passage in terms of s 76. The DA's application for the Act to be declared invalid had thus to be dismissed. MINISTER OF LOCAL GOVERNMENT, ENVIRONMENTAL AFFAIRS AND DEVELOPMENT PLANNING, WESTERN CAPE v HABITAT COUNCIL AND OTHERS 2014 (4) SA 437 (CC) 

Local authority — Town planning — Town planning and zoning schemes — Appeal rights — Provision permitting appeal of municipal land-use decisions to provincial government — Provision unconstitutional and invalid — Land Use Planning Ordinance 15 of 1985, s 44. This case confirms that s 44 of the Land Use Planning Ordinance 15 of 1985 is unconstitutional and invalid. The section created an appeal for affected persons against land-use decisions of a municipality. The appeal was to the provincial government which was given the power to replace the municipality's decisions with its own. The provision was unconstitutional for taking from local authorities the power of 'municipal planning' (s 156(1)(a) of the Constitution read with part of sch 4) and for intruding on their sphere and failing to recognise it. There were in fact no circumstances in which their land-use decisions were appealable to provincial governments: all zoning and subdivision decisions — regardless of their extra-municipal impact — were within their competence. However, provincial governments had co-ordinate powers to grant or withhold approvals of their own. VAN ZYL AND ANOTHER NNO v KAYE NO AND OTHERS 2014 (4) SA 452 (WCC) 

Trust — Legal personality — Separate identity — Piercing of trust veneer — Nature of remedy.Trust — Legal personality — Sham trust — Nature of.Evidence — Admissibility — Statement from s 417 enquiry into affairs of company at later civil proceedings — Such admissible, if requirements of s 3 of Act 45 of 1988 met — Companies Act 61 of 1973, s 417; Law of Evidence Amendment Act 45 of 1988, s 3.Insolvency — Trustee — Provisional trustee — Actions by and against — Authorisation to proceed — Provisional trustee may apply simultaneously for authority to bring proceedings and for substantive relief — Requirements for grant — Insolvency Act 24 of 1936, s 18(3). In this case the applicants applied to a court for it to 'go behind' a trust and to disregard its 'veneer' in order to give effect to what they said was the true situation. This they alleged was that it was the alter ego of one K. They contended, following from this, that the assets of the trust ought to be regarded as those of K. Held, that 'going behind the trust form' and establishing that a trust was a sham had to be distinguished. A trust was a sham and did not exist where the requirements to establish it had not been met, or where it appeared that they had been met, but that this was a dissimulation. By contrast, 'going behind the trust form' was an equitable remedy for a third party affected by an abuse of the trust form. It entailed accepting that the trust existed, but disregarding the consequences of its existence. It was likely to find application where a trustee treated trust property as his personal property G and used the trust as his alter ego. In such an instance the trustee might, for example, be held personally liable for an obligation he had ostensibly undertaken in his capacity as trustee. Significantly, establishing that an individual used a trust as his alter ego did not in itself render a trust a sham. Here the applicants had failed to show that the trust was a sham or that K had used it as his alter ego. The applicants also sought relief in respect of a company of which K had been the sole director, and which had owned an immovable property. They sought a declaration based on s 20(9) of the Companies Act 71 of 2008, that the property be treated as an asset in K's insolvent estate.Held, though, that the requirements of the section had not been satisfied. Separately, the applicants relied in their papers on evidence given by K at an enquiry under s 417 of the Companies Act 61 of 1973. The respondents objected to its admissibility on the ground of it being hearsay, and applied to strike it out. The applicants responded by applying for its admission in terms of s 3 of the Law of Evidence Amendment Act 45 of 1988. Held, that s 3 allowed the use of evidence from a s 417 enquiry in a subsequent civil proceeding, provided that the requirements of s 3 were satisfied. Here, though, those requirements had not been met and the evidence was thus inadmissible. A further matter was the application by the applicants — the provisional trustees of K's insolvent estate — for authorisation to institute the proceedings. This was in terms of s 18(3) of the Insolvency Act 24 of 1936. The section requires a provisional trustee to obtain the authorisation of a court in order to bring any legal proceedings. Held, that it was competent for provisional trustees to apply simultaneously for authority to bring proceedings and for substantive relief. Where they sought  authorisation, they would have to satisfy the court that (1) there was urgency; (2) that the cause of action was prima facie enforceable; and (3) that the interests of the creditors of the insolvent estate would not be prejudiced by the earlier institution of

proceedings. Here the applicants had failed to satisfy the court of the second requirement and their application was accordingly dismissed. COOL IDEAS 1186 CC v HUBBARD AND ANOTHER 2014 (4) SA 474 (CC) Housing — Consumer protection — Unregistered builder — Contract between consumer (home buyer) and unregistered builder — Court refusing to enforce arbitral award directing consumer to pay balance of contract price — Housing Consumers Protection Measures Act 95 of 1998, s 10.Arbitration — Award — Enforcement — Award directed at performance of act prohibited by statute unenforceable — Principle of party autonomy will yield to principle of legality where enforcement of award would constitute criminal offence.Constitutional law — Constitution — Foundational values — Principle of legality — Fairness may not be invoked to circumvent plain meaning of statute which is rationally connected to legitimate purpose. This case illustrates the following principles:   •   Fairness may not be invoked to circumvent the plain meaning of a statute which is rationally connected to a legitimate purpose.   •   Courts would rarely enforce a private arbitration contrary to a plain statutory provision, and never where enforcement would constitute a criminal offence.

  •   An unregistered home builder may be deprived of any claim for payment.Ms Hubbard appointed Cool Ideas to build her a house for R2 695 600. Cool Ideas was not, however, registered as a home builder under the Housing Consumers Protection Measures Act 95 of 1998, s 10(1)(b) of which provided that only registered builders were entitled to payment. Hubbard I discovered structural defects, refused to make final payment, and instituted arbitration proceedings for the costs of remedial work. Cool Ideas counterclaimed for the balance of the contract price, approximately R550 000. The arbitrator found in favour of Cool Ideas but Hubbard refused to comply with his award. Cool Ideas asked the high court for an order enforcing the award. Hubbard opposed the application on the ground that Cool Ideas was unregistered and therefore barred from receiving payment. Cool Ideas argued that this would be unfair, that the actual construction was in any event done by a registered subcontractor, and that it had itself A since registered. The high court granted the application, but Hubbard's appeal to the SCA was upheld.In an application for leave to appeal to the Constitutional Court the following issues were raised for determination: the proper interpretation of s 10(1)(b) of the Act; whether Cool Ideas would be arbitrarily deprived of its property if it were barred from enforcing a claim for unjustified enrichment; whether the building contract remained valid; whether equity considerations applied; and whether a refusal to make the arbitral award an order of court would constitute a denial of the right of access to court.Held (per Majiedt AJ, with Moseneke ACJ, Skweyiya ADCJ, Khampepe J and Madlanga J concurring): The appeal would be dismissed on the following grounds:    •   Section 10(1)(b) did not allow registration to take place during or at the end of construction; it was required at the beginning. Nor was Cool Ideas' non-registration cured by the fact that a subcontractor did the actual work.   •   The deprivation in s 10(1)(b) was aimed at a legitimate statutory purpose, namely the protection of home consumers against unscrupulous or unskilled builders. There was a rational, proportional connection between the penalty and the purpose, and hence no arbitrariness.

   •   A distinction had to be drawn between the arbitration agreement and the underlying building contract. The latter remained valid in order to protect the consumer in respect of what was already erected and the home builder for what it had already received.    •   Fairness could not be invoked to circumvent the plain meaning of s 10(1)(b), regardless of how much work had been done.    •   Arbitral awards that sanctioned illegalities or subverted the purpose of statutes were unenforceable. But this did not mean that courts would never enforce awards that were at odds with statutory prohibitions: it depended on public policy. In the present case the award violated a statutory prohibition backed by a criminal sanction, and was therefore contrary to public policy and unenforceable. In a dissenting judgment Froneman J (Cameron J, Dambuza J and Van der Westhuizen J concurring) held that the Act had to be interpreted in a manner less damaging to the right to property. TUNING FORK (PTY) LTD t/a BALANCED AUDIO v GREEFF AND ANOTHER 2014 (4) SA 521 (WCC) Company — Business rescue — Business rescue plan — Release of company from debts — Business rescue provisions of Act not containing term preserving creditor's rights against sureties where rescue plan releasing company from its debts — Companies Act 71 of 2008, ss 128 – 154. Tuning Fork (Pty) Ltd sold audio-visual equipment to a company, with the defendants as sureties for the company's debt. The company was ultimately placed in business rescue and a business rescue plan adopted. The plan provided that creditors such as Tuning Fork were to receive a dividend of 28 cents in the rand in full and final settlement of their claims. Tuning Fork then instituted action against the sureties for payment of the debt. The sureties delivered notice of intention to defend and Tuning Fork served an application for summary judgment. The sureties opposed on the basis that the compromise between the company and its creditors released them from liability. Held: The compromise provisions of the Companies Act 71 of 2008 (s 155) expressly provided that a compromise did not affect the liability of a surety of the company. But the business rescue provisions (ss 128 – 154) included no such express stipulation. Nor did they contain an implied term preserving creditors' rights against sureties where the company had been released from its debts pursuant to a business rescue plan. The legislature had simply not dealt with the issue. The effect of this was that it was for the stakeholders to regulate the position of sureties in the business rescue plan. And creditors could safeguard themselves against the effects of a compromise or release by including appropriate terms in their suretyships. The legislature's silence meant that in this case regard had to be had to the common law to assess the liability of the sureties. The common-law principle was that extinction of the principal debtor's obligation extinguished the surety's obligation. This applied where discharge of the principal debt was by a release or compromise that was voluntary or statutory. The principle had to be applied to the terms of the business rescue plan. The correct interpretation of the plan was that the company's payment of the dividend to the affected creditors discharged its debts to them. The plan contained no provisions preserving the creditors' rights against sureties. Accordingly, applying the common law, the sureties'

debts had been discharged. Given this the court refused summary judgment and granted leave to defend the main action. A COMPANY AND OTHERS v COMMISSIONER, SOUTH AFRICAN REVENUE SERVICE 2014 (4) SA 549 (WCC) Attorney — Privilege — Legal professional privilege — Legal advice privilege — Ambit — Extending to disclosure of actual communications between attorney and client in respect of seeking and giving legal advice, and such parts of documents from which such content may be inferred. Evidence — Privilege — Legal professional privilege — Legal advice privilege — Attorney's fee notes — Not privileged category of document per se — Privilege only extending to parts of fee notes disclosing content of privileged communications between attorney and client or from which such content may be inferred — Test to be applied whether, objectively, reference to legal advice disclosing content (and not only existence) of privileged material. Evidence — Privilege — Legal professional privilege — Legal advice privilege — Attorney's fee notes — Manner of asserting legal privilege — Incumbent on party claiming privilege to contextualise claim so as to facilitate determination of issue without court having to resort to private judicial inspection.  The applicants, three companies in a group of companies, had applied for a declaratory order that certain content of two fee notes (invoices) rendered by their attorneys to the first applicant (A Co) was subject to legal professional privilege, more particularly legal advice privilege. Copies of the invoices had been supplied to the Commissioner of the South African Revenue Service (SARS) but the applicants had redacted what they considered subject to the claim of privilege. The application by the companies for declaratory relief had been brought in the context of the Commissioner's insistence on being provided with unexpurgated copies of the documents concerned. The applicants' replying affidavit clarified that the claim was not based on the documents per se being privileged but that 'certain of the contents of the disputed invoices [were] privileged, to the extent that they set out the nature of the advice sought by the applicants from their attorneys and/or the advice given by those attorneys'.The issue was whether the privilege claimed subsisted, ie whether the ambit of the legal professional privilege extended to the redacted parts of an otherwise unprivileged document that had been disclosed. However, since  disclosure of part of a privileged document may constitute an implied or imputed waiver of the whole, the court considered it appropriate to also decide whether a lawyers' fee note qualified by its nature and as a general rule as a privileged document. A further issue, which arose from the applicants' indication they would make uncensored copies of invoices available for inspection by the court at the hearing for purposes of a 'judicial peek', was the appropriate manner of asserting the claimed privilege. IHeld: As to the ambit of the privilege, the most relevant case law was all foreign. The line of English authority that appeared to cloak solicitors' fee notes with privilege as a blanket rule should not be followed. Applying the reasoning of a different line of English case law in the local context impelled the conclusion that fee notes were not amenable to any blanket rule that would characterise them as privileged communications per se: They were not created for the purpose of the giving of advice and were not ordinarily of a character that would justify it being said of them

