CIVIL PROCEDURAL LAW APRIL 2016

INDEX

CASE NAMES

SUBJECT INDEX

CASES

CASE NAMES

“MT” v “CT” [2016] JOL 35468 (WCC)

ABSA Bank Limited v Naude NO and others [2015] JOL 33323 (SCA)

ABSA Bank Ltd v Le Roux and others [2016] JOL 35649 (WCC)

Blastrite (Pty) Ltd v Genpaco Ltd 2016 (2) SA 622 (WCC)

Brown v Health Professions Council of South Africa and others [2016] 2 All SA 62 (WCC)

Cilliers and others v Steenkamp and others [2016] JOL 34781 (WCC)

Cliff v Electronic Media Network (Pty) Ltd and another [2016] 2 All SA 102 (GJ)

Dormell Properties 282 CC v Bamberger [2015] JOL 33307 (SCA)

First National Bank v Scenematic One (Pty) Ltd (20832/2014) ZASCA 60 (14 April 2016)

Firstrand Bank Ltd v Hazan and another; Firstrand Bank Ltd v Hazan Wholesalers and Distributors CC [2016] 2 All SA 112 (GJ)

Foxlake Investments v Ultimate Raft Foundation Design (144/15) [2016] ZASCA 54 (01 April 2016)

Gongqose and others v S; Gongqose and others v Minister of Agriculture, Forestry and Fisheries and others [2016] 2 All SA 130 (ECM)

Herrie Windsor Construction (Pty) Ltd v Raubenheimers Inc (7533/2015, H245/2013) [2016] ZAWCHC 47 (22 April 2016)

Imperial Group (Pty) Ltd t/a Cargo Motors Klerksdorp v Dipico and Others (1260/2015) [2016] ZANCHC 1 (1 April 2016)

Investec Bank Limited v 367\4 Nieuw Muckleneuk (Pty) Ltd and Others; In re: Investec Bank Limited v Swart and Others (38642/2011; 3811/2011) [2016] ZAGPPHC 244 (20 April 2016)

KwaZulu-Natal Law Society v Debba and Another (5112/15) [2016] ZAKZPHC 35 (25 April 2016)

Makate v Vodacom (Pty) Ltd (CCT52/15) [2016] ZACC 13 (26 April 2016)

Mathale v Linda and another 2016 (2) SA 461 (CC) 

Mtokonya v Minister of Police [2016] JOL 35636 (ECM)

Mtshayeni v Eastern Cape Development Corporation: In re Mtshayeni v Eastern Cape Development Corporation [2016] JOL 35627 (ECM)

National Treasury and another v Kubukeli 2016 (2) SA 507 (SCA)

Nedbank Limited v Fredericks (1483/2011) [2016] ZAGPJHC 71 (7 April 2016)

Nkata v Firstrand Bank Limited and Others (CCT73/15) [2016] ZACC 12 (21 April 2016)

Oelofsen NO and Another; In re: Oelofsen NO and Another v Bamboo Rock 1215 CC and Others (8949/16) [2016] ZAGPPHC 245 (21 April 2016)

Off-Beat Holiday Club v Sanbonani Holiday Spa (20231/2014) [2016] ZASCA 62 (25 April 2016)

Osborne v Cockin and Others; Osborne v Cockin N.O. and Others (5618/2015, 6053/2015) [2016] ZAECGHC 19 (12 April 2016)

Padayachee v Adhu Investments CC and others [2016] JOL 35318 (GJ)

Singh and another v Mount Edgecombe Country Club Estate Management Association 2 (RF) NPC and others [2016] 2 All SA 218 (KZD)

South African Airways Society v BDFM Publishers (Pty) Ltd and others 2016 (2) SA 561 (GJ)

Stamford Sales & Distribution (Pty) Limited v Metraclark (Pty) Limited [2015] JOL 33682 (SCA)

Tshwane City and others v Nambiti Technologies (Pty) Ltd 2016 (2) SA 494 (SCA)

Van den Heever NO and others v Aon South Africa (Pty) Ltd [2016] 2 All SA 302 (GJ)

SUBJECT INDEX

Anton Pillar order-return date-court to ascertain if order was necessary Osborne v Cockin and Others; Osborne v Cockin N.O. and Others (5618/2015, 6053/2015) [2016] ZAECGHC 19 (12 April 2016)

Appeal-Application for leave to appeal – Jurisdiction – Section 16(1)(b) of the Superior Courts Act 10 of 2013 Mtshayeni v Eastern Cape Development Corporation: In re Mtshayeni v Eastern Cape Development Corporation [2016] JOL 35627 (ECM)

Attorney- Legal advice-to a non-client has a potential to expose the legal practitioner concerned to liability should the non-client act to its detriment following that advice. Herrie Windsor Construction (Pty) Ltd v Raubenheimers Inc (7533/2015, H245/2013) [2016] ZAWCHC 47 (22 April 2016)

Attorneys Act 53 of 1979- suspend practice in terms of s 22(1)(d) - inspection committee- books of accounts-show withdrawals from trust account - justified as trust transactions- application for the suspension of the first respondent is dismissed with costs, such costs to include the costs of two counsel where so employed. KwaZulu-Natal Law Society v Debba and Another (5112/15) [2016] ZAKZPHC 35 (25 April 2016)

Constitutional law — Foundational values — Rule of law — Rational decision-making — Exercise of public power — Fiscal investigation into municipality's finances — Right to be heard incidental to main purpose of investigation — Failure to interview particular individual not justifying finding that investigation arbitrary or irrational. National Treasury and another v Kubukeli 2016 (2) SA 507 (SCA)

Costs-Liquidators-ordered to pay costs de bonis propriis-omitted to divulge information to the court -uberrimae fides Oelofsen NO and Another; In re: Oelofsen NO and Another v Bamboo Rock 1215 CC and Others (8949/16) [2016] ZAGPPHC 245 (21 April 2016)

Court orders-Court directive – Non-compliance – Contempt of court“MT” v “CT” [2016] JOL 35468 (WCC)

Court — Powers of — Separation of powers — Between judiciary and executive — Order reinstating cancelled municipal tender — Compelling state organ to consider and award tender it decided not to proceed with may infringe on doctrine of separation of powers. Tshwane City and others v Nambiti Technologies (Pty) Ltd 2016 (2) SA 494 (SCA)

Evidence – Parol evidence rule – Rule that extrinsic evidence is not admissible in order to determine meaning of a written instrument abolished by new approach to interpretation – Integration rule determines content or limits of written instrument – Integration rule remains good in law. Padayachee v Adhu Investments CC and others [2016] JOL 35318 (GJ)

Evidence — Privilege — Confidentiality — Enforcement — Any relief sought to protect confidentiality subject to public-interest override — In circumstances of present case, public interest in being informed outweighing state organ's rights to confidentiality — Constitution, s 16. South African Airways Society v BDFM Publishers (Pty) Ltd and others 2016 (2) SA 561 (GJ)

Execution — Execution order under s 78 of Magistrates' Courts Act 32 of 1944 — Whether appealable — Approach to be adopted by courts — Appealability dependent on whether order final in effect in terms of s 83(b) of Magistrates' Courts Act 32 of 1944. Mathale v Linda and another 2016 (2) SA 461 (CC) 

Interdicts- – Interim interdictory relief – Requirements – Applicant must establish a prima facie right, albeit open to some doubt; a well-grounded apprehension of irreparable harm to the applicant if the interim relief is not granted and the applicant

ultimately succeeds in establishing his right; the absence of a satisfactory alternative remedy; and the balance of convenience favouring the applicant. Cliff v Electronic Media Network (Pty) Ltd and another [2016] 2 All SA 102 (GJ)

Lawyers— Privilege — Confidentiality — Legal advice privilege — Waiver — Imputed waiver — Strict test — Whether to impute waiver from delay in claiming confidentiality.

Motion applications- founding affidavit filed by the applicant is hopelessly flawed in the respect that it fails to disclose the cause of action that entitles the applicant to the relief sought- application for the suspension of the first respondent is dismissed with costs, such costs to include the costs of two counsel where so employed KwaZulu-Natal Law Society v Debba and Another (5112/15) [2016] ZAKZPHC 35 (25 April 2016)

Motion applications-Ex parte applications-material facts not disclosed-de boniis costs awarded Oelofsen NO and Another; In re: Oelofsen NO and Another v Bamboo Rock 1215 CC and Others (8949/16) [2016] ZAGPPHC 245 (21 April 2016)

Motion proceedings – Dispute of fact – Where disputes of fact have arisen in motion proceedings, a final order, whether it be an interdict or some other form of relief, may be granted if those facts averred by the applicant, which have been admitted by the respondent, together with the facts alleged by the respondent, justify such an order. Singh and another v Mount Edgecombe Country Club Estate Management Association 2 (RF) NPC and others [2016] 2 All SA 218 (KZD)

Motion proceedings – Founding affidavit – Deponent to – Authority of – Deponent to an affidavit in motion proceedings need not be authorised by the party concerned to depose to the affidavit, as it is the institution of the proceedings and the prosecution thereof that must be authorised – Remedy of a respondent who wishes to challenge the authority of a person allegedly acting on behalf of the purported applicant is not to challenge the authority in the answering affidavit, but instead to make use of rule 7(1) of the Uniform Rules of Court. Firstrand Bank Ltd v Hazan and another; Firstrand Bank Ltd v Hazan Wholesalers and Distributors CC [2016] 2 All SA 112 (GJ)

Motions — Urgent applications — Default procedure set out for matters in respect of which less than 24 hours' notice is to be given — Mandatory for applicant's attorney to follow such procedure. South African Airways Society v BDFM Publishers (Pty) Ltd and others 2016 (2) SA 561 (GJ)

National Credit Act 34 of 2005 — section 129(3) — requirements for reinstatement of credit agreement — payment of credit provider’s reasonable costs of enforcement — credit provider unilaterally capitalised the costs in consumer’s bond account without demand of payment and taxation or agreement on reasonableness — costs not due and payable — reinstatement not precluded Nkata v Firstrand Bank Limited and Others (CCT73/15) [2016] ZACC 12 (21 April 2016)

National Credit Act 34 of 2005-the loan agreement-notice section 129 of the Act.- admission of liability is pleaded-did not replace the credit transaction or agreement which is specifically pleaded both in the summons and declaration. Investec Bank

Limited v 367\4 Nieuw Muckleneuk (Pty) Ltd and Others; In re: Investec Bank Limited v Swart and Others (38642/2011; 3811/2011) [2016] ZAGPPHC 244 (20 April 2016)

National Credit Act, 34 of 2005- of s 148(2)(a)- review and set aside the decision of Adv EJP Kammies, the Chairperson of the Northern Cape Consumer Court (NCCC) Imperial Group (Pty) Ltd t/a Cargo Motors Klerksdorp v Dipico and Others (1260/2015) [2016] ZANCHC 1 (1 April 2016)

Non-joinder – Test for non-joinder – does party have direct and substantial interest in subject matter of litigation which may prejudice non-joined party – Creditors who would be prejudicially affected by setting aside of business rescue plan should be joined as parties to the matter- Business rescue – Adoption of business rescue plan – Application for setting aside of plan – ABSA Bank Limited v Naude NO and others [2015] JOL 33323 (SCA)

Particulars of claim-an order amending the incorrect description of a defendant in a summons does not amount to a substitution of the defendant where the summons was served at the offices and on the director shared by the incorrectly cited party and the true defendant who was clearly recognisable from the original summons – original summons complied with the requirements of s 15(1) of the Prescription Act 68 of 1969 and service thereof interrupted running of prescription.

Pleaded cause of action – Binding nature – Pleadings must set out cause of action in clear and unequivocal terms to enable opponent to know exactly what case to meet – Once party has pinned its colours to mast – Impermissible to change stance later Dormell Properties 282 CC v Bamberger [2015] JOL 33307 (SCA)

Pleaded cause of action – Departure from – Court’s discretion – Court’s discretion in relation to pleadings – Based on consideration of all factors involved Taking into account fairness to parties – If outcome of exercise of discretion will prejudice a party – Court should be slow to exercise discretion Dormell Properties 282 CC v Bamberger [2015] JOL 33307 (SCA)

Pleadings – Particulars of claim – Exception to Cilliers and others v Steenkamp and others [2016] JOL 34781 (WCC)

Plea-Special plea – Res judicata and issue estoppel – Requirements for res judicata – Common law requirements for res judicata are three-fold, viz same parties, same cause of action, same relief – Defendant failing to make out case – Special plea dismissed. Van den Heever NO and others v Aon South Africa (Pty) Ltd [2016] 2 All SA 302 (GJ)

Prescription – application of ss 11 and 12(3) of the Prescription Act 68 of 1969 – claim to recover sum of money deducted through unauthorised debit order payments – appeals in respect of the special pleas of prescription dismissed. First National Bank v Scenematic One (Pty) Ltd (20832/2014) ZASCA 60 (14 April 2016)

Prescription – extinctive prescription – whether claims brought by minority shareholders under ss 252 and 266 of the Companies Act 61 of 1973 constitute ‘debts’ as envisaged in s 10 of the Prescription Act 68 of 1969 and are susceptible to prescription – whether s 13(1)(e) of the Prescription Act insulates a claim brought under s 266 of the Companies Act from prescription. Off-Beat Holiday Club v Sanbonani Holiday Spa (20231/2014) [2016] ZASCA 62 (25 April 2016)

Prescription Act 68  of 1969 - prescription-claim was not a debt as contemplated by the Prescription Act-claim had not prescribed-meaning of “debt”- section 39(2) of the Constitution-obligation on the courts to interpret statutes in a manner consistent with the Bill of Rights-a provision that limits a right in the Bill or Rights (in this case, the right to access the courts) is to be interpreted narrowly. Makate v Vodacom (Pty) Ltd (CCT52/15) [2016] ZACC 13 (26 April 2016)

Prescription-Delict – Unlawful arrest and detention – Claim for damages – Prescription Mtokonya v Minister of Police [2016] JOL 35636 (ECM)

Review application – Court’s powers on review – Courts should take care not to usurp the functions of administrative agencies as its task is to ensure that the decisions taken by administrative agencies fall within the bounds of reasonableness as required by the Constitution – As long as the purpose sought to be achieved by the exercise of public power is within the authority of the functionary, and as long as the functionary’s decision, viewed objectively, is rational, a court cannot interfere with the decision simply because it disagrees with it or considers that the power was exercised inappropriately. Administrative law – Health Professions Council. Brown v Health Professions Council of South Africa and others [2016] 2 All SA 62 (WCC)

Review application – Undue delay – Section 7(1)(b) of the Promotion of Administrative Justice Act 3 of 2000 makes it incumbent on a person bent on challenging an administrative action on review under the Act to resort to such proceedings without unreasonable delay and not later than 180 days after the date on which the person concerned was informed of the administrative action. Gongqose and others v S; Gongqose and others v Minister of Agriculture, Forestry and Fisheries and others [2016] 2 All SA 130 (ECM)

Security for costs — Peregrinus — Common-law practice in terms of which peregrinus plaintiff could be called upon to furnish security for costs — Whether amounting to unfair discrimination and/or violation of constitutional right to equality. Blastrite (Pty) Ltd v Genpaco Ltd 2016 (2) SA 622 (WCC)

Spoliation-Incorporeal rights – Possession of incorporeal rights is protected against spoliation by the mandament – Mandament van spolie is not concerned with the protection or restoration of rights, but the restoration of the factual possession of which the spoliatus has been unlawfully deprived. Singh and another v Mount Edgecombe Country Club Estate Management Association 2 (RF) NPC and others [2016] 2 All SA 218 (KZD)

Summary judgment – Verifying affidavit – Rule 32(2) of the Uniform Rules of Court – Verifying affidavit must be made by person who can swear positively to facts

verifying cause of action – Sufficient for there to be direct knowledge of material facts underlying cause of action – Knowledge may be gained by person who has possession of all of documentation Stamford Sales & Distribution (Pty) Limited v Metraclark (Pty) Limited [2015] JOL 33682 (SCA)

Summary judgment application – Supporting affidavit – Deponent to – Personal knowledge of facts ABSA Bank Ltd v Le Roux and others [2016] JOL 35649 (WCC)

Surety- certificate of balance-value of the equipment - breached an implied duty to mitigate its loss- plaintiff’s claims are dismissed with costs. Nedbank Limited v Fredericks (1483/2011) [2016] ZAGPJHC 71 (7 April 2016)

CASES

“MT” v “CT” [2016] JOL 35468 (WCC)

Court orders-Court directive – Non-compliance – Contempt of court

The parties in this matter were involved in divorce litigation. The principal issue in the main action was the care and contact arrangement in relation to the parties’ minor son, who resided with the plaintiff in the Cape while the defendant resided in Johannesburg.

