INDEX1

SOUTH AFRICAN LAW REPORTS MAY 2015

SA CRIMINAL LAW REPORTS MAY 2015

All SOUTH AFRICAN LAW REPORTS MAY 2015

SALR MAY 2015

STRATFORD AND OTHERS v INVESTEC BANK LTD AND OTHERS 2015 (3) SA 1 (CC) 

Insolvency — Compulsory sequestration — Provisional sequestration — Application — Furnishing of copy of petition to employees of debtor — Employees including also domestic employees — Petition must be made reasonably accessible to them — Insolvency Act 24 of 1936, s 9(4A).Insolvency — Compulsory sequestration — Final sequestration — Facta probanda — Advantage to creditors — Reasonable prospect that some pecuniary benefit will result — Concept of 'advantage' broad and not to be rigidified — Potentially impeachable transactions making sequestration advantageous to creditors — Insolvency Act 24 of 1936, s 12(1)(c).

In 2002 the Insolvency Act 24 of 1936 was amended by the insertion of s 9(4A), which required a petition for sequestration to be 'furnished' to the debtor's employees. In Gungudoo the Supreme Court of Appeal found that this meant service on the debtor's business, not domestic, employees. This was an important distinction since sequestration entailed the suspension of the employment contracts of all the debtor's employees (see s 38). In the present appeal the first issue hinged on the correct interpretation of s 9(4A). The second related to the ambit of the words 'advantage to creditors' in s 12(1)(c) of the Act, which allows a court to finally sequestrate a debtor's estate if it were satisfied 'there was reason to believe that it [would] be to the advantage of creditors'.On 15 October 2012 the Western Cape High Court on petition of Investec Bank (the bank) granted an order provisionally sequestrating the joint estate of Ivor and Sheila Stratford, who owed the bank R240 million. A candidate attorney representing the bank left a copy of the petition with the Stratfords for them to give to the single

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

LEGAL NOTES VOL 6/2015

Compiled by: Adv M Klein

domestic worker they admitted employing. For its part the bank relied on evidence of a series of potentially impeachable transactions by the Stratfords that had the effect of prejudicing creditors and therefore amounted to acts of insolvency. The value of the listed transactions approached R37 million.The Stratfords were joined in their opposition to a final sequestration order by their domestic workers, who turned out to actually number three. Together they launched a counter-application in which they argued that, as interpreted in Gungudoo, s 9(4A) offended the right to equality by discriminating against domestic employees. They consequently contended that Gungudoo's interpretation of the section was incorrect.The High Court granted a final sequestration order. It found, inter alia, that the Stratfords had committed an act of insolvency and failed to explain their financial situation; that sequestration offered prospects of financial benefit to creditors; and that a proper investigation by an appointed trustee would likely uncover substantial assets in the Stratfords' joint estate. In deciding the constitutional challenge in the counter-application, the High Court applied Gungudoo and found that the Stratfords' domestic employees were not discriminated against. The court held that notice had in any event been served on them when the candidate attorney left the petition with the Stratfords. Leave to appeal to the Supreme Court of Appeal having been refused, the appellants (the Stratfords and their domestic employees) obtained leave to appeal to the Constitutional Court, which —Held: As to the first issue, that Gungudoo was wrongly decided: defining 'employees' in s 9(4A) to include domestic employees accorded with constitutional imperatives. Such a wider reading meant that the appellants' challenge to the constitutionality of the provision fell away. Given, however, that many petitioners had acted on the authority of the Gungadoo decision, the new interpretation of s 9(4A) would not operate retrospectively. Furnishing of the petition in accordance with s 9(4A) required the petitioner to make it reasonably accessible to the debtor's employees. But since the purpose of s 9(4A) was not to provide debtors with a technical defence, the petition could conceivably be granted despite a failure to so furnish the required notice. In the present case the furnishing requirement as outlined above was complied with: the petition had been made reasonably accessible to the Stratfords' domestic employees.As to the second issue: The meaning of the term 'advantage' in s 12(1)(c) was broad and should not be rigidified. Specifying cents in the rand or a 'not negligible' benefit to creditors was unhelpful. It was for the court to assess whether the sequestration would result in some payment to the body of creditors; whether there was substantial estate from which creditors could not get payment, except via sequestration; or whether some pecuniary benefit would result for the creditors. In the present case it was evident, in the light of the potential impeachable transactions listed by the bank, that sequestration would be to the advantage of the Stratfords' creditors. Hence the court would not interfere with the High Court's final sequestration order.