that they were directly related to the performance of the attorney's professional duties as legal adviser to the client.However, it was readily conceivable that attorneys' fee notes might contain references to legal advice sought and given in the course of a narration of the services in respect of which the fees had been raised. Disclosure by reference (in a document which was not itself privileged) of the mere fact that advice had been sought or given did not give rise to any privilege. The matter in respect of which the privilege may be claimed was the actual communications between the client and the lawyer involved in the seeking and giving of the advice, or references in documents that would disclose their content or from which their content might be inferred. Thus, where a fee note set out the substance of the privileged communications in respect of the seeking or giving of legal advice, or contained sufficient particularity of their substance to constitute secondary evidence thereof, those parts, but not the document as a whole, would be amenable to the privilege. The test was whether, upon an objective assessment, the references disclose the content, and not just the existence, of the privileged material. The privilege should be asserted in such cases in precisely the manner that the applicants did — by redacting the information so as to disclose those parts of the document that were not subject to the privilege and covering up those that were. A party asserting the legal professional privilege should generally be able to provide a rational justification for such claim without needing to disclose the content or substance of the matter in respect of which the privilege is claimed. Private judicial inspection of the content of allegedly privileged material is a practice which should be followed as a last resort. It was incumbent on a party to contextualise the claim to privilege as far as possible so as to facilitate determination of the issue without a private judicial inspection, or at least to minimise the effect of the one-sided treatment of the issue that a private inspection necessarily occasioned. TM v NM AND OTHERS 2014 (4) SA 575 (SCA) Customary law — Customary marriage — Validity — Proof — Certificate of registration providing prima facie proof of existence of customary marriage — In absence of countervailing evidence impugning authenticity, conclusive proof of such marriage. The appellant sought orders declaring (1) a customary marriage between herself and the deceased — allegedly concluded in 1970 and registered in 1991 — valid; and (2) a later 'civil marriage' contracted between the first respondent and the deceased in 1995 void. The first respondent disputed the validity of the marriage, alleging inter alia, that when she had married the deceased the appellant had in fact been married to a third party. The appellant conceded to several of the allegations, including admitting to this marriage. A settlement agreement was subsequently concluded between the parties to circumscribe the issues in dispute and no oral evidence was led by the first respondent. Ultimately the high court dismissed the appellant's application on grounds including that, as certain of her initial assertions regarding the conclusion of the customary marriage had been untrue, she could not rely on the registration certificate, for to allow her to do so would be to assist her in the perpetration of a fraud. Taking the matter on appeal, the appellant argued that the certificate of registration was conclusive proof of her customary marriage and could only be rendered invalid if evidence were led to show it had been obtained by fraud, which had not been done. 

The Supreme Court of Appeal agreed with the appellant, holding that the registration certificate issued to her in 1991 constituted, at the very least, prima facie proof of the existence of her marriage. In the absence of countervailing evidence impugning its authenticity, it therefore established the truth of the facts stated. In the light of the finding that the customary marriage was valid, it was further held that the marriage of the first respondent to the deceased could not survive. VAN HEERDEN v NOLTE 2014 (4) SA 584 (GP) Credit agreement — Consumer credit agreement — Credit provider — Whether obliged to register if not frequently providing credit — National Credit Act 34 of 2005, ss 40(1)(a) and (b). The plaintiff sued the defendant for three amounts owing to him arising from various agreements relating to the purchase of immovable property. The defendant excepted to the particulars of claim on grounds, inter alia, that as the total principal debt exceeded the threshold of R500 000, the plaintiff was obliged to allege in his particulars that he was a registered credit provider in terms of ss 40(1)(a) and (b) of the NCA, which he had not done. The plaintiff contended that he was not obliged to so register as the relevant provisions were exclusively directed at persons who engaged frequently in the provision of credit and not 'once-off' transactions, as in the present case.The court rejected this argument holding that the plaintiff was indeed obliged to register in terms of the NCA. Registration as a credit provider was accordingly an essential allegation, in the absence of which the particulars failed to disclose a cause of action. The exception was accordingly upheld but leave to amend within 20 days of the order was granted. ZULU AND OTHERS v ETHEKWINI MUNICIPALITY AND OTHERS 2014 (4) SA 590 (CC) Land — Unlawful occupation — Eviction — Interim order aimed at preventing  future land invasion or occupation — Existing occupiers having locus standi in such proceedings where parts of interim order could have effect of authorising their eviction.Constitutional law — Duties of state — Assistance to and protection of courts — Court should be able to rely on submissions made by organ of state — Where inconsistent, state party failing their constitutional mandate — Constitution, ss 7(2) and 165(4). This case concerns an appeal against a high court's refusal to grant the appellants leave to intervene in proceedings in which they had been not cited and where an interim order had been granted which, so they claimed, affected their rights in that it related to land that they had been living on. The interim order authorised the South African Police Service (SAPS) and the municipality where the land was situated to 'take all reasonable and necessary steps' to, inter alia, 'prevent any persons from invading and/or occupying . . . the immovable properties . . . subsequent to the grant of this order'; and interdicted 'any persons from invading and/or occupying and/or undertaking the construction of any structures and/or placing of any material upon any of the aforementioned properties'.The Member of the Executive Council for Human Settlements and Public Works, KwaZulu-Natal (the MEC), who had initiated the proceedings in her capacity as the

ex officio owner of the land concerned, and the municipality, contended that the interim order only related to invasions or attempted invasions that occurred or would occur after the grant of that order, so that it did not 'interfere with the entrenched rights of the [appellants] who . . . were in occupation of the . . . property prior to the grant of the order'. Notwithstanding this stance, it transpired that the day after the hearing of this matter, the municipality relied on the interim order to demolish some of the appellants' shacks. This introduced the conduct of state parties as a secondary issue.Held: The narrow question to be determined, ie whether the high court was correct in refusing the appellants leave to intervene, depended upon whether the appellants had a direct and substantial interest in the proceedings and therefore had locus standi. That in turn depended on whether the order affected their rights or interests adversely or had the potential to affect their I rights or interests. The authorisation to take 'all reasonable steps' to 'prevent any persons from . . . occupying . . . the immovable properties' seemed wide enough to include the prevention of the continuation of such occupation. That meant that in terms of that part of the order the appellants could be prevented from continuing to occupy the property and, to that extent, it was an eviction order. The interim order was also an eviction order to the extent that its interdicting of 'any persons from . . . occupying . . . any structures  . . . upon the immovable property' was open to a reading that it applied to continuing occupation of structures on the property. There could be no doubt that the interim order authorised the taking of steps which could have the effect of evicting persons who were already living on the property or had completed building their homes on the property when the order was granted. The appellants therefore had a direct and substantial interest in the interim proceedings and in the discharge of the interim order. The high court had erred in dismissing their application for leave to intervene and, that being the case, the appeal had to succeed. As to the secondary issue, the submissions on the interpretation of the order put forward by the municipality, the conduct of the municipality in demolishing the structures, and the explanations offered in this court remained troublingly inconsistent. Section 165(4) of the Constitution imposed a positive duty on organs of state to 'assist . . . courts to ensure [their] . . . effectiveness'; and s 7(2) to respect, protect, promote and fulfil  the rights in the Bill of Rights, including 'the right to have any dispute that can be resolved by the application of law decided in a fair public hearing'. Failing to fulfil these obligations fell short of their constitutional mandate. Further, government officials had a duty not only to discharge their functions but also to account for when they have not. A court should be able to rely on the submissions of organs of state — otherwise our very constitutional order would be undermined. FISCHER AND ANOTHER v RAMAHLELE AND OTHERS 2014 (4) SA 614 (SCA) Practice — Applications and motions — Dispute of fact — Referral for oral evidence — Whether court may raise point of law mero motu at oral-evidence hearing — Court may do so to suggest alternative approach or argument but it remains for parties to adopt it — Court may not require that issues so raised be argued instead of hearing oral evidence and deciding issues as formulated by parties. The court a quo, at the hearing of oral evidence to decide a dispute of fact in a counter-application, required the parties to address it on a number of legal points that it had raised mero motu, and then decided the matter on those points without

hearing oral evidence. On appeal the Supreme Court of Appeal, rejecting this approach —Held: While a court may sometimes suggest a line of argument or an approach to a case that had not occurred to the parties, it was then for the parties to determine whether they wished to adopt the new point, and not for the court. If they wished to stand by the issues they had formulated, it was not open to the court to raise new ones or compel them to deal with matters other than those they had formulated in their pleadings or affidavits. ABSA BANK LTD v VAN RENSBURG AND ANOTHER 2014 (4) SA 626 (SCA) 

Appeal — Power of court of appeal — Power to dismiss appeal where judgment or order sought would have no practical effect or result — Appeal scrapped where (1) issue raised involved ambit of court rule and best disposed of by Rules Board; (2) court having heard argument from one side only; and (3) order not of appealable nature. Absa had initiated high court actions against the respondents based on mortgage bonds. The claims in question were commenced by way of simple summonses to which copies of the bonds and the deed of suretyship signed by the owners' spouses were annexed. When the claims were set down for hearing as unopposed applications for default judgment, the high court had to decide whether it was necessary to also attach the underlying credit agreements to the summonses. The matter was, in the light of divergent views on the question in the division, referred to a full court. The full court held that it was necessary to attach the credit agreements and postponed the matter to allow Absa time to do so. Absa then settled the matter with the respondents but persisted with an appeal to the SCA on the ground that the question at law in issue was likely to arise frequently, with the result that a judgment would still have a practical effect or result. Two preliminary questions arose: (1) whether the SCA would hear the matter at all in the light of s 21A(1) of the Supreme Court Act 59 of 1959; and (2) whether the matter was, given the nature of the orders appealed against, in any event appealable.Held: The court had a discretion to allow an appeal where its decision or order would have a practical effect, not between the parties but in other respects, for example where important questions of law which were likely to arise frequently were at issue and their determination could benefit others. The present question — namely the precise requirements of a rule of procedure — fell within the ambit of the Rules Board and had to be resolved by it. In addition, the court would not decide the merits of the appeal on the basis of arguments from one side (in casu Absa) only. Lastly, an order postponing a hearing of an application for default judgment in order to give the plaintiff an opportunity to take further steps was merely a direction and not  appealable.

SA CRIMINAL LAW REPORTS AUGUST 2014

NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS AND OTHERS v FREEDOM UNDER LAW 2014 (2) SACR 107 (SCA) 

Criminal procedure — Prosecution — Prosecuting authority — Decision to discontinue prosecution — Reviewable on principle of legality, not under Promotion of Administrative Justice Act 3 of 2000. 

The same policy considerations underlying the exclusion of a decision to institute or to continue to prosecute from the ambit of the Promotion of Administrative Justice Act 3 of 2000 (PAJA), applied to a decision not to prosecute or to discontinue a prosecution. Decisions to prosecute and not to prosecute were of the same genus and, although on a purely textual interpretation, the exclusion in s 1(ff) of PAJA was limited to the former, it must be understood to incorporate the latter as well. Although decisions not to prosecute were — in the same way as decisions to prosecute — subject to judicial review, it did not extend to a review on the wider basis of PAJA, but were limited to grounds of legality and rationality. The Supreme Court of Appeal (the SCA) so held in an appeal against the high court's setting-aside on review of decisions made by the National Director of Public Prosecutions (the NDPP) and the head of the Specialised Commercial Crimes Unit to, inter alia, withdraw certain criminal charges against one Lieutenant-General Mdluli; and a decision by the National Commissioner: South African Police Service (the Commissioner) to withdraw disciplinary proceedings against Mdluli. Accordingly, the SCA upheld the high court's setting-aside of the impugned decisions not to continue with Mdluli's prosecution only insofar as setting it aside was justified on the grounds of legality and rationality, and not also — as the high court had found — on the basis that such decisions were subject to review under PAJA.In addition, the high court had ordered the NDPP to reinstate all the charges against Mdluli and to ensure that the prosecution of these charges were enrolled and pursued without delay; and had directed the Commissioner to reinstate the disciplinary proceedings and to take all steps necessary for the prosecution and finalisation of these proceedings. The SCA agreed with the NDPP and the Commissioner that such mandatory interdicts were inappropriate transgressions of the separation of powers doctrine. It held that a court will only be allowed to interfere with this constitutional scheme on rare occasions and for compelling reasons, and that this was not such a case. 

S v PEYANI 2014 (2) SACR 127 (GP) Evidence — Intermediary — Appointment of — Criminal Procedure Act B 51 of 1977, s 170A(1) — Requirements for — Intermediary merely arriving at court and acting as such after consultation with witnesses — No report by intermediary as to necessity for intermediary — In case where witnesses were young children and accused was facing numerous charges of serious sexual offences, no irregularity as witnesses would clearly suffer undue stress. The appellant appealed against his convictions and sentences imposed in a regional magistrates' court for seven counts involving sexual offences. On appeal it was contended as a point in limine that the magistrate had committed an irregularity in his conduct of the proceedings relating to the evidence of an intermediary. The issue arose from the testimony of three children aged, respectively, 10, 14 and 16 years. The charges involved either rape, indecent assault or sexual assault. The prosecutor applied in terms of s 170A of the CPA that an intermediary be appointed. The intermediary in question was a social worker employed by the Department of Social Development and had been employed as an intermediary for a period of three years.