The Family Advocate had been engaged to prepare a report regarding the welfare of the child and recommended care and contact arrangements. She informed the court that she required a full consultation with the plaintiff and an assessment of the child in his domestic environment. Although undertaking to comply with both requests, the plaintiff failed to stand by her undertakings. The court issued a rule nisi calling on the plaintiff to show cause why she should not be found to be in contempt of court for the failure.

A question raised by the court was whether contempt proceedings may be held against a person who has disobeyed a direction given in terms of rule 37(8) as opposed to an actual court order.

Held that the obligatory report by the Family Advocate in terms of section 6 of the Divorce Act 70 of 1979 was critical to the trial court coming to a just decision in the interests of the child. The directions which were given by the court were critical to the finalisation of the pre-trial procedures and compliance therewith by the parties was a sine qua non to the matter being brought to its completion after many years of unnecessary delay. The Court held that the plaintiff’s failure to adhere to the directions given was capable of being addressed through contempt proceedings.

Turning to the requirements for contempt, the Court stated the principle that the party in default be guilty of intentional disobedience. Highlighting three separate acts of the plaintiff, the Court found that she was guilty of contempt of court.

On the issue of sanction, the Court stated that the purpose of finding a party to be in contempt is to ensure compliance with the order previously ignored. Most often the

sanction will contain a punitive element (which is suspended either wholly or in part) on condition that the order is complied with.

As the Court’s attention was drawn to previous instances of non-compliance with court orders by the plaintiff, it postponed the matter and called for the filing of further affidavits in that regard.

Cilliers and others v Steenkamp and others [2016] JOL 34781 (WCC)

Pleadings – Particulars of claim – Exception to

The plaintiffs were shareholders in a company (“KCM”) over which the first to third defendants were the duly appointed liquidators. In January 2014, the plaintiffs issued summons against the liquidators and the fourth to sixth defendants (the latter on the basis of vicarious liability for alleged acts or omissions on the part of the individual liquidators during the course and scope of their respective employment).

The third and sixth defendants excepted to the amended particulars of claim, contending that the claims advanced by the plaintiffs, as currently pleaded, failed to disclose a cause of action, alternatively were vague and embarrassing and that they were severely prejudiced as a result.

Held that a pleader is required to allege the primary facts upon which he relies as well as the conclusion sought to be drawn from those facts. A pleading will be defective if a conclusion is asserted without pleading the primary facts to support it. The particular facts that a party must plead in order to disclose the cause of action relied upon, pertain not to matters of procedure but to substantive law, given that they must form the foundation for the legal conclusion which in the ordinary course, would support the party’s right to judgment. If that is not done, the pleading will be excipiable for failing to disclose a cause of action.

An exception on the ground that a pleading is vague and embarrassing is aimed at the formulation of the cause of action rather than its legal validity per se, but this type of exception can only be taken if the vagueness goes to the cause of action itself, and will only be allowed if the excipient will be seriously prejudiced as a result.

The grounds of the exception in this case related to the assertion by the plaintiffs of the existence of a duty on the liquidators of KCM to take control of its wholly owned subsidiary; the absence of the assertion of any such duty as pleaded in the third claim (an unspecified duty of care is instead relied upon); and the fact that the claims were all for pure economic loss but lacked averments necessary to sustain same.

The excipients contended that although the pleading alleged a failure to discharge the duty to take control of the subsidiary, it did not allege any primary facts from which a conclusion of the duty to take control could be drawn. The plaintiffs pinned their colours to the sole mast that the fiduciary duty imposed upon the liquidators includes the duty to take control of KCM’s wholly owned subsidiary. The excipients correctly submitted that not only had the plaintiffs failed to allege any primary facts to support that legal conclusion, but the conclusion itself was wrong in law. The Court

held that the pleading failed to disclose a cause of action in respect of the first three claims, or alternatively was vague and embarrassing.

The excipients’ remaining attack was directed at the fact that all of the claims were for pure economic loss. That exception was also upheld. The plaintiffs were given leave to further amend their particulars of claim by a stipulated date.

Padayachee v Adhu Investments CC and others [2016] JOL 35318 (GJ)

Contract – Exit agreement – Agreement to pay facilitation fee – Prevention of payment of fee – Claim for contractual damages – Where party claiming damages had performed his contractual obligations in terms of agreement failure by other parties to pay fee due was in breach of agreement – Said parties liable for damages

Evidence – Parol evidence rule – Rule that extrinsic evidence is not admissible in order to determine meaning of a written instrument abolished by new approach to interpretation – Integration rule determines content or limits of written instrument – Integration rule remains good in law

In terms of an agreement involving the plaintiff, the first two defendants, and certain other entities, the plaintiff was to be paid a fee of R2,5m for assisting in the raising of funds from a funder to facilitate a transaction. The plaintiff would then exit the transaction. The exit agreement flowed from a fall out between the second defendant and plaintiff. They had, before they fell out, planned a BEE transaction in terms of which their joint venture company (“Teleosis”) was to acquire 51% of the shares in a valuable company (“AFST”). The shareholding in Teleosis was, if all had gone according to plan, to be held by second defendant’s company (“Adhu”) and plaintiff’s company, Spartan, in the proportions 49% to 51% respectively.

The plaintiff instituted action against the first and second defendants for damages caused by them to him, by diverting and preventing payment of the fee referred to above. He averred that the said defendants failed to perform such acts as might be necessary to give effect to the terms of the exit agreement. In their amended plea the first two defendants admitted the conclusion of the exit agreement, but denied that the conditions necessary for payment of the fee were met. They denied that the plaintiff had done what was required of him for payment of the fee. They pleaded that after the conclusion of the exit agreement, the third defendant (“Livispex”) purchased the assets and business of AFST.

In its plea, Livispex denied the plaintiff’s allegations and raised a special plea of prescription.

Held that the issues for determination were what the plaintiff’s obligations in terms of the exit agreement were and whether he complied with his obligations; whether the second defendant breached the exit agreement; and If so, whether the plaintiff was obliged to comply with the breach clause in the exit agreement and whether he did. The final question was whether the plaintiff was entitled to rely on the provisions of either sections 12(2) or (3) of the Prescription Act 68 of 1969 in respect of his claim against Livispex.

The duties of the plaintiff and second defendant were recorded in the written agreement. The first question for determination was whether the evidence of the plaintiff and second defendant, over and above that which was recorded in the agreement in relation to what their obligations were, was admissible in evidence. Evidence about what parties thought their obligations are, which is at variance with the express provisions of the exit agreement, would be inadmissible as offending the integration rule (a sub-rule of the parole evidence rule). The Court referred to the “new” approach to interpretation, which has abolished one of the branches of the parol evidence rule (ie the “interpretation rule” which stated that extrinsic evidence was not admissible in order to determine the meaning of a written instrument). That does not affect the operation of the other “branch” of the parol evidence rule, being the so-called “integration rule”, which determines the content or limits of a written instrument. Thus, the integration rule remains good law. Applying that, the Court found the evidence of the plaintiff to be preferable to that of the second defendant. It was therefore concluded that the plaintiff had performed his contractual obligations in terms of the exit agreement. Consequently, the first and second defendants ought to have procured compliance by Levispex of the obligations owed by Teleosis to the plaintiff in terms of the exit agreement. Instead, they prevented Levispex from paying the plaintiff the sum of R 2,5 million contemplated by the exit agreement. In those circumstances, they were in breach of the exit agreement, and were liable to the plaintiff for the damages claimed.

The Court dismissed the defence of prescription, finding no merit therein.

Judgment in the amount of R2,5 million was granted against the defendants jointly and severally, the one paying the other to be absolved.

Dormell Properties 282 CC v Bamberger [2015] JOL 33307 (SCA)

Pleaded cause of action – Binding nature – Pleadings must set out cause of action in clear and unequivocal terms to enable opponent to know exactly what case to meet – Once party has pinned its colours to mast – Impermissible to change stance later –

Contract – Deed of suretyship – Deed of suretyship invalid where annexed to agreement of lease not signed by landlord –

Civil procedure – Pleaded cause of action – Departure from – Court’s discretion – Court’s discretion in relation to pleadings – Based on consideration of all factors involved Taking into account fairness to parties – If outcome of exercise of discretion will prejudice a party – Court should be slow to exercise discretion

The appellant leased property to a company (Edulyn). The respondent (Bamberger) as the sole director of Edulyn, represented and signed the offer to lease on behalf of Edulyn. In doing so, he also bound himself as surety for Edulyn’s obligations under the lease. The lease agreement had been signed by Bamberg, but the appellant had not signed it. The deed of suretyship was made an annexure to the lease agreement, and was annexed to the appellant’s particulars of claim as if it were the instrument that bound Bamberger as surety and co-principal debtor. The deed of suretyship was expressly said to arise from the agreement of lease to which the suretyship was annexed.

On the ground that Edulyn had breached the lease agreement by not paying rent, the appellant cancelled the agreement and obtained an eviction order. The Court granted judgment against Edulyn and the respondent, jointly and severally, the one paying the other to be absolved. Bamberger in turn successfully appealed against the order, leading to the present appeal.

Bamberger’s argument was that the appellant’s cause of action, as pleaded ab initio, was premised on the deed of suretyship and not on the offer to lease containing the suretyship clause. It was argued further that no reference at all was made in the particulars of claim to the suretyship clause in the offer to lease, and that the appellant could not later change that by seeking to rely upon the suretyship clause.

Held that the purpose of pleadings is to define the issues for the parties and the Court. Pleadings must set out the cause of action in clear and unequivocal terms to enable the opponent to know exactly what case to meet. Once a party has pinned its colours to the mast it is impermissible at a later stage to change those colours.

A party who wishes to claim on a deed of suretyship must comply with the ordinary rules relating to pleading of a contract. In the present case, the appellant should have alleged, inter alia, a valid contract of suretyship that complied with the provisions of the General Law Amendment Act 50 of 1956 – the terms of the deed of suretyship must have been embodied in a written document signed by or on behalf of the surety which identified the creditor, the surety and the principal debtor. It must have alleged the cause of the debt in respect of which the defendant undertook liability as well as the actual indebtedness of the principal debtor. In this case, the deed of suretyship was invalid because the suretyship was annexed to an agreement of lease which was not signed by the appellant, as the landlord. The appellant’s failure to sign the agreement of lease meant that the agreement did not come into existence, and therefore the suretyship to which it was annexed was in respect of a non-existent obligation and was accordingly unenforceable. While conceding the invalidity, the appellant averred that there was no prejudice to Bamberger in relying instead on the suretyship embodied in the offer to lease which was itself still valid. It also submitted that, despite the principle that the object of pleading is to define the issues and that the parties will be kept strictly to their pleadings, within those limits the court has a wide discretion. The Court explained the ambit of such discretion. Generally a court’s discretion in relation to pleadings is based upon a consideration of all the factors involved, taking into account fairness to the parties. The exercise of the discretion is not unlimited and must be judicially justifiable. If the outcome of the exercise of a discretion will prejudice a party such as Bamberger, a court should be slow to exercise the discretion. Bamberger submitted that, had the matter been properly pleaded, he could have raised a number of defences that had not been pleaded and canvassed during the course of the trial.

Finding merit in Bamberg’s contentions, the Court exercised its discretion against allowing the appellant to rely on the offer to lease.

The appeal was dismissed with costs.

ABSA Bank Limited v Naude NO and others [2015] JOL 33323 (SCA)

Business rescue – Adoption of business rescue plan – Application for setting aside of plan – Non-joinder – Test for non-joinder – does party have direct and substantial interest in subject matter of litigation which may prejudice non-joined party – Creditors who would be prejudicially affected by setting aside of business rescue plan should be joined as parties to the matter

The appellant bank had voted against a business rescue plan in respect of the second respondent. Despite that, the plan was adopted. As a result, the bank brought an application against the company and the first respondent who was the business rescue practitioner, for a declaratory order that the decision taken at the relevant meeting of creditors, approving the business rescue plan for the company, was unlawful and invalid. A counter-application was brought by the company and the practitioner for a declaratory order that in terms of the old Companies Act 61 of 1973, a cross-suretyship executed by the company and other related companies, in favour of the bank, was void.

The application was dismissed, inter alia, on the basis that the bank had failed to join the creditors of the company and that it was precluded by section 133 of the Companies Act 71 of 2008 from bringing such an application without the written consent of the practitioner or the leave of the Court. The counter-application was dismissed as it was found that the cross-suretyship was valid and not contrary to the provisions of section 226(1) of the old Companies Act 61 of 1973.

In a subsequent application, the bank stated that it seemed that the plan could not be implemented as the bank had not received any payments. In the meanwhile the business rescue plan was implemented and the first payments to creditors, in terms of the business rescue plan, were made. The practitioner deposed to an answering affidavit and raised the issue of the non-joinder of the creditors of the company. The reasons for insisting on joinder of the creditors were that the setting aside of the business rescue plan would undo their vote in favour of such plan and it would require each creditor to return all monies that were paid to it pursuant to such plan. The bank averred that the notice given to creditors in terms of section 130 of the Companies Act 71 of 2008 was sufficient.

Held that notice in accordance with the provisions of section 130(3) is confined to matters where an application is brought prior to the adoption of a business rescue plan. The court held further that the argument by the bank that the issue of non-joinder did not arise because the creditors had knowledge of the proceedings, due to the notices dispatched to them, and did not intervene, was without substance. The test whether there has been non-joinder, is whether a party has a direct and substantial interest in the subject matter of the litigation which may prejudice the party that has not been joined. If an order or judgment cannot be sustained without necessarily prejudicing the interest of third parties that had not been joined, then those third parties have a legal interest in the matter and must be joined. In this case, as explained above, if the creditors were not joined their position would be prejudicially affected. Consequently, the court below was correct in upholding the non-joinder point.

The appeal was dismissed with costs.

ABSA Bank Ltd v Le Roux and others [2016] JOL 35649 (WCC)

Summary judgment application – Supporting affidavit – Deponent to – Personal knowledge of facts

The plaintiff bank sued the defendants in their capacity as sureties and co-principal debtors in respect of the obligations of the principal debtor. After the defendants gave notice of their intention to defend the action, the plaintiff applied for summary judgment.

Opposing the application for summary judgment, the first and second defendants took the point that the affidavit in support of the application for summary judgment did not comply with the sub-rule in that it did not appear therefrom that the deponent was a person able to swear positively to the facts verifying the cause of action.

Held that summary judgment is regulated in terms of rule 32 of the Uniform Rules of Court. It is generally accepted that a person can swear positively to the facts only if they are within his personal knowledge. There must be enough on the papers to satisfy the court that the deponent does indeed possess the requisite knowledge. The supporting affidavit in this matter fell materially short of what the rule 32(2) requires. It was found to be inherently improbable on the information before the Court that the deponent had direct knowledge of most of the salient facts. The Court noted the conflicting judgments on the question of the requirements of rule 32(2). It held that the correct approach is that unless it appears from a consideration of the papers as a whole that the deponent to the supporting affidavit probably did have sufficient direct knowledge of the salient facts to be able to swear positively to them and verify the cause of action, the application for summary judgment is fatally defective and the court will not even reach the question whether the defendant has made out a bona fide defence. The Court recognised the concern that the said approach might place an impossible burden on institutional plaintiffs such as banks, particularly in the modern age in which much of their business is conducted facelessly on computer networks and recorded electronically. It pointed out that electronically stored data falling within the defined meaning of “data message” in section 1 of the Electronic Communications and Transactions Act 25 of 2002 (“the act”) is admissible in evidence in terms of section 15 of the Act. Thus, if the deponent to a supporting affidavit in summary judgment proceedings were to be able to aver that he is:

(i) an officer in the service of the plaintiff;

(ii) that the salient facts - which should be particularised - were electronically captured and stored in the plaintiff’s records;

(iii) that he had regard thereto;

(iv) that he was authorised to certify and had executed a certificate certifying the facts contained in such record to be correct; and

(v) on the basis thereof was able to swear positively that the plaintiff would – having regard to the provisions of section 15(4) – be able to prove the relevant facts at the

trial of the action by producing the electronic record or an extract thereof, that the requirements of rule 32(2) would be satisfied.

The non-compliance with rule 32(2) in this case led to the dismissal of the summary judgment application.

Stamford Sales & Distribution (Pty) Limited v Metraclark (Pty) Limited [2015] JOL 33682 (SCA)

Summary judgment – Verifying affidavit – Rule 32(2) of the Uniform Rules of Court – Verifying affidavit must be made by person who can swear positively to facts verifying cause of action – Sufficient for there to be direct knowledge of material facts underlying cause of action – Knowledge may be gained by person who has possession of all of documentation

The high court had granted summary judgment against the appellant (“Stamford”) in favour of the respondent (“Metraclark”). Metraclark’s claim against Stamford was based upon a cession by a close corporation (the cedent) of its book debts to Metraclark. It was alleged by Metraclark in its particulars of claim that the cedent was indebted to it in the sum of R1 621 694, 60 which the cedent had failed to pay.

