INDEX1

SOUTH AFRICAN LAW REPORTS SEPTEMBER 2015

SA CRIMINAL LAW REPORTS SEPTEMBER 2015

All SOUTH AFRICAN LAW REPORTS SEPTEMBER 2015

EDITORIAL

1) Adv Crouse

The National Bar has its first shortlisted applicant for a judge’s post! I quote our vice chairman:It gives me great pleasure to announce that one of our members Adv Elizabeth Crouse has been shortlisted  for the vacancy in the Eastern Cape Division of the High Court. There is only one (1) vacancy and three (3) candidates. Indeed, as NBCSA we will support her nomination. She was nominated by Legal Aid South Africa where she currently holds the position of Senior Litigator for the Eastern Cape Region Legal Aid South Africa. Motivation advanced in support for her nomination are summarised as follows: 1. She has a strong background in criminal, civil and constitutional law; 2. She has argued complex matters in the High Courts, SCA and Concourt; 3. That she has contributed to developing the law and protecting vulnerable and poor people. (See: Sarrahwitz v Maritz NO and Another {2015} ZACC 14 where she successfully challenged the right to property of a poor person who has paid for property in full before a seller went insolvent). In terms of the common law the property falls into the insolvent estate and the trustee can deal with it as he sees fit. The trustee was in the process the buyer from the property. Through this court case she saved the buyer from losing her home, but also succeeded in changing the law that has been in operation in South Africa for many years. Therefore she has played a role in ensuring that our common law is not in conflict with the Constitution. (NB: We live in an era of constitutionalism).4.See also S v Khohliso 2014 (2) SACR 49 (ECM) where a poor rural woman was charged under a law which allows for strict liability. The law was declared unconstitutional.

1 A reminder that these Legal Notes are my summaries of all reported cases as are set out in the Index. In other words where I refer to the June 2015 SACR , you will find summaries of all the cases in that book. It is for private use only. It is only an indication as to what was reported, a tool to help you to see if there is a case that you can use!

LEGAL NOTES VOL 10/2015

Compiled by: Adv M Klein

5, See also S v Qhinga and Others 2011 (2) SA SACR 378 (CC) where the Concourt held that the disissal of the accused's SCA petititon infringed on the right to a fair trial as it was impossible to consider the merits of their complaint without having regard to the whole record. The Concourt found in the accused's favour and the matter was remitted to the SCA and the SCA granted leave to appeal on petition.She has acted in 25 reported cases and delivered judgment in one reported matter in Burchell v Anglin 2010 (3) SA 48 (ECG). Of importance to note is that her judgment was referred to with approval by the SCA. Her first acting stint as a judge was in 2007. Her last was in March 2015 at the Gauteng Local Division where she presided in the civil and criminal courtsBefore joined the General Council of the Bar from 1992 to 2004 and practised on her own account. From 2004 to 2009 she was a High Court Unit Manager. From 2009 to present she serves as a Senior Litigator in Eastern Cape Legal Aid.She joined the National Bar Council of South Africa in 2014. Colleagues, I present to you Adv Crouse. Let us rally behind her. Kind regardsBafo  2) Offices in four provinces

Our members can make use of the offices which are in the provinces. It is the way to go! The other Bar societies have limits on their intake numbers due to space, but with the Nadal/Regus office concept you can go to our offices, no extra membership charge and make use of same! You can now have an office and telephone number and address for delivery of papers.

3) Visit to Judge President Makgoba in Polokwane.

We were warmly received by the J.P. and can now look forward to appearing in the new High Court building which will host 22 courts, the Legal Aid S.A. and the NPA.

The judge president also invited us to submit applications for acting judges posts in Polokwane.

4) Annual General Meeting of the NBCSA

The AGM is due to be held in Pretoria this year on 7 November 2015, kindly diarise the date, full particulars to follow.

SALR SEPTEMBER 2015

SOUTHERN AFRICA LITIGATION CENTRE v MINISTER OF JUSTICE AND CONSTITUTIONAL DEVELOPMENT AND OTHERS 2015 (5) SA 1 (GP)

International law — International criminal law — International Criminal Court — Arrest warrant — Binding on South African state — State granting immunity to visiting head of state against whom ICC arrest warrants pending — State's disregard

of warrants and of court order to compel their enforcement unconstitutional — Constitution, s 231; Implementation of the Rome Statute of the International Criminal Court Act 27 of 2002.International law — Diplomatic immunity — Discretion of minister to grant immunity — Must be lawfully exercised — Diplomatic Immunities and Privileges Act 37 of 2001. Constitutional law — Constitution — Foundational values — Rule of law — Duty of state to adhere to international law — Disregard — Threat to democratic state — Constitution, s 231.Constitutional law — Constitution — Foundational values — Rule of law — Duty of state to abide by court order — Disregard — Threat to democratic state.Section 231 of the Constitution provides that '(a)n international agreement binds the Republic . . . after it has been approved by resolution in both the National Assembly and the National Council of Provinces' and that '(a)ny international agreement becomes law in the Republic when it is so enacted into law by national legislation'.President Omar al Bashir of Sudan attended the African Union summit held in Johannesburg, South Africa, from 7 to 15 June 2015. At the time there were three warrants of arrest issued by the International Criminal Court pending against him. The founding treaty of the ICC, the Rome Statute, was incorporated into South African law under the Implementation of the Rome Statute of the International Criminal Court Act 27 of 2002. The Rome Statute and the Act obliged South African authorities to cooperate with the ICC by, among other things, implementing its warrants of arrest. The ICC had issued the warrants against Bashir for atrocities (genocide, war crimes and crimes against humanity) allegedly committed in Darfur, Sudan.Acting on an urgent application by the Southern Africa Litigation Centre, a human-rights organisation, the Gauteng Division on 14 June 2015 made an interim order prohibiting Bashir from leaving South Africa and instructing the South African Government (represented by the various respondents) to enforce it. The matter was postponed until the next day to give the government time to file answering affidavits. But by then Bashir had left the country.For its argument that Bashir was, as a foreign head of state attending the AU summit, immune from arrest, the government relied on the hosting agreement it had concluded with the AU early in June 2015. It provided that South Africa would grant members and staff of the AU Commission, delegates, and representatives of intergovernmental organisations attending the meeting certain privileges and immunities. The government also relied on the OAU (now AU) Convention, which conferred immunity from arrest or detention on representatives of member states. It was common cause that neither the hosting agreement nor the OAU Convention was domesticated into South African law.The government formalised the immunity by a Government Notice — underpinned E by a cabinet minute — issued under s 5(3) of the Diplomatic Immunities and Privileges Act 37 of 2001. The notice restated the relevant provisions of the hosting agreement.Held The court would, notwithstanding the departure of Bashir, provide reasons for its order of 15 July. They included the following: •   The Immunities Act, under which the immunity was purportedly granted, did not domesticate the OAU/AU Convention. Hence it was not binding in South Africa and

could not confer automatic immunity on the structures, staff and personnel of the AU in South Africa.   •   The hosting agreement did not confer immunity on heads of state, but only on members and staff of the AU Commission. And even if it did, it would not be binding in South Africa and would not override its obligations under the Rome Statute, which expressly provided that heads of state did not enjoy immunity under its terms.    •   Even if the Immunities Act gave the minister a general discretion to grant immunities and privileges to persons of her choosing, such a power had to be lawfully exercised. The minister was not entitled to circumvent the country's domestic and international obligations by preventing the arrest of a person who was subject to an ICC warrant and request for surrender.    •   While s 4(1)(a) of the Immunities Act — unlike the cabinet minute, s 5(3) of the Immunities Act or the hosting agreement — referred to a head of state, it could not be used to confer immunity on Bashir, who did not enjoy immunity under the rules of customary international law. (Significantly, the cabinet minute and Government Notice made no reference to s 4 of the Immunities Act.)    •   The government's reliance on the above provisions was therefore ill-advised and ill-founded. They could not trump the Rome Statute and the Implementation Act.   •   While the government never relied on necessity by arguing that international policy considerations justified its conduct, such considerations would by their nature fall outside the purview of the court.In closing, the court questioned the government's conduct in allowing Bashir to leave the country in the face of the court order expressly prohibiting it. It pointed out that a democratic state based on the rule of law would crumble if the government ignored its constitutional obligations and failed to abide by court orders.

LEASK AND ANOTHER v ROAD ACCIDENT FUND 2015 (5) SA 20 (GJ) Delict — Specific forms — Loss of support — Claim by parents for loss of support of deceased child — Indigence — Requirements discussed.

The case concerns an action brought by parents against the Road Accident Fund (Fund) for the loss of support of their son who died in a motor vehicle accident. Their claim was based on the contention that he had supported them from the time he was employed until his death and would have continued to do so, but for his death. The Fund conceded liability in respect of the merits but disputed that the deceased had supported them; had owed them a duty of support or that they were indigent. After examining the requirements needed to establish indigence the court held that the parents had failed to adduce sufficient evidence to support their contentions. Absolution from the instance was granted.

GROUP FIVE CONSTRUCTION (PTY) LTD AND OTHERS v MEC FOR PUBLIC TRANSPORT, ROADS AND WORKS, GAUTENG AND OTHERS 2015 (5) SA 26 (GJ)

Recusal — Familiarity — Same party, similar dispute — Trial and subsequent motion proceedings — Familiarity with parties and dispute not compelling recusal of judge from motion proceedings — Recusal refused in absence of extraordinary circumstances.

Engineering and construction — Building contract — Construction guarantee — Demand for payment in terms of guarantee based on false information and therefore fraudulent — Constituting ground for refusal to enforce guarantee.

It has never been our law that a judge who has presided in one matter cannot preside in another matter involving some or all of the same parties, or that a judge who has adjudicated on one dispute cannot adjudicate on a similar dispute. There would have to be something beyond the ordinary for a recusal by a judge who is cognisant of her or his duty to sit in a case. The presiding judge in the present motion proceedings had adjudicated in a trial in which one of the parties to the present proceedings was involved. During the course of the present matter the presiding judge realised that she had a recollection of the earlier matter and certain facts led in evidence. The first respondent then applied for the recusal of the presiding judge. The application was refused, mainly on the ground of the differences between trial and motion proceedings. The judge pointed out that she was in an application like the present one bound by what was on the record, and that there was no room for the assessment of witnesses, impressions and personal observations as there would be at a trial. She was not at liberty to diverge from the written word as placed before her, and whatever she might think she recollected from the trial would not feature in her judgment on the application unless it were placed before her and dealt with by counsel in the application. Absence of good faith as a ground for declining enforcement of a guarantee provided in terms of a construction contract, such as the provision of false and fraudulent information in order to enforce the guarantee, has received support in a number of decided cases. Thus, where a demand for payment in terms of such a guarantee is based on fraud, the guarantee should be set aside as of no force and effect and unenforceable.

BOOST SPORTS AFRICA (PTY) LTD v SOUTH AFRICAN BREWERIES (PTY) LTD 2015 (5) SA 38 (SCA)

Company — Proceedings by and against — Security for costs — Application for furnishing of — Approach of court — Effect of omission in new Companies Act of provision similar to that of repealed Companies Act allowing court to C order plaintiff company to furnish security for costs — Court may order plaintiff incola company to furnish security if satisfied that proceedings vexatious, reckless or otherwise amounting to abuse.

Section 13 of the repealed Companies Act 61 of 1973 provided a statutory exception to the general rule under common law that an incola plaintiff cannot be compelled to furnish security for costs. It vested a court with a discretion to order a company, that had instituted action, to furnish security for costs if there were reason to believe that it would be unable to pay the costs of its opponent.The issue in this case was whether, absent an equivalent provision to s 13 in the new Companies Act 71 of 2008, an incola company could be ordered to furnish security for costs.HeldIn terms of the common law mere inability by an incola to satisfy a potential costs order was insufficient to justify an order for security. Something more was required, namely that the action was reckless or vexatious. Absent s 13, there was no

legitimate basis for differentiating between an incola company and an incola natural person. And because our superior courts have a residual discretion arising from their inherent power to regulate their own proceedings, it must follow that an incola company could at common law be compelled to furnish security for costs. Accordingly, even though there may be poor prospects of recovering costs, a court, in its discretion, should only order the furnishing of security for such costs by an incola company if it were satisfied that the contemplated main action (or application) was vexatious or reckless or otherwise amounted to an abuse. 

RICHTER v ABSA BANK LTD 2015 (5) SA 57 (SCA)

Business rescue — Liquidation proceedings already initiated — Scope of suspensive provision — Meaning of liquidation proceedings — Whether competent to apply for business rescue after final liquidation order — Companies Act 71 of 2008, s 131(6). Section 131(6) of the Companies Act 71 of 2008 provides that '(i)f liquidation proceedings have already been commenced by or against the company at the time an application [for business rescue] is made . . . the application will suspend those liquidation proceedings'.The term 'liquidation proceedings' does not refer only to a pending application for a liquidation order but includes the process of winding-up of a company after a final liquidation order has been granted, ie it includes proceedings that occur after a winding-up order to liquidate the assets and account to creditors, up to deregistration of a company. There is no sensible justification for drawing the proverbial 'line in the sand' between pre- and post-final liquidation in circumstances where prospects of success of business rescue exist. The legislature did not do so and to restrict business rescue to those cases in which a final winding-up order has not been granted was inimical to the Act. 