She had seen the children before the commencement of the proceedings and she was sworn in by the magistrate. There was no objection by the appellant's legal representative who admitted that the young witnesses would suffer undue stress. Counsel for the appellant contended that no factual basis had been laid for the evidence to be taken through the intermediary, nor had the intermediary compiled a report with regard to the minor witnesses, and the court had merely appointed the intermediary.Held, that, even if no factors were placed before the magistrate it was quite clear that the intermediary had consulted with the minors before the trial commenced. It could therefore be inferred that she found it necessary to take part in the proceedings for the benefit of the complainants/witnesses.From the magistrate's answer to this ground of appeal, namely that the intermediaries were provided by the Department of Social Services based on the language of the child and that once the intermediary reported that she had come for a particular case it would be absurd for the court to ask whether she was so desired or not. It could further be inferred that the children would be unduly stressed due to their biological age as well as the nature of the charges. There was accordingly no justification for alleging that an irregularity had occurred. This point in limine was dismissed.

S v MBATHSHA 2014 (2) SACR 143 (ECG) Plea — Plea of guilty — Unrepresented accused — Magistrate's duty in respect of — Explanation of rights before plea — Rights explained by prosecutor and no indication on record of content of explanation — Irregularity vitiating whole trial — Conviction and sentence set aside. The accused was sentenced to 24 months' imprisonment after having pleaded guilty to housebreaking with the intent to steal and theft. The matter came on review and it appeared from the record that the prosecutor had informed the accused of his rights, and he informed the court that the accused told him that he wished to plead guilty. The magistrate then proceeded to question the accused in terms of s 112(1)(b) of the Criminal Procedure Act 51 of 1977, whereupon the accused was convicted and sentenced.Held, that, although the prosecutor mentioned in his brief summary to the magistrate what rights he had explained to the accused, his explanation to the accused was not recorded and one therefore did not know what he actually said to the accused or whether the accused understood him. The record therefore did not reflect that the accused's rights were properly explained to him. Held, further, that the irregularity which had taken place had vitiated the whole trial and in effect there was no trial at all. The conviction and sentence therefore had to be set aside. The court ordered that the accused be tried de novo before a different magistrate. DIRECTOR OF PUBLIC PROSECUTIONS, WESTERN CAPE v MALAN 2014 (2) SACR 146 (WCC)  Appeal — Leave to appeal — Application for — In terms of s 311(1) of Criminal Procedure Act 51 of 1977 — Time within which application to be made — Outer limit for lodging of application is 30 ordinary days and any time beyond would be unreasonable.

Fraud — What constitutes — Misrepresentation — Whether misrepresentation made to world at large could constitute criminal fraud — This legal question sufficient to constitute reasonable prospects of success for appellant on appeal. An application for leave to appeal brought in terms of s 311(1) of the Criminal Procedure Act 51 of 1977, must be lodged within a reasonable time as it prescribes no time period within which an appeal on a question of law must be lodged. An application for leave, where no time is stipulated must be lodged within the range of 15 court days and 14 – 30 ordinary days of the decision appealed against. The outer limit for the lodging of an application for leave to appeal under this provision is 30 ordinary days and any time I beyond that period would be unreasonable. In considering whether to grant the applicant leave to appeal, the court noted that the merits of the appeal turned on a question of law, namely whether a misrepresentation that had been made to the world at large, could constitute fraud. The court examined a number of cases referred to it by counsel for the applicant and held that there was authority for the proposition that such a misrepresentation could constitute fraud. In the light of this, and the often difficult question whether silence or non-disclosure was criminally fraudulent, there was a reasonable prospect of success on appeal. S v MTHETHANDABA 2014 (2) SACR 154 (KZP)  Appeal — Leave to appeal — Application for — Petition to Supreme Court of Appeal — Application for leave to appeal against refusal by high court of petition for leave to appeal — Appeal against refusal of petition lies to Supreme Court of Appeal but only with special leave of that court. Since the repeal of the Supreme Court Act 59 of 1959 and its replacement by the Superior Courts Act 10 of 2013 which came into force on 23 August 2013, the position regarding petitions to appeal to the Supreme Court of Appeal is as follows:(1)   A petition delivered in terms of s 309C of the Criminal Procedure Act 51 of 1977 directed to a Judge President of a division of the high court and placed by her or him before two judges of the high court for consideration by them is in effect an appeal against an incorrect decision of a lower court.(2)   When considering that petition, the two judges concerned are sitting as a court of first instance and their refusal of the petition is in any event a decision of the high court delivered consequent upon an appeal to the division concerned.(3)   An appeal against the refusal of that petition lies to the Supreme Court of Appeal but only with the special leave of the Supreme Court of Appeal. In the present matter, an application for leave to appeal against the refusal of a petition for leave to appeal, the court accordingly held that it lacked jurisdiction to entertain the application and accordingly the matter had to be struck from the roll. BAASDEN v MINISTER OF SAFETY AND SECURITY 2014 (2) SACR 163 (GP)  Arrest — Arrest on warrant — Copy of warrant — Proof of — Appearance of existence of warrant on other document or electronic data or system not constituting warrant — Existence of warrant not proven and arrest held to be wrongful.

The plaintiff instituted action against the defendant for damages for unlawful arrest and detention arising out of his arrest at OR Tambo Airport on 14 August 2010 on his return from a period abroad. Evidence was led that the plaintiff's passport triggered a response in a computer of the Movement Control System. This led to his arrest by a police officer who confirmed telephonically with the Garsfontein Police Station that the warrant for the plaintiff's arrest, on a charge of theft, issued in 2002, was still valid. The plaintiff was held for a period of 24 hours and was only released on bail on the intervention of two advocates. Despite the defendant claiming that the arrest was valid on the basis of the existence of a warrant of arrest, no warrant was produced at the trial and the plaintiff testified that he was never shown a copy of the warrant. A witness for the defendant testified that, in the event of a warrant going missing, another warrant had to be applied for.Held, that the appearance of information regarding the existence of a warrant of arrest on any other document or electronic data or system did not constitute a warrant but merely evidenced that a warrant had been issued. A warrant had to exist in real terms as a document that could be exhibited when necessary, hence the need to reapply for one when the original went missing.Held, further, that the defendant, who admitted that he bore the onus of proving the lawfulness of the arrest, led evidence about the existence of a warrant of arrest, but none had been included in the documents before the court. It was not for the court to infer the existence of a warrant of arrest or to assume that it did exist. There had been no explanation for why not even a copy of the warrant in question was furnished. It should have been not just a logical but the easiest thing for the defendant to access this critical detail in order to prove its case. Proof on a balance of probabilities by the defendant could not be achieved by drawing inferences in favour of his case. It had to be done on the weight of evidence presented by the defendant. This the defendant had failed to do and he had accordingly failed to prove the lawfulness of the arrest. Judgment granted in favour of the plaintiff.  S v NKUNKUMA AND OTHERS 2014 (2) SACR 168 (SCA) Sentence — Prescribed sentences — Minimum sentence — Imposition of in terms of Criminal Law Amendment Act 105 of 1997 — Assessment of proper sentence — Starting point is prescribed minimum sentence — Not to be departed from for flimsy reasons.Robbery — Aggravating circumstances — Sentence — Minimum sentence in terms of s 51 of Criminal Law Amendment Act 105 of 1997 — Sentence of effective three years' imprisonment imposed on 19-year-old offender for participating in attack on two women and child in their home at night woefully inadequate — Starting point is prescribed minimum sentence — Sentence altered to effective 12 years' imprisonment. The three respondents were convicted in a circuit court of housebreaking with intent to rob; robbery with aggravating circumstances as defined in s 1 of the Criminal Procedure Act 51 of 1977; and, in respect of the first and third respondents, rape in contravention of the provisions of the Criminal Law (Sexual Offences and Related Matters) Amendment Act 32 of 2007. The state invoked the provisions of s 51 of the Criminal Law Amendment Act 105 of 1997. For the housebreaking with intent to rob they were sentenced to two years' imprisonment each. The court found substantial and compelling circumstances present in the case of all the respondents, apparently as a result of their youthfulness. It sentenced the first and third respondents to 10

years' imprisonment, in respect of the robbery and 15 years' imprisonment in respect of the rape, and sentenced the second respondent to eight years' imprisonment of which five years were suspended, for the robbery. The state appealed against the sentences imposed. The convictions arose from an incident in which the three respondents broke into the home occupied by a 38-year-old woman (the complainant), her 3-year-old son and her mother. The complainant was not at home when the three respondents broke into the house. They threatened her mother with knives and demanded money from her. When the complainant returned to the house they demanded money from her and assaulted her. When they left they took the complainant with them and she was made to traverse rugged terrain in the dark. After a short distance the first and third respondents raped her at knifepoint. The respondents were, respectively, 21, 19 and 22 years of age at the time of the offences. On appeal the court reiterated the previous warning by the court in S v Malgas (2001 (2) SA 1222; [2001] 3 All SA 220; [2001] ZASCA 30) in paras 7 and 9, that it was not business as usual after the passing of the minimum-sentencing legislation, andHeld, that the court a quo, having approached the matter of sentencing as if the sentencing yardstick were the sentences imposed in certain cases, and to then ask whether the applicable minimum sentences could be considered too severe against that bench mark, committed a misdirection, and the court was therefore at large to consider the question afresh. Held, further, that the sentence of an effective three years' imprisonment in J respect of the second respondent was woefully inappropriate and was shockingly lenient in the light of the seriousness of the crimes and the manner in which they were committed. The prescribed minimum sentence of 15 years' imprisonment remained the starting point. Taking all the factors into consideration, a reduction of three years' imprisonment from the prescribed minimum sentence would be justified in his case. Held, further, that, in the case of the first and third respondents, the prescribed minimum sentence of 15 years' imprisonment in respect of the robbery, and life imprisonment in respect of the rape, would be appropriate. The sentences were altered accordingly. S v FORTUNE 2014 (2) SACR 178 (WCC) Sentence — Prescribed sentences — Imposition of in terms of Criminal Law Amendment Act 105 of 1997 — 'Substantial and compelling circumstances' — Constitutionally compatible administration of minimum sentence I legislation reliant on judicial nuance, which is undesirable — Legislation had to be applied in manner that avoids infringement of convicted person's basic rights in terms of s 12 of Bill of Rights.Robbery — Aggravating circumstances — Sentence — Minimum sentence in terms of s 51 of Criminal Law Amendment Act 105 of 1997 — Appropriate for sentencing court to have regard to gradations in manifestations of offence — Accused with number of previous convictions threatening woman in broad daylight in city street with knife and grabbing handbag — Sentence of 15 years' imprisonment disproportionate to offence and replaced with sentence of eight years' imprisonment. The appellant was convicted in a regional magistrates' court of robbery with aggravating circumstances and was sentenced to the mandatory minimum sentence of 15 years' imprisonment, the court not having found the existence of any

substantial and compelling circumstances justifying a lesser sentence. In granting the appellant's application for leave to appeal, the trial magistrate remarked that he and his regional magistrate colleagues would benefit from a greater degree of clarity in how to approach the issue of substantial and compelling circumstances. On appeal, the court embarked upon a review of the decisions of the top-tier courts relating to the imposition of minimum sentences and remarked that the constitutionally compatible administration of the minimum sentence legislation was reliant upon judicial nuance. This was hardly desirable and was a position that was bound in practice to result in approaches to sentence that would be difficult to reconcile and appeared to be discordant. What was clear was that the criminal courts have the duty to approach sentence, treating each case on its individual merits and mindful of the need to apply the minimum sentence legislation, in a manner that did not result in punishment that was disproportionate, having regard to the peculiar circumstances of the commission of the offence and the personal circumstances of the offender. The provisions of the legislation fell to be applied in a manner that avoided any infringement of the convicted person's basic rights in terms of s 12 of the Bill of Rights. The offence in question was committed by the appellant who threatened the complainant with a knife on a street at the edge of Cape Town's central business district in broad daylight, and, by these means, was able to wrest from her and steal the handbag she had been carrying. He had initially pretended to approach her for the purpose of asking for a match to light a cigarette. The complainant suffered no injuries. The appellant was 30 years of age when the offence was committed and was a handyman earning a monthly income of approximately R4000. He had a number of previous convictions, including convictions for robbery, malicious injury to property, housebreaking with intent to steal and theft, and common theft. He had a drug-abuse problem. The court held that regard had to be had to the gradations in the manifestations of the offence of robbery with aggravating circumstances in determining an appropriate sentence. The fact that the complainant had been threatened rather than physically assaulted and injured was a relevant factor to be taken into account, along with all the other factors that had to be weighed in determining whether a departure from the prescribed sentence was warranted. A sentence of 15 years' imprisonment was disproportionate in the peculiar circumstances of the commission of the offence in question, and would unjustly equate the punishment of the offence with that imposed under the applicable legislation for far more serious instances of robbery. In the present case the complainant had not been physically injured and the value of the property stolen was relatively small. In the circumstances a sentence of eight years' imprisonment would be appropriate. The appeal was upheld and the sentence was set aside and replaced with a sentence of eight years' imprisonment. 