On appeal, two issues were raised. The first was whether the verifying affidavit in support of the application for summary judgment by Metraclark complied with the requirement in rule 32(2) of the Uniform Rules of Court, that it be made by a person who could swear positively to the facts verifying the cause of action, and the second was whether Stamford’s affidavit opposing the grant of summary judgment disclosed a bona fide defence to Metraclark’s claim, as required by rule 32(3)(b) of the rules.

Held that as long as there is direct knowledge of the material facts underlying the cause of action, which may be gained by a person who has possession of all of the documentation, that is sufficient. The enquiry, which is fact-based, considers the contents of the verifying affidavit together with the other documents properly before the Court. The object is to decide whether the positive affirmation of the facts forming the basis for the cause of action, by the deponent to the verifying affidavit, is sufficiently reliable to justify the grant of summary judgment. An insistence upon personal knowledge by a deponent to a verifying affidavit of all of the material facts forming the basis for the cause of action, where the cessionary of a claim seeks summary judgment against the debtor, in most cases would effectively preclude the grant of summary judgment. It also emphasised formalism in procedural matters at the expense of commercial pragmatism. On the particular facts of this case and on a conspectus of the verifying affidavit together with the other documents referred to, the Court was satisfied as to the reliability of the statement by the deponent in the verifying affidavit that she was able to swear positively to the facts and verify all the causes of action.

Turning to the issue of whether Stamford’s opposing affidavit disclosed a bona fide defence in terms of rule 32(3)(b), the Court noted that conspicuously absent from Stamford’s affidavit was any attempt to disclose fully the nature and grounds of the defence and the material facts relied upon therefor as required by rule 32(3)(b). It therefore failed to disclose a bona fide defence to the claim of Metraclark.

The appeal was dismissed

Mtokonya v Minister of Police [2016] JOL 35636 (ECM)

Delict – Unlawful arrest and detention – Claim for damages – Prescription

The plaintiff had been arrested and detained for four days in September 2010. In April 2014, he sued the defendant for damages arising therefrom. The defendant raised a special plea of prescription in terms of the Prescription Act 68 of 1969.

Held that section 11(d) of the Act provides that a debt prescribes after three years, while section 12(1) provides that prescription shall begin to run as soon as the debt is due. Section 12(3) provides that a debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises - provided that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable care.

In this case, the plaintiff did not institute an action within three years as he was enjoined to do so in terms of section 11(d). In July 2013, he was advised by his attorney that he had a cause of action against the defendant. But summons was filed only on 23 April 2014. The upshot of the plaintiff’s case was that he did have the knowledge of identity of the debtor and the material facts giving rise to the debt at the time when he was released from detention in September 2010; but he did not know that he had a legal remedy against the defendant. The question then, was whether knowledge of a legal remedy is required for prescription to run.

In the case of Yellow Star Properties v MEC, Department of Planning and Local Government [2009] 3 All SA 475 (SCA), the Supreme Court of Appeal held that while the applicant in that case might not have appreciated the legal consequences which flowed from the facts, its failure to do so did not delay the date on which prescription commenced to run.

In this case the plaintiff did acquire knowledge that the defendant was the arrestor as well as that the arrest and detention were not justified; but he did nothing about that. The court held that it was negligent, rather than innocent, inaction on the part of the plaintiff that allowed his claim to prescribe.

The special plea was upheld and the plaintiff’s claim dismissed.

Mtshayeni v Eastern Cape Development Corporation: In re Mtshayeni v Eastern Cape Development Corporation [2016] JOL 35627 (ECM)

Application for leave to appeal – Jurisdiction – Section 16(1)(b) of the Superior Courts Act 10 of 2013

The Court decided an appeal in this matter in favour of the respondent. Pursuant thereto, the Court granted an application for leave to appeal, ruling that the appeal be heard by the Full Bench of this Court instead of the Supreme Court of Appeal. The next process was an application brought in terms of rule 42 of the uniform rules of this Court at the instance of the applicant seeking the correction of the order such

that an order be made referring the appeal to the Supreme Court of Appeal in terms of section 20(4)(b) of the Supreme Court Act 59 of 1959. The basis of the application was that the order made was premised on a mistake common to the parties within the ambit of rule 42(1)(c), to the extent that the provisions of section 20(4)(b) of the Supreme Court Act enjoined the Court to make an order referring the appeal to the Supreme Court of Appeal.

The application was opposed by the respondent on the basis that the provisions of section 16(1)(b) of the Superior Courts Act 10 of 2013 (“the Superior Courts Act”) replaced the provisions of section 20(4)(b) of the Supreme Court Act pursuant to the repealing thereof in its entirety, with effect from the commencement of the new Act on 23 August 2010.

Held that on a reading of section 20(4)(b), the high court sitting as a court of appeal from the magistrates’ court has power to grant leave to appeal to either the Full Bench or Supreme Court of Appeal. Section 16(1)(b) of the Superior Courts Act provides that an appeal against any decision of a division on appeal to it, lies to the Supreme Court of Appeal upon special leave having been granted by that court or the Supreme Court of Appeal. Therefore, the issue for decision was whether in light of the provisions of section 16(1)(b), the present Court, sitting as an appeal court, did have the power to entertain an application for leave to appeal.

The applicant submitted that the provisions of section 52 of the Superior Courts Act created an exception to the new rule in section 16(1)(b) that all appeals from the appeal courts of the high courts lie to the Supreme Court of Appeal on special leave. Section 52 provides that proceedings pending in any court at the commencement of the Act, must be continued and concluded as if this Act had not been passed. Based on the principle that the intention of the legislature must be ascertained from the language used in the statute, there is no room for interpreting the words “proceedings pending” in section 52(1) as applicable to the present case because summons had been issued and judgment had been passed in the magistrates’ court in this matter before 23 August 2013.

Therefore, the present Court sitting as an appeal court did not have jurisdiction to entertain an application for leave to appeal.

MATHALE v LINDA AND ANOTHER 2016 (2) SA 461 (CC) 

Magistrates' court — Civil proceedings — Practice — Execution — Execution order under s 78 of Magistrates' Courts Act 32 of 1944 — Whether appealable — Approach to be adopted by courts — Appealability dependent on whether order final in effect in terms of s 83(b) of Magistrates' Courts Act 32 of 1944.

At the time of approaching the Constitutional Court, the applicant, Mr Mathale, had been residing at a property in the township of Winnie Mandela Park, Tembisa, for over 20 years. The first respondent, Mr Linda, had obtained, in the Tembisa Magistrates' Court, an order evicting the applicant from such property on the ground that he (the first respondent) was the registered owner thereof, it having been

allocated to him by the second respondent, the Ekurhuleni Metropolitan Municipality, the local authority within whose jurisdiction the property fell. The applicant appealed such eviction order, which appeal was still pending. In the light of delays in finalising such appeal, Mr Linda successfully applied in the magistrates' court, in terms of s 78 of the Magistrates' Courts Act 32 of 1944 (the Act), for the eviction order to be implemented, pending the finalisation of the eviction appeal. Mr Mathale appealed such execution order. In dismissing such appeal the High Court assumed that a s 78 order was appealable, provided that it was in the interests of justice to regard it as such. It held that this was not such a case. The Supreme Court of Appeal dismissed Mr Mathale's application for special leave to appeal.

The fundamental question for the Constitutional Court was whether, in general, s 78 orders and those concerning an eviction from one's home, in particular, were appealable. A related question was whether the High Court had erred in its approach to the appeal. Finally, the court had to decide whether to set aside the execution order, and hence interfere with the magistrates' court's exercise of its discretion.Held, that, while it was generally not in the interests of justice for interlocutory relief, which interim execution orders are ordinarily considered to be, to be subject to appeal, as this would defeat the very purpose of the relief, an exception existed in the form of s 83(b) of the Act, which provides that any order obtained in any civil suit or proceeding in a court, having the effect of a final judgment, is subject to appeal. The execution order under consideration had the effect of a final judgment. This was in the light of: the fact that once a court permitted the execution order to be executed, pending an appeal, Mr Mathale's right to occupy his home would be brought to an abrupt end; there was no guarantee that Mr Mathale would be able to return to and continue living in the property he had been living in for the last 20 years; and the immediate and devastating effect the execution order would have when implemented, which would render Mr Mathale homeless, causing him immeasurable suffering and indignity. Given the finality of the order, it was appealable.

Held, further, that properly interpreted, s 83(b) of the Act meant that all orders, even if they were interlocutory, were appealable if they had the effect of a final judgment. In other words, s 83(b) made interlocutory relief appealable, provided it was final in effect. A High Court was required to examine the facts and circumstances of each case to determine whether, in truth, the order was final in effect. Held, further, that the High Court erred in its approach to the appeal, and in concluding that the execution order was not appealable. Section 83(b) did not require a court to determine whether the interests of justice would favour viewing an order as appealable; rather, the relevant enquiry under s 83(b) was only whether the judgment or order would have the effect of a final judgment. Once a High Court had found that the decision from the magistrates' court had the effect of a final judgment, it was obliged to look into the merits and decide whether or not to set aside the execution order. The High Court's failure in this regard on this basis alone was sufficient to set aside the High Court's order.

Held, further, that the execution order granted by the magistrates' court had to be set aside. On a consideration of (a) the irreparable harm suffered by either parties; (b) the prospects of success on the main appeal; and (c) the balance of convenience, the magistrates' court was incorrect in its conclusion that the

application of the just-and-equitable test called for it to grant the execution order. As to (a), the harm suffered by Mr Mathale would be irreparable were the eviction to be put into operation, pending the appeal.To have his home taken away while he defended his rights in the courts — given the sanctity of a home — would not serve the ends of what was just and equitable. As to (c), on the basis that Mr Mathale stood to be evicted from his home, with no alternative means of accommodation whilst still prosecuting the appeal, the balance of convenience favoured Mr Mathale. The decision of the High Court was set aside, as well as the order of the magistrates' court permitting Mr Mathale's eviction pending his appeal against his eviction order.

TSHWANE CITY AND OTHERS v NAMBITI TECHNOLOGIES (PTY) LTD 2016 (2) SA 494 (SCA)

Administrative law — Administrative action — What constitutes — Cancellation of municipal tender prior to adjudication — Not constituting administrative action — Promotion of Administrative Justice Act 3 of 2000, s 1.Government procurement — Procurement process — Cancellation of tender prior to adjudication — Not constituting administrative action and therefore not subject to review under PAJA — Promotion of Administrative Justice Act 3 of 2000, s 1.Court — Powers of — Separation of powers — Between judiciary and executive — Order reinstating cancelled municipal tender — Compelling state organ to consider and award tender it decided not to proceed with may infringe on doctrine of separation of powers.The cancellation of a tender by an organ of state prior to its adjudication did not constitute administrative action — it was not a decision of an administrative nature and had no direct external legal effect — and therefore could not be reviewed under the Promotion of Administrative Justice Act 3 of 2000. The Supreme Court of Appeal so held in upholding an appeal against a High Court decision (made on judicial review under PAJA) which set aside as unfair the City of Tswhane's cancellation of a tender prior to its adjudication, and ordered the City to adjudicate and award the cancelled tender.For a court to effectively compel a state organ to consider and award a tender that it had decided not to proceed with, may infringe on the doctrine of separation of powers and should only be done in extreme circumstances.

NATIONAL TREASURY AND ANOTHER v KUBUKELI 2016 (2) SA 507 (SCA)

Constitutional law — Foundational values — Rule of law — Rational decision-making — Exercise of public power — Fiscal investigation into municipality's finances — Right to be heard incidental to main purpose of investigation — Failure to interview particular individual not justifying finding that investigation arbitrary or irrational. During May and June 2013 the National Treasury conducted a forensic investigation into financial irregularities in the hiring and use of mayoral cars by the OR Tambo District Municipality. The investigation arose from a newspaper article alleging that the mayor had hired luxury cars for two months at a cost of R500 000, and that two of them were then crashed, resulting in liability for the municipality of R225 000.The treasury asked the municipality to make Mr Kubukeli, the mayor's bodyguard and driver, available for an interview, but Mr Kubukeli was never informed of the request. The treasury completed its investigation without interviewing Mr Kubukeli,

made findings of financial mismanagement and lack of internal controls at the office of the mayor, and offered certain recommendations. In respect of Mr Kubukeli the treasury found that car-hire costs had mushroomed when he became the mayoral driver and that he had negligently crashed the two cars. It recommended that the resulting damages be recovered from him.

Mr Kubukeli complained that he received no notice of the treasury's request to make himself available for an interview. Expressly disavowing reliance on PAJA, he asked the High Court for an order declaring the findings against him to be unlawful under the rule-of-law requirement of rational decision-making. But the High Court found in favour of Mr Kubukeli on the ground that the report constituted unfair administrative action under PAJA because he was denied the right to make representations. In an appeal to the SCA —

HeldThe High Court, by finding for Mr Kubukeli on the basis of procedural unfairness under PAJA, misconceived the nature of the enquiry. Since it was a constitutional-rationality enquiry, the question was whether the treasury's exercise of its investigative powers was rationally connected to their purpose. Though there was no general duty on decision-makers to consult interested parties for a decision to be rational under the rule of law, such a duty might arise in particular circumstances. In the present case the conduct of an individual like Mr Kubukeli was merely incidental to treasury's purpose of securing — via its investigative powers — sound management of the municipality's fiscal and financial affairs. † It followed that the request that Mr Kubukeli attend an interview was not a recognition of his right to be heard but merely intended to assist the treasury to achieve its purpose, which it did. Viewed objectively, the purpose of the investigation — the identification of shortcomings in the financial management and internal control of the municipality — was achieved. The findings were, moreover, not binding on Mr Kubukeli, and open to challenge in later proceedings. Hence the investigation, report and recommendations without the participation of Mr Kubukeli were founded on reason and not arbitrary or irrational. Appeal upheld.

SOUTH AFRICAN AIRWAYS SOC v BDFM PUBLISHERS (PTY) LTD AND OTHERS 2016 (2) SA 561 (GJ)

Evidence — Privilege — Confidentiality — Enforcement — Any relief sought to protect confidentiality subject to public-interest override — In circumstances of present case, public interest in being informed outweighing state organ's rights to confidentiality — Constitution, s 16. Evidence — Privilege — Confidentiality — Legal advice privilege — Ambit — Privilege against disclosure not absolute — Protection of confidentiality of any information, including privileged legal advice, subject to public-interest override — In circumstances of present case, public interest in being informed outweighing state organ's rights to confidentiality — Constitution, s 16. Evidence — Privilege — Confidentiality — Legal advice privilege — Ambit — Not extending to preservation of confidentiality of advice disclosed by unauthorised means — Constituting only negative right to prevent admission into evidence of advice obtained from legal advisor in confidence.

Lawyers— Privilege — Confidentiality — Legal advice privilege — Waiver — Imputed waiver — Strict test — Whether to impute waiver from delay in claiming confidentiality.Evidence — Privilege — Confidentiality — Unauthorised disclosure of confidential information — Remedy — Interdictory relief inappropriate — Once disclosed, confidentiality lost and its protection futile. Motions — Urgent applications — Default procedure set out for matters in respect of which less than 24 hours' notice is to be given — Mandatory for applicant's attorney to follow such procedure.

This case concerns an application by the respondent media houses for reconsideration (in terms of Uniform Rule 12(1)(b)) of an order granted in their absence, interdicting them from publishing the contents of a legal opinion that South African Airways (SAA) had obtained and which had entered the public domain by unauthorised means. SAA had served the application for the order on the respondent media houses only after news items covering the contents of the opinion had already been published. Also relevant in the reconsideration application was that, despite the intended publication having been brought to SAA's attention and their subsequent interactions with representatives of the media houses, SAA made no demand to stop publication, claimed no privilege and gave no indication that legal action would follow to prevent publication. Of further relevance was that when the application was launched, service was by email sent at 22h00, notifying that the hearing would be at 22h30 but not where it would be held. In the event, the application was decided approximately two hours after notification, shortly after midnight at a judge's home, on SAA's version alone.