PANAMO PROPERTIES (PTY) LTD AND ANOTHER v NEL AND OTHERS NNO 2015 (5) SA 63 (SCA)

Business rescue — Resolution to begin — Appointment of business F rescue practitioner — Failure to comply with procedural requirements in respect of resolution or appointment of practitioner — Effect — Companies Act 71 of 2008, ss 129(3) – (5).Company — Business rescue — Resolution to begin — Setting-aside of — When permitted — Companies Act 71 of 2008, s 130(5).

In this matter a trust was the sole shareholder of a company. The trustees — the Nels — were also the directors of the company. Acting in their capacity as directors, they resolved to put the company into business rescue. Two years H later, after the appointment of a business rescue practitioner, the adoption of a business rescue plan, and some execution of that plan, the Nels — acting as trustees — applied opportunistically for a declaration that the resolution to place the company in business rescue had lapsed and was a nullity (s 129(5) of the Companies Act 71 of 2008), owing to a failure to comply with ss 129(3) and (4); and that all further steps in the purported business rescue were void. The High Court upheld the application but granted leave I to appeal.

In issue in the Supreme Court of Appeal was the effect of non-compliance with s 129(5). (It provides inter alia that: 'If a company fails to comply with any provision of subsection (3) or (4) . . . its resolution to begin business rescue proceedings . . . lapses and is a nullity; . . . .' Subsection (3) is to the effect that 'Within five business days after a company has adopted and filed a resolution . . . the company must . . . publish a notice of the resolution . . . and . . . appoint a business rescue practitioner . . . .' Subsection (4) provides that '(a)fter appointing a practitioner . . . a company must . . . file a notice of the appointment . . . within two business days . . . and . . . publish a copy of the notice . . . to each affected person within five business days after the notice was filed'.) Held, that non-compliance with ss (3) and (4) caused the resolution to lapse and become a nullity (ss (5)) rendering it liable to be set aside under s 130(1)(a)(iii) read with s 130(5)(a), but did not automatically terminate business rescue proceedings. Only if a court set aside the resolution would the business rescue terminate (s 132(2)(a)). Held, further, that the 'or' in s 130(5)(a) was to be read as 'and'. Thus, to set aside a resolution under s 130(5) a litigant would have to establish a ground in s 130(1)(a), as well as to satisfy the court that it was just and equitable to do so.The appeal was upheld and order of the High Court set aside and replaced with an order dismissing the trust's application on the basis that its application was out of time (s 130(1)); its locus standi doubtful (s 130(2)); and setting aside of resolution would not have been just and equitable

STANDARD BANK OF SOUTH AFRICA LTD v SWANEPOEL NO 2015 (5) SA 77 (SCA)

Trust — Contracts — Parties — Description of party to contract as trust (as opposed to its trustee) — Whether sufficient.

This case concerned a contract of loan entered into between a bank and a trust. The agreement provided that the 'borrower' was the Harne Trust, and set out its registration number; and the agreement was signed by one Mr Swanepoel 'on behalf of the borrower'. (Swanepoel was the trust's trustee.)Ultimately the trust defaulted, and the bank instituted action against Swanepoel as trustee. He excepted, contending that the loan agreement was invalid. This on the basis that the loan had been concluded between the bank and the trust (as opposed to its trustee); that trusts were not legal persons and had no contractual capacity; and thus that a valid agreement had not been concluded. The High Court upheld the exception but granted leave to appeal to the Supreme Court of Appeal.Held, that the naming of the trust as the party to the agreement was sufficient — H and the contract valid — where the party signing the agreement for the trust clearly did so in the capacity of trustee. Appeal upheld, and the order of the High Court set aside and replaced with an order dismissing Swanepoel's exception.

DE v RH 2015 (5) SA 83 (CC)

Delict — Specific forms — Injuria — Adultery — Delictual action for adultery (contumelia and loss of consortium) obsolete and unconstitutional — Abolition of action confirmed. 

The innocent spouse's delictual action for adultery (contumelia and loss of consortium) against the third party is obsolete and unconstitutional, and its abolition by the Supreme Court of Appeal * would be confirmed. (See paras [22] – [27] at 91G – 93A of the main judgment on changing public attitudes to adultery; paras [28] – [38] at 94A – 97F on trends in foreign jurisdictions; paras [52] – [55] at 101F – 103B on the applicable constitutional norms; and para [63] at 105B – C read with paras [17] – [21] at 90D – 91G on the resulting absence of wrongfulness.)

TRIPARTITE STEERING COMMITTEE AND ANOTHER v MINISTER OF BASIC EDUCATION AND OTHERS 2015 (5) SA 107 (ECG)

Education — Right to education — Duties of state — Provision of transport — Right to basic education including transport to and from school, at state expense, where appropriate — Constitution, s 29(1)(a). 

The right to basic education is meaningless without transport to and from school, at state expense, in appropriate cases. In instances where scholars' access to schools is hindered by distance and an inability to afford the costs of transport, the state is obliged to provide transport to them in order to fulfil its constitutional obligations. 

S v MOTSEPE 2015 (5) SA 126 (GP)

Media — Freedom of expression — Limitations — Criminal defamation — Limitation of media freedom justified — No grounds for decriminalisation of defamation in respect of media accused.

The factsA magistrates' court convicted Mr Motsepe, a journalist, of criminal defamation for stating in a newspaper article that a magistrate's sentencing showed racial bias. Although the statement turned out to be based on false information and untrue, Mr Motsepe did not realise this and based his decision to publish on truth and public interest. Injury to the magistrate's reputation having been conceded, the only issues before the appeal court were intention and unlawfulness.The lawThe offence of criminal defamation consists in the unlawful and intentional publication of matter concerning another which tends to injure his or her reputation. It was held to be consistent with the Constitution in S v Hoho 2009 (1) SACR 276 (SCA) ([2009] 1 All SA 103).The issuesSeveral media organisations — the amici — contended that the offence was an unwarranted and unconstitutional restriction of the freedom of the media I and asked the court to develop the common law by limiting its application to non-media entities. They argued —

   •   that Hoho failed to address the effect of the offence on the media and therefore did not bar the court from deciding that criminal defamation was unconstitutional insofar as it applied to the media;   •   that the civil remedy for defamation provided adequate means to deter and prevent defamation by the media; and   •   that a number of international instruments and international case law supported their argument in favour of the repeal of criminal defamation laws against the media.HeldAs to intention: It was absent. Although Mr Motsepe had acted recklessly by failing to ensure that the information provided to him was accurate, this did not equate to intention. Intention was also negated by Mr Motsepe's belief that publication was covered by the defence of truth and public interest. The absence of intention meant that the conviction could not stand. As to the arguments of the amici on unlawfulness: They would not stand. Hoho had to be interpreted in the light of judgments holding that freedom of the media was not unrestrained but had to yield to other rights, in particular the individual's rights to dignity and not to be unlawfully defamed. While the media had a special role in the protection of freedom of expression, it also had an obligation to respect the rights of others, in particular the right to individual dignity. So viewed, the criminal offence of defamation constituted a reasonable and justifiable limitation of journalists' right to freedom of expression, its relatively drastic effect being counterbalanced by its onerous burden of proof. The prosecution of media journalists who committed the offence of defamation was therefore consistent with the Constitution. Moreover, the international instruments and case law referred to by the amici involved the condemnation of extreme situations of governmental abuse of journalists and were not applicable to South Africa, where journalists and citizens enjoyed the protection of the law and the Constitution. Since the amici failed altogether to make out a case for the decriminalisation of defamation in respect of media accused, the common-law crime of criminal defamation as it pertained to the media would be declared consistent with the Constitution.

CHATER DEVELOPMENTS (PTY) LTD (IN LIQUIDATION) v WATERKLOOF MARINA ESTATES (PTY) LTD AND ANOTHER 2015 (5) SA 138 (SCA)

Winding-up — Property of company — Sale of by liquidator — Validity — If property purchased in good faith, sale valid even if not authorised by members of company — Insolvency Act 24 of 1936, s 82(8) read with Companies Act 61 of 1973, s 339.

Section 82(8) of the Insolvency Act 24 of 1936 operates, by virtue of s 339 of the Companies Act 61 of 1973, to protect a bona fide purchaser of company property sold by a liquidator who was not authorised to sell. By validating the purchase s 82(8) shields the innocent purchaser from the consequences of an unenforceable transaction. Since neither s 386(5) nor s 387(4) of the Companies Act deals with the sale of property to innocent third parties, they cannot detract from the applicability of s 82(8). Mr Marais, the second respondent and liquidator of Chater, acting under an authorisation by Chater's creditors to sell its assets, sold Chater's shares in another company to Waterkloof. But Chater refused to comply with the agreement, arguing that it was unenforceable because Mr Marais failed to obtain an authorising

resolution from its members as required by s 386(3)(a) of the Companies Act. Waterkloof sued out the High Court for an order directing delivery of the shares. The High Court held in favour of Waterkloof that the agreement was valid and enforceable due to the operation of s 82(8) of the Insolvency Act. The SCA dismissed Chater's appeal on the principles set out above.

The decision in the North Gauteng High Court in Waterkloof Marina Estates (Pty) Ltd v Charter Development (Pty) Ltd (in Liquidation) and Others2013 (6) SA 185 (GNP) confirmed.

SOUTH AFRICAN RESERVE BANK AND ANOTHER v SHUTTLEWORTH AND ANOTHER 2015 (5) SA 146 (CC)

Constitutional law — Parliament — Act of Parliament — Money Bills — What constitutes — Difference between taxes and regulatory charges — Dominant- Cpurpose test — Constitution, s 77 read with s 75.Exchange control — Exchange Control Regulations — Exit charge on value of assets sought to be exported upon emigration — Whether regulatory charge, or revenue-raising mechanism subject to compliance with Currency and Exchanges Act 9 of 1933, s 9(4) and reg 10(1)(c); Constitution, s 77 read s 75.Exchange control — Exchange Control Regulations — Exit charge on value of assets sought to be exported upon emigration — Broad discretionary powers of minister to oppose — Necessary for flexible, speedy and expert approach to exchange control.

Section 9(1) of the Currency and Exchanges Act 9 of 1933 (the Act) provides that the President 'may make regulations in regard to any matter . . . relating to or affecting or having any bearing upon currency, banking or exchanges'. One such regulation, reg 10(1)(c) of the Exchange Control Regulations of 1961, provided that '(n)o person shall, except . . . in  accordance with such conditions as the [Minister of Finance] . . . may impose. . . enter into any transaction whereby capital or any right to capital is . . . exported from the Republic'. Notably reg 10(1)(c) was not tabled and approved in accordance with the procedures prescribed in s 9(4) of the Act for regulations made under s 9 which are 'calculated to raise any revenue'. The Minister, acting in terms of reg 10(1)(c), however, imposed a condition that raised an exit charge by making South African Reserve Bank (SARB) approval of applications to exit more than R750 000 of 'blocked assets' 'subject to an . . . exit charge of 10% of that amount'.This case concerns a legal challenge to the validity of this exit charge by the respondent, Mr Shuttleworth (MS). He had paid it upon transferring his remaining capital out of South Africa, but under protest pending reconsideration by the SARB of its decision to impose the charge. When the SARB declined to do so (claiming it was bound by the ministerial condition) MS approached the High Court, attacking the constitutionality of the regulations broadly, and specifically also s 9(1) of the Act read with reg 10(1)(c), on the basis that it gave the Minister overbroad open-ended discretionary powers.That court held against MS that the exit charge was lawful (ie that it was not calculated to raise revenue and therefore did not have to comply with s 9(4) of the Act); and it held against the state respondents that some of the regulations were

unconstitutional. MS appealed and the state parties cross-appealed to the Supreme Court of Appeal, which set aside the High Court judgment in its entirety. The SCA held the exit charge was a revenue-raising mechanism for the state which could only be authorised in a money Bill enacted in accordance with the money Bill provisions of the Constitution (ss 75 and 77) and not by way of delegated legislation (reg 10(1)(c)).Next, the state parties applied to the Consitutional Court for leave to appeal and to appeal — and MS for leave to cross-appeal in the event leave to appeal was granted to the state parties, and to cross-appeal — against those portions of the SCA judgment adverse to them. The Constitutional Court, by a majority (Froneman J dissenting  , identified the core issue in the main appeal as whether this exit charge constituted a regulatory charge, or whether it was a tax, a revenue-raising mechanism for the state. If it were the latter, the regulation that authorised the exit charge would be invalid because it had not been enacted in accordance with the prescribed strictures of ss 75 and 77 of the Consitution (and s 9(4) of the Act). The court — having granted leave to appeal, and leave to cross-appeal only on the narrow issue of the constitutional validity of s 9(1) of the Act read with reg 10 (1)(c) — held as follows:Main appealThe procedural requirements of s 9(4) have been superseded by the Constitution. This meant that a Bill that was 'calculated to raise revenue' by imposing a national tax must comply with the constitutional requirements for a money Bill. On the other hand, if the exit charge were not calculated to raise revenue and thus not akin to a money Bill, it would not have to comply with s 9(4). The recurring question was how to distinguish a regulatory charge from a tax that may be procured only through a money Bill. There were no bright lines E between the two: all regulatory charges raise revenue, and 'every tax was in some measure regulatory'. That explains the need, as a basic distinguishing device, to consider carefully the dominant purpose of a statute imposing a fee or a charge or a tax. If regulation of public conduct were the primary purpose of the revenue raised under the statute, it would be considered a fee or a charge rather than a tax; if the dominant purpose were to raise revenue to fund the state and its public operations, then the charge would ordinarily be a tax. Here the subject-matter was exchange-control legislation with the avowed purpose to curb or regulate the export of capital from the country. The plain dominant purpose of the instant measure was to regulate and discourage the export of capital and to protect the domestic economy. The Gexit charge was not directed at raising revenue. The uncontested evidence of the Minister was that the exit charge was part of regulation directed at easing in the dismantling of exchange controls. And there were other factors that also pointed away from revenue-raising, such as that the charge was imposed on a discrete portion of the population — ie only those who had capital to externalise in excess of R750 000 were to be affected. It was true that during its subsistence the exit charge generated revenue of approximately R2,9 billion, but that garnering of income by the Treasury was incidental to the dominant object of regulating and discouraging capital flight. Revenue-raising was a mere by-product of the exit charge's true purpose: regulation of the export of capital. The exit charge was therefore not one which attracted the definition of 'money Bill'. The SCA therefore I erroneously concluded that the dominant purpose of the exit charge was to raise revenue and that therefore it had to be subjected to the requirements of s 75 of the Constitution.