S v SMITH 2014 (2) SACR 190 (FB)  Sentence — Habitual criminal — Declaration as in terms of s 286 of Criminal Procedure Act 51 of 1977 — Accused not warned in advance of provisions of section — Magistrate also not exercising his discretion properly in failing to consider nature of offences and their commission — Declaration as habitual criminal set aside. The appellant had been convicted in a regional magistrate's court of housebreaking with the intent to steal and theft. After proof of his previous convictions the

magistrate declared the appellant a habitual criminal in terms of the provisions of s 286(1) of the Criminal Procedure Act 51 of 1977. It appeared that the magistrate did not warn the appellant before sentencing him that he was considering declaring him a habitual criminal, although he had been warned on a previous occasion, when he was sentenced for theft committed whilst he was out on a warning awaiting trial for the present offence, and for which he was subsequently sentenced to six years' imprisonment of which a period of three years' imprisonment was suspended for five years. In all, 14 previous convictions were proved against him for offences that had been committed between 1987 and 2010. The appellant's first conviction occurred when he was 19 years old and a series of seven convictions followed in the next five years, including for attempted theft, theft and robbery. For these convictions the appellant was sentenced to relatively light sentences. There then followed a period of two and a half years before his next conviction. Then another five and a half years passed without any convictions and again thereafter a period of two and a half years, and then a period of four and a half years between convictions. A further two years passed before the last conviction. On appeal against the conviction,Held, that the appellant's record did not justify the conclusion that he committed offences whenever the occasion presented itself or whenever he found himself hard-pressed financially or unable to afford something he wanted. The convictions did show a propensity towards crimes of dishonesty. Held, further, that the facts in the matter did not justify the inference that the appellant habitually committed crimes and that the community needed to be protected against him, or that a declaration was justified without a warning having been given. The warning that had been issued could not be a relevant consideration, for obvious reasons. Held, further, that the magistrate had failed to exercise his discretion properly and in these circumstances the sentence had to be set aside and replaced with a sentence of eight years' imprisonment of which two years imposed were to run concurrently with the sentence that the appellant was already serving for theft. S v SELEKE 2014 (2) SACR 199 (NCK)  Trial — Presiding officer — Unavailability of to continue with trial — Part-heard trial where evidence already adduced and accused convicted — Other magistrate not entitled to proceed with trial de novo — Sentence imposed by new magistrate — Court on review holding that no purpose would be served by remitting matter to original magistrate for finalisation of case, and sentence imposed by new magistrate eminently sensible sentence — Court regarding subsequent proceedings as proceedings in terms of s 275 of Criminal Procedure Act 51 of 1977. The accused appeared in a magistrates' court in Kimberley in 1999 charged with a traffic offence. He pleaded guilty to the charge and was questioned by the H magistrate in terms of s 112(1)(b) of the Criminal Procedure Act 51 of 1977 (the CPA). After questioning, the magistrate altered the plea to one of not guilty in terms of s 113 of the CPA as she was not satisfied that he had admitted all the elements of the offence. The matter was subsequently postponed and eventually evidence was led and both parties closed their cases. The magistrate then remanded the case for the accused's mother to testify in mitigation of sentence. The accused failed to appear on the date to which the case was postponed and a warrant for his arrest was authorised. The accused's attendance in court was secured only

on 16 May 2013, some 14 years later when he appeared before a different magistrate. The matter was postponed once again and when the matter came before court the magistrate ordered that the case start de novo before her as the original magistrate was not available. It appeared that that magistrate had been transferred to another district but no indication was given of any attempts to bring that magistrate to Kimberley to finalise the matter. The accused then pleaded guilty in terms of s 112 of the CPA on the same charge and he was convicted and sentenced to a fine of R4000 or four months' imprisonment, and he was given an opportunity to pay the fine in instalments. The matter then came before a judge on automatic review.Held, that, regard being had to s 275 of the CPA, the second proceedings before the magistrate were irregular. That magistrate was not competent to set aside the conviction. The proceedings before the second magistrate should have been set aside but it would serve no purpose to set aside the sentence that had been imposed. To refer the matter for resentencing before the original magistrate or any other magistrate in terms of s 275 of the CPA C would only cause hardship to the accused and no worthwhile purpose would be served. The sentence imposed was an eminently sensible one in that it had kept the accused out of prison. He had already paid almost half of the fine. The court accordingly regarded the proceedings in terms whereof the accused was sentenced by the second magistrate as proceedings in terms of s 275 of the CPA. The conviction and sentence were confirmed. MKHUBA v MINISTER OF POLICE AND ANOTHER 2014 (2) SACR 205 (ECM) Search and seizure — Seizure by police in terms of s 20 of Criminal Procedure Act 51 of 1977 — Disposal of articles thereafter — Section 34 of Act applicable only in respect of items transferred to court by police for purposes of trial. Arms and ammunition — Seizure of — Compensation for in respect of firearms and ammunition forfeited to state — Applicant seeking compensation, had valid licence to possess firearm when firearm seized, but licence had lapsed while firearm in custody of police — Sections 134 and 135 of Firearms Control Act 60 of 2000 not preventing payment of compensation. The applicant applied for an order declaring that the action of the respondents in failing to hand over a firearm belonging to him was unlawful and should be set aside. He also prayed for an order directing the respondents to hand over the firearm to him or to compensate him for the firearm. It was common cause that the applicant had appeared in the magistrates' court in 2003 in connection with a charge of murder. At that time he held a licence for the firearm in question that had been issued in 1998. In June 2005 the charges against him were withdrawn. According to the respondents, however, the matter had merely been removed from the roll pending the availability of a photograph album. In any event there was no evidence that since 2005 the matter had been put back on the roll. It was common cause that the firearm had been seized in terms of s 20 of the Criminal Procedure Act B 51 of 1977 (the Act). After the withdrawal of the charges against him the applicant approached the investigating officer on numerous occasions requesting him to hand over the firearm. The investigating officer in question was subsequently transferred and thereafter the applicant received no assistance from the station commander at that police station. He launched the present proceedings in January 2013 which were opposed by the respondents on the basis that the firearm in question would be used as an exhibit in

pending criminal proceedings against the applicant. In this regard they relied on the provisions of s 34 of the Act. The respondents contended further that, as the applicant's licence had been issued in 1998, it would have expired five years later and the police accordingly could not return the firearm to the applicant, as he did not have a valid licence for it. It appeared, however, from documents handed in by the respondents that the firearm in question had actually been stolen from the police station in 2005 and was no longer in the possession of the respondents. As regards compensation, the respondents contended that no compensation was payable in terms of the provisions of ss 134 and 135 of the Firearms Control Act 60 of 2000.Held, that s 34 of the Act applied only to instances where the item in question had been transferred to court by the police for purposes of the trial. There was no evidence that this had happened in the instant case. (Paragraph [5] at 209c.)Held, further, that s 134 did not apply, as the firearm in question had not been forfeited to the state. Section 135 also did not apply, as a licence had been issued to the applicant and the firearm was lawfully in his possession at the time it was seized. In the circumstances the applicant or his firearm did not fall under any of the categories or scenarios mentioned in s 135 and he was therefore entitled to compensation.

S v NKOSI 2014 (2) SACR 212 (GP) Sentence — Fine — Ability of accused to pay fine — Court deliberately imposing excessive fine so that accused would serve some imprisonment — Such amounting to injudicious exercise of court's discretion and contrary to interests of justice — Sentence set aside and replaced with wholly suspended sentence. The accused, a 29-year-old unmarried, unemployed first offender was found guilty in a magistrates' court, of assault with intent to do grievous bodily harm, and was sentenced to a fine of R5000 or five months' imprisonment, of which R3000 or three months' imprisonment was suspended for three years on certain conditions. The offence was committed after a street fight. The accused went home after the fight and fetched a rake, and returned to the complainant's home and hit him once or twice on the head, and ran away. It appeared clear that the accused could not afford to pay the fine, let alone the fine imposed. The magistrate nonetheless, regardless of his inability to pay, imposed a sentence to ensure that the accused served part of the sentence. Held, that it was cruel and contrary to the interests of justice to indirectly impose incarceration through an excessive fine to an indigent person. The ability of the offender to pay the fine should play an important determinative role in deciding whether or not to impose a fine. Held, further, that the court a quo's misplaced emphasis on the retributive aspect F of punishment being an end in itself and the deliberate imposition of an excessive fine amounted to an injudicious exercise of its discretion. The court accordingly set aside the sentence and imposed a sentence of five months' imprisonment wholly suspended for a period of five years. ALL SA LAW REPORTS AUGUST 2014

PART ONE

Butters v Mncora [2014] 3 All SA 259 (SCA)

Civil procedure – Court order – Variation of – Circumstances in which court can alter or amend judgment or order – Error – A court may clarify its judgment or order if, on a proper interpretation, the meaning remains uncertain and it seeks to give effect to its true intention.

Civil procedure – Pleadings – While the object of pleadings is to define the issues, and parties are kept to their pleadings, the court has a wide discretion – Interference by an appellate tribunal is not justified merely because the pleading of the opponent has not been as explicit as it might have been.

The appellant and respondent began cohabiting in about 1993. Two children were born of their relationship. The appellant started a business which flourished, allowing him to accumulate substantial assets. However, his relationship with the respondent began deteriorating, and in 2007, he married someone else without the respondent’s knowledge. The respondent successfully applied to the High Court for a declaration that a universal partnership existed in respect of all their assets. In granting the application, the High Court also ordered that the universal partnership be dissolved with effect from 15 November 2007 and that the respondent was entitled to be paid 30% of the nett proceeds of the assets. An appeal by the appellant to this Court failed, as did his application for leave to appeal to the Constitutional Court. Subsequently, the respondent applied to the High Court in terms of rule 42(1)(b) of the Uniform Rules of Court, alternatively the common law, to have the order varied by replacing the year 1998 with the year 1988, maintaining that the order contained a typographical error in that regard. She contended that 1988 was the year in which the parties first met and commenced their relationship. The granting of her application for variation led to the present appeal.

Held – The issue for determination was whether the High Court had the authority to vary its own judgment or order and whether the alleged patent error was attributable to the court itself rather than to the respondent’s legal representative. The appellant argued that the date 1998 was not a patent error because the respondent had deliberately pleaded her case in the particulars of claim as such, with the result that the order was correct and the present Court could not at this late stage interfere with that order in the absence of an amendment of the particulars of claim. The court held that submission to be flawed because it misunderstood the purpose of pleadings. While the object of pleadings is to define the issues, and parties are kept to their pleadings, the court has a wide discretion. Interference by an appellate tribunal is not justified merely because the pleading of the opponent has not been as explicit as it might have been. In this case, the date upon which the universal partnership was alleged to have commenced was part of the narrative of events, rather than a vital element of the scope and ambit of the partnership. The appellant’s case was not concerned with when the universal partnership began, but was about him denying the existence of a universal partnership all together and his refusing to share anything with the respondent. The essence of the dispute was the sharing of the assets of the parties and not the date of commencement of the universal partnership. Once the High Court and the present Court found that a universal partnership existed, the commencement date of such partnership was irrelevant. The present appeal was not about redefining a universal partnership but about determining the correctness of the variation.

The general rule is that once a court has duly pronounced a final judgment it has no authority to correct, alter or supplement it. The reason is that its jurisdiction in the case having been finally exercised has ceased. However, there are exceptions to that rule. A court may clarify its judgment or order if, on a proper interpretation, the meaning remains uncertain and it seeks to give effect to its true intention. The sense and substance of the order ought not to be altered.

The date “1998” in the High Court order was clearly a patent error, and was incorrect because it went against the evidence adduced during the trial and also against the body of the ratio decidendi of the High Court as well as the present Court’s reasons for dismissing the appeal. The order, therefore, had to be varied to give effect to the conclusions of the trial court as endorsed by the present Court. Save for the variation, the appeal was dismissed.

Commissioner for the South African Revenue Services v Pretoria East Motors (Pty) Ltd [2014] 3 All SA 266 (SCA)

Tax – Assessments raised on income tax and Value-Added Tax – Income Tax Act 58 of 1962 and Value-Added Tax Act 89 of 1991 – Appeal against dismissal of objection – Onus of proof – Onus on taxpayer to show on a preponderance of probability that the decisions against which it appealed were wrong.