B BRAUN MEDICAL (PTY) LTD v AMBASAAM CC 2015 (3) SA 22 (SCA) 

Contract — Breach — Repudiation — Demand for performance — Not reasonably perceived as indicating repudiation.Contract — Interpretation — Evidence — Extraneous evidence to be used as conservatively as possible.

C Contractual repudiation depends on perception, not intention, and a reasonable person would not understand a demand for performance to be an indication of repudiation. The interpretation of a contract is a matter for the court and not for witnesses, and extraneous evidence must, to the extent that it is admissible, be used as conservatively as possible.

COETZEE v FINANCIAL PLANNING INSTITUTE OF SOUTH AFRICA AND OTHERS 2015 (3) SA 28 (SCA) 

Disciplinary body — Disciplinary proceedings — Charge — Facts underlying — Test for sufficiency of. Coetzee was found to have contravened the code of conduct of the Financial Planning Institute by both its disciplinary committee and appeal tribunal, and a High Court had dismissed her attempt to review the tribunal's finding. On appeal to the Supreme Court of Appeal she asserted that the Institute had failed to draft the charges with sufficient particularity, and that as a result she had not had a proper hearing.Held, that a charge-sheet in a disciplinary proceeding did not need to be drafted with the same formality as a charge in a criminal proceeding, but the facts supporting the charge had to be provided with the same level of particularity. The test was whether enough of the facts underlying the charge had been provided in order to answer it. Held, that sufficient facts had been provided here. Appeal dismissed.

STUPEL & BERMAN INC v RODEL FINANCIAL SERVICES (PTY) LTD 2015 (3) SA 36 (SCA) 

Conveyancer — Relationship between conveyancer and parties to transaction — Conveyancer undertaking to pay net proceeds of sale of immovable property to third party upon transfer — Seller later instructing conveyancer to withdraw undertaking — Third party claiming payment from conveyancer on basis that undertaking irrevocable — Undertaking given as agent which seller entitled to revoke as principal.

Appellant attorneys were appointed to act as conveyancers in the registration of transfer of an immovable property. While awaiting transfer the seller obtained bridging finance from a third party, the respondent, in terms of two discounting agreements. The agreements each included a section entitled 'Undertaking by Conveyancer' in terms of which the appellant undertook to pay the net proceeds from the sale to the respondent upon transfer. The seller encountered various obstacles in the sale process and at a certain point instructed the appellant to withdraw the undertakings, which it did. Registration of transfer ultimately did take place, however, and the proceeds were paid to the seller. After unsuccessfully attempting to recover its money in other ways the respondent instituted an action against the appellant for payment based on the undertakings. The court a quo upheld the claim on the basis that the respondent was an adjectus solitionis causa and that the seller could therefore not instruct the appellant to withdraw the undertakings to pay the respondent. The central issue on appeal was whether the undertaking was revocable in the circumstances. The SCA,Held: The fundamental premise by the court a quo, namely that the undertakings were part of a tripartite agreement in which the respondent was cast in the role

of adjectus, was unfounded. The undertakings constituted stand-alone agreements between the respondent and appellant in terms of which the appellant had plainly acted in pursuance of its mandate as the agent of the seller. Once this was accepted the law of agency provided that the instructions could be terminated. Accordingly the seller was entitled to withdraw appellant's mandate and the latter had no option but to act upon A that termination. Appeal upheld with costs.

SPENMAC (PTY) LTD v TATRIM CC 2015 (3) SA 46 (SCA) 

Contract — Consensus — Mistake — Seller's innocent misrepresentation inducing buyer to make material and reasonable mistake as to nature of merx — 'No representations' clause — Whether seller may employ.

Spenmac (Pty) Ltd, the owner of a unit in a sectional title scheme, innocently misrepresented to Tatrim CC that the unit was one of only two in the scheme, and that the owner of the unit had a right to veto any subdivision of the other unit. The misrepresentation induced Tatrim to enter into an agreement to buy the unit. One of the provisions of the contract was an acknowledgement by Tatrim that it had not been induced by any representation to enter into the agreement; and that it waived any rights it might have acquired as a result of such a representation. Ultimately the true position came to light and Tatrim applied successfully to a High Court for a declaration that the agreement was void. Spenmac appealed to the Supreme Court of Appeal.Held, that the agreement had been void from the outset. This because Spenmac's misrepresentation had induced Tatrim to make a material mistake about the nature of the unit, and consequently there had never been consensus as to the subject of the sale. Tatrim's mistake was also reasonable. As for the representations clause, it, along with the rest of the agreement, had been void from the start. Appeal dismissed.