At issue were — (1) the implications of the absence of proper service of the urgent application; (2) whether the legal professional privilege could be invoked to obtain an interdict against publication; (3) the futility of the order, given the extent of publication prior to the application being served and the order being granted; (4) if legal professional privilege ever existed, whether not claiming it when interacting with the respondents' representatives constituted imputed waiver of the privilege; and (5) whether, assuming a right by SAA in the confidentiality of the contents of the document, public interest trumped such confidentiality rights.Held(1)   There was a mandatory professional duty on an attorney in any urgent application on less than 24 hours' notice, to undertake certain default actions to ensure effective service. The interactions which took place prior to the application were misrepresented in SAA's founding affidavit in a calculated effort to positively mislead the judge and to obscure the unprofessionalism attendant on the service of the application. These misrepresentations, together with the sham service, by themselves justified dismissal of the application. (2)   A person whose confidential legal advice was by some unauthorised means released into the public domain could not invoke the legal professional privilege to obtain an interdict against its publication. If the confidentiality were lost and the world came to know of the information, there was no remedy in law to restrain publication by strangers who learned of it. This was because the legal advice privilege was a negative right to refuse disclosure, in proceedings, of any confidential information exchanged between attorney and client; not a positive right to protection or

preservation of information, the confidentiality of which had been or may be breached through unauthorised means. This vulnerability to loss of the confidentiality of the information over which a claim of privilege could be made flowed from the nature of the right itself. (3)   It was incontrovertible that the contents of the document were confidential to SAA. However, once shattered, confidentiality cannot be put back together again. In circumstances such as the present, where a court could not conceive of any utility in an order and which would if granted be a mere sterile gesture, courts have refused relief. If confidentiality were not yet breached, an interdict may be an appropriate form of relief to preserve confidentiality, but if already breached it was unlikely that any interdictory relief could be effective, and such an order would be inappropriate.(4)   Imputed waiver required clear proof and could not be lightly inferred. The test to impute an intention to waive must be strict. SAA had on four occasions communicated with journalists without claiming that any of its rights were violated, and could properly be criticised for not proclaiming a right to confidentiality earlier. However, a claim of privilege could be belated, and on the probabilities it could not be assumed that the employees of SAA construed the document as being eligible for a claim of privilege earlier than the consultation with their attorney and counsel. That probability and the clumsiness that attended the urgent application went hand in hand. On the facts, imputing waiver of confidentiality was not justified. (5)   The limitations on the application of legal advice privilege did not inhibit a person from seeking relief to prevent publication of confidential information in a general sense. Information which was the subject of a claim of privilege was simply an example of one form of confidential information. However, any relief sought from a court to protect any form of confidential information was subject to recognised public interest overrides — an exercise which required a balancing of contending values in a fact-specific context. The right to freedom of expression in s 16 of the Constitution had to be weighed. SAA was an organ of state whose financial and governance affairs were of legitimate interest to all South Africans, and had been subject to critical scrutiny for a long time. Also, little of what was claimed as confidential information was not already in the public domain before the document containing the confidential legal advice was leaked to the media. Accordingly, the public interest in being informed outweighed the right of SAA to confidentiality in the contents of the document. BLASTRITE (PTY) LTD v GENPACO LTD 2016 (2) SA 622 (WCC)

Practice — Intermediate proceedings — Security for costs — Peregrinus — Common-law practice in terms of which peregrinus plaintiff could be called upon to furnish security for costs — Whether amounting to unfair discrimination and/or violation of constitutional right to equality.This matter concerned the constitutionality of the common-law practice in terms of which a peregrinus plaintiff that owns no immovable property in South Africa could be called upon to furnish security for costs. Arising from arbitration proceedings in which a peregrinus, both of the Republic and the court, Genpaco Ltd (Genpaco), sought certain relief from an incola, Blastrite (Pty) Ltd, the latter had applied, in terms of s 21(1) of the Arbitration Act 42 of 1965, for an order directing Genpaco to put up security for costs in the arbitration proceedings. Genpaco in response argued, firstly, that the applicant had not made out a case for the exercise of the court's discretion in favour of ordering security, and that equity and fairness dictated that the application should be refused. The court disagreed, holding that the circumstances of the case

called for it to exercise its discretion in favour of Blastrite, namely: the fact that Genpaco had the means to furnish the security and would thus not be prevented from its claim; and the uncertainty, inconvenience and additional expense associated with the enforcement of any costs order that Blasrite would be awarded, were Genpaco to be unsuccessful in its claim. Genpaco further argued that the common-law practice in terms of which a plaintiff peregrinus may be called upon to give security for costs was unconstitutional in that: (a) in differentiating without a rational basis between a plaintiff peregrinus and a plaintiff incola, the practice violated the right to equality before the law enshrined in s 9(1) of the Constitution; and (b) in displaying a xenophobic attitude to Genpaco, and by directly or indirectly imposing a burden or disadvantage on a peregrinus, it amounted to unfair discrimination.Held, that any differentiation upon which Genpaco relied was irrelevant. The common-law practice was not such that security for costs was required purely on the basis that a litigant was a peregrinus that owns no immovable property in this country. The court in fact retained a discretion whether or not to order security, to be exercised on the basis of the particular circumstances of the case and considerations of fairness and equity to both parties.

Held, further, that the practice, in distinguishing between a peregrinus plaintiff and an incola plaintiff, did not violate s 9(1) of the Constitution. The differentiation underlying such practice was rational. The purpose of the practice, which was aimed at enabling an incola to recover the costs of successfully defending a claim by a peregrinus, was in fact to increase equality between a peregrinus plaintiff and an incola plaintiff. A peregrinus, which did not reside or conduct business in South Africa, and that did not own sufficient assets to satisfy a costs order, was not at risk on an equal footing with an incola or resident party. The practice relating to security for costs thus had the effect of restoring a measure of equality between the parties. Held, further, that the practice relating to security did not impose any burden or disadvantage on a peregrinus: the security represented a small proportion of the total expenses of litigation and, as such, would unlikely be prohibitively expensive. )Held, further, that the practice had nothing to do with xenophobia — it was laid down as far back as 1828 that a non-resident plaintiff who did not own immovable property in this country could be called upon to give security for the costs of the action.Held, accordingly, that the common-law practice in terms of which a non-resident plaintiff who does not own immovable property in this country can be called upon to give security for the costs of a lawsuit, was neither irrational nor amounted to unfair discrimination and, as such, was consistent with the Constitution. 

Brown v Health Professions Council of South Africa and others [2016] 2 All SA 62 (WCC)

Administrative law – Health Professions Council – Decision of – Review application – Court’s powers on review – Courts should take care not to usurp the functions of administrative agencies as its task is to ensure that the decisions taken by administrative agencies fall within the bounds of reasonableness as required by the Constitution – As long as the purpose sought to be achieved by the exercise of public power is within the authority of the functionary, and as long as the functionary’s decision, viewed objectively, is rational, a court cannot interfere with the decision simply because it disagrees with it or considers that the power was exercised inappropriately.

In terms of a new dispensation in existence since July 2008, general damages may now only be claimed by a person who has been injured in a motor vehicle accident where a “serious injury” has been suffered by the claimant and where that has been either accepted by the Road Accident Fund (“RAF”) or proved in the manner prescribed by regulation.

The applicant was injured as a passenger in a motor vehicle accident, and lodged a claim for compensation. In order to be awarded general damages it was incumbent on him to prove, in the prescribed manner, that he had sustained a serious injury as contemplated in section 17 of the Road Accident Fund Act 56 of 1996 read together with the Regulations.

The Fund required the applicant to submit to tests and accepted the report of an occupational therapist who concluded that the applicant’s injuries were not serious. The applicant lodged a dispute against that assessment but the Appeal Tribunal found that the applicant’s injuries could not be regarded as serious.

On the grounds that the decision was taken arbitrarily or capriciously and/or relevant considerations were not considered; that the decision was not rationally connected to the information before it; the decision was procedurally unfair in that, despite the applicant’s request, the Tribunal/panel did not include an occupational therapist, the applicant sought its review.

Held – It was necessary to note the ambit of a court’s discretion and powers on review, particularly in relation to the distinction between a review and an appeal. As pointed out in case law, the court should take care not to usurp the functions of administrative agencies. Its task is to ensure that the decisions taken by administrative agencies fall within the bounds of reasonableness as required by the Constitution.

Decisions of administrative bodies must be rationally related to the purpose for which the power was given, otherwise they are in effect arbitrary and inconsistent with this requirement. That does not mean that the courts can or should substitute their opinions as to what is appropriate for the opinions of those in whom the power has been vested. As long as the purpose sought to be achieved by the exercise of public power is within the authority of the functionary, and as long as the functionary’s decision, viewed objectively, is rational, a court cannot interfere with the decision simply because it disagrees with it or considers that the power was exercised inappropriately.

Applying the above principles, the Court found no grounds upon which to review the decision of the first respondent. The impugned decision was taken by a panel of medical experts who considered all the medical reports before them, at least half of which supported the decision which they ultimately took. In the circumstances, the application was dismissed.

Cliff v Electronic Media Network (Pty) Ltd and another [2016] 2 All SA 102 (GJ)

Civil procedure – Interim interdictory relief – Requirements – Applicant must establish a prima facie right, albeit open to some doubt; a well-grounded

apprehension of irreparable harm to the applicant if the interim relief is not granted and the applicant ultimately succeeds in establishing his right; the absence of a satisfactory alternative remedy; and the balance of convenience favouring the applicant.

The applicant had held a position as a judge in the television programme “SA Idols” flighted by the respondents (collectively referred to by the court as “M-Net”). M-Net severed their relationship with the applicant for the 2016 Idols season as a consequence of a tweet he posted on social media, which was construed as racist, or in support of racism. A racist and derogatory statement made by a third party (“Sparrow”) on a social media platform was the starting point of the matter. The comment was met with widespread anger and outrage and sparked a public outcry, particularly on social media. Joining in the debate, the applicant posted a tweet stating, “People really don't understand free speech at all”. That was also met with outrage and a barrage of criticism on social media, with some members of the public equating the statement not as support for freedom of speech, but as support for the racist views of Sparrow. That led to accusations that the applicant was himself being racist. The applicant’s tweet led M-Net to allege that the comment was detrimental to their brand and necessitated the termination of the applicant’s role as brand ambassador in his capacity as an Idols judge.

In an urgent application, the applicant sought relief in that regard. The present hearing dealt only with the first part of the two-part application. The relief sought by the applicant in Part A of his application was the urgent reinstatement of his contract with M-Net.

Held – The Court was not, at the present stage, concerned with the issues of freedom of speech or whether the applicant’s conduct amounted to racism. The Court defined the ambit of the dispute as relating solely to the contractual relationship between the parties and whether it should be restored to its position prior to its termination.

A court has a wide discretion in deciding whether to grant interim relief. In order for the applicant to be successful in an application for interim relief, pending the determination of the main issues in dispute, he must establish a prima facie right, albeit open to some doubt; a well-grounded apprehension of irreparable harm to the applicant if the interim relief is not granted and the applicant ultimately succeeds in establishing his right; the absence of a satisfactory alternative remedy; and the balance of convenience favouring the applicant.

The establishment of a prima facie right is the first and most important requirement for an applicant claiming interim interdictory relief. A prima facie right may be shown even where the facts set out by the respondents show contradictions and inconsistencies in the applicant’s version. A temporary interdict can be granted even if the right is open to some doubt. It is only if there is serious doubt cast on the facts alleged by the applicant that a court must refuse the interim relief. M-Net disputed that it had entered into any agreement with the applicant in respect of the 2016 season of Idols. However, the Court found its conduct and its statements to the media to display the contrary. The Court held that it was disingenuous of M-Net to now refute the existence of an agreement between the parties. If not an oral

agreement, then there was a tacit agreement that the applicant would be an Idols judge. Consequently, the Court was satisfied that the applicant had shown a prima facie right that he had a contract with M-Net which was terminated without due process.

The irreparable harm contended for by the applicant was that of being branded a racist. Being fired for being labelled a racist does untold reputational and financial harm to him. Acknowledging such reputational harm, the Court found merit in the applicant’s submissions that he had a reasonable apprehension of suffering irreparable harm. A defamation action in due course or even a declaration of the unconstitutionality of M-Net’s termination of the contract would not address the reputational damage that the applicant was suffering at present. The interim relief sought was the only satisfactory remedy that would go some way in addressing the issue.

To see where the balance of convenience lay, the Court had to weigh the prejudice suffered by the applicant if the relief was refused as against the prejudice M-Net would suffer if the relief was granted. The Court was satisfied that the balance of convenience in this matter favoured the applicant.

Concluding that the applicant had satisfied the requirements for interim relief, and made out a prima facie case for the contractual relief he contended for, the Court held that temporary reinstatement was a competent prayer in the circumstances of this case. Therefore, pending the finalisation of Part B of the notice of motion, the contractual relationship between the parties was reinstated to what it was on or about 6 January 2016.

Firstrand Bank Ltd v Hazan and another; Firstrand Bank Ltd v Hazan Wholesalers and Distributors CC [2016] 2 All SA 112 (GJ)

Motion proceedings – Founding affidavit – Deponent to – Authority of – Deponent to an affidavit in motion proceedings need not be authorised by the party concerned to depose to the affidavit, as it is the institution of the proceedings and the prosecution thereof that must be authorised – Remedy of a respondent who wishes to challenge the authority of a person allegedly acting on behalf of the purported applicant is not to challenge the authority in the answering affidavit, but instead to make use of rule 7(1) of the Uniform Rules of Court.

Insolvency – Winding-up application – Requirements for the grant of a final winding-up order – Applicant required to show that it was a creditor of the respondent within the meaning of section 346(1)(b) of the Companies Act 61 of 1973 read with item 9 of Schedule 5 of the Companies Act 71 of 2008, and that the respondent was unable to pay its debts within the meaning of section 345 of the 1973 Act.

Two matters were heard together due to the common facts involved.

The applicant (“FNB”) was the same in each application. It had sought and obtained a provisional winding-up order of Hazan Wholesalers and Distributors CC (“the Savoy”). The present Court had to decide, in the first application, whether a final order for the winding-up of the Savoy should be granted.

FNB had advanced a loan and other credit facilities to the Savoy. The sole member of the Savoy (“Mr Hazan”) and his wife signed suretyship agreements binding themselves in respect of payment of the debts of the Savoy. The Savoy breached the facility agreement and the loan agreement and all amounts owing became due and payable. FNB made a demand for payment but the respondents failed to make payment. In the second application, the Court was required to determine FNB’s claims for payment against the sureties.

Held – The respondents’ first challenge was to the authority of the deponent to FNB’s founding affidavit to depose to FNB’s founding affidavit and to bring the application on behalf of FNB. In determining the question whether a person has been authorised to institute and prosecute motion proceedings, it is irrelevant whether such person was authorised to depose to the founding affidavit. The deponent to an affidavit in motion proceedings need not be authorised by the party concerned to depose to the affidavit. It is the institution of the proceedings and the prosecution thereof that must be authorised. The remedy of a respondent who wishes to challenge the authority of a person allegedly acting on behalf of the purported applicant is not to challenge the authority in the answering affidavit, but instead to make use of rule 7(1) of the Uniform Rules of Court. That option was not utilised by the respondents.

The next argument raised by the respondents was that the certificates of indebtedness relied upon by FNB did not form part of the facility agreement as they had not been attached when the facility agreement was requested by the respondent’s attorney. The Court had regard to a clause in the suretyship agreements which provided a contractual foundation for the use of the certificates. Therefore, the certificates could be used as evidentiary tools. The accuracy of the content of the certificates was confirmed by the Court.

None of the various defences to the claims for payment were found to have any merit.

Turning to the winding-up application, the Court held that in order for a final winding-up order to be granted, FNB had to demonstrate that it was a creditor of the Savoy within the meaning of section 346(1)(b) of the Companies Act 61 of 1973, which was to be read with item 9 of Schedule 5 of the Companies Act 71 of 2008; and that the Savoy was unable to pay its debts within the meaning of section 345 of the 1973 Act. That onus was discharged.

Consequently, the respondent was placed under final winding-up, and judgment was granted against the respondents in the remaining application.

Gongqose and others v S; Gongqose and others v Minister of Agriculture, Forestry and Fisheries and others [2016] 2 All SA 130 (ECM)

Administrative law – Review application – Undue delay – Section 7(1)(b) of the Promotion of Administrative Justice Act 3 of 2000 makes it incumbent on a person bent on challenging an administrative action on review under the Act to resort to such proceedings without unreasonable delay and not later than 180 days after the date on which the person concerned was informed of the administrative action.

Criminal law – Conservation offence – Fishing in marine protected area – Marine Living Resources Act 18 of 1998 – Section 43(2)(a) – Unlawfulness – Whether proof of existence of customary right of access to marine resources negated unlawfulness – Court confirming validity of customary right, but finding that failure to seek exemption before fishing in area rendered conduct unlawful.

For convenience, the present matter encompassed both an appeal and a review simultaneously.

Common to both proceedings was a complaint concerning the entitlement of three traditional communities (referred to by the court as the “Dweba-Cwebe communities”) to exercise their customary rights to access certain marine resources in a marine protected area. The Dwesa-Cwebe communities, of which the appellants and some of the applicants were a part, resided outside the borders of the Dwesa-Cwebe Nature Reserve (the “Reserve”) which, together with its neighbouring marine protected area, was located on either side of a river. The communities had, over a long period of time, enjoyed customary law rights of access to the marine resources in the Reserve. Their relocation between 1900 and 1950 resulted in their being excluded from a significant portion of their ancestral land and barred from exercising their customary law rights of access to the marine resources in the marine protected area.