Cross-appealNot all wide legislative discretion was inconsistent with the constitutional norm and invalid. The broad discretionary power of the Minister under the impugned provisions was justified in that South Africa's exchange control system required a flexible, speedy and expert approach to ensure that proper financial governance prevailed. Circumstances could change at any time, requiring an adaptation of the rules in place, so that it would be impossible to lay down rules or set out factors in advance. The cross-appeal must therefore fail.

AFRICAN BANKING CORPORATION OF BOTSWANA LTD v KARIBA FURNITURE MANUFACTURERS (PTY) LTD AND OTHERS 2015 (5) SA 192 (SCA)

Business rescue — 'Binding offer' — Meaning — Questions in respect of — Companies Act 71 of 2008, s 153(1)(b)(ii).Company — Business rescue — Practitioner — Duties — Costs orders against — Companies Act 71 of 2008, ss 138 – 141 and 150(4).

This case concerned a company in business rescue. At the meeting to consider the business rescue plan, a vote was duly held on whether to approve it. A bank (the holder of 63 % of creditors' voting interests) voted against approval. The shareholders (who were also the directors) — Mr and Mrs Nchite — then made a 'binding offer to purchase the voting interests' (s 153(1)(b)(ii) of the Companies Act 71 of 2008) of the bank. The business rescue practitioner ruled that the bank could not respond to the offer; that it was binding; and that its voting interests were transferred to the Nchites. He amended the plan accordingly. A new vote was immediately held, with the Nchites — now the holders of the majority of the voting interests — voting to approve the plan.The bank applied to the High Court for a declaration that the 'binding offer' did not bind it, and for the setting-aside of the approval of the plan. It also applied for the setting-aside of the directors' resolution to commence business recue.The High Court dismissed the application, holding that an offer under s 153(1)(b)(ii) automatically bound offeror and offeree on being made.On appeal, held by the Supreme Court of Appeal (Dambuza AJA) that a 'binding offer' was an offer as understood in the common law, save that it was binding in the sense that the offeror could not withdraw it until the offeree had responded to it. Here, there was no offer at all — the Nchites' proposal not revealing who was making the offer, nor the price, or where, when and how payment was to be made. Absent a binding offer, the transfer of the voting interest, and later the vote of approval of the plan, was null and void. Held, further, that a requirement to pass the resolution to commence business rescue proceedings — a belief on the part of the directors (on reasonable grounds) that there appeared to be a reasonable prospect of rescue (s 129(1)) — had been lacking. The directors could not have had such a belief — as purported — on the basis of the 2005 financial statements, and in I circumstances where the company had not operated in the five years preceding the resolution. The court also deprecated the practitioner's conduct. He had acted contrary to his duty of care in the assessment of the company and in the preparation of the business rescue plan. (He had relied on information supplied by the J Nchites and on

his own assessment; and had based the plan on outdated books of account, and inaccurate and incomplete information.) He had also failed to act objectively and impartially — ignoring the bank's inquiries or treating them with hostility. The failure of objectivity and impartiality extended to the legal proceedings, where the practitioner, in the capacity of attorney, had represented himself as practitioner, as well as the company. Appeal upheld; order of the High Court set aside, and replaced with an order declaring the 'binding offer' not binding, and setting aside the approval of the business rescue plan, and the resolution to begin business rescue proceedings. Costs of the appellant on appeal to be paid jointly and severally by the Nchites and the business rescue practitioner. Leach JA concurred with the reasons and order of Dambuza AJA. He raised questions concerning the 'binding offer' in the section. These included:   (1)   Whether the offeree had a period of time in which to consider the offer;   (2)   the effect of the offer being rejected;   (3)   whether the offer could be conditional (and if so, what conditions were permissible);   (4)   whether an offer excluded the making of a counter-offer, or offers being made by other affected persons (and if offers were made by other affected persons, how those were to be ranked); and   (5)   whether the offer alone was sufficient, or whether it had to be accompanied by a tender of payment or security for payment. Held, also, that, for the offer to be valid, it had to state the price or the price had to be readily ascertainable from it. It was insufficient for the price to be determined at a later date. Here the price was neither mentioned nor readily ascertainable — and the offer was consequently invalid.

ABSA BANK LTD v HAMMERLE GROUP 2015 (5) SA 215 (SCA)

Winding-up — Grounds — Inability to pay debts — Proof — 'Without prejudice' offer indicating inability to pay debts — Amounting to admission of insolvency — Not privileged — Admissible in liquidation proceedings.Company — Winding-up — Grounds — Inability to pay debts — Debt relied on subordinated in favour of other creditors — Applicant nevertheless contingent creditor — Debt due and payable and applicant entitled to apply for winding-up — Companies Act 61 of 1973, s 346(1)(b).

An offer made by a company — even on a 'without prejudice' basis — may be admitted in an application by a creditor for its liquidation if it contains an admission of insolvency (ie of an inability to pay its debt). An admission of liability would serve to interrupt the running of prescription against the creditor. In a letter written in response to Absa's demand for the settlement of a debt, Hammerle stated that it 'would like to make a settlement proposal', but that 'notwithstanding the aforesaid' it was 'struggling to turn the business around' and unable 'to make any meaningful profit in the business'.In an appeal against the dismissal of Absa's application for the winding-up of Hammerle, the SCA, having construed the letter to be both an indication of commercial insolvency and an acknowledgement of liability, (i) overruled Hammerle's argument that its contents were inadmissible; and (ii) held that it had interrupted the running of prescription against Absa. The SCA furthermore overruled the High

Court's finding that Absa's claim was not yet due and payable because it was, by agreement between the parties, subordinated to the claims of Hammerle's other creditors, on the ground that a subordinated creditor like Absa was a 'contingent creditor' with standing under s 346(1)(b) of the Companies Act. In the result the SCA replaced the order of the High Court with one liquidating Hammerle.

UNIVERSITY OF STELLENBOSCH LEGAL AID CLINIC AND OTHERS v MINISTER OF JUSTICE AND CORRECTIONAL SERVICES AND OTHERS 2015 (5) SA 221 (WCC)

Execution — Attachment of salary — Constitutionality of process — Provisions unconstitutional and invalid to extent that failing to provide for judicial oversight over issuing of attachment order against judgment debtor — Magistrates' Courts Act 32 of 1944, ss 65J.Magistrates' court — Civil proceedings — Jurisdiction — Consent — Where credit agreements regulated by NCA — Judgment debtor not permitted to consent to jurisdiction in place other than where resident or employed — Magistrates' Courts Act 32 of 1944, s 45; National Credit Act 34 of 2005, s 90 and s 91. 

First applicant, a public-interest organisation, assisted 15 of its low-income clients (applicant debtors two to sixteen) in bringing an application to set aside salary-attachment orders issued in terms of s 65J(2)(a) of the Magistrates' Courts Act 32 of 1944 (MCA) in favour of various micro-lenders (respondents four to eleven and thirteen to sixteen). The latter had been represented by Flemix & Associates Inc (respondent seventeen), a firm of attorneys and their external debt collector. Since the debtors had consented to the orders, there had been no enquiry as to affordability or whether the orders were 'just and equitable' as provided for in s 65A. Most of the orders had also obtained on written consent (s 45 of the MCA) in jurisdictions located far from where they lived and worked. The applicants challenged the constitutionality of s 65J(2)(a) and ss 65J(2)(b)(i) and (ii) on grounds that it made no provision for judicial oversight. They also contested the lawfulness of s 45. Flemix contended that since a debtor was entitled to approach a court to have an execution order varied or set aside, there was nothing inherently wrong with the process. HeldFor debtors such as the applicants, who worked in low-paid and vulnerable occupations, their salaries were invariably their only asset and means of survival. A reduction therein had the potential for reducing human dignity. Any court order or legislation, which deprived them of their means of support or ability to access their socioeconomic rights accordingly constituted a limitation of their right to dignity. Further, that, since the Flemix respondents were obtaining judgments and attachment orders against the applicants in courts far away from their homes and places of work, and in places which they could not hope to reach, the right of the debtors to approach the courts was seriously jeopardised, if not effectively denied. The use of s 45 to bypass the courts in areas in which the debtors or their employers resided was a patent case of forum-shopping. The state had to protect its citizens against human-rights abuses by business enterprises by providing victims with a remedy. The attachment-order system established by the MCA failed to do this by allowing orders to be issued without the involvement of a judicial officer or the opportunity for representations. The right to

have the order reviewed was not an effective remedy if s 45 were interpreted to allow indigent debtors to consent to jurisdiction of other courts. Where debtors were vulnerable and overindebted, and at real risk of abuse by unscrupulous creditors, there was a strong argument for judicial oversight in the issue of the orders. This was also in accordance with general principles that there should be judicial oversight where an applicant sought an order to execute or seize the property of another. Accordingly when attachment orders were issued, judicial oversight was to be mandatory and occur when the execution order was issued.  As to s 45 of the MCA, properly interpreted, the broader approach to jurisdiction of s 45 could not be reconciled with the more restrictive approach in s 65J and s 90 and s 91 of the National Credit Act 34 of 2005 (NCA), especially in the light of the consumer-protection rationale underlying the NCA. It followed that when a debtor admitted liability for a debt and consented to an attachment order, s 45 did not permit the debtor to consent to the jurisdiction of a court outside of the district where the debtor worked or resided. The court accordingly declared that the attachment orders were invalid and unlawful; that s 65J(2)(a) and s 65J(2)(b) were unconstitutional and invalid to the extent that they failed to provide for judicial oversight; and that s 45 did not permit a debtor to consent in writing to the jurisdiction of a magistrates' court other than that in which that debtor was resident or was employed. The court also directed that a copy of the proceedings be forwarded to the relevant Law Society to determine whether Flemix and its representative were in beach of their ethical duties, particularly with regard to forum-shopping, to secure salary-attachment orders. 

FIRSTRAND BANK LTD v KONA AND ANOTHER 2015 (5) SA 237 (SCA)

Credit agreement — Consumer credit agreement — Debt re-arrangement — Debt re-arrangement and sequestration — Existence of rearrangement order not barring sequestration of consumer's estate at behest of credit provider — National Credit Act 34 of 2005, s 88(3). 

Court — Precedent and stare decisis — Observance of doctrine mandatory.

The existence of a debt-rearrangement order does not bar the sequestration of the consumer consumer's estate at the behest of the credit provider.Sequestration-respondent under debt review-sequestration proceedings are not treated as ‘other judicial process’ -s (88)(3) of NCA not impose a bar on the institution of sequestration proceedings- moratorium imposed lifted

It is not necessary to have the moratorium lifted by court order. Therefore, the decision of the court a quo was incorrect and was set aside. The SCA further expressed its displeasure with the court a quo, which referred to a number of cases which were binding on it but nevertheless came to a conclusion contrary to those decisions and the established law. The SCA reaffirmed the importance of the principle of stare decisis and the binding nature of precedent, and held that the high court should not have ruled as it did.