The respondent conducted business as a car dealership selling new and used vehicles. During June and July 2003 officials in the employ of the appellant (“SARS”) conducted a detailed audit of the tax affairs of the respondent for the period 2000 to 2004. At the conclusion of the audit various additional Income Tax (“IT”) and Value-Added Tax (“VAT”) assessments were raised by SARS. The respondent’s objection to the assessments was disallowed by SARS, and it appealed to the Special Tax Court. That court upheld SARS’ assessment in relation to 18 of the 21 items in dispute and found for the respondent in respect of the remaining 3 items. It also confirmed the penalties at the maximum rate of 200% that had been levied by SARS in respect of the additional assessments. SARS was ordered to pay the costs of the appeal on the basis that the taxpayer was substantively successful and was entitled to costs. The appeal by SARS and the cross-appeal by the taxpayer were directed against the conclusions adverse to them.

Held – Taxable income is arrived at by first determining the taxpayer’s gross income, consisting of all receipts and accruals, other than those of a capital nature, and certain other specified amounts and then deducting therefrom any amounts exempt from normal tax. One thereby arrives at the income of the taxpayer. The taxpayer’s taxable income is then determined by deducting from its income the various amounts which the Income Tax Act 58 of 1962 allows by way of deduction, of which those covered bysection 11(a) were of relevance to this matter. The general deduction formula laid down in section 11(a) permits the deduction from the taxpayer’s income of expenditure and losses actually incurred in the production of the income, provided such expenditure and losses are not of a capital nature, whilst sections 23(f) and (g) of the Act prohibit a deduction in respect of any expenses incurred in respect of any amounts received or accrued which do not constitute income as defined in section 1; and any moneys, claimed as a deduction from income derived from trade, to the extent to which such moneys were not laid out or expended for the purposes of trade. VAT is a tax on added value, and is

calculated on the value of each successive step as goods move along the commercial chain.

The appeal had to be approached on the basis that the onus was on the respondent to show on a preponderance of probability that the decisions of SARS against which it appealed were wrong.

In the appeal by SARS, the first ground of appeal involved input tax on the purchase of second-hand vehicles. Part of the respondent’s business as a motor dealership involved the acquisition of second-hand vehicles from third parties. In terms of section 16(3) of the VAT Act the amount of VAT payable by a vendor is calculated by, inter alia, deducting from the sum of the output tax of the vendor the amounts of input tax in respect of qualifying goods and services. The respondent had claimed input VAT deductions in respect of the purchase of second-hand vehicles for the period 2000 to 2003 in the total sum of R14 099 943. Those were disallowed by SARS on the basis that the respondent had not kept the necessary records as required by the VAT Act. The requirement of a declaration by the supplier stating whether the supply is a taxable supply or not was not a requirement in terms of the applicable statutory provision, with the result that that SARS’ disallowance of the input tax deduction on the basis that the taxpayer was not in possession of those declarations, could not stand. SARS’ first ground of appeal was thus dismissed.

With regard to the second ground of appeal, it was noted that SARS had disallowed income tax deductions claimed by the respondent in respect of the period 2000 to 2002 pertaining to the use of fuel coupons or vouchers to obtain fuel for demonstration vehicles, delivery of vehicles or for other internal purposes by the respondent. The respondent’s claim was adequately supported by vouchers which were not challenged by SARS as being untruthful. Instead, the evidence was simply ignored. The disallowance of the income tax deductions claimed by the respondent in respect of the fuel vouchers for the period in question could not stand, and the appeal by SARS in relation to this ground also failed.

Finally, SARS disallowed IT deductions and VAT input tax deductions in respect of payments allegedly made as rentals to a landlord in respect of an additional parking space leased by the respondent. At issue between the parties was not the entire rental but just the alleged cash component and in that respect the evidence was insufficient to discharge the onus. Inadequate evidence was adduced on behalf of the respondent pertaining to the cash payments. As it failed to discharge the onus of proof in that regard, the appeal by SARS had to succeed in relation to this item, but the matter was remitted to SARS for further investigation and assessment.

Turning to the cross-appeal, the Court found that five of the respondent’s grounds of appeal had to be upheld, while the remaining four were dismissed.

In light of the substantial success that the respondent had in the present Court, SARS was ordered to pay the respondent’s costs.

Kalil NO and others v Mangaung Metropolitan Municipality and others [2014] 3 All SA 291 (SCA)

Administrative law – Property rates – Increase in rates levied on commercial properties – Whether municipality complied with its statutory obligations with regard to publication and community participation before adopting its budget – Whether ratio

between the proposed rate for commercial properties and that on residential properties exceeded the permissible ratio prescribed under section 19(1)(b) of the Local Government: Municipal Property Rates Act 6 of 2004 – Municipality empowered to levy higher rates on business properties than on residential properties – Section 19(1)(b) provides that a municipality may not levy a rate on non-residential properties that exceeds a prescribed ratio to the rate on residential properties; not that a rate on non-residential properties may not exceed that imposed on residential properties.

At a council meeting of the first respondent municipality, a resolution was taken, approving an increase to municipal rates on commercial properties within the municipal area for the 2013/2014 year. The appellants, who were municipal ratepayers, brought an urgent application to court, seeking to prevent the municipality from adopting the resolution, the application was dismissed, and the resolution was adopted. The appellants then appealed to the present Court against the dismissal of their application. The court dismissed the appeal, and now furnished its reasons.

Held – The exercise of all public power must comply with the Constitution and the doctrine of legality. In seeking relief, the appellants relied solely upon the legality principle, with the result that the matter turned on whether the municipality’s 2013/2014 budget could lawfully be adopted.

Contending that the adoption of the budget would be unlawful, the appellants argued that since the levying of property rates was an integral part of the budget process in terms of the Local Government: Municipal Property Rates Act 6 of 2004 (the “Rates Act”), the Local Government: Municipal Finance Management Act 56 of 2003 (the “Finance Act”) and the Local Government: Municipal Systems Act 32 of 2000 (the “Systems Act”), the decision to increase the rates on business properties required community participation which had not occurred. Second, they argued that the ratio between the proposed rate for commercial properties and that on residential properties exceeded the permissible ratio prescribed under section 19(1)(b) of the Rates Act as read with the regulations promulgated thereunder.

Municipalities have a constitutional duty to provide services to their communities, and are allowed to levy rates in order to enable then to carry out that function. Whether the municipality complied with its statutory obligations with regard to publication and community participation before adopting its budget was a matter of dispute in the court below. Whether a municipality has satisfied the requirement of public participation is an issue to be determined by the yardstick of reasonableness in the given circumstances of each particular case. The legality of the municipality’s conduct was impugned on the basis of its alleged failure to properly publish the proposed budget and related documents to the local community. The court found that the proposed budget and related documents envisaged by section 17(3) of the Finance Act were not published for comment and the requirements in that regard were thus not met. The court below should, therefore, have granted the urgent order sought by the appellants. However, due to the fact that much time had since elapsed, and that the municipality was now considering its next annual budget, the impugned budget could not be set aside solely by reason of the lack of proper public participation. The outcome of the appeal therefore hinged upon a decision on the appellants’ principal point, namely, that the determination of a rates ratio of 1:3.8 between residential and commercial properties offended the principle of legality.

The appellant’s case in that regard was based squarely on the conclusion of the court in the case of South African Property Owners Association v Johannesburg Metropolitan Municipality and others that section 19(1)(b) of the Rates Act, as read with the regulations promulgated pursuant to section 19(2), prohibits the imposition of a rate on any category of non-residential property higher than the rate levied on residential property. That conclusion by the judge in question was obiter dictum on an issue in respect of which he had not enjoyed the benefit of full argument and which was not supported by any other members of the court. It was therefore of limited persuasive value, and according to the present Court, clearly wrong. There is nothing in the Rates Act or its related legislation that indicates that the maximum permitted rate on property would be that imposed in respect of residential properties. Section 19(1)(b) provides that a municipality may not levy a rate on non-residential properties that exceeds a prescribed ratio to the rate on residential properties; not that a rate on non-residential properties may not exceed that imposed on residential properties. The High Court therefore erred in not finding in favour of the appellants in respect of the issue of public participation but was correct, albeit for the wrong reasons, in not holding the proposed rate for business properties to be unlawful.

On the issue of costs, the Court held that as the appellants ought to have achieved substantial success in the High Court, the order of costs granted against them could not be allowed to stand. It was only to a limited extent that the order of the High Court had to be altered, and the appeal was otherwise dismissed. That was relevant to the question of costs in this Court. Also relevant was the fact that the appellants had failed in their argument relating to the unlawfulness of the rate to be imposed on business properties, which was their principal concern in instigating the litigation. However, the manner in which the municipality approached the appellants’ application militated against a costs order in its favour. In public interest litigation, public officials should not attempt to frustrate the constitutional rights of the public. The manner in which the municipality presented its case in its affidavits fell far short of what was expected from an organ of State, the legality of whose actions was in dispute. Therefore, although the appeal had to fail, save for the costs order in the High Court, it was just for there to be no order in regard to the costs of the appeal.

Minister for Safety and Security (now Minister of Police) v Scott and another [2014] 3 All SA 306 (SCA)

Civil procedure – Appeal – Lapsing of appeal – Supreme Court of Appeal’s Rules – Rule 10(2A)(a) – Rule provides that if an appellant fails to lodge heads of argument within the prescribed period or within the extended period, the appeal shall lapse.

Civil procedure – Appeal – Late filing of appeal record – Condonation – In considering applications for condonation, the court must take into account the adequacy of the explanation, the extent and cause of the delay, any prejudice to the parties, the importance of the case, a respondent’s interest in the finality of the judgment of the court below, the avoidance of unnecessary delay in the administration of justice and the applicant’s prospects of success on the merits.

Delict – Claim for damages – Claim based on an interference with a contractual relationship – General rule in our law is that only the intentional interference with the

contractual relationship of another constitutes an independent delictual cause of action.

In 2005, the respondents sued the appellant (the “Minister”) for damages arising from the alleged unlawful arrest and detention of the first respondent (“Scott”). The latter was a professional hunter and a registered undertaker of big game hunting enterprises in South Africa. He was also the chief executive officer of the second respondent, which conducted hunting safaris for paying guests. Included in the claim for damages was a claim by the second respondent for loss of contractual income and profits.

Scott’s arrest occurred during an altercation outside a pub. He claimed that he had been assaulted without provocation by a group of people outside the pub. However, the version of the other persons involved in the incident was that Scott had been disgruntled at not being able to buy alcohol at the pub because it was closing. The witness who testified in court alleged that Scott had asked him where he could get alcohol and was annoyed by the response he received. When the witness (“Verster”) left the pub, he was attacked by Scott and his friends. The police arrived and arrested Scott.

The claim for loss of contractual income was based on the following set of facts. On the night of Scott’s arrest, an American group arrived at his ranch for a planned hunting trip. Scott, having been arrested, was not contactable and by the time he returned after being released from detention the following afternoon, it was no longer possible to undertake the elephant hunting trip. The failure of the trip led to the American magazine which carried advertisements for Scott’s business advising him that it was terminating its agreement with him. In terms thereof, the magazine would no longer run his advertisements, and would also no longer bring its own clients to his ranch as planned.

The High Court awarded Scott R75 000 for general damages in respect of the unlawful arrest and detention and R577 610 being wasted advertisement costs. The second respondent was awarded R49 268 289 in respect of loss of contractual income. The Minister now appealed against the award of loss of contractual income and profits awarded to the second respondent and the amount of R75 000 awarded to Scott.

At the commencement of the hearing, the Minister brought an application for reinstatement of the appeal and condonation for the late filing of the appeal record and the heads of argument. The appeal had lapsed for failure on the part of the Minister to prosecute it by not timeously filing his heads of argument.

Held – Rule 10(2A)(a) of the Supreme Court of Appeal’s Rules provides that if an appellant fails to lodge heads of argument within the prescribed period or within the extended period, the appeal shall lapse.

In considering applications for condonation, the court must take into account the adequacy of the explanation, the extent and cause of the delay, any prejudice to the parties, the importance of the case, a respondent’s interest in the finality of the judgment of the court below, the avoidance of unnecessary delay in the administration of justice and the applicant’s prospects of success on the merits. A litigant who does not comply with the rules is required to show good cause why the rules should be relaxed. The court was satisfied with the explanation for the delay in

this case, and found the prospects of success on appeal to be reasonable. Condonation was, therefore, granted and the appeal was reinstated.

It was noted on appeal that the question of the Minister’s liability to the second respondent for loss of contractual income and profits was not considered by the High Court. The court had not considered whether a claim for pure economic loss could be sustained in the circumstances of the case. The present Court, therefore, turned to consider the issue of the Minister’s liability to the second respondent. It was common cause that the claim for loss of income and profits was a claim for pure economic loss. Accepting that such a claim could only be brought by way of an Aquilian action, the respondents were constrained to concede that in that respect the particulars of claim were technically lacking. No exception having been filed, the appropriate enquiry was whether, despite the deficiency in the pleadings, and having regard to the evidence, the Minister should be held liable for the loss suffered by the second respondent.