MFV EL SHADDAI OXACELAY AND ANOTHER v MFV EL SHADDAI AND OTHERS 2015 (3) SA 55 (KZD) 

Shipping — Admiralty law — Admiralty jurisdiction of high court — Ambit — Matter must have meaningful marine or maritime connection — Admiralty jurisdiction not extending to matter easily dealt with via court's normal jurisdiction — Court ordering release of arrested ship where underlying cause was loan for fishing venture — Admiralty Jurisdiction Regulation Act 105 of 1983, s 1(1)(ee).

To establish admiralty jurisdiction in a high court a claimant must show that its claim is a 'maritime claim' — see s 2 of the Admiralty Jurisdiction Regulation Act 105 of 1983. The widest definition of 'maritime claim' is found in s 1(1)(ee), a catch-all provision that defines it to encompass 'any claim for, arising out of or relating to . . . any other matter which by virtue of its nature or subject matter is a marine or maritime matter'.The high court had granted an order for the arrest of the El Shaddai for the I purpose of providing security for claims by the applicants against its owner, Braxton Security Services CC (the second respondent). The applicants had loaned money to Braxton to enable it to conduct a commercial fishing venture. They obtained judgment in their favour in Montevideo, Uruguay, but the determination of the quantum was

postponed. The parties agreed that the arrest would be set aside if the applicants were unable to show that their claim was a maritime claim under the Act. 

Held: For a claim to be a 'maritime claim' it had to have a meaningful maritime connection such that a high court exercising its admiralty jurisdiction would be the appropriate forum to hear it, instead of a high court exercising its usual jurisdiction. The applicants' claim did not qualify as a maritime claim. It was based on a loan agreement entered into to finance Braxton, and its nature was not altered by the fact that Braxton was to repay the loan out of the proceeds of its fishing operations. And since the underlying loan was not a maritime claim, the applicants were also precluded from relying on the Uruguayan judgment as being a 'judgment relating to a maritime claim' as intended in s 1(1)(aa) of the Act. The arrest of the El Shaddai accordingly fell to be set aside.

GM v KI 2015 (3) SA 62 (GJ) 

Children — Parents — Responsibilities and rights — Suspension or termination — Right may not be terminated or suspended while responsibility preserved and vice versa — Permissible duration of suspension — Children's Act 38 of 2005, s 28(1)(a).Children — Parents — Biological father — Duty to maintain child — Duty existing H independently of whether father holder of parental rights and responsibilities — Children's Act 38 of 2005, s 21(2).

Ms GM applied for the termination of Mr KI's parental rights in respect of their child, but for the preservation of his parental responsibilities. The application was made in terms of s 28(1)(a) of the Children's Act 38 of 2005. KI I was the biological father of the child but had never been married to GM and had acquired full parental responsibilities and rights by consenting to be identified as the child's father. He had subsequently disappeared. The issue was the competence of the relief.

Held, on an interpretation of the section, that it would not be competent to suspend or terminate a parental right alone or a parental responsibility alone — any termination or suspension would have to be of both the right A concerned and its accompanying responsibility. Held, further, that the suspension of a parental right and responsibility could be for a specified period or until the occurrence of a future event, but it could not be indefinite. Held, moreover, on an interpretation of s 21(2), that the duty of a father to B maintain his child existed independently of whether he had acquired parental rights and responsibilities under s 21(1). KI's parental responsibilities and rights suspended until an application was made by the child or on behalf of the child for maintenance.

VISSER v 1 LIFE DIRECT INSURANCE LTD 2015 (3) SA 69 (SCA)

Insurance — Long-term insurance — Life insurance — Policy — Proposal and declaration — Duty of disclosure — Materiality of misrepresentation or non-disclosure of pre-existing medical condition — Only arising as issue once insurer discharged onus of proving alleged pre-existing medical condition — Long-term Insurance Act 52 of 1998, s 59(1). 

Section 59(1) of the Long-term Insurance Act 52 of 1998 provides that an insurer may avoid liability on the ground of misrepresentation, ie a representation that was not true or amounted to non-disclosure of information, 'if [it were] . . . likely to have materially affected the assessment of the risk under the policy concerned at the time of its issue'.1 Life, an insurer, had repudiated a claim by the beneficiary (Visser) of a life- insurance policy on the basis that the deceased had misrepresented and failed to disclose certain details of her pre-existing medical condition, which materially affected risk assessment under the policy. The high court dismissed Visser's action for payment, finding that 1 Life's basis for repudiating her claim was justified. In Visser's appeal, the Supreme Court of Appeal — 

Held: 1 Life failed to discharge the onus of proving the truth and accuracy of the contents of the hospital records on which it relied to prove a pre-existing medical condition of the insured. In the absence of proof of the deceased's pre-existing medical condition, the issue of whether the deceased made a misrepresentation and the materiality of any alleged misrepresentation or non-disclosure did not arise.