The Supreme Court of Appeal (SCA) upheld the appeal by Firstrand Bank (the appellant) and set aside the order of the North Gauteng High Court, Pretoria. In the

result, the joint estate of Raymond Clyde Kona and Amie Gertrude Kona (the respondents) was placed under final sequestration. The issue before the SCA was whether s88 (3) of the National Credit Act (the Act) prevented a credit provider from applying for the sequestration of a consumer where that consumer was the subject of a debt-rearrangement order. The appellant had a liquidated claim of around R950 000 against the joint estate of the respondents. The provisions of the Act applied to the relevant transaction and the appellant was a ‘credit provider’ and the respondents were ‘consumers’ for the purposes of the Act. In 2009, the respondents were declared over-indebted by a magistrate’s court and their debts were re-arranged. Subsequently, they failed to meet their obligations to the appellant in terms of the debt-rearrangement order. The appellant accordingly sought to have the joint estate of the respondents sequestrated. The respondents argued that the appellants were prohibited from applying for their sequestration in terms of s 88(3) of the Act, which provides inter alia that a credit provider who has received notice of an application for debt review may not ‘exercise or enforce by litigation or other judicial process any right or security under [an affected] credit agreement’ unless certain conditions are met. The court a quo upheld the respondents’ argument, and ruled that a sequestration application constituted ‘other judicial process’, that the appellant intended to pursue recovery of the debt through sequestration 2 2 proceedings, and that a debt-rearrangement order under the Act, unless and until set aside by a competent court, constitutes a bar to the compulsory sequestration of a consumer’s estate. The SCA, referring to a number of cases previously decided both by itself as well as by the Constitutional Court, held that there was clear authority to the effect (i) that sequestration proceedings are not treated as ‘other judicial process’ for the enforcement of a credit agreement for the purposes of the Act, and that s (88)(3) therefore does not impose a bar on the institution of sequestration proceedings; (ii) that the motive of the appellant in applying for sequestration is irrelevant in this context; and (iii) that the moratorium imposed by the debt-rearrangement order is automatically lifted once the conditions in s88 (3) are met. It is not necessary to have the moratorium lifted by court order. Therefore, the decision of the court a quo was incorrect and was set aside. The SCA further expressed its displeasure with the court a quo, which referred to a number of cases which were binding on it but nevertheless came to a conclusion contrary to those decisions and the established law. The SCA reaffirmed the importance of the principle of stare decisis and the binding nature of precedent, and held that the high court should not have ruled as it did.

TRENCON CONSTRUCTION (PTY) LTD v INDUSTRIAL DEVELOPMENT CORPORATION OF SOUTH AFRICA LTD AND ANOTHER 2015 (5) SA 245 (CC)

Administrative law — Administrative action — Review — Remedies — Substitution C of decision — Test — Promotion of Administrative Justice Act 3 of 2000, s 8(1)(c)(ii)(aa).Administrative law — Administrative action — Review — Remedies — Court's discretion to grant any order that is just and equitable — Whether discretion in true or loose sense — Promotion of Administrative Justice Act 3 of 2000, s 8(1). In this case the Industrial Development Corporation of South Africa Ltd had invited building contractors to bid for the award of a contract to upgrade its head office. Trencon Construction (Pty) Ltd, one such bidder, received the endorsement of the bid evaluators within the IDC, but on the recommendation of Trencon being

presented to the IDC's executive committee for decision, that committee had — erroneously — found Trencon's bid not to conform to the tender requirements. Exco instead awarded the tender to Basil Read (Pty) Ltd.Trencon challenged the award in the High Court, which set it aside, and F substituted a decision of award of the tender to Trencon. This in terms of s 8(1)(c)(ii)(aa) of the Promotion of Administrative Justice Act 3 of 2000.The IDC appealed to the Supreme Court of Appeal, which set aside the High Court's order and remitted the matter to the IDC for reconsideration.Trencon appealed to the Constitutional Court.In issue was when a court could substitute its own decision for that of an administrator, as provided for in s 8(1)(c)(ii)(aa). The section provides that:   '(1) The court or tribunal, in proceedings for judicial review in terms of section 6(1), may grant any order that is just and equitable, including orders —   . . .    (c)   setting aside the administrative action and —      (i)   remitting the matter for reconsideration by the administrator, with or without directions; or      (ii)   in exceptional cases —      (aa)   substituting or varying the administrative action or correcting a defect resulting from the administrative action; . . . .' Held, that the factors to be taken into account in deciding if a case was 'exceptional' were:(1)   whether the court would be in as good a position as the administrator to make the decision;(2)   whether the decision was a foregone conclusion;(3)   delay; and (4)   bias or incompetence on the part of the administrator. If factor (1) were established, the court had to consider factor (2), and thereafter (3) and (4). In assessing (1), a court had to consider whether the administrator's expertise was required to make the decision, and whether it — the court — had all the information that was pertinent to making the decision. As to (2), there would be a foregone conclusion if there could only be one proper decision; and in regard to (3), delay caused by litigation had to be considered with caution. Even if there were exceptional circumstances, substitution could only be ordered if it would be just and equitable. This required considering the fairness of C substitution to all of the parties involved. General considerations to be taken into account were that substitution was an extraordinary remedy — and remittal the ordinary course; and that courts had to be appropriately deferent to the administrators concerned. Here, the Constitutional Court was in as good a position as the decision-maker to decide whether to award the contract to Trencor: it had all the information necessary to make the decision; and special expertise was not required. The IDC's decision was also a foregone conclusion — the only proper decision it could make would be to award the contract to Trencor. Remittal would also involve delay and further costs. As against these factors, the IDC had acted in good faith. Held, ultimately, that substitution was appropriate. Also in issue was the nature of the discretion in s 8(1) to grant any order that was just and equitable.Held, that it was a discretion in the true sense. Accordingly, as there had been no defect in the High Court's exercise of the discretion in ordering substitution, the

Supreme Court of Appeal ought not to have interfered with that order and set it aside.

 Appeal upheld; order of the Supreme Court of Appeal set aside; and the substitution order of the High Court reinstated.

ABSA BANK LTD v GOLDEN DIVIDEND 339 (PTY) LTD AND OTHERS 2015 (5) SA 272 (GP)

Business rescue — Resolution to begin — Application to set aside — Whether necessary to join creditors — Companies Act 71 of 2008, s 130(3)(b).Business rescue plan — Extension of time for publication — Whether extension to be granted at meeting — Companies Act 71 of 2008, s 150(5)(b).Business rescue plan — Quaere: Whether creditor may challenge plan not meeting requirements of Act — Companies Act 71 of 2008, s 150(2).

In this matter a bank applied to terminate the business rescue proceedings of a company. The following issues were raised.   (1)   Whether, in addition to notifying each affected person of an application J to set aside a resolution commencing business rescue proceedings (s 130(3)(a) of the Companies Act 71 of 2008), an applicant had also to join all of the creditors as parties to the application. (The bank had notified the creditors of the application by email, but had not joined them.)Held, that the applicant did not need to.    (2)   Whether the holder (or holders) of a majority of creditors' voting interests may, outside of a meeting of creditors, allow an extension of time for the publication of a business rescue plan (s 150(5)(b)). (The majority creditor had in this case granted an extension at a meeting that — owing to its notice requirements not having been met — was invalid.)Held, that such an extension could be granted without the holding of a meeting.   (3)   Whether, if a business rescue plan did not substantively meet the requirements for such a plan in s 150(2), a creditor could challenge the adoption of the plan. The dictum of a single judge in the Gauteng Division was that an affected party could not challenge an adopted business rescue plan.Held, that the dictum might be appropriate where a party sought to challenge a plan that did not suit it. However, it seemed inappropriate where the complaint was that the plan did not meet the substantive requirements of the Act. It was, however, unnecessary to finally decide the issue. Resolution to begin business rescue proceedings ultimately set aside; business rescue terminated; and company placed in final liquidation. 

FEDGROUP PARTICIPATION BOND MANAGERS (PTY) LTD v TRUSTEE, CAPITAL PROPERTY TRUST 2015 (5) SA 290 (SCA)

Land — Ownership — Encroachment — Encroacher may not bring independent cause of action claiming transfer of encroached-upon land in absence of removal order by owner.

 An encroacher is not, in the absence of an application or action being brought by the owner of the land for a removal order, entitled to approach a court for an order compelling the owner to transfer the encroached-upon land against a tender of compensation.  In this case the question is whether someone encroaching on another's land is entitled, in the absence of an action or an application being brought by the owner of the land for a removal order, to approach a court for an order compelling the owner to transfer, not only that part of the land on which there is encroachment, but also to seek transfer of additional vacant land against a tender of compensation. The short answer is no. The background and the reasons for that conclusion follow.This appeal is directed against the judgment and order of Victor J in the Gauteng Local Division, Johannesburg, in terms of which she refused an application by the appellant, Fedgroup Participation Bond Managers (Pty) Ltd (Fedgroup), for an order along the lines described in the preceding paragraph. For clarity it is necessary to record specific parts of the order sought by Fedgroup, namely:   '1.   . . . (D)irecting the respondent, in its capacity as registered owner  of Erf 990 Sunninghill Extension 85 Township, Registration Division IR, Provence of Gauteng, in extent 1,1821 hectares (the Property), forthwith upon demand:      1.1   to do all things necessary and to sign all documents necessary to facilitate and to allow the subdivision of the Property in  accordance with the Subdivision Plan annexed to the founding affidavit in these proceedings as Annexure FA4; and      1.2   to do all things necessary and to sign all documents necessary to facilitate and to allow the transfer of the newly-created portion of the Property, in extent 2396 m2 and as indicated on the aforementioned Subdivision Plan, to the Applicant. . . .'  The respondent is the trustee of The Capital Property Trust Collective Investment Scheme in Property. The trust was established in terms of the Collective Investment Schemes Control Act 45 of 2002. We shall refer to it as CPT. As quid pro quo for the order referred to in para 2,  Fedgroup was willing to accede to an order in respect of which it would (i) bear all the costs pertaining to the subdivision of the property and the transfer of the newly created portion thereof; and (ii) against registration of the transfer, pay to the respondent the sum of R1 950 000, plus value- added tax. Furthermore, Fedgroup agreed to pay CPT a pro rata amount of the rates and taxes which the former had paid to the local authority since the commencement of the encroachment, in the ratio that the property to be transferred bore to the whole of the property.What follows is a description of how Fedgroup and CPT became  D adjoining landowners and how the encroachment at the centre of the present dispute occurred. On 31 July 2006 Fedgroup and CPT entered into a written agreement in terms of which the latter acquired from the former a total of 27 income producing properties and associated businesses, as letting enterprises, for an aggregate amount of R308 035 000. One of the properties acquired by CPT is the erf referred to in para [5] above (Erf 990), including the improvements referred to in para [6]. Registration of the property into CPT's name took place on 15 December 2006. The incomplete structure on Fedgroup's property referred to above partially encroaches on CPT's property. The encroachment was discovered by Fedgroup during April or May 2008, almost two years after the conclusion of the written agreement of sale. It is common cause that the incomplete structure which encroaches on CPT's property had already been erected when Fedgroup acquired it from a predecessor in title. It is unchallenged that the structure was erected

unlawfully, more particularly because building plans had not been submitted for approval.A fence erected on the property lulled Fedgroup into a false sense of security about the cadastral boundaries of the property it disposed of to CPT. Upon discovering the real state of affairs, Fedgroup approached CPT concerning the encroachment and to discuss a possible resolution. Communications between the parties ensued but ultimately negotiations broke down. This is unsurprising since the land concerned is prime commercial property, with each party probably seeking to extract maximum benefit for itself.Before us, counsel on behalf of Fedgroup, when engaged by this court on how they would circumscribe the right the encroacher was seeking to enforce in the court below, experienced difficulty in doing so. The response ultimately was that no right could be circumscribed but that it would be a sad day if this court did not come to Fedgroup's assistance, especially in the face of the present impasse. Counsel on  behalf of CPT responded as follows: it was the owner of the land; it had not sought the removal of the offending structure; and as far as it was concerned there was no justiciable dispute. There was thus no impasse.

However, an encroacher does not have an independent cause of action. He or she cannot offensively compel another to part with rights of ownershipIt is clear from what is set out above that adjudication in relation to encroachment is fraught with complexities. The appeal is dismissed with costs, including the costs of two counsel. 

WILLOW WATERS HOMEOWNERS ASSOCIATION (PTY) LTD v KOKA NO AND OTHERS 2015 (5) SA 304 (SCA)

Land — Rights in — Registered title deed condition prohibiting transfer without homeowners' association consent — Whether real or personal right — Whether binding on trustees of property owners in sequestration.

A title condition registered against the title deed of immovable property, prohibiting the transfer thereof without a clearance certificate from a homeowners' association, is a real right and therefore enforceable against the trustees of property owners in sequestration.