The court first set out the legal position in respect of claims based on an interference with a contractual relationship. The general rule in our law is that only the intentional interference with the contractual relationship of another constitutes an independent delictual cause of action. In the present case, the police had no knowledge of the contract between the second respondent and the visiting American hunting group. There could therefore not be any intentional interference in the contractual relationship. On that basis alone, the second respondent’s claim had to fail. Even if that was not true, then the second respondent was found not to be able to establish the delictual requirements of wrongfulness and causation. The Court concluded that the damages claimed by the second respondent were too remote to be recoverable.

The appropriateness of the damages awarded to Scott was the next issue considered on appeal. The assessment of general damages is a matter within the discretion of the trial court and depends upon the unique circumstances of each particular case. An appeal court is generally slow to interfere with the award of the trial court but will do so where there has been an irregularity or misdirection. Where the appeal court is of the opinion that no sound basis exists for the award made by the trial court or where there is a striking disparity between the award made by the trial court and the award which the appeal court considers ought to have been made. A comparative study with other cases revealed that the award made by the High Court was grossly excessive. The court held that an award of R30 000 was more appropriate, and upheld the appeal.

Pithey v Road Accident Fund [2014] 3 All SA 324 (SCA)

Motor vehicle accidents – Claim for compensation – Unidentified driver – Applicability of section 17(1)(b) of the Road Accident Fund Act 56 of 1996 – While there is a fundamental distinction between a claim under section 17(1)(a) and one under section 17(1)(b), that cannot be taken to mean that the fund is entitled to repudiate the claim on the basis that no valid claim had been made when the fund, within the prescribed two year period is in possession of information which a claimant is statutorily obliged to supply and which, when read in tandem with the claim form, reveals that the claim really relates to an unidentified vehicle.

A motor vehicle collision which occurred in November 2004 left the appellant with injuries for which she sought compensation from the respondent (“the fund”). She alleged that the sole cause of the collision was the negligence of the driver of an unidentified blue minibus, but was unable to establish the identity of either the owner or the driver of the blue minibus at the material time. Her claim for compensation was therefore one in terms of section 17(1)(b) of the Road Accident Fund Act 56 of 1996. The issue arising in the present appeal was whether the claim was rendered invalid because the claim form conveyed that it was a claim under section 17(1)(a) of the Act whereas it was evident from the accompanying documents that such a claim was in terms of section 17(1)(b) of the Act.

In a special plea, the fund averred that the appellant’s claim was unenforceable because the appellant had not lodged a claim in respect of an unidentified vehicle within a period of two years from the date on which her claim arose, as required in terms of regulation 2(3) of the Regulations, promulgated in terms of section 26 of the Act.

The issue for determination by the court below was whether the appellant’s claim as set out in her claim form read together with the documents which she lodged with the fund, constituted a valid claim in terms of the Act and the regulations. The court based its finding on the statement of agreed facts and upheld the fund’s special plea, thereby dismissing the claim. The reason was that the appellant’s claim form did not relate to a claim based on the negligence of the driver of an unidentified vehicle. It was found that the appellant had instituted action against the fund without first lodging a claim for compensation in the prescribed form with the fund in respect of the claim that she sought to advance in her action, that is, in respect of an unidentified vehicle.

Held – The true question on appeal was whether the claim as such was correctly identified in the submitted Form 1. The delivery of the form, duly completed, is a peremptory requirement. The distinction between claims submitted in terms of section 17(1)(a) on the one hand, and section 17(1)(b) on the other, is fundamental. Therefore, the correct identification of the claim to be instituted either as one in which the insured vehicle is identified, or as one in which the opposite is the case, must be regarded as peremptory. Accordingly, unambiguous identification of a claim as one that arose as a result of the driving of an identified vehicle cannot be substituted by the filing of a contradictory affidavit as one caused by an unidentified vehicle. The requirement relating to the submission of the claim form is peremptory and the prescribed requirements concerning the completeness of the form are directory. What that means is that substantial compliance with such requirements suffices. It was contended for the appellant that the claim form ought not to have been read in isolation but together with the documents that accompanied it. Had that approach been adopted by the fund, continued the argument, rather than focusing intently on the single incorrect paragraph of the form, the fund would have realised that the claim advanced by the appellant was that arising from the driving of a motor vehicle where the identity of neither the owner nor the driver thereof had been established.

While there is a fundamental distinction between a claim under section 17(1)(a) and one under section 17(1)(b), that cannot be taken to mean that the fund is entitled to repudiate the claim on the basis that no valid claim had been made when the fund, within the prescribed two year period is in possession of information which

a claimant is statutorily obliged to supply and which, when read in tandem with the claim form, reveals that the claim really relates to an unidentified vehicle.

To uphold the fund’s contentions in the circumstances of the present case would be to elevate form above substance, to be rigidly technical against a just result, and to subvert the objects of the Act.

The appeal was upheld, and the special plea dismissed with costs.

Essop v S [2014] 3 All SA 337 (KZP)

Criminal law – Fraud – Appeal against conviction – Charge sheet – Averment of prejudice – Fraud is defined as “unlawfully making, with intent to defraud a misrepresentation which causes actual prejudice or which is potentially prejudicial to another” – Elements of fraud that must be proved by the State are a misrepresentation, unlawfulness, the intent to defraud and prejudice, actual or potential – Court held that the charge sheet as it stood did not contain any allegation of prejudice (express or implied) and was defective.

Criminal procedure – State is required to inform the accused of all the essential averments, and a charge sheet should contain all the essential allegations to be proved by the prosecution in order to sustain a guilty verdict – Constitution of the Republic of South Africa, 1996 – Section 35(3)(a) – Right to be duly informed of a charge – Court held that without sufficient information about the legal and factual basis, an accused is at a disadvantage to defend himself against the charge preferred against him.

Charged with 69 counts of fraud, the appellant was found guilty on all counts and was sentenced to 5 years’ imprisonment.

The charges arose out of his employment as the shipping manager in the complainant’s company. The case reflected in the charge sheet was that cheque requisitions presented by the appellant to his employer for cheques to be drawn in favour of the account of a non-existent entity resulted in the employer making out cheques which were deposited to that account. The account was in fact one which had been opened by the appellant, and payments were made to that account by the employer without there being any basis for them to be made.

The appellant argued on appeal that the charge sheet lacked an essential averment for the crime of fraud, namely that the employer had suffered actual or potential prejudice when it acted on the appellant’s misrepresentation.

In the minority judgment, it was held – Actual or potential prejudice is an essential averment for a charge of fraud. In the absence of such an averment, the indictment discloses no offence. It was true that there was no express averment of prejudice in the charge sheet. However, the Court referred to case law which stated that an express averment to that effect in the charge sheet is unnecessary, and that an implied averment in that regard suffices. The Court, therefore, had to assess whether or not the necessary averment of prejudice was implied in the present charge sheet. It concluded that it was.

Turning to the merits, the Court examined the evidence adduced and found no grounds upon which to interfere with the trial court’s findings. The appeal was thus dismissed.

In the majority judgment, it was held – An objective analysis of the charge sheet, read with the preamble thereto showed that it was silent as to whether any prejudice was caused and to whom. In the view of the majority judges, the charge sheet was defective for want of an essential averment. Fraud is defined as “unlawfully making, with intent to defraud a misrepresentation which causes actual prejudice or which is potentially prejudicial to another”. The elements of fraud that must be proved by the State are a misrepresentation, unlawfulness, the intent to defraud and prejudice, actual or potential.

On a procedural level it is required of the State to inform the accused of all the essential averments, and a charge sheet should contain all the essential allegations to be proved by the prosecution in order to sustain a guilty verdict. That allows an accused person to consider whether the charge should be contested and what evidence to tender to challenge the averments contained in the charge sheet. Without sufficient information about the legal and factual basis, an accused is at a disadvantage to defend himself against the charge preferred against him. The right to be duly informed of a charge is guaranteed in section 35(3)(a) of the Constitution.

The details relating to the prejudice caused and to whom, were important particulars and should have been furnished in this case. The charge sheet as it stood did not contain any allegation of prejudice (express or implied) and was defective. The convictions and sentence had to be set aside, and the appeal was therefore upheld by the majority.

Fischer and another v Persons whose identities are to the applicants unknown and who have attempted or are threatening to unlawfully occupy Erf 150 (remaining extent), Philippi; Ramahlele and others v Fischer and another[2014] 3 All SA 365 (WCC)

[See appeal below]

Housing – Eviction – Right not to be evicted without an order of court made after considering all the relevant circumstances – Constitution of the Republic of South Africa, 1996 – Section 26(3) – Scope and ambit of right – Meaning of the word “home”.

Spoliation – Statutory protection from eviction – Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (“PIE”) – Informal structures recently erected on another’s property but no signs of habitation evident – Local authority demolishing structures without first obtaining a court order in accordance with PIE – Local authority directed to construct for those parties whose informal structures had been demolished and who still required them, “temporary habitable dwellings that afforded shelter, privacy and amenities at least equivalent to those that were destroyed and which were capable of being dismantled, at the site at which their previous informal housing structures were demolished”.

The first and second applicants in the main application were a landowner (“Fischer”) and the City of Cape Town (“the City”) respectively. The respondents in the main application were cited in the proceedings as “Persons whose identities are to the Applicants Unknown and who have attempted or are threatening to unlawfully occupy Erf 150 (Remaining Extent), Philippi”. A counter-application was brought by

46 persons (“the counter-applicants”) against both of the applicants in the main application.

In the main application, the applicants were granted a rule nisi calling on the respondents to show cause why they should not be interdicted, inter alia, from entering or remaining upon being upon Fischer’s property for the purpose of erecting, completing and occupying structures on the property. Over time there had been incursions on to the property by persons intent on setting up as unlawful occupiers. This continued despite the City having taken steps to demolish structures which were put up on the property. Eventually in an operation that was carried out over two days on 7 and 8 January 2014 the City demolished a number of informal structures that had been erected over the previous two days on the property. This was done without first obtaining a court order under the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 (“PIE”). The occupiers (the “counter-applicants”) then sought leave to anticipate the return date of rule nisi granted at the instance of the applicants, and sought their own rule nisi calling on Fischer and the City to show cause why an order should not be made declaring the conduct of the City in demolishing the informal structures erected by the counter-applicants on Fischer’s property to be unconstitutional and unlawful; interdicting them from evicting the counter-applicants or demolishing any of the informal structures erected by them without a court order; and directing the City to construct temporary habitable dwellings for those counter-applicants whose informal structures had been demolished and to do so at the site at which their previous informal housing structures were demolished.

At the conclusion of argument the parties were in agreement that the return day of the rule nisi in the main application should be extended. The Court made such an order. The judgment here reported, therefore, deals mainly with the counter-application.

Held – The counter-applicants effectively sought spoliatory relief. They raised the lawfulness of the City’s conduct in demolishing their structures in the light of the provisions of section 26(3) of the Constitution and PIE. Section 26(3) of the Constitution provides that “no one may be evicted from their home, or have their home demolished, without an order of court made after considering all the relevant circumstances”. PIE which was intended to provide “for the prohibition of unlawful eviction” states in its preamble that it was enacted, inter alia, because “no one may be evicted from their home, or have their home demolished without an order of court made after considering all the relevant circumstances”.

The City contended that prior to its demolition of the structures it was not bound to observe the provisions of PIE because PIE applied only to persons who occupied land in “homes”; that the structures in question could not be regarded as “homes” because they had not been on the property for a sufficient length of time, and because they were “vacant” in the sense that there were no people, or signs of human habitation such as furniture or personal effects, to be found in them.

The Court rejected this argument. The question was not whether the temporary structures were homes but rather whether those structures were occupied at the time that they were demolished. What PIE prohibited was depriving a person of the occupation of a building, structure or land where the occupation of such building, structure or land had occurred without the consent of the owner or person in charge

thereof without first obtaining a court order. It was common cause in casu that the occupiers had no consent to be on Fischer’s property. The only issue was whether the occupiers were deprived of occupation of the temporary structures, or occupation of the land on which those structures were erected. It was not in dispute that all the structures that had been demolished were completed. This indicated an intention on the part of the builder of each structure to commence living in the structure. The fact that a particular structure was empty when the City demolished it did not mean that the structure was unoccupied. The occupant may have been elsewhere at the time. If the structure was complete, then the provisions of PIE applied. Even if an informal structure had not been completed, its builder nevertheless occupied the land on which the informal structure was in the process of being erected. The land was occupied because the structure, partial or complete, was located on the land.

The word “home” in the Constitution – appearing as it did in that part dealing with socio-economic rights – had to be construed widely rather than restrictively. A generous interpretation was warranted. Rudimentary structures could constitute “homes”. Where a person’s housing circumstances were dire, to establish that a structure was a “home” would not necessarily require a demonstration of regular occupation and a degree of permanence. It was not so much the period of occupation of the property which rendered PIE applicable as the intention behind it.