With the promulgation of the Marine Living Resources Act 18 of 1998 (the “MLRA”) the Reserve was declared a strict “no take” zone, which in effect prohibited even members of the Dwesa-Cwebe communities from exercising any form of access to the marine resources. Section 43(2)(a) of the MLRA made it an offence for anyone to fish or attempt to fish in a marine protected area without the permission of the Minister responsible for environmental affairs. Nevertheless, after the regulatory framework was imposed members of the Dwesa-Cwebe communities continued exercising their customary right of access to the marine protected area and the Reserve.

In the meantime, the Dwesa-Cwebe communities lodged a land restitution claim in respect of what was referred to as the “Dwesa-Cwebe Nature Reserves”. That resulted in a settlement agreement between the claimant communities and the then Minister of Land Affairs in terms of which the claimed land would be restored to the claimant communities. The settlement agreement excluded the marine protected area from its ambit, but confirmed that the communities should have access to sea and forest resources, based upon the principle of sustainable utilisation as permitted by law.

The appeal related to criminal proceedings in terms of which the appellants were convicted of attempting to fish in the marine protected area without permission. Apart from appealing the finding that they were guilty of a contravention of the offence in question, the appellants, together with other members of the Dwesa-Cwebe communities, also launched proceedings seeking an order reviewing and setting-aside the decision to declare the marine protected area on a strictly “no-take” basis.

Held – In considering the appeal, the question to be addressed was whether proof of the existence of the customary right of access to marine resources negated

unlawfulness on a charge under the MLRA. The appellants contended that the MLRA, which did not recognise the appellants’ customary fishing rights, had not extinguished those rights. They argued that customary law conferred on them the necessary authority to fish in the marine protected area without a permit. The Court held it to be unlikely that a law of general application aimed at preserving and protecting marine living resources for the benefit of all, had the effect of jettisoning (and not preserving) the customary rights that had been exercised by traditional communities. Upon a proper reading of the relevant provisions of the MLRA nothing prevented the appellants from seeking exemption on the basis that in terms of customary law such permit was not required. The appellants had not sought the exemption before setting out to fish, rendering their conduct unlawful.

The Court then turned to consider the appellants’ alternative submission that section 43(2)(a) of the MLRA was inconsistent with the Constitution and invalid to the extent that it did not recognise existing customary law rights of access to marine resources and criminalised the exercise of customary law rights that had never been extinguished in circumstances that would satisfy the Constitution. It was held that section 43 was not unconstitutional for not permitting the recognition of customary law rights of access to marine resources.

There being no merit in the appeal, the Court was left to consider the review application. The applicants’ principal complaint in relation to the marine protected area decision was that they were not consulted at all when the impugned declaration was made. They contended that the decision is reviewable on the grounds that it was procedurally unfair; unreasonable and irrational; inconsistent with sections 30, 31, 39(3) and 211 of the Constitution; and inconsistent with the right to environmental justice and equitable access to natural resources. It is trite law that whilst the validity of the administrative act is generally challenged by way of judicial review, such challenge may arise not by the initiation of the proceedings, but by way of a defence, as a collateral issue, in a claim for the enforcement of a private law right. The review application in this matter was found not to constitute a collateral challenge.

The problem which the applicants in the review application did face was that of undue delay in seeking review. Section 7(1)(b) of the Promotion of Administrative Justice Act 3 of 2000 makes it incumbent on a person bent on challenging an administrative action on review under the Act to resort to such proceedings without unreasonable delay and not later than 180 days after the date on which the person concerned was informed of the administrative action. The review application in this case was brought some 13 years after the decision to which it related was made. The Court had to decide whether such delay should be condoned. Finding that the interests of justice did not favour the grant of condonation, the Court upheld the plea of undue delay.

As a result, both the appeal and the review application failed.

Singh and another v Mount Edgecombe Country Club Estate Management Association 2 (RF) NPC and others [2016] 2 All SA 218 (KZD)

Motion proceedings – Dispute of fact – Where disputes of fact have arisen in motion proceedings, a final order, whether it be an interdict or some other form of relief, may be granted if those facts averred by the applicant, which have been admitted by the respondent, together with the facts alleged by the respondent, justify such an order.

Contract – Residential estate rules – Lawfulness – Where rules were agreed to by all the residents of the estate, and were not contrary to public policy, they had to be given effect to.

Spoliation-Incorporeal rights – Possession of incorporeal rights is protected against spoliation by the mandament – Mandament van spolie is not concerned with the protection or restoration of rights, but the restoration of the factual possession of which the spoliatus has been unlawfully deprived.

In three applications before the court, the conduct rules of the Mount Edgecombe Country Club Estate Management Association 2 (RF) (NPC) were challenged. For ease of reference, the court referred to the country club as “the respondent”. The first applicant in the first application was the applicant in the second and third applications, and was referred to simply as “the applicant” in the court’s judgment.

In the first application (“the rules application”), the two applicants sought an order declaring certain specified rules of the conduct rules to be declared unlawful and to be regarded as pro non scripto. The respondent instituted a counter-application in which it sought an order declaring that it was entitled to suspend the use of the access cards issued to the applicant, his invitees and members of his family, together with the biometric access for such persons, for as long as certain fines issued to him pursuant to the conduct rules had not been paid. In the second application (“the spoliation application”), the applicant sought confirmation of a rule nisi directing the respondent to reactivate his access cards and the biometric access of his family. In the third application (“the trespass application”), the applicant sought an order directing the respondent to allow certain contractors engaged by him access to the estate and a further order restraining the respondent, or any person acting through or with its instructions, from entering upon various specified immovable properties within the estate.

Held – The relationship between the applicants and the respondent had its foundation in contract and that contractual nature of the relationship between the parties had to provide the framework within which the application had to be decided.

Beginning with the rules application, the Court examined each of the impugned rules, and concluded that they could not be considered unlawful. Despite their restrictive and regimented nature, they could not be said to be contrary to public policy. Moreover, the rules had been agreed upon by all the residents of the estate. The rules therefore had to be given effect to.

Turning to the respondent’s counter-application, the Court noted that the applicant had put the commission of the breach of the conduct rules in issue. Where disputes of fact have arisen in motion proceedings, a final order, whether it be an interdict or some other form of relief, may be granted if those facts averred by the applicant, which have been admitted by the respondent, together with the facts alleged by the

respondent, justify such an order. The respondent fell at the first hurdle, as it failed to establish that the relevant rules were breached.

In the spoliation application, the applicant complained of the effect of deactivating his access cards and biometric access as he, and the members of his family, would not be able to enter the estate “as a resident”. The applicant was therefore contending for the illicit deprivation by the respondent of the exercising, or “quasi-possessio”, of his right to enter the estate in such capacity. The possession of incorporeal rights is protected against spoliation by the mandament. The mandament van spolie is not concerned with the protection or restoration of rights, but the restoration of the factual possession of which the spoliatus has been unlawfully deprived. What is protected by the remedy is the actual performance of acts, which if lawfully performed, would constitute the exercise of the right in question. Based on the evidence before it, the Court found that the respondent’s contention that it had legally suspended the applicant’s access cards and biometric access to the estate by operation of the provisions of its memorandum of incorporation and conduct rules was without merit. The applicant was, therefore, entitled to confirmation of the rule nisi.

Finally, the Court dismissed the trespass application, finding that the applicant had not established that there had been an “intrusion” onto his property by the respondent’s manager during the course of an inspection.

Van den Heever NO and others v Aon South Africa (Pty) Ltd [2016] 2 All SA 302 (GJ)

Special plea – Res judicata and issue estoppel – Requirements for res judicata – Common law requirements for res judicata are three-fold, viz same parties, same cause of action, same relief – Defendant failing to make out case – Special plea dismissed.

The present case focused on the principles attached to res judicata and issue estoppel. The special plea raised by the sole defendant in the present action (“AON”) stemmed from the fact that an action (“the first action”) was previously instituted under another case number in this Court. The present matter was referred to by the court as “the second action”.

The multiplicity of parties and their inter-relation made the factual background to the litigation complicated. Suffice to say that in the first action, the plaintiffs were the three liquidators of a company (“PGH”). They instituted action to recover monies transferred out of PGH’s banking account and paid into the account of the second defendant (“Glenrand MIB”). The court found that they were entitled to judgment against the first defendant (“Glenrand MIB Financial Services” – a subsidiary of Glenrand MIB), and that there was a disposition of property which was without value. Before that court handed down judgment, a merger between Glenrand MIB and AON took effect. The merger resulted in AON being joined as an interested party to an appeal which was at that stage being pursued in the Supreme Court of Appeal (SCA). Once the SCA handed down judgment, the appointed liquidators of Glenrand MIB Financial Services (by then also liquidated) caused summons to be issued against AON in this Court (in the present or second action). In the particulars of

claim, the plaintiffs alleged that as AON had acquired Glenrand MIB in the merger referred to above, AON was liable for payment of the amount held by the court in the first action to be payable.

To that, AON raised a special plea that the plaintiffs were precluded by reason of the exceptio res iudicata vel litis finitae or issue estoppel, from pursuing the present action.

Held – The sole issue for determination by this Court was whether the special plea of res judicata and issue estoppel should be upheld or dismissed.

The party who raises res judicata must allege and prove all the elements based on the defence.

Referring to Amler’s “Precedents of Pleadings”, the court noted the statement of the law as being that the exceptio rei judicatae is based on the irrebuttable presumption that a final judgment on a claim submitted to a competent court is correct. This presumption is founded on public policy which requires that litigation should not be endless and on the requirement of good faith, which does not permit of the same things being demanded more than once. Reference was also made to case law, in which it was stated that the common law requirements for res judicata are three-fold, viz same parties, same cause of action, same relief.

In applying the legal principles to the facts of the instant matter, it became clear that the defendant had not met the requirements of res judicata and/or issue estoppel. A close scrutiny of the pleadings in the first action and the second action, with the concomitant comparison of the two, show that the plaintiffs in the second action were not plaintiffs in the first action. None of the other requirements of res judicata had been met. Although AON argued for the relaxation of the traditional requirements for a successful plea of res judicata, the Court found no reason to accede to that request.

The special plea was thus dismissed with costs.

Investec Bank Limited v 367\4 Nieuw Muckleneuk (Pty) Ltd and Others; In re: Investec Bank Limited v Swart and Others (38642/2011; 3811/2011) [2016] ZAGPPHC 244 (20 April 2016)

National Credit Act 34 of 2005-the loan agreement-notice section 129 of the Act.- admission of liability is pleaded-did not replace the credit transaction or agreement which is specifically pleaded both in the summons and declaration.

The loan agreement concluded on 6 July 2004 between the Plaintiff, Investec Bank Limited (Investec) and Erf 367\4 Nieuw Muckleneuk (Pty) Ltd (Muckleneuk) in respect of which the fourth defendant, Louis Gabriel Phillipus Swart (Swart) bound himself as a surety for the debt of Muckleneuk, became the subject of the dispute before me.

The dispute arises from the question whether the manner in which plaintiff (Investec) pleaded its cause of action made the provisions of the National Credit Act 34 of 2005 (the Act) applicable to the loan agreement in question and thus obliging Investec to give a notice of its intention to institute the present action as contemplated in section 129 of the Act.

Investec in its summons, inter alia, pleaded:

" The Plaintiff confirms that it has complied with the terms of Section 129, 130 and 86(10) of the National Credit Act, Act 34 of 2005 and as proof thereof the registered letters with proof of delivery thereof and directed at the Defendants are attached hereto as Annexure" , "G", "H", "/" and "J".

The Plaintiff further confirms that the First Defendant signed an admission of liability and offer to pay in terms of Section   57   of Act 32 of 1944 as well as consent to judgment and order for instalments in terms of Section 58 of Act 32 of 1944. These documents are attached hereto   as   Annexures "K" and "L".

The Plaintiff further confirms that at all relevant times the First, Second, Third, and Fifth Defendants were duly represented by the Fourth Defendant who was authorised to act on their behalf in terms .of Resolutions passed by each of the respective companies in this regard. Copies of these Resolutions are attached hereto as Annexure "M", and "N" "O", and "P".

Based on the pleaded admission of liability, consent to judgment and offer to pay, counsel for Swart contended that the provisions of the Act have been made applicable to the agreement. I understood this to suggest that the loan agreement which was not subject to the provisions of the Act have been made to be so applicable by having pleaded admission of liability, consent to judgment and offer to pay in the liquidation of the debt.

The submission was made without any evidence being led. For the following reasons, I cannot agree with the submission:

It was made clear in paragraph 37.2 of the declaration that an admission of liability and offer by Swart did not constitute novation of the existing agreement between the parties.

The loan agreement, suretyship and covering mortgage bond executed on 11 March 2005 under bond number 8032937/05 were pleaded in the declaration.

Section 4 deals the application of the Act and insofar as it might still be relevant to the issue whether the loan agreement is a credit agreement that falls to be dealt with in terms of section 129 of the Act or not, I deal with the issue as follows: Section 129 deals with the procedures required to be followed before institution of legal proceedings based on a credit agreement. Subsection (1) (a) thereof provides that if the consumer is in default under a credit agreement, a credit provider may draw the default to the notice of the consumer in writing and propose that the consumer refer the credit agreement to a debt counsellor, alternative dispute resolution agent, consumer court or ombudsman with jurisdiction, with the intent that the parties resolve any dispute under the agreement or develop and agree on a plan to bring payment under the agreement up to date and (b) (i) (a) creditor provider may not commence any legal proceedings to enforce the agreement before first having provided such a notice to the consumer.

Based on the provisions of section 129, the contention that section 129 is applicable to the loan agreement under consideration, must be seen in the context of the provisions of section 4 of the Act. The provisions of the Act, are in terms of section 4 applicable to every credit agreement except inter alia, where the consumer is a juristic person whose asset value or annual turnover, together with the combined asset value or annual turnover of all related juristic persons, at the time of the agreement is made, equals or exceeds the threshold value determined by the Minister in terms of section 7(1) or in terms of subsection (1) (b) if a large agreement as described in section 9(4), in terms of which the consumer is a juristic person whose asset value or annual turnover is, at the time the agreement is made, below the threshold value determined by Minister in terms of section 7(1).

Counsel for Investec strongly argued that the loan agreement was a large agreement, as envisaged in section 4(1) (b) and as such did not fall to be dealt with in terms of Section 129. Swart did not appear to differ in this regard.

I must immediately say, whilst admission of liability is pleaded, that, in my view, was superfluous in that, it did not replace the credit transaction or agreement which is specifically pleaded both in the summons and declaration. Therefore, to seek to rely on the pleaded admission of liability and thus find an application of the provisions of the Act, in my view, amount to taking technical issues which have no significant bearing on the plaintiff s main cause of action based on the loan agreement.

Section 8 of Part C deals with the classifications and categories of credit agreements. It is not clear from the quotations above whether the applicability of sectioning 8(1) (a) and 8(4) of the Act as suggested in paragraph 11 of the quotation refers to the admission of liability and attached as Annexure "T" or to the loan agreement. In the preceding paragraphs of the judgment, I dealt with the reasons why the provisions of the Act are not applicable to the loan agreement and why the pleaded admissions of liability did not replace the loan agreement and the covering mortgage bond.

Consequently an order is hereby made as follows:

14.1. Judgment is granted under case number 38642\2011 against the fourth defendant, Mr Louis Gabriel Phillipus Swart in the sum of R1 207 482.43.

14.2. Interest on the amount of R1 207 482.43 at the rate of 8% per annum calculated from 14 April 2011 to date of final payment.

14.3. Costs of suit on attorney and client scale.

14.4. Case number 38811/11 is postponed sine die to enable the plaintiff in that case to give a notice as envisaged in section 129 of the Act within 14 days from date hereof and costs in the case aforesaid reserved.

Nedbank Limited v Fredericks (1483/2011) [2016] ZAGPJHC 71 (7 April 2016)

Surety- certificate of balance-value of the equipment - breached an implied duty to mitigate its loss- plaintiff’s claims are dismissed with costs.

This judgment follows on the trial of an action in which the plaintiff, a bank, claims R356 687.41 from the defendant, a businessman, who is the surety of the plaintiff’s debtor. The debtor, a company, was liquidated on 6 April 2010, and the defendant

was one of its shareholders and directors. The amount due and owing by the debtor to the plaintiff is common cause. It is R856 687.41, and it is also common cause that this arises from an instalment sale agreement (“ISA”) whereby the plaintiff sold the equipment to the debtor, the first instalment of which was payable on 1 September 2008 and the final instalment three years later on 1 August 2011. The debtor had defaulted in respect of five instalments before being wound up at the instance of third party creditors.