SACLR SEPTEMBER 2015

DE VOS NO AND OTHERS v MINISTER OF JUSTICE AND CONSTITUTIONAL DEVELOPMENT AND OTHERS 2015 (2) SACR 217 (CC)

Trial — Mental state of accused — Enquiry in terms of s 77 of Criminal Procedure C Act 51 of 1977 — Whether provisions of s 77(6)(a) peremptory — Use of words 'shall direct' in section peremptory.Trial — Mental state of accused — Enquiry in terms of s 77 of Criminal Procedure Act 51 of 1977 — Whether provisions of s 77(6)(a) constitutionally valid — Under legislative scheme as it applied to hospitalisation, only once accused found to have

committed serious offence was he admitted to psychiatric hospital, and this precautionary measure rendered provision constitutionally permissible.Trial — Mental state of accused — Enquiry in terms of s 77 of Criminal Procedure Act 51 of 1977 — Whether provisions of s 77(6)(a) constitutionally valid — Different treatment provided for by s 78(6) — Fact that s 78 provided for wider discretion of no moment as provisions dealt with different inquiries and outcomes.Trial — Mental state of accused — Enquiry in terms of s 77 of Criminal Procedure Act 51 of 1977 — Whether provisions of s 77(6)(a) constitutionally valid — Imprisonment in terms of section — Imprisonment only viable as 'stopgap' measure if patient were likely to cause serious harm to himself or others — These instances permissible as they served constitutionally mandated purpose of protecting public — Where accused person unlikely to cause severe harm to himself or others, presiding officer should be able to craft appropriate order pending availability of bed in psychiatric hospital akin to s 35(1)(f) of Constitution or discretion in s 79(2)(c) — Safeguards ensuring procedural component of right to freedom not violated.Trial — Mental state of accused — Enquiry in terms of s 77 of Criminal Procedure Act 51 of 1977 — Whether provisions of s 77(6)(a) constitutionally valid — Detention of children in terms of s 77(6)(a)(i) — Section entailing presiding officer had no discretion to deal with child appropriately, and unconstitutional to that extent.Trial — Mental state of accused — Enquiry in terms of s 77 of Criminal Procedure Act 51 of 1977 — Whether provisions of s 77(6)(a) constitutionally valid — Detention in terms of s 77(6)(a)(ii) — Objective of treatment could not on its own justify institutionalisation, as this failed to appreciate mental illness complex and varying types and degrees of mental disability — Trial of facts therefore not providing for appropriate procedural safeguard to deprivation of freedom — Gulf between automatic application of provision and objectives of treatment and safety too wide and breached substantive component of s 12 right.

The High Court held that the provisions of s 77(6)(a)(i) and (ii) of the Criminal Procedure Act 51 of 1977 were peremptory and that a presiding officer was required to institutionalise, imprison or place a mentally ill or an intellectually disabled person in a psychiatric hospital. This infringed such person's right to freedom and security of the person, as well as children's rights, and was accordingly unconstitutional. In proceedings for the confirmation of the declaration of invalidity the respondents contended that the impugned provisions were consistent with the Constitution in that they were rational and served a legitimate government purpose. They submitted that a judicial discretion in dealing with mentally ill or intellectually disabled persons who had been found, on a balance of probabilities, to have committed serious offences could put society at risk. The respondents also challenged the finding that the impugned section was peremptory and contended that the words 'shall direct' could be read as 'may direct'. Held, that the word 'shall' was an obligatory word and there was no justification for departing from the ordinary, clear definition of the word, and furthermore there were discrete and specified options available to a presiding officer and, as a result, discretion was precluded. The section was accordingly peremptory. Held, further, that, under the legislative scheme as it applied to hospitalisation under s 77(6)(a)(i), the accused was properly and extensively evaluated in terms of s 79 of the CPA and, once an accused was found not to understand court proceedings due to a mental illness or an intellectual disability, and a prosecutor requested that he be dealt with in terms of s 77(6)(a), and a I court so directed, then a trial of the facts was

undertaken. Only once the accused person was found to have committed a serious offence was he admitted to a psychiatric hospital. This precautionary measure was constitutionally permissible and any admission into a hospital would subsist no longer than was necessary. Held, further, that the fact that s 78 provided for a wider discretion when dealing J with accused persons, who at the time of the commission of the offence were found not to have had capacity, was of no moment. The distinction made between the options provided for under s 77(6)(a)(i) on the one hand, and s 78(6) on the other, was not irrational. They dealt with different enquiries and different possible outcomes. Section 78 dealt with a person who committed an offence and who, by reason of a mental illness or an intellectual disability, was incapable of appreciating the wrongfulness of the act or of acting in accordance with an appreciation of the wrongfulness of the act. If it were established that at the time of the offence the person did not have the requisite appreciation or ability to act in accordance therewith, the accused had to, for that reason, be found not guilty. It was only then that the several options in s 78(6) became available. Sections 77 and 78 thus served different purposes and that was why s 78(6) provided a wider range of options. Held, further, that imprisonment was only viable as a 'stopgap' measure if the presiding officer were of the opinion that the state patient was likely to cause serious harm to himself or others. These instances were permissible as they served the constitutionally mandated purpose of protecting the public. In instances where the evidence illustrated that the accused person was unlikely to cause severe harm to himself or others, a presiding officer should be able to craft an appropriate order pending the availability of a bed in a psychiatric hospital. This order could be akin to s 35(1)(f) of the Constitution or the discretion in s 79(2)(c). These safeguards would ensure that the procedural component of the right to freedom was not violated. Held, further, as to the interrelationship of provisions of the Child Justice Act 75 of 2008 with s 77(6)(a)(i), that if a child found himself in a s 77(6)(a)(i) process, then the prescripts of that provision applied and the presiding officer had no discretion to deal with the child appropriately. The trial of facts might reveal that the child did nothing at all or might reveal other important information that the presiding officer would be unable to take into account. Therefore detention, which had to follow, deprived courts of a discretion to deal appropriately with children who fell within the ambit of the impugned section. Therefore, to the extent that s 77(6)(a)(i) applied to children, it was unconstitutional. Held, further, as to the provisions of s 77(6)(a)(ii), that the objective of treatment could not on its own justify institutionalisation, as this failed to appreciate that mental illness was complex, and there were varying types and degrees of mental disability such that institutionalisation and treatment were not always required or appropriate. Some intellectual disabilitiescould not be treated and institutionalisation or treatment never improved such cognitive conditions. The trial of the facts therefore did not provide for an appropriate procedural safeguard accompanying the deprivation, as deprivation in terms of the section happened regardless of the outcome, and the provision therefore breached the procedural component of the right. Furthermore, the gulf between the automatic application of the provision and the objectives of treatment and safety was too wide and one could not conclude that the objective behind the detention met the purpose proffered. Section 77(6)(a)(ii) therefore also breached the substantive component of the s 12 right and was constitutionally invalid. The court ordered accordingly. 

S v MADLALA 2015 (2) SACR 247 (GJ)

Bail — Evidence adduced at bail proceedings — Admissibility of at subsequent trial — Compliance with provisions of section — Warning by presiding officer evidence might be used against him at subsequent trial equally applicable to evidence on affidavit as oral evidence — Criminal Procedure Act 51 of 1977, s 60(11B)(c). 

The appellant appealed against his conviction for robbery with aggravating circumstances in a regional magistrates' court. He contended inter alia that the magistrate had misdirected himself in admitting his bail affidavit into the record without proof of substantial compliance with s 60(11B)(c)of the CPA, which required that the applicant not only be advised by his attorney that the statements in his bail affidavit could be used against him during his trial and form part of the record, but also that the court itself had to inform him that the statement might be used against him at his trial. His counsel contended that the misdirection had resulted in an unfair trial. Counsel for the state argued that there was no requirement that the presiding officer at E the bail proceedings had to inform the accused of his rights if the accused, as in the instant case, had submitted an affidavit. He argued that s 60(11B)(c) only required the presiding officer to warn the accused if he elected to testify during the course of the bail proceedings, and an affidavit was not testifying.Held, that both oral evidence and affidavits were evidence that could be used in the subsequent trial. As such, the requisite warning had to be issued by the court to the accused before he elected to testify orally or by way of an affidavit. Held, further, that, even if the presiding officer did not inform the accused of his rights during the bail proceedings, such misdirection did not warrant a reversal. The admission of inadmissible evidence was material and prejudicial to the accused if it formed the basis for an adverse decision reached. In the present case the failure of the magistrate to exclude the inadmissible evidence was immaterial and non-prejudicial to the accused, as the magistrate did not emphasise the inadmissible evidence in reaching his conclusions as to the factual issues in the case. The magistrate did not hang his hat on internal consistencies between the appellant's statements made during the bail hearing and his testimony at trial, but rather on the general demeanour of the appellant and his co-accused insofar as they presented evidence that was incredible, unreliable and riddled with external contradictions, as against the complainant who was a credible and reliable witness. Even without factoring in the internally contradictory statement made by the appellant during the bail proceedings and at trial, a finding of guilt was still supported by the magistrate's credibility findings, based on the externally contradictory evidence of the appellant and his co-accused at trial. The appeal was dismissed.

S v MANDLOZI 2015 (2) SACR 258 (FB)

Drug offences — Methamphetamine — Dealing in -in contravention of s 5(b) of Drugs and Drug Trafficking Act 140 of 1992 — Dealing in 25,8 kg of — Appellant acting as courier delivering drugs from one province to another — Dangers of methamphetamine troubling factor and quantity of involved huge — Sentence of 18 years' imprisonment should be sparingly reserved for drug manufacturers and suppliers — Sentence of 18 years' imprisonment set aside on appeal and replaced with 18 years' imprisonment of which four years suspended.

The appellant, a 46-year-old woman, was convicted in a magistrates' court of dealing in 25,8 kg of methamphetamine in contravention of s 5(b)of the Drugs and Drug Trafficking Act 140 of 1992. The evidence revealed that H she had agreed to courier the drugs from Johannesburg to Cape Town on a bus. Her conduct immediately prior to her arrest revealed that she was not just a naive person who had been taken advantage of by a drug lord but that she was in fact a cunning mule. She appealed against her sentence of 18 years' imprisonment.Held, that the negative and devastating repercussions of drugs on society in I general and addicts in particular were so notorious that no reasonable person could claim to be ignorant of them. The appellant could not be heard to complain that she was ignorant of such devastating effects of the drugs she was carrying and she had to be held to have taken such inherent danger into the bargain when she agreed to traffic a consignment of a large quantity of drugs from Gauteng to the Western Cape. Held, further, that what was very troubling about 'tik' (methamphetamine) was the ease with which it could be manufactured and that the drug had become so easily available that it had been referred to as the drug of choice. Held, further, that the quantity of the drug involved was indeed huge, but at the same time, huge as it was, exceedingly large consignments of drugs such as cannabis transported by cargo carriers were imaginable. Very severe sentences, such as the one imposed on the appellant, should generally and sparingly be reserved for drug manufacturers, suppliers and repeat offenders. In the present case the court was not grappling with a worst case scenario of a courier. Held, further, that the sentence of 18 years' imprisonment was, in all the circumstances, disturbingly severe and the court a quo had excessively stressed the gravity of the crime, together with the harm to society, at the expense of the profile of the appellant. As a result of the imbalance, the court had inappropriately imposed a sentence which tended to be more retributive than deterrent in effect. Held, that an appropriate sentence in the circumstances would be one of 18 years' imprisonment of which four years were suspended for five years. 

S v MASOKA AND ANOTHER 2015 (2) SACR 268 (ECP)

Evidence — Admissibility — Evidence illegally obtained — Prosecutor instructing investigating officer to obtain witness statement from alibi witness of accused No 2, after alibi witness already having consulted with accused No 2's attorney — Interference with defence witness in criminal trial compromised integrity of witness and accused's right to fair trial — Gross irregularity on part of prosecutor.

The second accused had indicated in his plea explanation on a charge of robbery, that he had an alibi and disclosed the name and address of the witness. His attorney consulted with the witness on the following day. The prosecutor instructed the investigating officer to obtain a witness statement from the alibi witness, which was obtained but never mentioned until the statement was produced when the second accused completed his examination-in-chief and the prosecutor started cross-examination. When this occurred the magistrate referred the matter on special review to the High Court.

Held, that no legal representative was allowed to consult or influence or interfere in any way whatever with the opposing party's witnesses. In criminal matters an accused who interfered with state witnesses could be imprisoned pending trial, and might be refused bail. The rule was as binding on investigating officers and prosecutors who interfered with defence witnesses. Held, further, that, to interfere with or attempt to influence a defence witness in a criminal trial was to compromise the integrity of that witness. If an accused's witness was compromised, the accused's right to a fair trial was equally compromised. If this happened the evidence became worthless and the true facts could not be ascertained. The entire justice system was then undermined and justice could not be done. Held, further, that the prosecutor was guilty of serious misconduct and had to be duly censured. The proceedings against the accused had to be set aside and the Director of Public Prosecutions had to decide whether or not to commence criminal proceedings against him afresh before another magistrate. If so, the witness statement obtained by the state from the defence witness had to be removed from the police docket and be regarded as pro non scripto, and he had to be disqualified as a state witness. 

S v MALUKA 2015 (2) SACR 273 (GP)

Trial — Mental state of accused — Enquiry in terms of ss 77, 78, 79 of Criminal Procedure Act 51 of 1977 — Order of detention in terms of s 77(6) pending decision of judge in chambers — No mechanism for review of such order — Potential prejudice requiring mechanism for review — Matter should receive attention of executive and legislature and, pending adoption of suitable mechanism, magistrates should submit matters for review. 