The Court made an order declaring that the conduct of the City in demolishing and/or dismantling the informal structures in question was unconstitutional and unlawful. Fischer and the City were interdicted from evicting any of the occupiers or demolishing any of the informal structures erected by the counter-applicants on Fischer’s property without a valid court order and interdicted from demolishing, removing or otherwise disposing of any informal structures, or the constituent materials of such structures, erected by the counter-applicants on the property. The City was directed to construct for those counter-applicants whose informal structures had been demolished on 7 and 8 January 2014, and who still required them, “temporary habitable dwellings that afforded shelter, privacy and amenities at least equivalent to those that were destroyed and which were capable of being dismantled, at the site at which their previous informal housing structures were demolished”.

ALL SA LAW REPORTS AUGUST 2014

PART TWO

Fischer and another v Ramahlele and others [2014] 3 All SA 395 (SCA)

Civil procedure – Motion proceedings – Dispute of fact – Court’s approach – Not open to the court to decide mero motu not to hear oral evidence and determine the application on legal points not emerging from the papers and not raised by the parties.

The court provided its reasons for having upheld the present appeal.

In January 2014, the City of Cape Town’s Anti Land Invasion Unit (the “Unit”), with the assistance of the police, demolished certain structures erected on the property of

the first appellant. The appellants then launched an urgent application seeking an interdict restraining the illegal occupiers from seeking to occupy the property or erecting structures thereon. A rule nisi was issued and the return date was anticipated by the unlawful occupiers, who opposed the confirmation of the rule nisi. They in turn launched a counter-application against the City, in which they alleged that they had been in peaceful and undisturbed possession of the structures which they had erected on the property and that the demolished structures were their homes. They sought various orders, including a declaration that the City’s demolition operation was unlawful and unconstitutional, and an interdict restraining the appellants from evicting or demolishing any informal structures erected by them. The High Court granted the relief sought in the counter-application, leading to the present appeal.

The first appellant had occupied the property owned by her on the Cape Flats for 47 years. It was not in dispute that since April 2013, there had been a number of incursions onto the property by people seeking to erect informal structures thereon. Therefore, at the request of the first appellant, the City moved onto the property and demolished a number of structures illegally erected thereon. Despite that, people continued erecting more structures on the property. That led to the City conducting raids on the property on 7 and 8 January 2014, so as to carry out a systematic demolition operation. In describing the operation, the head of the Unit averred that the City did not demolish or indeed interfere with any structures that appeared to be a home or a dwelling. However, the affidavits of the occupiers alleged that they had moved onto the property at various times between April 2013 and January 2014, erected structures and made those structures their homes.

There was clearly a dispute of fact between the parties in respect of the counter-application. Accordingly, the issue of whether the structures demolished were only vacant ones was referred to oral evidence. The present appeal arose because the High Court did not hear the evidence needed to resolve the dispute between the parties but instead decided the case on what it regarded as a legal issue. The court had required that the parties address it on two points of law which related to the City’s conduct during the demolition operations. The first question, since the incursion had taken place on private land, related to the capacity in which the City purported to act, and the second issue questioned the basis on which the City claimed that its conduct was lawful in the context of the provisions of section 26(3) of the Constitution and the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998. The second point was decided in the occupiers’ favour, leading to this appeal.

Held – The issue was, whether on 7 and 8 January 2014 the occupiers had been in possession and occupation of the structures that the City demolished on those days. The only dispute was the purely factual one of whether those structures were unoccupied and vacant on the dates in question.

In our legal system, civil litigation requires that parties, either in the pleadings or affidavits, set out and define the nature of their dispute and for the court to adjudicate upon those issues. It is not for the court to raise new issues not traversed in the pleadings or affidavits. The court may not raise new ones or compel the parties to deal with matters other than those they have formulated in the pleadings or affidavits. In this case, as referred to above, the High Court required the parties to argue as a preliminary issue what it described as two issues of legality. The result

was that this appeal arose from a decision by the court below on issues not identified by the parties as relevant to their dispute and without hearing the evidence that they agreed was both relevant and determinative of the dispute. Without determining the factual dispute that lay at the heart of the counter-application, the court below granted the relief claimed by the counter-applicants. The course adopted in the court below was impermissible. It should simply have heard the evidence tendered by the parties and determined the true facts. The appeal was, accordingly, upheld.

Hepple and others v Law Society of the Northern Provinces [2014] 3 All SA 408 (SCA)

Attorneys – Misconduct – Striking from roll – Appeal – Attorneys Act 53 of 1979 – Section 22(1)(d) – Misappropriating trust funds – Where irregularities in trust accounts showed systematic dishonesty, appellants could not be seen to be fit and proper persons to practise as attorneys, and no exceptional circumstances existed to order their suspension instead of removal from the roll.

An order by the High Court, removing the names of the first two appellants from the roll of attorneys was the subject of the present appeal.

Held – In terms of section 22(1)(d) of the Attorneys Act 53 of 1979 (the “Act”), an attorney may on the application by the Law Society concerned be struck off the roll or suspended from practice by the court if found not to be a fit and proper person to continue to practise as an attorney. The court referred to case authority in which it was started that the application of section 22(1)(d) involves a three-fold enquiry. The first enquiry is aimed at determining whether the law society has established the offending conduct upon which it relies, on a balance of probabilities. The second question is whether, in the light of the misconduct established, the attorney concerned is not a fit and proper person to continue to practise as an attorney. Section 22(1)(d) now expressly provides that the determination of the second issue requires an exercise of its discretion by the court. The third enquiry requires the court to decide, in the exercise of its discretion, whether the person who has been found not to be a fit and proper person to practise as an attorney deserves the ultimate penalty of being struck from the roll or whether an order of suspension from practice will suffice.

In the present case, the respondent law society had brought the application for the removal of the first two appellants from the roll of attorneys after an investigation into the accounting and financial records of their firm revealed a number of irregularities amounting to contraventions of certain provisions of the Act and the rules of the law society.

The proceedings in applications to strike the name of attorneys from the roll are not ordinary civil proceedings. They are proceedings of a disciplinary nature and are sui generis. Therefore, where allegations and evidence are presented against an attorney they cannot be met with mere denials by the attorney concerned. If allegations are made by the law society and underlying documents are provided which form the basis of the allegations, they cannot simply be brushed aside. The attorneys are expected to respond meaningfully to them and to furnish a proper explanation of the financial discrepancies as their failure to do so may count against them.

An examination of the evidence convinced the Court that the irregularities in the trust accounts were not merely the result of accounting errors, but were the result of deliberate dishonesty. The offending conduct was found to have been established on a balance of probabilities.

On the second leg of the enquiry, the Court could not fault the High Court’s conclusion that the two appellants were not fit to practise as attorneys at all.

In deciding the final question, regarding the sanction, the Court held that before imposing the sanction of striking from the roll, a court should be satisfied that the lesser stricture of suspension from practice will not achieve the court’s supervisory powers over the conduct of attorneys. Where there is dishonesty, exceptional circumstances should exist before the court will order a suspension instead of a removal from the roll. There being no exceptional circumstances in this case, the High Court’s conclusion was justified.

The appeal was, accordingly, dismissed.

LA Health Medical Scheme v Horn and others [2014] 3 All SA 421 (SCA)

Pension funds – Rules of – Interpretation of – Pension Funds Act 24 of 1956 – Entitlement to redundancy or retrenchment benefit provided by fund established for local authorities – Where employer of employees claiming benefit was not a local authority, and not a party to the collective agreement providing for such benefits, employees not entitled to benefits in question.

The appellant operated a medical aid scheme for local authorities in the Western Cape. The respondents were former employees who, by virtue of their employment with the appellant, were members of a retirement fund. In 2005, in terms of the provisions of section 197(2)(a) of the Labour Relations Act 66 of 1995, the respondents were automatically transferred to another company (“Discovery”). They contended that they thereby became entitled to redundancy or retrenchment benefits under the rules of the fund. The present appeal arose from the upholding of the respondents’ claim by the High Court and on appeal by the Full Court.

The respondents’ membership of the fund was a concession and anomalous because the appellant was not a local authority, but such membership had been permissible under the rules of its predecessor. As at 31 December 2004, the respondents were members of the fund and the appellant was the employer for the purpose of discharging the obligations imposed on employers under the fund’s rules. In general it was to be treated on the same footing as employers that were local authorities and it would owe the same obligations to the fund as those employers. In terms of section 13 of the Pension Funds Act 24 of 1956, the rules of the fund were binding upon the appellant as the employer at the relevant time.

The issue between the parties was whether, on being transferred to the employ of Discovery, the respondents were entitled to the benefits provided for in the fund’s rules. In terms of the rule in question, if the respondents’ claims were valid, the appellant would be obliged to pay those claims. The appellant contended that the benefit was only available to employees who could show that their contracts of employment provided for that benefit and the respondents’ contracts of employment did not do so.

Held – The appeal turned on the proper interpretation of the rule. That involved a consideration of the language of the rule read in the light of its context, apparent purpose and the factual background against which it came into existence.

The appellant relied on the introductory words of the rule, which read, “The MEMBER’S conditions of SERVICE provide for an additional redundancy/retrenchment benefit to be paid by the LOCAL AUTHORITY”. The appellant contended that the effect of those words was to refer to the conditions of employment of the claimants in accordance with the definition of “service” in the rules and, as the conditions of service of the respondents did not make provision for the payment of the redundancy benefits, a necessary pre-condition to their entitlement to the benefits was absent. The respondents submitted that the reference in the introductory words to an additional benefit referred to a redundancy or retrenchment benefit payable by the local authority in terms of an obligation falling outside the ambit of the rules of the fund and not to any part of the benefit embodied in the rule itself. To resolve the opposing contentions of the parties, the Court examined the genesis of the rule. It established that the benefits in questions were ones which local authority employers agreed to provide to their employees. That led to the question of whether the fund rule in question applied to employers, such as the appellant. The court questioned whether the context of the rule required the application of the extended meaning of “local authority” to include the appellant as a local authority bound by the obligations under the rule. It answered that question in the negative.

When the rule was viewed in context, the references to the “local authority” could only be construed as references to local authorities properly so called and not to other employer members of the fund falling within the extended definition of that term. That being so the rule did not apply to the appellant and its employees and the respondents were not entitled when transferred to Discovery to claim a redundancy or retrenchment benefit under the rule. The appeal was, accordingly, upheld.

Royal Sechaba Holdings (Pty) Ltd v Coote and another [2014] 3 All SA 431 (SCA)

Civil procedure – Res judicata – Issue estoppel – Same relief requirement – While the issues to be determined between the appellant and the respondents were largely the same as the issues determined in arbitration, there were issues which were not adjudicated upon in the arbitration with the result that respondents could not rely on defence of issue estoppel.

Civil procedure – Res judicata – Requirements for valid defence – Matter adjudicated upon must have been for the same cause, between the same parties and that the same thing must have been demanded.

As directors of the appellant, the respondents appointed a Business Development director (“Jones”) in 2007. In terms of his contract, Jones would be paid commission on every contract he procured for the benefit of the appellant. In addition, he would be paid an incentive commission for managing and overseeing the performance of the contract concerned. Flowing therefrom, Jones was paid an amount of almost R24 million over a period of two years from May 2007 to May 2009. The payments were authorised by the respondents. In 2009, the appellant launched an investigation conducted by an auditor. The auditor found that the payments made to

Jones were incorrectly calculated on gross profit, rather than net profit; that Jones had received payments before he had become entitled thereto in terms of the payment schedule in his contract; and that he had claimed and received commission on new business which had not been procured by him. That led to the dismissal of the respondents for authorising payments to Jones to which he was not entitled. Disputing that Jones had been overpaid, the respondents argued that the phrase “net profit” as used in the contract meant “net contract contribution” which differs from net profit in the ordinary accounting sense.

The disputes between the appellant and Jones eventually culminated in the cancellation of his employment contract. Their disputes were subsequently referred to arbitration. The arbitrator found that reference to “actual net profit” in Jones’ contract meant net profit in the accounting sense of the phrase, namely, net profit after all expenses had been taken into account. Jones successfully appealed against the arbitration award, and the appellant instituted a review application in terms of section 33(1)of the Arbitration Act 42 of 1965 in the High Court, for the setting aside of the appeal tribunal award. That application was dismissed with costs.

In the present matter, the appellant sued the respondents for damages arising from the alleged breach by them of their fiduciary duties to the company. The respondents raised a special plea of issue estoppel, which was upheld by the High Court. The present appeal was against that judgment.

Contending that the plea of issue estoppel had been wrongly upheld by the High Court, the appellant argued that the “same person” requirement had not been met in that the respondents were not parties to the Jones arbitration. Secondly, it contended that the “same cause” requirement had not been satisfied as the issues which would arise in the appellant’s claim against the respondents were not the same as those determined in the arbitration.

Held – The requisites of a valid defence of res judicata in Roman Dutch law were that the matter adjudicated upon must have been for the same cause, between the same parties and that the same thing must have been demanded. The expression “issue estoppel” is a convenient description of instances where a party may succeed despite the fact that the classic requirements for res judicata have not been complied with because the same relief is not claimed, or the cause of action differs, in the two cases in question. It involves a relaxation of the res judicata doctrine, and is linked to considerations of equity and fairness.