Whether the plaintiff’s case, which involved crediting the defendant with the value of the equipment, must be viewed as being for specific performance of the rental payment obligation (with what would then be a gratuitous credit of the value of the equipment), or instead as being for contractual liquidated damages following cancelation and repossession, seems to matter not. Either way, the parties are agreed that the value of the equipment properly became an issue in the trial. They were agreed too that the date on which the plaintiff’s damages, if any, are to be reckoned is 6 April, 2010, the date of liquidation.

Although the pleadings ranged further, after the submissions at the end of the trial had been concluded, there remained really three central issues for determination. The first was whether the plaintiff’s reliance on a certificate of balance was justified; the second, whether the value of the equipment exceeded or fell short of the outstanding balance; and the third, if the value fell short of the outstanding balance and the defendant thus became liable to pay that difference, whether the plaintiff breached an implied duty to mitigate its loss. I deal with these in turn.

The certificate of balance

The clause in the suretyship agreement relied upon by the plaintiff for the legitimacy of exh D, is clause 6: “The nature and amount of my obligation, as well as the interest rate applicable in respect thereof, shall be determined and proved by a certificate purporting to have been signed by a manager or accountant for the time being of any branch or the head office of Nedbank, whose capacity or authority it will not be necessary to prove (or any other form of evidence contemplated in section 169  (3) of the National Credit Act, 2005, if applicable). This certificate or other form of evidence, as the case may be, will upon the mere production thereof be binding on me and be proof of the contents of such certificate on the face of it and of the fact that such amount is due and payable in any legal proceedings against me, and will be valid as a liquid document against me in any competent court.”

The court held that where the certificate was authored by an independent third party, that was different, and was permissible. But where, as in that case, and also in the present case, the certificate was to be authored by the other contracting party, the objection applied.

On the basis then of Abstein, clause 6 of the suretyship, as it stands, is invalid. The Abstein court was not asked to decide whether there was scope for the court to sever the objectionable part of the clause from its unobjectionable part, thereby to preserve for the clause some degree of enforceable legitimacy. In particular, the question arises whether a court would have the power to apply such a clause,

despite its express meaning, in a way that curtails its express effect, such as meaning that such a certificate would simply be prima facie evidence of its contents?

Sasfin held that the court did have the power, under the principle of severability, within an instrument as a whole to sever the objectionable clauses from those that were unobjectionable, thereby preserving the enforceability of the balance of the instrumentWhether this power should be exercised in a particular instance would depend on the intention of the parties and, in particular, whether it could be said that that which would remain after severance would still represent that which the parties had agreed upon.

contain words that indicate the final and binding nature of the certificate: in the first

In the result, I am afraid that in this case the judicial pen stops after the downward stroke whereby the clause was deleted. Nothing can come in its place. Consequently I find that clause of the suretyship is invalid and unenforceable.

That is not the end of the plaintiff’s case. The amount outstanding was common cause; the fact that the value of the equipment had to be credited to that amount was common cause; and that the equipment did have some value as at date of liquidation, was common cause. The only final impact of the finding concerning the certificate, is that the interest rate has not been proved.

A court is not bound by what experts have agreed; it has to be persuaded of the intrinsic validity of the reasoning they advance. In this instance one has the evidence of the defendant’s expert who valued the equipment before litigation was on the radar screen, at a market value of R3,5m and a fire-sale value of R1,5m, on 12 January 2010. He inspected the equipment at the time, and took photographs of it. He explained that he had assumed a willing buyer and seller, and that the values were net of removal costs.

The value that he agreed to six years later with the plaintiff’s expert for the equipment as of 6 April 2010, had allowed for a reduction from R1,5m to R1,2m in situ, fully operational.

The court did not receive evidence of comparable sales, which is the usual standard if there is a market for the item. But there may not be a market for this item in the usual sense, and in any event, the witness’ expertise and thus his qualifications to express his opinion were not attacked.

In consequence my finding is that the value of the equipment as of 6 April 2010 was no less than R1m, in dismantled form; and, at best of the plaintiff, R860 000. Since either value exceeds the balance owing to the plaintiff, the defendant does not owe the plaintiff any money, and the claim must be dismissed.

Had I concluded that the value of the equipment was less than the outstanding balance, I would have had to consider the third issue, being whether the plaintiff was obliged to have accepted the defendant’s offer to borrow money from the plaintiff to buy the equipment. I record the view I would have taken, albeit that it is obiter.

The defendant has the onus to prove that the plaintiff has failed by reasonable action to mitigate its loss. It is accepted that the onus is difficult to discharge. In my view the defendant has not discharged that onus. The defendant suggested that the plaintiff should have accepted his offer to enter into a fresh financing agreement with the defendant, whereby the outstanding balance of the debt owed by the principal debtor would have been financed. The plaintiff did not respond to that offer.

However, the plaintiff would have been rightly put off by the fact that the defendant was a director and shareholder of the very debtor that went insolvent in the first place. The defendant said in his evidence that he was good for the commitment, but in my view, having regard to the immediate history of the liquidation of the principal debtor, he was required to have gone further. He would have had to have shown why it was unreasonable of the plaintiff to have declined to lend him money. I do not suggest that that would have been an impossible row to hoe, but it certainly, in my view, would have been difficult. In view of my conclusion on value, this issue does not arise.

[45]    In the result I make the following order: The plaintiff’s claims are dismissed with costs.

Foxlake Investments v Ultimate Raft Foundation Design (144/15) [2016] ZASCA 54 (01 April 2016)

Particulars of claim-an order amending the incorrect description of a defendant in a summons does not amount to a substitution of the defendant where the summons was served at the offices and on the director shared by the incorrectly cited party and the true defendant who was clearly recognisable from the original summons – original summons complied with the requirements of s 15(1) of the Prescription Act 68 of 1969 and service thereof interrupted running of prescription.

The factual background of the appeal is briefly as follows. Foxway Developments (Pty) Ltd (Foxway) and Foxlake Investments (Pty) Ltd (Foxlake) share the same registered address, principal place of business, contact details, receptionist and managing director, namely Mr R Henry. The respondents instituted the action against the appellant on 13 July 2012. In the particulars of claim the respondents cited the appellant as follows:

‘4. Foxlake Investments (Pty) Ltd t/a Foxway Developments (Pty) Ltd, a company duly registered and incorporated in terms of the company laws of the Republic of South Africa under registration number 1970/012838/07 with its principal place of business.  . . .’

The particulars of claim further alleges that Foxlake Investments (Pty) Ltd t/a Foxway Developments (Pty) Ltd entered into an agreement with the respondents in terms of which the appellant appointed the first respondent as a consulting engineer on the Boitekong project.

[4] The copy of the agreement between the parties was attached to the particulars of claim. The agreement indicates that the first respondent entered into an agreement

with Foxway. The street address, fax number and name of the managing director of Foxway are indicated on the agreement.

[5] On 31 August 2012, the appellant raised an exception to the particulars of claim. The notice of exception the relevant part of which reads as follows:

‘2. Ex facie the contents of the agreement, attached to the plaintiff’s particulars of claim . . . the first defendant is not a party to the agreement as alleged.

3. Accordingly, no cause of action lies against the first defendant in that:

3.1 the contracting parties are reflected as the first plaintiff and Foxway Developments (Pty) Ltd;

3.2 Foxlake Investments (Pty) Ltd with registration number 1970/012838/07 is a separate legal entity that does not trade as Foxway Developments (Pty) Ltd.

3.3 Foxway Developments (Pty) Ltd with registration number 1968/006089/07 is a separate legal entity and is not a trading Division of Foxlake Investments (Pty) Ltd.’

[6] Upon receipt of the notice of exception the respondents elected to amend the citation of the appellant as reflected in paragraph 4 of the particulars of claim by substituting the word ‘trading as’ with the word ‘alternatively’ and by deleting the words ‘under registration number 1970/012838/07.’ Once this was effected paragraph 4 of the particulars of claim would have read as follows:

‘The first defendant is Foxlake Investments (Pty) Ltd alternatively Foxway Developments (Pty) Ltd a company duly registered and incorporated in terms of the company laws of the Republic of South Africa with its principal place of business. . .

[7] After the amended pages were served on the appellants, they filed another notice of exception which reads in relevant part as follows:

‘7. The plaintiffs alleged in their particulars of claim that the first defendant ie, Foxlake Investments (Pty) Ltd alternatively Foxway Developments (Pty) Ltd entered into an agreement with the first plaintiff in terms of which the first defendant has appointed the first plaintiff as consulting engineer on their Boitekong Project. . . .

8. Ex facie the contents of the agreement attached to the plaintiffs’ particulars of claim. . .  Foxlake Investments (Pty) Ltd is not a party to the agreement.’

[8] On 20 August 2013 the respondents filed a notice of amendment  seeking to amend paragraph 4 of their particulars of claim which, at that stage, cited the first defendant as Foxlake alternatively Foxway. The amendments sought by the respondents were directed at the deletion of the words ‘Foxlake Investments (Pty) Ltd alternatively’ from their particulars of claim thereby citing Foxway as the first defendant. The appellants did not oppose the proposed amendment.

[9] In argument before us the appellant’s counsel submitted that the amendment which the respondents sought in the court below was directed at the deletion of the words ‘Foxlake Investments (Pty) Ltd alternatively’ from the summons and the particulars of claim, that it sought to introduce Foxway – a separate legal entity – as the first defendant and that the summons were never served on Foxway. He further submitted that the proposed amendment sought to introduce Foxway as a party to the action in  circumstances where the alleged claim against Foxway had, in terms of s 15 of the Prescription Act 68 of 1969 (the Act) prescribed.

[10] On the other hand, the respondents’ counsel in this court submitted that Foxway appeared on the initial summons and particulars of claim, and that the amendment only sought the deletion of Foxlake so as to leave Foxway as the sole first defendant. He further argued that the proposed amendment did not seek to introduce a new legal entity and that the amendment was in the nature of correcting a misnomer  rather than a substitution.

Amendment allowed.

First National Bank v Scenematic One (Pty) Ltd (20832/2014) ZASCA 60 (14 April 2016)

Prescription – application of ss 11 and 12(3) of the Prescription Act 68 of 1969 – claim to recover sum of money deducted through unauthorised debit order payments – appeals in respect of the special pleas of prescription dismissed.

The first appellant (FNB) was the respondent’s banker. The respondent, Scenematic (Pty) Ltd (Scenematic) is a manufacturing company that constructs various steel items and components. To that end it requires specialist equipment which it purchases using finance provided by Wesbank, also a division of FirstRand Bank Limited. At material times Naude was a director and employee of Scenematic. It is undisputed that on 22 May 2007 Naude entered into an instalment sale agreement (the agreement) in his own name with Wesbank, for the purchase of a Mitsubishi Pajero motor vehicle. It is not in dispute that the actions of Wesbank may be attributed to FNB.

[3] In terms of the agreement, the vehicle would be financed by Wesbank over a period of 46 months commencing on 2 July 2007 and ending on 21 May 2011. A typescript cheque bank account number belonging to Naude was initially reflected on the agreement. Before signature of the agreement, Naude struck out the typescript account number and replaced it with Scenematic’s bank account number [6.........] in manuscript. Thereafter Naude initialled the amendment and then signed the agreement. The purpose for which the bank account number was entered in the agreement was to enable Wesbank to draw the monthly instalment repayment through debit orders from Scenematic’s bank account with FNB. It is necessary to record that in the agreement, under the heading ‘ERKENNINGS’ which translated means ‘acknowledgments

In relation to the question whether Scenematic failed to exercise reasonable care in checking to see whether the debit orders were indeed authorised each time its bank account was debited – a question connected to the provisions of s 12(3) of the Act – the following parts of the judgment of the court below are relevant (paras 17-18):

‘I find Mr [Annandale’s] explanation for the failure of his staff to establish the origin of the debits as soon as they were reflected on the bank statements plausible. In the context of the huge amounts debited to the account monthly, these debits were relatively insignificant. Although the plaintiff’s staff may not be entirely blameless, I cannot find that their failure to investigate the debits was so unreasonable that it can be said that the plaintiff had not exercised reasonable care.

I am, however, not impressed with the explanations of Mr Annandale and Ms Annandale for the plaintiff’s failure to find the cause of the debits when the auditor requested them to find the source documents. The efforts of Ms Annandale to establish from Wesbank the origin of the debits were half-hearted to say the least. However, that is irrelevant. The auditor requested the documents during August or September 2008. That is the date from which prescription ran. That is less than three years before summons was issued.’

Hiemstra AJ concluded that the plaintiff’s claim had not prescribed. SCA agreed and appeal dismissed.

Off-Beat Holiday Club v Sanbonani Holiday Spa (20231/2014) [2016] ZASCA 62 (25 April 2016)

Prescription – extinctive prescription – whether claims brought by minority shareholders under ss 252 and 266 of the Companies Act 61 of 1973 constitute ‘debts’ as envisaged in s 10 of the Prescription Act 68 of 1969 and are susceptible to prescription – whether s 13(1)(e) of the Prescription Act insulates a claim brought under s 266 of the Companies Act from prescription.

That the claim in the present case is the claim of the company and not of its shareholders has been made abundantly clear in Johnson v Gore Wood[63] in which Lord Bingham, in a passage subsequently quoted with approval in this court,[64] said:

‘Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. No action lies at the suit of a shareholder suing in that capacity and no other to make good a diminution in the value of the shareholder’s shareholding where that merely reflects the loss suffered by the company. A claim will not lie by a shareholder to make good a loss which would be made good if the company’s assets were replenished through action against the party responsible for the loss, even if the company, acting through its constitutional organs, has declined or failed to make good that loss.’[65]

[60] Consequently the derivative action the appellants seek to bring under the section must be distinguished from any personal action they might have to enforce a debt owed to them. It is brought not to recover damages suffered by the shareholders due to the wrongs of a director but damages suffered by the company itself.

[61] For this reason, in regard to the issue of prescription of a claim under s 266, it would be wrong to regard the shareholder as effectively being the creditor and the company the debtor in respect of the claim. At all times the company remains the creditor and the delinquent director the debtor. All the section does is to allow the shareholder to bring the claim on behalf of the company.  And as long as that claim exists it may be enforced, either by the company itself or by an aggrieved shareholder acting under s 266.

[62] In these circumstances, for these reasons alone, as Shareblock’s claim against Mr Harri has not prescribed, the appellants are entitled to invoke s 266 to enforce it on behalf of the company. In my view this conclusion, in itself, renders it

unnecessary to consider whether my learned colleagues are correct in their conclusion that no obligation or liability arises until the court acts under s 266 to authorise the curator to institute proceedings in the name of the company and on the company’s behalf. I do not necessarily disagree with that conclusion; I merely find it unnecessary to deal therewith. On all the remaining issues we are ad idem.

KwaZulu-Natal Law Society v Debba and Another (5112/15) [2016] ZAKZPHC 35 (25 April 2016)

Attorneys Act 53 of 1979- suspend practice in terms of s 22(1)(d) - inspection committee- books of accounts-show withdrawals from trust account - justified as trust transactions- application for the suspension of the first respondent is dismissed with costs, such costs to include the costs of two counsel where so employed.

Motion applications- founding affidavit filed by the applicant is hopelessly flawed in the respect that it fails to disclose the cause of action that entitles the applicant to the relief sought- application for the suspension of the first respondent is dismissed with costs, such costs to include the costs of two counsel where so employed.

Two applications served before us, a condonation application and the main application. We have considered it necessary to hear both of the applications at the same time since no useful purpose could be served by hearing them separately.  The main application is an application to suspend the first respondent from practice in terms of s 22(1)(d) of the Attorneys Act 53 of 1979 (hereinafter referred to as ‘the Act’). The ancillary relief is set out in the notice of motion.

The first respondent, Ajay Brijlall Debba, an admitted attorney of this court practiced for his own account under the name and style A Debba and Associates. For ease of reference he shall be referred to as the respondent. There is a history to this application. He was provisionally suspended on 16 November 2011 and on 3 December 2013, both times the suspensions were uplifted.

The applicant based its application on three grounds. The first ground relates to a conveyancing transaction and the respondent’s handling of same. The second ground was a complaint lodged by a client that was involved in a road accident, the complaint relates to the respondent’s lack of professional conduct. The third ground is that the respondent has failed to present to the inspection committee all his books of accounts to show that the withdrawals from his trust account were justified as trust transactions.

The jurisprudence as it has developed shows that applications for the suspension or removal from the roll of an attorney require a three-stage enquiry. Firstly, the court has to conduct a factual enquiry and determine whether the alleged offending conduct has been established. Secondly, it must consider whether the person concerned is in the discretion of the court a person not fit and proper to continue to practice. Thirdly, the court must enquire whether in all the circumstances the person

concerned is to be removed from the roll of attorneys or whether an order of suspension from practice would suffice. 