In the light of conflicting decisions on whether an order, in terms of s 78(6)(a)(ii)(aa) of the CPA, that an accused person be admitted to an institution to be treated as an involuntary mental health care user, as contemplated by s 37 of the Mental Health Care Act 17 of 2002, should be reviewed by the High Court, the present matter was referred to the full bench of the court for decision. Held, that the potential for serious prejudice to accused persons in such circumstances made it desirable for some form of automatic review mechanism to be considered. This, however, was a matter for the legislature to consider, and the court should carefully guard against the usurping of the legislative function.Held, further, that, given that such matters usually required careful consideration, research and extensive consultation, it might take some time before a final position was adopted, and in the interim, and pending that process, and in order to avoid prejudice to those affected, as a matter of good practice, magistrates should refer orders made in terms of s 78(6)(a)(ii)(aa) to the High Court for review. 

CHALA AND OTHERS v DIRECTOR OF PUBLIC PROSECUTIONS, KWAZULU-NATAL AND ANOTHER 2015 (2) SACR 283 (KZP)

Trial — Assessors — Appointment of — For purposes of trial — Murder trial — Section 93ter(1) of Magistrates' Courts Act 32 of 1944 — Failure to invoke provisions of s 93ter constituting fatal irregularity vitiating entire trial. Trial — Assessors — Appointment of — For purposes of trial — Murder trial — Section 93ter(1) of Magistrates' Courts Act 32 of 1944 — Magistrate's duty to explain to accused rights in this regard and to record accused's response where elects not to have assessors, but magistrate nevertheless still to consider whether such course advisable in circumstances of case. 

The failure to properly invoke the provisions of s 93ter of the Magistrates' Courts Act 32 of 1944 will constitute a fatal irregularity vitiating the entire trial. It should always appear from the record of proceedings in cases where s 93ter is required to be invoked that a proper explanation is given by the magistrate to the accused, that they have the choice in the appointment of assessors, together with a brief exposition of the import of that choice and as to what was required of them. The record should also reflect, after having given such explanation and requesting a response from the accused, in cases where they elected not to have assessors, that the magistrate nevertheless still considered whether such course was advisable in the particular case before him or her.

S v MWAKA 2015 (2) SACR 306 (WCC)

Bail — Appeal against refusal of — Factors to be taken into account — Accused foreign national who had fled country whilst out on bail and returned without reporting to police or court — Showing flagrant disregard for law with continued dealing in drugs, despite previous conviction — Claim of foreign nationals having suffered horrific conditions in South African justice system cheap attack — Not having discharged onus of showing interests of justice permitted release.

The appellant, a foreign national who resided permanently in South Africa, was charged with dealing in dependence producing drugs and with corruption in contravention of the provisions of s 3(b) of the Prevention and Combating of Corrupt Activities Act 12 of 2004. The offences fell within the ambit of sch 5 to the CPA and the onus accordingly rested upon the appellant to satisfy the court that the interests of justice permitted his release on bail. The regional magistrate refused bail and the appellant appealed against the refusal. At the time when the offences were allegedly committed, the appellant had already been arrested a number of times for other drug offences and he was sentenced a number of times in 2011, including having received a sentence of 36 months' imprisonment wholly suspended for a period of five years for dealing in drugs. The appellant was arrested for the present offences in June 2011 and, even before his appearance in the regional court, he was again arrested in a sting operation by the police for dealing in dependence producing drugs. According to the testimony of the police official who attempted to trace the appellant, the appellant had given four different addresses to the police. The appellant left the country in 2011 to travel to Tanzania, his home country, and returned to South Africa in 2012. He was rearrested in August 2014. He advanced two reasons for his failure to report at the court or the police on his return from Tanzania: firstly his inability to afford an attorney at the time; and his claim that, as a foreigner in South Africa, he had had some bad experiences and had heard horror

stories of experiences that other people had suffered in the justice system. He contended on appeal that the regional magistrate had erred in failing to properly consider suitable and/or stringent conditions as an alternative to the denial of bail and that the state's case against him was far from convincing.Held, that the appellant's reasons for not attending court were simply unconvincing. His explanation reeked of a cheap attack on our criminal justice system and he had failed to substantiate his claims of horror stories suffered in the justice system. His own circumstances demonstrated the contrary as he was arrested in rather quick succession on four different occasions, committing similar offences in 2010 and 2011, and was granted bail in each of those instances by the lower courts. It was difficult to imagine how stringent bail conditions in the circumstances of the case would be effective in ensuring his attendance at court if he had previously given four different addresses that successfully caused him to evade the police. Furthermore the ease with which he crossed South Africa's borders was also cause for concern as to whether he would indeed stand his trial, despite his present personal and family circumstances. Held, further, that the appellant had shown a flagrant disregard for the law and unashamedly continued with the possession and trafficking of drugs for which he had already been found guilty and had been sentenced. In considering all the relevant factors, releasing the appellant in the circumstances would bring the administration of justice into disrepute. The appellant had failed to show that the regional magistrate had erred in refusing bail. Appeal dismissed. 

S v PAPU AND OTHERS 2015 (2) SACR 313 (ECB)

General principles of liability — Defences — Private defence — Distinction B between private defence and putative private defence emphasised.General principles of liability — Defences — Private defence — When applicable — Police officials on remote farm, with battery of artillery with contingency plan to shoot if shot at, could not have entertained reasonable suspicion that quarry was at farm, and shot at deceased who was attempting to ascertain cause of disturbance and who fired shot when they refused to announce themselves — Defence of private defence rejected.General principles of liability — Defences — Putative private defence — When applicable — Police officials on remote farm with battery of artillery with contingency plan to shoot if shot at, could not have entertained reasonable suspicion that quarry was at farm and shot at deceased who was attempting to ascertain cause of disturbance, fired shot when refused to announce themselves — Could not honestly believe that their lives were in imminent danger and were not entitled to fire into darkness directly at would-be attacker without firing warning shot — Conviction for murder upheld.

The three appellants, all seasoned policemen, set out on a night mission to arrest a suspect at the premises of the deceased whose farmhouse was in a remote area. They were armed with R5 assault rifles. Their presence at the farmhouse was detected by the deceased's dogs and this alerted the inhabitants, some of whom ventured into the darkness to ascertain what was happening. The deceased called out to the appellants to announce their presence and when they failed to do so he fired a shot. This led to the appellants retaliating and a shot struck and killed the

deceased. At their trial on a charge of murder the court held that the state had discharged the onus of proving that the appellants had not acted in either private defence or putative private defence and convicted them of murder. On appeal against their conviction and sentence of direct imprisonment in terms of the provisions of s 276(1)(i) of the CPA,Held, that that the parties and the court a quo had conflated the two defences and it was apposite to emphasise the disparate nature of the two defences. A person who acted in private defence acted lawfully, provided his conduct satisfied the requirements laid down for such a defence and did not exceed its limits. The test was objective, namely whether a reasonable man in the position of the accused would have acted in the same way. In putative private defence, however, it was not lawfulness that was in issue but culpability, and if an accused honestly believed his life or property to be in danger, but objectively viewed they were not, the defensive steps he took I could not constitute private defence. If in those circumstances he killed someone his conduct was unlawful. His erroneous belief that his life or property was in danger might well exclude dolus, in which case liability for the person's death based on intention would also be excluded; at worst for him, he could then be convicted of culpable homicide. Held, further, that it was abundantly clear, as the trial court had correctly found, that none of the appellants could have entertained a reasonable suspicion that their quarry was on the farm. To thus proceed, under cover of darkness, to a remote farm, armed with a battery of artillery, and with a contingency plan foremost in their minds to shoot if they were shot at, was not only unreasonable but also foolhardy in the extreme. Held, further, that the appellants' reliance on putative private defence was also correctly found by the trial court to be misplaced. The appellants and, a fortiori, their contingent were all armed with assault rifles. When the deceased fired the first shot, the appellants, by their own admission, took cover behind a trailer before returning fire. The area was enveloped in darkness and they lay prone on the ground and could have retreated from a prone position. They could therefore not honestly have believed that their lives were in imminent danger. Shrouded in darkness and invisible to the perceived threat, they were in comparative safety and it was inconceivable that they could, in those circumstances, have believed they were entitled to fire into the darkness, directly at a would-be attacker, in defence of their lives, without even firing a warning shot. The trial court's finding that the state had proved beyond a reasonable doubt that the appellants subjectively had the requisite intent, to found a conviction for murder, was undoubtedly correct. The appeal was dismissed.

ALL SA LAW REPORTS SEPTEMBER 2015

PART ONE

Fedgroup Participation Bond Managers (Pty) Ltd v Trustee of the Capital Property Trust Collective Investment Scheme in Property [2015] 3 All SA 523 (SCA)

Property – Rights of owner – Ownership of land on which an encroachment exists – Whether encroacher can bring an independent cause of action claiming transfer of

the encroached – No basis on which an encroacher might offensively, as of right, claim the transfer of ownership into his name, of another’s land.

In July 2006, the appellant (“Fedgroup”) and respondent (“CPT”) entered into a written agreement in terms of which CPT acquired twenty-seven income producing properties and associated businesses from Fedgroup. One of those properties was contiguous to an erf owned by Fedgroup. An incomplete structure on Fedgroup’s property partially encroached on CPT’s adjoining property. The structure had pre-existed Fedgroup’s ownership of the property, and the encroachment was only discovered by Fedgroup some two years after the conclusion of the written agreement of sale. When negotiations with CPT failed to result in a resolution, Fedgroup launched an application for an order that the land on which the structure encroached be transferred to it. The land sought by Fedgroup constituted 20% of the total extent of the property owned by CPT.

Opposing the matter, CPT raised three points in limine. The first was that as there was no justiciable dispute, Fedgroup had no cause of action. It was argued in that regard that CPT was the owner of the land and had no desire to dispose of it, and as a land owner could not be compelled to sell property it was unwilling to part with, Fedgroup was seeking to compel an expropriation which, in our law, was incompetent. The second point was that more than three years had passed since Fedgroup first became aware of the encroachment, with the result that its claim had prescribed. Lastly, CPT contended that there were material disputes of fact that could not be resolved on the papers.

In considering the first point, the court below held that the court has a discretion, based on consideration of reasonableness and fairness, to order transfer against the payment of damages. However, in the circumstances of the present case, such transfer would not be feasible, and was thus refused. In relation to prescription, the court ruled against CPT.

Those conclusions led to an appeal and a cross-appeal.

Held – The judgment of the court below was tainted by major misconceptions in the reasoning and conclusions of the court. The cases relied upon by the court were not authority for the proposition that an encroacher can claim as of right that his neighbour’s land should be transferred to him.

Our law has always been careful to protect the right of ownership, particularly of immovable property. The Court could think of no basis on which an encroacher might offensively, as of right, claim the transfer of ownership into his name, of another’s land. Worse still for Fedgroup, was the fact that it was seeking transfer of more land than that occupied by the encroachment. No court has ever gone as far as ordering the transfer of land greater than the area of encroachment. Such an order is not competent. To overcome that obstacle, Fedgroup sought to amend its notice of motion on appeal to include an alternative prayer for transfer of only the encroached-upon land. Regarding that as a radical shift in Fedgroup’s case, the Court refused to allow the amendment.

The appeal was dismissed with costs, rendering the cross-appeal moot.

Aboobaker NO and others v Serengeti Rise Body Corporate and another[2015] 3 All SA 538 (KZD)

Administrative law – Town planning – Development of property – Approval of building plans – Approval of the building plans was administrative action falling within the ambit of judicial review of section 6 of the Promotion of Administrative Justice Act 3 of 2000 – Building plans did not meet with the applicable statutory requirements, with the result that the municipality’s approval was open to review.

Administrative law – Town planning – Development of property – Rezoning – A rezoning application requires notice of the intended rezoning to the affected parties – Court found that the public notice received by some interested parties, failed to notify those affected by any rezoning authorisation, as to the intended zonal change or the purpose of the rezoning – Notification to the public was wholly inadequate and did not meet the requirements of the relevant Ordinance.

The applicants sought an order ensuring that the second respondent municipality’s approval of the construction of a building on certain immovable property be declared illegal and that the structure be demolished. The applicants owned immovable property in the immediate vicinity of the structure that was being developed. As a result of the location of their properties, the majority of applicants enjoyed panoramic views of the city and sea until the first respondent erected the structure giving rise to this review. In seeking review, the applicants challenged the municipality’s approval of the first respondent’s building plans and its application for rezoning of the property in question.

Held – A rezoning application requires notice of the intended rezoning to be given to the affected parties. The first respondent claimed that it duly gave the public notice and notice to the surrounding properties regarding the rezoning process. However, the Court found that the public notice received by some interested parties, failed to notify those affected by any rezoning authorisation as to the intended zonal change or the purpose of the rezoning. The first respondent also failed to show that the notification was sent to each and every affected land owner or occupier of land adjacent to the property. Therefore, the notification to the public was wholly inadequate and did not meet the requirements of the relevant Ordinance.

The Court confirmed that the approval of the building plans was administrative action falling within the ambit of judicial review of section 6 of the Promotion of Administrative Justice Act 3 of 2000. The building plans did not meet with the applicable statutory requirements, with the result that the municipality’s approval was open to review.

Finding that grounds had been established for a demolition order, the Court made an order to that effect.