While the respondents were not party to the arbitration proceedings between the appellant and Jones, the Court held that the “same parties” requirement is not immutable and may in appropriate cases be relaxed or adapted in order to address new factual situations that a court may face. The High Court correctly concluded that the same parties’ requirement was not established but nevertheless, and without any analysis, went on to find that it was appropriate to extend the application of  res judicata to the facts in the instant case. There was insufficient basis to allow the court to extend the principles governing issue estoppel.

On the second ground of appeal, the Court agreed with the appellant that while the issues to be determined between the appellant and the respondents were largely the same as the issues determined in the arbitration, there were issues which were not adjudicated upon in the arbitration. The appeal was upheld and the special plea

dismissed. The matter was referred back to the High Court for adjudication on the particulars of claim and the substantive defence.

The Manok Family Trust v Blue Horison Investment 10 (Pty) Ltd and others [2014] 3 All SA 443 (SCA)

Land – Land reform – Restitution of land rights – Decision by regional land claims commissioner to reopen investigation into claim after having already decided that claim was precluded by section 2 of the Restitution of Land Rights Act 22 of 1994 – Whether decision final and regional commissioner thereafter functus officio – As the Act does not make any provision for the reversal by the regional commissioner of a decision made in terms of section 11(4), in reversing his initial decision and deciding to re-open investigations into the land claim, the regional commissioner acted in a manner that was inconsistent with the Constitution and his conduct was invalid.

In December 1998, a land claim was lodged with a regional land claims commissioner claiming restitution of the right of the descendants of a Jacobus Manok to a farm. The chief of the Manok clan lodged the claim, relying on the fact that in 1915 Jacobus Manok had owned a three-eighths undivided share in the farm. The regional commissioner, after setting out the history of the farm as revealed in the course of research conducted through his office, advised the appellant that neither Jacobus Manok, nor his descendants, were ever dispossessed of any rights in the farm as a result of past racial laws or practices, with the result that the claim was precluded in terms of the Restitution of Land Rights Act 22 of 1994.

In 2005, the first two respondents (“the respondent”) received confirmation that the commission had no record of land claims against the farm. They then embarked on a process of consultation with the relevant stakeholders in and around the farm, including the appellant regarding development of the property. However, the regional commissioner received a letter from another representative of the Manok community, requesting the reopening of the investigation into the restitution claim. In 2007, the commission informed the stakeholders that although the restitution claim had been dismissed, that decision was reversed and a review process had commenced. That led to the respondents launching an application in the Land Claims Court, seeking to set aside the decision of the regional commissioner to reconsider, accept and/or reinstate the Manok land claim. Granting the application, the court below set aside the decision of the regional commissioner on the basis that the regional commissioner, having made the decision to reject the claim, was functus officio and, consequently, could not reverse his decision. That resulted in the present appeal being lodged.

The appeal concerned the question of whether a regional commissioner, having determined that a claim for restitution is precluded by the provisions of section 2 of the Restitution of Land Rights Act because there had been no dispossession of the land in issue, may subsequently reconsider that decision and re-open the investigation into the claim.

Held – The regional commissioner’s decision that there had been no dispossession of the claimed land constituted administrative action.

The regional commissioner has the power, conferred by the Restitution of Land Rights Act, to change his original decision that the criteria set out in section 11(1) had been met. But the Act makes no provision for a reversal by the regional

commissioner of a decision, taken in terms of section 11(4), that the criteria set out in paragraphs (a), (b) and (c) of section 11(1) have not been met, thereby, in effect, declining to process the claim any further. The exercise of all public power must comply with the Constitution and the doctrine of legality. As the Act does not make any provision for the reversal by the regional commissioner of a decision made in terms of section 11(4), in reversing his initial decision and deciding to re-open investigations into the land claim, the regional commissioner acted in a manner that was inconsistent with the Constitution and his conduct was invalid. The decision to preclude the appellant’s land claim was final, and the commissioner was therefore functus officio and could not reverse or ignore the decision he had already made. Until set aside on review, the decision remained extant, and had legal consequences. It could not simply be overlooked or reversed, with the result that the commissioner’s decision to re-open the claim was invalid and fell to be set aside.

The appeal was dismissed.

Sanlam Capital Markets (Pty) Ltd v Mettle Manco (Pty) Ltd and others [2014] 3 All SA 454 (GJ)

Delict – Misrepresentation – Claim for damages – Duty of care – Unlawfulness – Defendants excepted to the particulars of claim on the basis that even though the negligent misstatements imputed to them were the cause of the plaintiff concluding a contract to its detriment, the representations were not wrongful – Court confirmed that the particulars in a delictual claim must contain an allegation of wrongfulness as well as the facts relied upon to support such allegation.

At the centre of the present dispute was a complex transaction concerning the buying and selling of financial instruments based on debts. The plaintiff engaged in the transactions by virtue of certain representations made to it by the defendants. It began with the first respondent calling on the plaintiff with a proposal, which invited the plaintiff and one other institution to participate in a debt securitisation scheme as the senior funders of such a scheme. In presenting the proposal, the defendants made certain representations (the “representations”), the crux of which was that the first, second and third defendants had been involved with and intimately knowledgeable of the business, history, management, personnel, financial position, accounts and structuring of another commercial entity (“MfP Logistics”). It was also represented that the said defendants had successfully used the scheme in the past. The representations went on to claim that a number of other important protective measures were in place which would ensure that the interests of the funders to the Securitisation Scheme were protected.

The plaintiff claimed that the defendants owed it a duty of care not to make the representations to it unless the representations were correct in all material respects. The crux of the case was that the defendants breached such duty by not ensuring that the representations were at all material times correct. The consequence of the defendants’ breach was that significant losses were incurred by the various associated companies of MfP Logistics.

In the alternative the plaintiff claims that the second, third and fourth defendants contravened section 76(3) of the Companies Act 71 of 2008 (the “2008 Companies Act”) by acting recklessly, alternatively negligently, in their capacities as directors of MfP Finance.

The defendants raised a number of exceptions against the particulars of claim. The only relevant exceptions related to the issue of unlawfulness, and the issue of the liability of the second, third and fourth defendants on the basis of their alleged contravention of various sections of the Companies Act 71 of 2008.

Held – The defendants excepted to the particulars on the basis that even though the negligent misstatements imputed to them were the cause of the plaintiff concluding a contract to its detriment, the representations were not wrongful. The Court confirmed that the particulars in a delictual claim must contain an allegation of wrongfulness as well as the facts relied upon to support such allegation. As the plaintiff relied on case authority which was confirmed by the present Court as good in law, the exceptions in this regard were dismissed.

The remaining exception was directed at the plaintiff’s alternative argument based on the Companies Act as referred to above. The Court found that the plaintiff was entitled to found its alternative action on the provisions of section 218(2) read in conjunction with section 76 and the various other sections of the Companies Act identified in the particulars. The remaining exception was thus also dismissed.

Thuo Gaming Western Cape (Pty) Ltd v Chairperson of the Western Cape Gambling and Racing Board [2014] 3 All SA 471 (WCC)

Gambling – Gambling licences – Licence to operate limited pay-out machines – Conditions attached to licence – Lawfulness – Western Cape Gambling and Racing Act 4 of 1996 – Court acknowledged that the imposition of the conditions in question was steeped in issues of policy and that such conditions were routinely imposed by the Board with the express intention of giving effect to those policy considerations – Court held that in casu there was no legislative basis for the conditions and the court a quo’s order was replaced with one declaring the conditions to be unlawful and of no force and effect.

In May 2010, the Western Cape Gambling and Racing Board (“the Board’) granted a licence to the appellant to operate certain gambling machines during the period 1 June 2010 to 31 May 2011, subject to certain conditions. The appellant had extensive interests in gambling and horse racing activities in the Western Cape. It applied for the review of the conditions imposed by the Board, but its application was dismissed. The present appeal sought to overturn that order. The Constitution grants concurrent national and provincial legislative competence in respect of “casinos, racing, gambling and wagering.” Consequently, gambling and racing in the Western Cape are regulated by both the Western Cape Gambling and Racing Act 4 of 1996 (“the Provincial Act”) and the National Gambling Act 7 of 2000 (“the National Act”). One of the aspects of gambling which is regulated concerns limited pay-out machines, which are gambling machines outside of a casino, which offer limited prizes. The appellant had a route operator licence, which was required by a company which engaged in the business of operating limited pay-out machines on its licensed premises.

The conditions imposed by the Board were firstly that no single business entity or natural person would own sites which, in total, operated more than 5% of the 2000 allocated limited pay-out machines approved by the Board, and secondly that no route operator could have a direct or indirect interest in any of the licensed sites. The appellant contended that there was no provision in the applicable legislation which

supported the conditions in question, and that the imposition of such conditions was therefore beyond the powers of the Board.

Held – Under section 46(3) of the Provincial Act, the Board was entitled to impose conditions in respect of any route operator licence it issued. The Board justified its decision by pointing out that the appellant was linked to a company which already had a stake in various gambling operations in the province, and that the conditions were intended to guard against the formation of monopolies. The Court acknowledged that the imposition of the conditions in question was steeped in issues of policy and that such conditions were routinely imposed by the Board with the express intention of giving effect to those policy considerations. While the Board should strive to advance policy considerations spelled out in the National and Provincial Acts, when it did so by way of licensing conditions it had to ensure that it did so fairly and rationally. Fairness required it to ensure that all applicants for licensing were made aware of the intention to impose conditions of that type.

In the present instance, the two conditions were not rationally connected to any empowering provisions under either the National Act, the Provincial Act, or any of the relevant regulations. There was no legislative basis for the conditions. The court a quo, therefore, erred in refusing to review the imposition of the conditions.

The appeal was upheld and the court a quo’s order was replaced with one declaring the conditions to be unlawful and of no force and effect.

Tuning Fork (Pty) Ltd t/a Balanced Audio v Greeff and another [2014] 3 All SA 500 (WCC)

Company law – Business rescue plan – Companies Act 71 of 2008 – Chapter 6 – Effect on creditor’s rights against sureties – Issue was whether a creditor loses its claim against a surety if a duly adopted and implemented business rescue plan provides for the creditor’s claim against the principal debtor to be compromised in full and final settlement of such claim – As the Companies Act does not address the issue of the effect by the adoption of a business rescue plan on creditors’ rights against sureties, the general principles of suretyship apply to determine what effect, if any, the provisions contained in any particular business rescue plan have on sureties – If a business rescue plan provides for the discharge of the principal debt by way of a release of the principal debtor, and the claim against the surety is not preserved by such stipulations in the plan as may be legally permissible, the surety is discharged.

As directors of a company, the defendants signed unlimited suretyships for the company’s debts, present or future, in favour of the plaintiff. In July 2013, the company was placed in business rescue pursuant to Chapter 6 of the Companies Act 71 of 2008. The plan was implemented in November 2013 and terminated in December 2013. In terms of the plan, the company’s largest trade creditor was to be paid R6 million to allow the company to continue receiving stock. The remaining concurrent creditors, including the plaintiff, were to receive a dividend of 28,2 cents in the rand in full and final settlement of their claims. On 25 November 2013, the business rescue plan was implemented, and the plaintiff received its concurrent dividend of R176 637,87.

After the adoption of the business plan but before its implementation, action was instituted by the plaintiff. The summons did not mention the business rescue plan. A

notice of intention to defend having been delivered, the plaintiff served an application for summary judgment. The defendants filed their opposing affidavit, in which they raised two grounds of opposition. The first was that the compromise with the principal debtor released them from liability; and the second was that they had reason to question the quantification of the plaintiff’s claim.

Held – The issue in this case was whether a creditor loses its claim against a surety if a duly adopted and implemented business rescue plan provides for the creditor’s claim against the principal debtor to be compromised in full and final settlement of such claim.

Once business rescue proceedings have commenced, the distressed company is protected from legal proceedings by way of the moratorium provided for in section 133 of the Companies Act 71 of 2008. The Act does not address the issue of the effect by the adoption of a business rescue plan on creditors’ rights against sureties. The general principles of our law of suretyship must thus be applied to determine what effect, if any, the provisions contained in any particular business rescue plan have on sureties. If the principal debt is discharged by a compromise with or release of the principal debtor, the surety is released unless the deed of suretyship provides otherwise. This general principle applies also to a compromise or release pursuant to a statute, regardless of whether the creditor himself supported the compromise or release. Accordingly, if a business rescue plan provides for the discharge of the principal debt by way of a release of the principal debtor, and the claim against the surety is not preserved by such stipulations in the plan as may be legally permissible, the surety is discharged. The plan in the present case was reasonably to be construed as one by which the company, as principal debtor, had been discharged from its liability to the plaintiff. Since the position of sureties for the company was not addressed in the plan, the defendants had on that construction of the plan, been discharged.

Summary judgment was refused and the defendant was granted leave to defend the action.