It follows that the principles of adjectival law, whether expressed in the Rules of Court or otherwise, are necessarily flexible. Unfortunately this concomitant brings in its train the opportunity for unscrupulous litigants and those who would wish to delay or deny justice to so manipulate the Courts’ procedures that their true purpose is frustrated.  Courts must be ever vigilant against this and other types of abuse. What is more important is that the Court’s officers, and especially its attorneys, have an equally sacred duty. Whatever the temptation or provocation, they must not lend themselves to the propagation of this evil, and so allow the administration of justice to fall into disrepute. Nothing less is expected of them, and if they do not measure up a Court will mark its disapproval either by an appropriate order as to costs against the defaulting practitioner or, in a proper case, by referring the matter to the Law Society for disciplinary action.’

Mr Chetty has conceded that the replying affidavit was filed out of time due to the fact that the applicant encountered problems in obtaining the further affidavits from the relevant complainants. In light of his earlier concession that none of those affidavits should have been filed without the permission of the court leads to the irresistible conclusion that no good cause has been shown by the applicant for not adhering to the order of 11 June 2015. I am not persuaded on the papers that condonation should be granted and accordingly, the matter is decided without consideration of those affidavits that were filed without permission of this court. To condone such late filing would mean that this court is condoning an irregular step without a justifiable reason.

What is disconcerting is that the applicant as the upper guardian of the ethics of the law profession would demonstrate such disregard for the Uniform Rules of Court. Moreover, the applicant as the custos morum of the legal profession practicing at the side Bar should at all times set an example, especially in instances where it acts as the regulatory body of the law profession. This court is very much aware of its duty to the public at large to protect them from professionals who do not act with the utmost integrity and respect for their strict ethical code. It is necessary with the aforesaid in mind that it is expected of the applicant to have acted with due process and fairness in regulating the conduct of the respondent. There has been an inordinate delay in investigating the conduct of the respondent and conducting an enquiry in terms of the Act. Had the applicant followed an internal enquiry then sufficient information could have been collected to bring an application for the respondent’s suspension.

The application is procedurally flawed. The founding affidavit fails to make out a case for the relief sought. The applicant has not succeeded in its burden of proof and accordingly the application fails.

[18] This brings me to the issue of costs. Mr Chetty has asked that the applicant not be penalised for fulfilling its obligation as a regulatory body. Mr Aboobaker SC has asked that this court impose a punative costs order for the following reasons:

(i) The applicant has brought a wholly deficient case before court;

(ii) It has acted precipitately without having regard to its own rules and the provision of ss 70 and 71 of the Act;

(iii) The applicant was forewarned of the difficulties associated with the application and persisted nonetheless;

(iv) There has been gross incompetence on the part of the Law Society.

[19] I have carefully considered the reasons listed by Mr Aboobaker and am of the view that the applicant has been penalised in that the court has disallowed those affidavits, filed without the necessary permission of the court. To order a punative costs order in these circumstances would result in the applicant being penalised twice for the same mistake. For this very reason I consider it unnecessary to make a separate costs order regarding the condonation application. Both applications are so intertwined that it cannot be separated from each other.

(a)  The application for condonation is refused. (b)  The application for the suspension of the first respondent is dismissed with costs, such costs to include the costs of two counsel where so employed.

Imperial Group (Pty) Ltd t/a Cargo Motors Klerksdorp v Dipico and Others (1260/2015) [2016] ZANCHC 1 (1 April 2016)

National Credit Act, 34 of 2005- of s 148(2)(a)- review and set aside the decision of Adv EJP Kammies, the Chairperson of the Northern Cape Consumer Court (NCCC),

This is an application in terms of s 148(2)(a) of the National Credit Act, 34 of 2005 (NCA), by Imperial Group (Pty) Ltd t/a as Cargo Motors Klerksdorp (Cargo Motors), to review and set aside the decision of Adv EJP Kammies, the Chairperson of the Northern Cape Consumer Court (NCCC), the second respondent, in refusing to grant condonation for the late filing of an appeal under Case number: 02/03/2014 at the NCCC and to substitute the Chairperson’s decision with an order in terms of which condonation is granted for the late filing of the appeal.

Around 14 April 2012 Cargo Motors, the applicant, and Mr Tebogo Leslie Dipico, the first respondent, entered into an agreement in terms of which Cargo Motors sold a Jeep Grand Cherokee vehicle to Mr Dipico who took delivery thereof. Pursuant thereto, Mr Dipico informed Cargo Motors, telephonically and by means of an e-mail, that the vehicle overheated and returned it to the merchant who, around 25 April 2012, undertook to replace it with a prototype Jeep Grand Cherokee. A new offer to purchase was concluded. Thereafter Mr Dipico and Wesbank, a Division of FirstRand Bank Limited, entered into a large instalment sale agreement in terms of which Wesbank financed the vehicle.

On 26 April 2012 Mr Dipico took delivery of the prototype which, according to him, also malfunctioned around 27 April 2012. He delivered it to the merchant for inspection and repair. Although gainsaid by the merchant, Mr Dipico allege that the vehicle was not suitable for its general intended purpose; not of good quality; not in

good working order; not free of any defect; and not usable and durable for a reasonable period of time. On 29 April 2012 Mr Dipico forwarded an email to the sales manager of Cargo Motors informing him that he was cancelling the transaction and returning the vehicle but the latter was not amenable to the cancellation. Mr Dipico nevertheless effected restitution on 30 April 2012. 

The grounds of review may be summarised as follows:

14.1 The court a quo (the Chairperson) failed to take into account the material facts before him and the legal principles;

14.2 The court a quo failed to give consideration to all the factors applicable in the evaluation of an application for condonation, inter alia, the importance of the case. The issues raised on appeal related to new legislation which required the Court’s interpretation to lend legal certainty thereto.

14.3 There is no rational connection between the facts and the finding arrived at by the court a quo.

14.4 Lastly, that the court a quo did not have jurisdiction to entertain the dispute: Firstly, because Cargo Motor’s business is situated outside the jurisdiction of the NCCC and secondly, the sale agreement, to which the dispute relates, was concluded outside the court’s territorial boundaries.

On a plain reading of s 69(b) a consumer may seek to enforce any right in terms of the CPA or in terms of a transaction or agreement, or otherwise resolve any dispute with a supplier, by: (1) referring the matter directly to the Tribunal, if such a direct referral is permitted by the Act in the case of the particular dispute; (2) referring the matter to the applicable ombud with jurisdiction, if the supplier is subject to the jurisdiction of any such ombud. If the supplier is not subject to the jurisdiction of any such an ombud the consumer has various alternative dispute resolution mechanisms set out in Section 69(c). I say this because the word “or” in s 69(c) postulates that interpretation. Put differently, the word “or” points to alternative dispute resolution structures available to the consumer, which are mutually exclusive or disjunctive as opposed to conjunctive.

[30] In my view, it could never have been the intention of the legislature that consumers subject to the ombud with jurisdiction are denied access to various other dispute resolution mechanisms accorded to other consumers. Such a construction would not be in conformity with the purpose of the CPA which, as already mentioned, is to provide for an accessible, consistent, harmonised, effective and efficient system of redress for consumers. I am of the view that had the legislature intended that a particular category of consumers submit to the jurisdiction of a specific dispute resolution forum only it would have expressly said so.

 

[[43] On the whole, insofar as the Chairperson expressed his doubt that the appeal had no reasonable prospects of success, he cannot be faulted. There is, in my view, a rational connection between the ultimate decision he arrived at and the material

before him. The corollary of this is that the review application must fail. Costs are to follow the result.

The Review Application is dismissed with costs.

Herrie Windsor Construction (Pty) Ltd v Raubenheimers Inc (7533/2015, H245/2013) [2016] ZAWCHC 47 (22 April 2016)

Attorney- Legal advice-to a non-client has a potential to expose the legal practitioner concerned to liability should the non-client act to its detriment following that advice. 

 Legal advice by a legal practitioner to a non-client has a potential to expose the legal practitioner concerned to liability should the non-client act to its detriment following that advice.  However, in order to attract liability, it will have to be established in respect of the legal practitioner concerned that it owed the non-client a legal obligation to act reasonably and, in particular, a duty not to make a negligent representation.  In this judgment I find that a legal practitioner is liable to a non-client on the basis of failure to act reasonably and on the basis of negligent representations which, in itself, constitutes a basis for liability. 

The determination whether in a specific case the defendant will be held liable to a third person not in privity is a matter of policy and involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff would suffer injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct and the policy of preventing future harm.”

 Basil Wunsh, in an article published in Tydskrif vir die Suid-Afrikaanse Reg at p58-59, opines that there is no conceptual obstacle in our law to an attorney being held liable in delict to a non-client for damages caused by negligence.  

In conclusion I find that the defendant is liable to the plaintiff for such damages the plaintiff may have suffered by reason of the fact that ownership of the equipment and the other movable goods in the then leased premises had not been transferred to the plaintiff.

Nkata v Firstrand Bank Limited and Others (CCT73/15) [2016] ZACC 12 (21 April 2016)

National Credit Act 34 of 2005 — section 129(3) — requirements for reinstatement of credit agreement — payment of credit provider’s reasonable costs of enforcement — credit provider unilaterally capitalised the costs in consumer’s bond account without demand of payment and taxation or agreement on reasonableness — costs not due and payable — reinstatement not precluded

The Constitutional Court handed down judgment in a matter concerning the interpretation of section 129(3) of the National Credit Act (the Act). This provision allows debtors who face legal action because of non-payment under a credit agreement to reinstate the credit agreement by paying all amounts that are overdue as well as the default charges and reasonable costs associated with enforcing the agreement.

In 2005 and 2006, FirstRand Bank Limited (Bank) provided Ms Nkata, a businesswoman living in the Western Cape, with mortgage finance to buy a house. A few years later, Ms Nkata ran into financial difficulty and fell behind on her payments. The Bank responded by taking legal action. First, it attempted to bring the default to Ms Nkata’s attention by way of notice under section 129(1) of the Act, but experienced difficulty finding the correct address. The Bank then applied to the Western Cape Division of the High Court, Cape Town (High Court) for default judgment. On 28 September 2010, the Registrar granted default judgment and authorised the Sheriff to attach and sell the house to recover the total outstanding debt.

The Bank and Ms Nkata later reached a settlement agreement. This delayed the sale of the house, subject to certain conditions. Ms Nkata caught up on her payments in March 2011 and applied, on an urgent basis, to rescind the default judgment against her, but the High Court refused her application. She fell behind on her payments again. Following numerous failed debt review applications, the Bank sold the house to a third party, Kraaifontein Eiendomme / Properties, on 23 April 2013.

Ms Nkata again approached the High Court for relief. She contended that by paying the outstanding debt in March 2011, she had reinstated the credit agreement. In January 2014, the High Court found in her favour. It ruled that the original credit agreement between Ms Nkata and the Bank had indeed been reinstated in March 2011. This prevented the Bank from selling her house. The sale of the house was therefore set aside.

The Bank appealed to the Supreme Court of Appeal. In March 2015 it reversed the High Court’s order and decided the case in the Bank’s favour. It held that Ms Nkata could not have reinstated her agreement, because her house had already been sold in execution.

In this Court, Ms Nkata again contended that her house should not have been sold because she successfully reinstated the credit agreement by paying the amounts owing in March 2011, in accordance with the Act. She further contended that she did not receive proper statutory notice of the default proceedings against her in 2010. The Bank contended that reinstatement did not occur because Ms Nkata failed to pay legal fees and other charges debited to her account, in addition to the amount she owed. In any event, the Bank contended that the credit agreement could not be reinstated after the default judgment and attachment in 2010.

The Socio-economic Rights Institute of South Africa (SERI) appeared as amicus curiae. It contended that the credit agreement was reinstated by operation of law before the house was sold.

The majority judgment, written by Moseneke DCJ (Jafta J, Khampepe J, Madlanga J, Nkabinde J, van der Westhuizen J and Zondo J concurring), held that the appeal against the Supreme Court of Appeal’s decision must succeed with costs. It reasoned that, because the constitutional values of fairness and equality inform the purposes of the Act, an interpretation of the Act should strike the appropriate balance

between the competing rights of the consumer and credit provider. The purpose of section 129(3), the majority held, is to encourage consumers to pay their overdue debts, default charges and legal costs. Consumers in good standing are rewarded with reinstatement of the credit agreement and the return of their attached property. The majority judgment held that Ms Nkata reinstated the credit agreement when she settled her bond arrears of R87 500 in full on 8 March 2011.

The majority judgment also held that the consumer is not compelled to give notice to, or seek the consent or cooperation of, the credit provider. The majority judgment further held that the consumer cannot be expected to take proactive steps to find out what legal costs need to be paid for reinstatement to take place. Nor can Ms Nkata be expected to initiate taxation on these costs or seek agreement with the credit provider on the quantification of these costs. The majority judgment held that the credit provider must take the necessary steps to recover the legal costs. These costs become due and payable only when they are reasonable, agreed or taxed, and on due notice to the consumer.

The majority judgment rejected the Bank’s contention that Ms Nkata’s right to reinstate the credit agreement was limited by the provisions of section 129(4) of the Act. Section 129(4) precludes a consumer from reinstating a credit agreement after the property has been sold pursuant to an attachment order. It also prevents a consumer from reinstating the credit agreement after the execution of any other court order enforcing that agreement or after cancellation of the credit agreement. The majority judgment found that, in this case, the sale in execution would not have prevented reinstatement because it took place in April 2013 – just over two years after Ms Nkata had cleared her arrears for the first time. Although the bonded property had been attached, no sale in execution occurred and no proceeds of the sale were realised at any time before she cleared her arrears in 2011. The majority judgment accordingly concluded that Ms Nkata was well within her rights to reinstate the credit agreement.

The minority judgment, written by Cameron J (Nugent AJ concurring), found that Ms Nkata had not reinstated the credit agreement. It reasoned that, by paying her arrears but not the Bank’s legal costs, Ms Nkata had failed to pay all of the amounts required by section 129(3) for reinstatement. The minority judgment disagreed with the majority judgment’s conclusion that, to recover costs, the Bank must take proactive steps – including demanding costs, establishing their reasonableness, and initiating taxation. The minority judgment instead found that the Act clearly puts the responsibility to pay all the outstanding amounts on the consumer; not the credit provider. This interpretation best gives effect to the plain language of the Act. And it strikes the balance between consumer and lender – a balance recognized by this Court’s jurisprudence as an important purpose of the Act. It concluded that the appeal must fail because the Act requires advanced payment, not postponed, incomplete or partial payment. The fact that the legal costs had not been presented to Ms Nkata, taxed by the Bank or agreed to by the parties, did not mean that Ms Nkata was no longer required to pay them.

In a separate judgment, Nugent AJ agreed with Cameron J that the appeal must fail. Like Cameron J, Nugent AJ disagreed with the majority judgment’s finding that section 129(3) requires the consumer to pay the legal costs only if they have been

demanded and taxed by the Bank. Nugent AJ found that the purpose of section 129(3) is to throw the consumer who has defaulted a lifeline and not to provide a remedy for banks to recover their costs. Nugent AJ also found expecting a bank to tax and demand costs each time such costs are incurred is impractical. Finally, Nugent AJ held that section 129(3) does not require payment of costs only if they have become payable at the time the section is invoked. The section itself makes them payable as a condition for reinstatement if they have been incurred. Nugent AJ accordingly agreed with Cameron J that Ms Nkata’s payment did not bring her within the protection of section 129(3) and that the order of the Supreme Court of Appeal was correct.

In a judgment concurring with the majority, Jafta J agreed with Moseneke DCJ that the appeal should be upheld and that the order of the Supreme Court of Appeal should be set aside. But he advanced additional reasons for his view. While he agreed that legal costs existed in fact, he disagreed that they constituted reasonable costs of enforcing the credit agreement. According to him, as a matter of law, no legal fees were due because the institution of the legal action without compliance with section 129(1) was irregular. Jafta J held that there was non-compliance because the Bank’s section 129(1) notice was served at an address different from the one appearing on the summons and the one Ms Nkata selected in the mortgage bond. As a result, the default judgment was a nullity because the Registrar had no power to grant it. Not only were the proceedings prohibited, but section 130(3) of the Act made the Court’s competence to adjudicate the matter dependent on the court first being satisfied that there was compliance with section 129(1). In Jafta J’s view, none of the submissions advanced by the Bank to counter the invalidity of the legal proceedings had merit.