Airports Company South Africa Limited v Airport Bookshops (Pty) Ltd t/a Exclusive Books [2015] 3 All SA 561 (GJ)

 Administrative law – Tender process – Organ of State – Lawfulness of tender process – Constitution of the Republic of South Africa, 1996 – Section 217 – Both the original agreement and the extension agreement were subject to the

constitutional and statutory framework for contracting by an organ of State – Letting of shop premises amounted to a disposal of assets, and fell within the purview of section 217.

Civil procedure – Cause of action – New cause of action – Replying affidavit – Applicant’s argument that the extension agreement on which it had originally relied, was invalid – Court held that a party may not seek to make out a new cause of action in reply and it must make out its cause of action in the founding affidavit.

Contract – Contractual terms – Incorporation of tacit terms – Necessity – Argument that the extension agreement was subject to a tacit term, whereby neither party was entitled to terminate the extension agreement until completion of a valid and lawful tender process to identify a new tenant – In casu, the court found that the tacit term was not precluded by the terms of the agreement.

In March 2009, the applicant (“ACSA”) and the respondent (“Exclusive Books”) entered into an agreement in terms of which ACSA leased a shop to Exclusive Books at its airport. An extension agreement subsequently provided that the lease would be renewed on a month-to-month basis. Towards the end of 2013, ACSA invited suitably qualified companies to submit bids to take up the rental of 13 shops in the airport. Exclusive Books responded by submitting a bid in the hope of retaining its tenancy of the shop, but was informed that its bid was unsuccessful. Although it attempted to challenge the lawfulness of the tender process, it was given notice to vacate the premises. In terms of section 6(2) of the Promotion of Administrative Justice Act 3 of 2000, Exclusive Books applied for judicial review. It refused to vacate the premises before the review application was finalised.

ACSA then launched this application for eviction.

Held – ACSA changed its stance in the replying affidavit, arguing that the extension agreement on which it had originally relied, was invalid. The Court held that the change in stance was not permissible. A party may not seek to make out a new cause of action in reply. It must make out its cause of action in the founding affidavit. Consequently, the matter had to be decided on the basis that the extension agreement was valid.

ACSA contended that it was entitled on the basis of the extension agreement to terminate the lease on a month’s notice at its discretion. Exclusive Books contended that the extension agreement was subject to a tacit term, whereby neither party was entitled to terminate the extension agreement until completion of a valid and lawful tender process to identify a new tenant. Setting out the law with regard to the incorporation of tacit terms into agreements, the Court found that the tacit term was not precluded by the terms of the agreement in this case.

The Court considered whether section 217 of the Constitution, dealing with procurement, applied in general terms to the letting of the premises concerned and decision-making pertaining to it, and then, whether it applied to the extension agreement. ACSA was an organ of State as envisaged in section 217(1). The letting of shop premises amounted to a disposal of assets, and fell within the purview of section 217. Both the original agreement and the extension agreement were subject to the constitutional and statutory framework for contracting by an organ of State. The limitation in duration brought about by the tacit term rendered the

extension agreement compliant with section 217 of the Constitution and the applicable statutory framework. The tacit term was therefore necessary.

Against that backdrop, ACSA’s tender process could not be said to be lawful.

The application was dismissed.

Engelbrecht NO and others v Zuma and others [2015] 3 All SA 590 (GP)

Insolvency – Application by liquidators – Declaratory relief – Directors and managers of company – Personal liability for debts – Section 424 of the Companies Act 61 of 1973, read with section 77 and Schedule 5 of the Companies Act 71 of 2008 – Fraudulent and reckless conducting of company’s affairs – Recklessness could consist of blameworthy conduct characterised by a failure to take any due care in the management of a company that results in detriment to the company and others and exhibiting a high degree of disregard for the standards observed by honest and diligent men of affairs – Court found that the second to fifth respondents were guilty of wilful deception by presenting bid documents containing numerous false assertions to the liquidators.

The applicants were all insolvency practitioners who were the provisional liquidators of a group of companies (“Pamodzi”). The respondents were the directors and managers of a now insolvent company (“Aurora”). The applicants sought a declaratory order that the respondents, jointly and severally, the one to pay the others to be absolved, be declared liable for all debts and liabilities owed by Aurora to the Pamodzi group of companies, as provided in section 424 of the Companies Act 61 of 1973, read with section 77 and Schedule 5 of the Companies Act 71 of 2008.

Held – The applicants had to establish the facts upon which they relied to prove fraudulent or reckless conduct on the part of the respondents on a balance of probabilities. They had to provide proof (on a balance of probabilities) that all five respondents were individually guilty of intentional deceit; or were each in his individual capacity guilty of reckless conduct of Aurora’s business. Recklessness could consist of blameworthy conduct characterised by a failure to take any due care in the management of a company that results in detriment to the company and others and exhibiting a high degree of disregard for the standards observed by honest and diligent men of affairs. It could also be demonstrated by a similarly uncaring and careless failure to attend to the company’s business or to prevent foreseeable harm from being caused by failing to take reasonable preventative measures against such eventualities.

Examining the facts, the Court found that the second to fifth respondents were guilty of wilful deception by presenting bid documents containing numerous false assertions to the liquidators. They were further guilty of reckless management of Aurora’s affairs. The applicants were entitled to the relief sought against them.

The first respondent was in a different position as he was not involved in the day to day management of Aurora’s business or in the negotiations with the liquidators. Ascertaining the date from which he must have become aware of the situation, the Court held him liable for all losses that were incurred thenceforth.

Fairhaven Country Estate (Pty) Ltd v Harris and another [2015] 3 All SA 618 (WCC)

Interdict – Clear right – Use of domain name – Issues for determination were whether the applicant had an exclusive right to use the domain and related domain names which might exist pertaining to the residential estate, and if so, whether the respondent’s use or intended use thereof, might result in passing off – Court held that the applicant had established an inextricable link between the domain names and its name, even though the first respondent was responsible for the registration thereof – First respondent’s mere registration of the domain name that was linked to the property which belonged to someone else, could not result in having exclusive right to the use of that domain name.

The applicant carried on business as the developer of a residential estate. It sought to interdict the first respondent against instructing the second respondent or in any way attempting to redirect or transfer the domain names incorporating the name of the applicant’s residential estate to any third party other than the applicant.

The first respondent had been engaged in business with the applicant, and when the business relationship came to an end, he did not inform the applicant that the domain names were registered in his name.

It was common cause that the said domain names were registered by the first respondent before the applicant was registered as a company. The applicant contended however, that it had maintained and operated the active domain using the relevant name, and that had it known from the outset that the first respondent was the registrant of the domains and would seek to exploit them in due course, it could have renamed the estate at the very beginning.

Held – The issues for determination were whether the applicant had an exclusive right to use the domain and related domain names which might exist pertaining to the estate, and if so, whether the respondent’s use or intended use thereof, might result in passing off.

The Court found, on the evidence, that the applicant had established an inextricable link between the domain names and its name, even though the first respondent was responsible for the registration thereof. The first respondent’s mere registration of the domain name that was linked to the property which belonged to someone else, cannot result in his having exclusive right to the use of that domain name.

The applicant was, therefore, entitled to interdictory relief as there was a threatened infringement of its clear rights.

GT v CT and others [2015] 3 All SA 631 (GJ)

Children – Adoption – Adoption order – Rescission of – Children’s Act 38 of 2005 – Section 7(1) – A court is obliged to consider the effect the rescission of the adoption orders will have on the children, especially where a considerable period of time has elapsed since the granting of such adoption orders and the children have formed a bond with their adoptive parent – In casu, the adoption was objectively de

facto a legal fiction because the first respondent did not recognise or accept the legal effect and consequences of the adoption of her children by the applicant.

The first and second respondents divorced in 2005. Pursuant to the divorce, the first respondent was awarded custody of the two children born of the marriage. The applicant and the first respondent married in June 2006, and the applicant adopted the two children. However, he and the first respondent were divorced in 2008. In terms of the settlement agreement, the first respondent was awarded the custody of the children. The breakdown in the relationship between the applicant and first respondent led to the applicant’s relationship with the children breaking down. The applicant was prevented from exercising any parental rights in respect of the children, by the first respondent’s obstructive behaviour. He therefore sought the rescission of the adoption order granted to him.

Opposing the application, the third respondent contended that the application seemed to be motivated by the applicant’s unwillingness to continue paying maintenance in respect of both children despite the fact that he still harboured love and affection for them. The third respondent also stated that the setting aside of the adoption orders would not be in the best interest of the children because the children had physically and emotionally bonded with the applicant whom they still regarded as their father figure.

Held – In weighing up the children’s best interests in adoption matters, the Court is obliged to consider the effect the rescission of the adoption orders will have on the children, especially where a considerable period of time has elapsed since the granting of such adoption orders and the children have formed a bond with their adoptive parent. Section 7(1) of the Children’s Act 38 of 2005 sets out a lengthy list of factors for courts to consider when determining a child’s best interests.

It had to be factually accepted that in analysing the apparent adoption by the applicant, the adoption was objectively de facto a legal fiction because the first respondent did not recognise or accept the legal effect and consequences of the adoption of her children by the applicant. Contact between the applicant and the children had ended in 2008. The applicant had stated that he was not interested in rebuilding the bond between him and the children and he did not intend continuing a parent-child relationship with the children. The setting aside of the adoption orders would afford the first and second respondents and the children an opportunity to strengthen their already existing parent-child relationship.

The application succeeded.

University of Stellenbosch Legal Aid Clinic and others v Minister of Justice and Correctional Services and others (South African Human Rights Commission as amicus curiae) [2015] 3 All SA 644 (WCC)

 Civil procedure – Debt collection procedure – Emoluments attachment orders (EAOs) – Lawfulness – Magistrates’ Court Act 32 of 1944 –Section 65J – Section permits the attachment of a debtor’s earnings and obliges his employer (the garnishee) to pay out of such earnings specific instalments to the judgment creditor or his attorney and the instalments are to be paid until the judgment debt and legal costs are paid in full – Legislation provides no statutory limit on the EAOs which may

be granted against a debtor or the amount which may be deducted from his salary or wages.

Constitutional law – Attachment of debtor’s earnings – Requirement – Judicial oversight – Constitution of the Republic of South Africa, 1996 – Section 38(d) – Most of the orders were obtained from courts located a great distance from where the debtors resided and worked and therefore the debtors’ rights to access the courts and enjoy the protection of the law were clearly compromised in those instances – Court held that section 65J(2)(b)(i) and section 65J(2)(b)(ii) of the Magistrates’ Court Act 32 of 1944 were constitutionally invalid to the extent that they allowed for emoluments attachment orders to be issued by a clerk of the court without judicial oversight.

The present application brought into sharp focus, the debt collection procedure employed by the micro-lending industry, and the abuse of the emoluments attachment order (“EAO”) procedure.

The first applicant was a law clinic whose clients were principally low wage earners in the Cape winelands area and nearby towns. In the course of its work, the clinic encountered evidence of the apparent large scale abuse of EAOs by credit providers and allegations of fraud in the process of the EAOs being issued. It therefore brought the present application in the public interest in terms of section 38(d) of the Constitution. The fourth to eleventh and thirteenth to sixteenth respondents were described as “the credit providers”. The seventeenth respondent (“Flemix”) a firm of attorneys, was their external debt collector and also acted on their behalf in opposing these proceedings.

Held – Section 65J of the Magistrates’ Court Act 32 of 1944 permits the attachment of a debtor’s earnings and obliges his employer (the garnishee) to pay out of such earnings specific instalments to the judgment creditor or his attorney. The instalments are to be paid until the judgment debt and legal costs are paid in full. Following an enquiry by a magistrate into a debtor’s financial position, the court may make such order as it deems “just and equitable”, in respect of the present applicants, the clerk of the court issued EAOs attaching their earnings without any evaluation of their ability to afford the deductions to be made from their salaries and without deciding whether or not the issuing of an EAO itself would be just and equitable. The whole process of obtaining the EAOs was driven by the creditors without any judicial oversight whatsoever.

A disturbing feature of this matter was the manner in which the respondents – the micro-lenders – forum shopped for courts which would entertain the applications for judgment and the issuing of EAOs. Most of the orders were obtained from courts located a great distance from where the debtors resided and worked. The debtors’ rights to access the courts and enjoy the protection of the law were clearly compromised in those instances. The court also expressed doubt as to whether the consents to jurisdiction and the judgments themselves were voluntarily obtained from the debtors.

Legislation provides no statutory limit on the EAOs which may be granted against a debtor or the amount which may be deducted from his salary or wages. The individual applicants are a group of low income earners. Their wages were invariably their only asset and means of survival. A substantial reduction of that asset had the potential of reducing human dignity. The State, if it is a party to the grant of the EAO,

has the duty to refrain from conduct which results in the debtor being left impoverished or facing a life of humiliation and degradation.

The Court held that section 65J(2)(b)(i) and section 65J(2)(b)(ii) of the Magistrates’ Court Act were constitutionally invalid to the extent that they allowed for EAOs to be issued by a clerk of the court without judicial oversight. The EAOs issued against the relevant individual applicants were declared to be unlawful, invalid and of no force and effect.