Makate v Vodacom (Pty) Ltd (CCT52/15) [2016] ZACC 13 (26 April 2016)

Prescription Act 68  of 1969 - prescription-claim was not a debt as contemplated by the Prescription Act-claim had not prescribed-meaning of “debt”- section 39(2) of the Constitution-obligation on the courts to interpret statutes in a manner consistent with the Bill of Rights-a provision that limits a right in the Bill or Rights (in this case, the right to access the courts) is to be interpreted narrowly.

The Constitutional Court handed down judgment in a matter concerning the payment of compensation for an idea that was disclosed pursuant to an oral agreement.

The applicant, Mr Kenneth Nkosana Makate, was employed by the respondent, Vodacom (Pty) Limited (Vodacom), as a trainee accountant. In November 2000 he conceived the Please Call Me idea which he intended to sell to a willing buyer. After seeking advice from within Vodacom, he approached Mr Geissler, who at the time was Vodacom’s Director and Head of Product Development. They reached an oral agreement that Vodacom would experiment with the idea and, if it proved commercially viable, Mr Makate would be paid a share of proceeds from the product subject to terms to be negotiated between him and Mr Geissler. Vodacom implemented the idea in March 2001. After Mr Makate’s demands on Vodacom to honour the oral agreement were unsuccessful, he instituted a claim against Vodacom in July 2008 in the then South Gauteng High Court (High Court).

The High Court found that Mr Makate had proved that he had entered into an agreement with Mr Geissler. However, it dismissed the claim on the basis that Mr Makate did not plead the ostensible authority (the seeming or apparent authority) of Mr Geissler to contract on behalf of Vodacom, and further had failed to demonstrate that Mr Geissler had such authority. Additionally, it found that Mr Makate’s claim against Vodacom had prescribed. The Supreme Court of Appeal dismissed Mr Makate’s application for leave to appeal for lack of reasonable prospects of success.

Before this Court, Mr Makate argued that the High Court erred in finding that ostensible authority had not been pleaded and that any claim or debt owed by Vodacom had prescribed in 2004. He also argued that the High Court’s failure to determine his case on ostensible authority violated his right of access to courts. Vodacom claimed that no facts were pleaded in the High Court to support a case for ostensible authority and in any case, ostensible authority was not proved. Vodacom also argued that Mr Makate’s claim had prescribed.

In the majority judgment, written by Jafta J (Mogoeng CJ, Moseneke DCJ, Khampepe J, Matojane AJ, Nkabinde J and Zondo J concurring), this Court upheld the High Court’s finding that Mr Makate had entered into an agreement with Mr Geissler. The Court identified two main issues for determination: whether ostensible authority had been properly pleaded and established by Mr Makate; and whether his claim had prescribed.

This majority judgment held that the High Court adopted an incorrect approach to the pleadings. By holding that ostensible authority had not been pleaded, the High Court had conflated ostensible authority with estoppel. On application of the elements of ostensible authority to the facts, the majority judgment found that ostensible authority had been established. Given Mr Geissler’s position at Vodacom; the organisational structure within which he exercised his power; and his role in the process which had to be followed before a new product could be introduced at Vodacom, the judgment held that Mr Geissler had ostensible authority to bind Vodacom.

On the issue of prescription, the majority judgment held that because Mr Makate’s claim was not a debt as contemplated by the Prescription Act, the claim had not prescribed. The Court held that the meaning of “debt” had to be construed in light of section 39(2) of the Constitution, which imposes an obligation on the courts to interpret statutes in a manner consistent with the Bill of Rights. Thus, a provision that limits a right in the Bill or Rights (in this case, the right to access the courts) is to be interpreted narrowly. The majority judgment concluded that the High Court had incorrectly interpreted “debt” which did not extend to the present claim.

In a concurring judgment, Wallis AJ (Cameron J, Madlanga J and van der Westhuizen J concurring) agreed that Mr Makate was entitled to the relief in the majority judgment. The concurring judgment agreed that the key issue was whether Vodacom represented that Mr Geissler had authority to conclude the agreement with Mr Makate. However, it reached a different conclusion on the issue of ostensible authority.

Wallis AJ disagreed on the juristic nature of ostensible authority where there is no actual authority. He argued that it was settled law that ostensible authority was a form or instance of estoppel, which was why it was commonly referred to as agency by estoppel. Wallis AJ held that there are cases in which ostensible authority coincides with actual authority arising by implication, and where actual authority and ostensible authority would be two sides of the same coin. But this was a case where it was accepted that there was no authority at all, express or implied. That took it into the realm of estoppel.The concurring judgment then concluded that Mr Makate had to prove that Vodacom represented to him that Mr Geissler had the necessary authority to conclude the agreement for remuneration with him. It held that that the board represented to the world, including Mr Makate that Mr Geissler had authority to conclude such an agreement on behalf of the company. He may have had actual authority, but it was sufficient to say that it was represented that he had authority, in other words, ostensible authority. The consequence was that Mr Geissler had ostensible authority to conclude a contract with Mr Makate and Vodacom was estopped from denying that authority. It was bound by the contract Mr Geissler concluded on its behalf.

In the result, leave to appeal was granted and the application was upheld with costs.

Oelofsen NO and Another; In re: Oelofsen NO and Another v Bamboo Rock 1215 CC and Others (8949/16) [2016] ZAGPPHC 245 (21 April 2016)

Costs-Liquidators-ordered to pay costs de bonis propriis-omitted to divulge information to the court -uberrimae fides

Motion applicatios-Ex parte applications-material facts not disclosed-de boniis costs awarded

The applicants are joint provisional liquidators of the insolvent estate, Tradewell Investments (Pty) Ltd (Tradewell). About 26 days before the liquidation of Tradewell four immovable properties were transferred from Tradewell estate to Bamboo Rock. This was the catalyst of the liquidator's ex parte application who sought a caveat be registered over all four properties and instituted an action to set aside the said dispositions.

It is contended by the liquidators that no exchange of funds took place for the disposition of the properties. However, the first respondent states that the disposition was conducted in terms of a contract that was concluded between it and Tradewell even though no bonds were registered over the properties.

The first respondent submits that on 28 October 2013 it sold two properties to Tradewell for R7000 000.00 (seven million) excluding vat. Tradewell developed a Sectional Title Complex known as River View on these properties purchased. According to the sale agreement, between the first respondent and Tradewell, provision was made for the purchase price to be paid by means of the transfer of selected units, in River View, to the seller, the first respondent.

The first respondent submits that to the best of its knowledge this sale agreement was transmitted to the first applicant on 27 January 2016 by the attorneys

responsible for the transfer of the properties, Van Den Berg Attorneys. That being the case the first respondent contends that the sale agreement was in the hands of the applicant's when the ex parte order was sought. It is further contended, that the transfer of the units, in terms of the sale agreement, took place on 6 November 2015.

It is common cause that at the time that the applicant's launched their ex parte application they were well aware of the sale agreement and its contents.

The first respondent has persisted with the submission that the sale and transfer was in the ordinary course of business. Further, when the applicant's brought their ex parte application they had the duty of uberrimae tides  in presenting all the material facts, the terms of the sale agreement and together with a copy thereof before the court, as these were essential to consider for the decision to grant or not to grant the order sought.

There is one crisp issue before me and I am guided by the dictum in National Director of Public Prosecutions v Basson (2002) 2 All SA 255 at para [21]:

"[21] Where an order is sought ex parte  it is well established that the utmost good faith must be observed. All material facts must be disclosed which might influence a court in coming to its decision, and the withholding or suppression of material facts, by itself, entitles a court to set aside an order, even if the non-disclosure or suppression was not wilful or ma/a fide (Schlesinger v Schlesinger 1979 (4) SA 342 (W) at 348E - 349B)."

In addition to these paragraphs is the applicant's reply to the first respondent's contention that material facts were not placed before the presiding officer who heard the ex parte application, this the sale agreement was received by the applicants, that it was 'evident'  that more than the purchase price was paid for sale, in that over and above the transfer of the units, an amount of R2 703 000.00 was 'allegedly' paid as 'a partial payment'.

Further, that in their replying affidavit they allege that the contents of the agreement were brought to the attention of the presiding officer and ' disclose (d) the contents thereof to the above Honourable Court, in my founding affidavit'. That the contents of the sale agreement will be in dispute and this was the reason why a copy was not attached for the ex parte application.

In dealing with this matter, I am of the view that the applicants have conceded that they did not attach the sale agreement in the ex parte application as the contents thereof were going to be in dispute in an action to be instituted and as such was not provided to the presiding officer at the ex parte application.

Was it a material document that the presiding officer required to make an informed decision in granting of the order that was made? From the first applicant's own averments the contract was alluded to in the form of what Paul Moolman claimed and it was also stated that the contents of the agreement were brought to the attention of the presiding officer at the hearing. What I am not able to discern from the papers, is the applicant's disclosure on the papers of the contents of the agreement in the founding affidavit as submitted by the applicants in their replying affidavit, especially so in respect of the manner of the payment of the purchase price.

“On an examination of the facts, the date of sale, the terms of the sale agreement, especially as regards the manner of the payment of the purchase price, the date of the opening of the sectional title and the date of transfer of the units, all these point towards, to my view, an ordinary sale agreement in the course of the business of the first respondent.”

[24] The applicants themselves found it relevant to make a cursory mention of the 'claim' of the sale agreement and when called out on the said sale agreement, in this current application, they saw it fit to put up the sale agreement which was in their possession and they saw it fit to advise the court of its contents.

The aforesaid, to me, is an indication that the sale agreement and the contents thereof were recognised by the applicants as being material. The applicant's saw it fit to suppress and not disclose this material information when they moved the ex parte application. This amounts to the violation warned of in Schlesinger supra when moving an ex parte application.

The reason advanced for the suppression of the material fact of the sale agreement, that is, the contents were to be contested in an action to be instituted, is evident that the applicant acted in a mala fide manner in the non-disclosure. The presiding officer should have been apprised of all the facts in order to make an informed decision. As the matter stands before me the likelihood is that a different result would have emerged and the order sought by the applicants might not have been granted.

In the circumstances I conclude that in this instance an order setting aside the order granted by Lauw J on 9 February 2016 is warranted.

The fact that the applicants are liquidators, owing a duty to the estate that is being liquidated (Tradewell), does not give them carte blanch to flaunt the law and act in a mala fide fashion, all in the name of protecting the estate. All litigants have a duty to ensure they litigate in good faith, uberrimae fides.  If the applicant's suspected that this amounted to a dispossession and they had the necessary factors to back this up and refute the first respondent case, then what was wrong with being honest and upfront with the court?

The order of Lauw J of 9 February 2016 is reconsidered and set aside.

The applicant's, Jacobson Marthinus Oelofsen N.O and Lebogang Michael Moloto N.O, are ordered to pay the costs de bonis propriis on a party a party scale the one paying the other to be absolved.

Such costs are to include the employment of two counsels, one being senior counsel.

Osborne v Cockin and Others; Osborne v Cockin N.O. and Others (5618/2015, 6053/2015) [2016] ZAECGHC 19 (12 April 2016)

Anton Pillar order-return date-court to ascertain if order was necessasry

There are before me two applications.  In case no 5618/2015 applicant seeks confirmation of a Rule Nisi in terms whereof an interim interdict relating to certain cattle was granted, together with an Anton Piller Order relating to documentation and the furnishing of information in respect of the cattle. 

In case no 6053/2015 applicant seeks an order for the provisional sequestration of a Trust known as the Cockin Trust, IT/304/2007.  Because the issues in both applications are to a certain extent interlinked they were argued together, with Mr. Smuts S.C. appearing for the applicant in both applications and Mr. Paterson S.C. appearing for the various respondents in each case.

Applicant describes himself as a director of companies and a businessman.  He avers that during 2013 he and a certain Shaun Cockin who was trading as Cockin Partners, entered into an oral agreement in terms of which, inter alia, applicant’s cattle would graze on farms owned or controlled by Shaun Cockin; their progeny would be divided equally between them on a date to be agreed; Shaun Cockin would account to applicant on a monthly basis for the cattle and their progeny; and applicant would retain ownership of the cattle.

For purposes of convenience I will refer to Shaun Cockin hereunder as “Shaun” as this is the manner in which he was referred to throughout the various affidavits filed in the two applications.

Pursuant to the above agreement applicant delivered a large number of cattle to Shaun.  An audit done on 28 February 2014 of all the cattle under Shaun’s control confirmed that 611 cattle belonging to applicant were in Shaun’s possession.  In addition thereto applicant and Shaun entered into a written “Agreement of Joint Venture” during March 2014 in terms whereof applicant made available 281 cattle for the joint cattle farming operation and Cockin Partners made available the land for grazing, with all offspring to be divided equally between the parties to the agreement.  It was also agreed that applicant retained ownership of the cattle.  It is not in dispute that in consequence of the agreements, both oral and written, Shaun came to be in possession of 1831 cattle belonging to applicant which were distributed by him amongst various farms for purposes of grazing.

On 31 August 2015 Shaun furnished to applicant a “DM Osborne and Cockin Partners Joint Venture and Report” in which the aforesaid number of cattle in Cockin Partners’ possession was confirmed and in which it was also reported that there were “no losses”. 

During mid-September 2015, however, applicant’s manager visited the various farms on which applicant’s cattle were allegedly grazing and discovered that there was in fact a significant shortfall in the number of applicant’s cattle under Shaun’s control.  In consequence of this applicant approached Shaun on 12 September 2015 with the request that he explain the discrepancies by not later than 14 September 2015. Tragically, on 13 September 2015, Shaun committed suicide. 

Thereafter, during the week of 14 September 2015, an inspection was conducted and applicant ascertained that most of his cattle were missing and could not be accounted for. 

No explanation has been forthcoming from any of the respondents as to how the misallocation of nearly R3 million in respect of lucerne sales could have been made and it is difficult to understand in the absence of any rational explanation on what innocent basis such a misallocation could have come about.  This was not a mere

“overstatement” of the lucerne sales as Rossouw would have it.  Two very large amounts were deliberately allocated to lucerne sales in two different financial years.  It is common cause that Shaun did not grow nor sell lucerne.  His only source of income was from his cattle speculating business and, at the time that such misallocation was made, he was “hopelessly insolvent”.  Rossouw simply reallocated this amount to Shaun’s loan account but there is no explanation at all as to why he did so.  As was submitted by Mr. Smuts, in the absence of any such explanation the reasonable inference arises that this was a false representation of the source of money which flowed from the deceased to the Trust.  In my view therefore, applicant has established, prima facie, that such money must be the proceeds of the unlawful sale of cattle not belonging to Shaun. 

[42] In this regard applicant states pertinently that the Cockin Trust is indebted to him in respect of his livestock that was fraudulently sold by Shaun and the proceeds of such sales having been deposited in the Cockin Trust accounts.  In the circumstances I am of the opinion that applicant has established, prima facie, that he is a creditor of the trust.  Furthermore, there is no suggestion that the Cockin Trust is able to pay such money to applicant in order to compensate him for such unlawful sale.  I agree with the submission by Mr. Smuts that in the light of the misallocation of the sum of R2 893 000 to false lucerne sales in the financial statements of the Trust, when the only source from which the insolvent deceased could have transferred this money was the unlawful sale of cattle, the Trust prima facie, cannot pay its debts and is insolvent.

[43] It will, in the circumstances, be in the best interest of creditors if the estate of the Trust is sequestrated and its affairs fully investigated.

[44] In my opinion therefore applicant has prima facie satisfied the requirements of section 10 of the Act.

[45] The following orders will issue:

Case no: 5618/2015

a.    The Rule Nisi is confirmed.

b.    The second and fourth respondents are ordered to pay the costs of the application jointly and severally, the one paying the other to be absolved.

Case no: 6053/2015

1.    The estate of the Respondent Trust is placed under provisional sequestration in the hands of the Master of this Honourable Court;

2.    The said Mark William Cockin, Marioth Janet Cockin and Andrew Oliver Smith, nomine officio in their capacities as the Trustees of the Cockin Trust and Werner de Jager nomine officio in his capacity as trustee of the insolvent deceased estate of Shaun Russell Cockin, be and are hereby called upon to show cause, if any, to this Court at Grahamstown on 17 May 2016 at 10h00 or as soon thereafter as the matter may be heard, why:

2.1         a final Order of Sequestration of the respondent estate should not be granted;

2.2         that the rule nisi be served upon Mark William Cockin, Marioth Janet Cockin, Andrew Oliver Smith and Werner de Jager personally;

2.3         That a copy of this Order be published once in the Daily Dispatch newspaper; and

2.4         That a copy of this Order be served:

2.4.1      On the employees of the respondent by affixing a copy thereof on a notice board to which the employees of the respondent have access inside the respondent’s premises, alternatively by affixing a copy of the order at the front gate of the respondent’s premises; and

2.4.2     On the South African Revenue Services in East London. 

3.    The Costs of this application shall be costs in the sequestration.