Van der Merwe and others v Zonnekus Mansion (Pty) Ltd (in liquidation) and others [2015] 3 All SA 659 (WCC)

Company in final liquidation – Business rescue proceedings – Whether it is competent to commence business rescue proceedings in terms of section 131(1) of the Companies Act 71 of 2008 when a company is in final liquidation – No justification for differentiating between pre-and post-final liquidation in circumstances where the prospects of success of business rescue exist, as the Legislature did not do so.

In terms of rule 6(5)(d) of the Uniform Rules of Court, application was made to the court to decide a point of law, namely whether it is competent to commence business rescue proceedings in terms of section 131(1) of the Companies Act 71 of 2008 when a company is in final liquidation.

Held – The Court was bound by the judgment in the case of Richter v ABSA Bank Limited [2015] JOL 33329 (SCA), even though it disagreed with the view stated therein. The court in that case observed that there was no sensible justification for differentiating between pre-and post-final liquidation in circumstances where the prospects of success of business rescue exist, as the Legislature did not do so and to restrict business rescue to those cases in which a final winding-up order had not been granted could be inimical to the Act.

It was therefore held in the present matter, that it is competent to commence business rescue proceedings in terms of section 131(1) of the Companies Act, when a company is in final liquidation.

ALL SA LAW REPORTS SEPTEMBER 2015

PART TWO

Financial Services Board v Barthram and another [2015] 3 All SA 665 (SCA)

Financial services – Financial services representative – Debarment of – Financial Services Advisory and Intermediary Services Act 37 of 2002 –Section 14(1) – Precludes representative from rendering financial services on an industry-wide basis and not just for the financial services provider responsible for the debarring.

In terms of a written contract of employment, the first respondent was appointed as a full-time employee to market and sell the products and policies of the second respondent (“Discovery”), and to provide financial advice in that regard. Under three years later, the first respondent terminated his employment with Discovery on 24

hours’ notice and he commenced employment a day later with another company. Officials of Discovery took control of client files which were in the first respondent’s possession. Discovery subsequently withdrew the first respondent’s authority to act on its behalf and removed his name from its register. It proceeded to notify the Financial Services Board (“FSB”) that the first respondent did not comply with the requirements of the Financial Services Advisory and Intermediary Services Act 37 of 2002 for continued appointment as a representative of Discovery, on the grounds of honesty and integrity.

In an attempt to have his debarment lifted, the first respondent launched an urgent application in the High Court. The court issued an interim order in the first respondent’s favour, pending finalisation of review proceedings seeking to vary the decisions and/or rulings of Discovery and the FSB. The first respondent launched the envisaged review application.

The review court concluded that the first respondent had not made out a case for the relief that he sought against Discovery and accordingly dismissed his application with costs. As the FSB did not oppose the application, the interim relief obtained against it was confirmed and made a final order. The court’s conclusion was that the effect of a debarment in terms of section 14(1) of the Act was that the applicant was precluded from rendering any new financial service on behalf of the first respondent. That preclusion was achieved by removing the applicant’s authority to represent the first respondent and by removing the applicant’s name from the first respondent’s register. However, the applicant was still at liberty to render financial services with other financial services providers. Entering the fray, the FSB obtained leave to appeal against the latter conclusion.

Held – Section 14 lay at the heart of the appeal and deals with debarment of representatives. Section 14(1) provides that “An authorised financial services provider must ensure that any representative of the provider who no longer complies with the requirements referred to insection 13(2)(a) or has contravened or failed to comply with any provision of this Act in a material manner, is prohibited by such provider from rendering any new financial service by withdrawing any authority to act on behalf of the provider, and that the representative’s name, and the names of the key individuals of the representative, are removed from the register referred to in section 13(3)”. The section is couched in peremptory terms.

The court below was held to have misinterpreted the legal effect of a debarment in terms of section 14(1) in holding that it precludes the representative from acting as such only in respect of the debarring financial services provider. The debarment of the representative by a financial services provider is evidence that it no longer regards the representative as having either the fitness and propriety or competency requirements. A representative who does not meet those requirements lacks the character qualities of honesty and integrity or lacks competence and thereby poses a risk to the investing public generally. Such a person ought not to be unleashed on an unsuspecting public and it must therefore follow that any representative debarred in terms of section 14(1), must perforce be debarred on an industry-wide basis from rendering financial services to the investing public. The FSB’s appeal therefore succeeded.

An appeal by the first respondent against the finding of the court in the review application also lay before the present Court. It was found that the review application

as against Discovery ought to have succeeded as Discovery was guilty of procedural unfairness in its debarring of the first respondent.

Naidoo and others v Kalianjee NO and others [2015] 3 All SA 679 (SCA)

Winding-up order – Suspicion of disposal of assets – Obtaining of search and seizure warrant in terms of section 69 of the Insolvency Act 24 of 1936 – Validity of warrant – Distinction between a warrant granted by a magistrate in terms of section 69(3) of the Insolvency Act and one issued under the Criminal Procedure Act 51 of 1977 – Anomalies in warrant not rendering it invalid – Warrant not too broad in scope.

The first appellant was the sole member of a close corporation (“the CC”) against which the fourth and fifth respondents obtained a winding-up order. The first and second respondents were appointed as joint liquidators of the CC.

On the strength of their suspicion that assets of the CC had been concealed, the liquidators approached a magistrate for a warrant under section 69 of the Insolvency Act 24 of 1936. The magistrate granted a warrant as there was clearly a reasonable suspicion as envisaged under section 69(3).

Launching a wide-ranging challenge to the validity of the warrant, the appellants’ principal contention, both initially and on appeal, was that the warrant could not stand as the respondents had applied for it without giving them notice of their intention to do so. However, that argument lost momentum in court, as it became clear that as there was a reasonable suspicion that assets had been concealed, the matter fell to be decided on the basis that the respondents had been entitled to apply for the warrant without notice.

Held – The appellants then proceeded with an argument that the liquidators’ application had constituted abuse of the process of court. The Court found no merit in that contention, pointing out again, that where there was a reasonable suspicion that assets of the CC had been concealed, the liquidators were perfectly entitled to apply for a warrant, and when they did, the magistrate was fully entitled to issue it.

In the next challenge to the warrant, the first appellant alleged that some of the assets which formed the subject matter of the warrant were acquired by the appellants independently. Dismissing the point, the Court pointed out that the warrant related to assets of the CC and not to any assets that belonged to any of the appellants. In any event, if assets seized in execution of the warrant were shown by the appellants not to have been the property of the CC when it was placed into liquidation, they were liable to be returned.

As a result of the failure of its arguments as stated above, the appellants fell back on challenges relating to alleged technical imperfections in the warrant. Acknowledging that the warrant contained certain anomalies as maintained by the appellants, the Court explained that the affected clauses would simply be meaningless and without effect, but would not render the warrant invalid.

Relying upon the provisions of section 69(4) of the Act, the appellants then argued that as the section required the warrant to be “executed in a like manner as a warrant to search for stolen property”, the warrant was in fact one issued under the

provisions of the Criminal Procedure Act51 of 1977 – in which case the strict requirements of that Act had not been complied with. That contention was also rejected by the Court, which explained the fundamental distinction between a warrant issued under section 69 and a criminal warrant. The fundamental differences mean that a warrant under section 69 can neither be construed as being akin to a warrant issued under section 21 of the Criminal Procedure Act nor necessarily subject to the same limitations and restrictions attendant upon criminal warrants.

The appeal was dismissed with costs.

Council for Medical Schemes and another v Bonitas Medical Fund [2015] 3 All SA 688 (GP)

Medical schemes – Inspection order – Existence of appeal – Medical Schemes Act 131 of 1998 – Section 49(1) – Interpretation of – Whethersection 49(1), having regard to the language used and its context confers a right of appeal on the respondent to the first applicant against the inspection order – Question was whether a decision by the Registrar to order an inspection, was a decision for the purposes of section 49(1) – Court preferred a construction that the inspection decision is not subject to appeal under section 49(1).

The second applicant (the “Registrar”), acting under powers conferred by section 44(2) of the Medical Schemes Act 131 of 1998, issued a written direction (the “inspection order”) in which he appointed an inspector to inspect the affairs of the respondent and some 17 other institutions. The purpose of the inspection was stated to be to obtain evidence of whether or not certain transactions were irregular and contravened the Act. The inspector asked the respondent for a great deal of documentary information. The respondent then proceeded to query the need for any inspection at all and sought certain information from the Registrar. The response from the Registrar did not satisfy the respondent and by notice of appeal, the respondent delivered what it described as a notice of appeal in terms of section 49(1) of the Act.

Held – The question to be addressed was whether section 49(1), having regard to the language used and seen in its context (which includes the purpose for which the measure was enacted) confers a right of appeal on the respondent to the first applicant against the inspection order. That required a proper interpretation of section 49(1). Distilled further, the question was whether a decision by the Registrar to order an inspection, was a decision for the purposes of section 49(1).

Having regard to the effect of an appeal on an inspection order, the Court preferred a construction that the inspection decision is not subject to appeal under section 49(1).

Jerrier v Outsurance Insurance Company Limited [2015] 3 All SA 701 (KZP)

Insurance – Insurance claim – Repudiation of claim by insurer – Failure by insured to report accidents occurring after commencement of policy – Whether the non-disclosure amounted to a material disclosure or breach of the insurance policy, absolving the respondent from liability for the subsequent accident – Court held that

the obligation to report a claim or an incident only arises if the insured wishes to enforce the indemnification for loss which the insurer is obliged to honour – Failure of the insured to report the two previous incidents within the 30-day time bar could not permit the respondent to avoid liability under the insurance agreement in respect of loss sustained in a later, unrelated accident.

The appellant owned a high performance sports motor vehicle, and entered into a contract of insurance with the respondent to provide comprehensive cover for the vehicle. When he met with an accident on 2010, he lodged a claim with the respondent. However, the latter repudiated the claim, initially on the ground that the appellant was intoxicated at the time of the accident, but later, on the ground that he had failed to disclose two previous accidents in which the vehicle was involved.

In 2008, the appellant’s vehicle was damaged when it hit a pothole, and the following year, it was involved in a minor collision. Believing that the incidents were minor, and not wishing to claim under his insurance policy due to a no-claim incentive offered by the insurer, the appellant repaired the vehicle at his own cost.

Held – The present appeal turned on whether the court a quo was correct in concluding that the failure of the appellant to report the earlier incidents (in respect of which no claim was lodged) amounted to a material disclosure or breach of the insurance policy, absolving the respondent from liability for the subsequent accident.

The obligation to report a claim or an incident only arises if the insured wishes to enforce the indemnification for loss which the insurer is obliged to honour. If the insured chooses to absorb the loss, there can be no possible reason for the insurer to be informed of the incident. The court a quo was found to have erred in conflating the duty to disclose true and correct information at the commencement of the contract and the duty to disclose during the duration of the contract. The policy did not provide for this on-going duty to report after commencement of the policy.

Consequently, the failure of the appellant to report the two previous incidents within the 30 day time bar could not, on any interpretation, permit the respondent to avoid liability under the insurance agreement in respect of loss sustained in a later, unrelated accident. The failure of the appellant to disclose the two previous incidents could not be said to constitute a material non-disclosure.

The appeal was upheld and the lower court’s order was replaced with one directing the respondent to indemnify the appellant in respect of the collision.

Tripartite Steering Committee and another v Minister of Basic Education and others [2015] 3 All SA 718 (ECG)

Schools – Right to basic education – Issue was whether the constitutional right to education includes the right for children to be provided with transport to and from school at State expense for scholars who live a distance from their schools and who cannot afford the cost of that transport – Court held that in instances where scholars’ access to schools was hindered by distance and an inability to afford the costs of transport, the State was obliged to provide transport to them in order to meet its obligations.

The first applicant was a body formed by the governing bodies of three schools. Its main object is to uphold and promote the right to education. The second applicant is the school governing body of another school. The respondents were various State functionaries, representing two spheres of government, viz the education and transport.

Essentially, the relief sought by the applicants raised the question of whether the constitutional right to education includes the right for children to be provided with transport to and from school at State expense for scholars who live a distance from their schools and who cannot afford the cost of that transport.

Held – It was an established fact that a number of learners in the Eastern Cape province (in which the applicants were based) lived a long distance from the schools they attended and if they were not provided with transport to and from their schools by the State, they had to walk to and from school each day whatever the conditions might be. That impacted on their physical and psychological wellbeing, and on academic performance. The right to education was rendered meaningless without learner transport. Consequently, in instances where scholars’ access to schools was hindered by distance and an inability to afford the costs of transport, the State was obliged to provide transport to them in order to meet its obligations.

Although scholar transport was provided in terms of a policy adopted by the provincial government in 2003, that policy was never converted into legislation.

The decision to refuse scholar transport to learners from the affected schools was reviewed and set aside. The Court then remitted the matter to the respondents for a fresh decision to be made. The respondents were directed to provide transport for the school represented by the second applicant, and to report to the court on progress in the adoption of the new scholar transport policy.