In a separate concurring judgment Willis JA agreed that the issue of materiality did not arise but considered that it nevertheless had to be dealt with, to give the unsuccessful litigant who failed for lack of evidence an indication of what it might have been expected to prove. REGENT INSURANCE CO LTD v KING'S PROPERTY DEVELOPMENT (PTY) LTD t/a KING'S PROP 2015 (3) SA 85 (SCA) 

Insurance — General legal principles — Duty of disclosure — Non-disclosure of nature of business carried on at insured premises — Whether, objectively, non-disclosure materially affecting insurer's risk assessment — Whether, subjectively, non-disclosure of material fact induced insurer to issue policy or extend cover — Short-term Insurance Act 53 of 1998, ss 53(1).

Section 53(1) of the Short-term Insurance Act 53 of 1998 introduced an objective test for determining the materiality of a non-disclosure — whether a reasonable person would have considered that the risk should have been disclosed to the insurer. The onus of proving materiality was on the insurer, as was proving that the non-disclosure or representation induced it to conclude the insurance contract. The test for inducement, however, remained subjective — whether the particular insurer was induced by the failure to disclose a material fact to issue the policy (or to extend cover).

The Supreme Court of Appeal (the SCA) so stated the applicable law in an appeal against a High Court decision which had held that Regent, an insurer, was precluded by estoppel from relying on a material non-disclosure to avoid liability under a short-term insurance policy because it had misled the insured (King's Prop) into believing that the insurance cover was effective. The SCA held that no misrepresentation by the insurer had been proved, and so no estoppel had been established.

The High Court had made no finding regarding the materiality of the alleged non-disclosure. Regent had repudiated King's Prop's insurance claim for failing to disclose the nature of a business carried on by a tenant on the premises of an insured building damaged by a fire, ie manufacturing vehicle bodies out of highly flammable materials, including fibreglass and resin. This non-disclosure, the SCA held —   •   was material, in that the reasonable, prudent person would consider that it should have been disclosed so that Regent could have formed its own view as to the effect of the information on the assessment of the risk (s 53(1)(b) of Act); and   •   had clearly induced Regent to enter into the contract. Had it known about the nature of the manufacturing business, it would not have extended cover under the policy concerned or would have declined cover altogether. Thus, concluded the SCA (upholding the appeal), Regent was entitled to reject the claim and to regard the policy as void.

LAND AND AGRICULTURAL DEVELOPMENT BANK OF SOUTH AFRICA v PHATO FARMS (PTY) LTD AND OTHERS 2015 (3) SA 100 (GP) 

Prescription — Extinctive prescription — Period of prescription — Debt secured by general notarial bond — Not constituting 'mortgage bond' to which 30-year prescription period applying but 'notarial contract' to which 6-year prescription period applying — Prescription Act 68 of 1969, ss 11(a)(i) and 11(c).Mortgage — Notarial bond — General notarial bond — Extinctive prescription — Period of prescription — General notarial bond constituting 'notarial contract' to which 6-year prescription period applying — Prescription Act 68 of 1969, ss 11(a)(i) and 11(c).

Subsection 11(a)(i) of the Prescription Act 68 of 1969 provides for a prescription period of 30 years iro 'any debt secured by mortgage bond'; and s 11(c) for a 6-year prescription period in respect of 'a debt arising [inter alia] from . . . a notarial contract'.A general notarial bond is not a mortgage bond for the purposes of ss 11(a)(i); it is a notarial contract as contemplated in ss (11)(c).

HANGER v REGAL AND ANOTHER 2015 (3) SA 115 (FB)

Animals — Wild animal — Liability of owner for damage by wild animal kept in captivity — Himalayan bear kept in cage, on owners' farm, surrounded by jackal-proof wire fence — Bear biting plaintiff's hand causing injuries after pulling her arm through fence — Plaintiff allowing fingers to protrude through fence, enabling bear's action — Safety measures taken reasonable in circumstances — Owners not liable for plaintiff's damages. 

The plaintiff sued the defendants for damages for injuries caused to her lower right arm and hand, including the loss of a finger and part of another, by a Himalayan bear during a visit to their farm. The bear had been kept in a cage which was surrounded by jackal-proof wire fencing. She had initially claimed, on the papers, that the bear had put his mouth through the wire fencing and bitten her hand, pulling her hand and arm through the wire. The negligence ascribed to the defendants rested on them not

having provided fencing that was sufficiently safe and adequate to prevent the bear injuring people through it. Later, during cross-examination, she conceded to having let her fingers protrude through the fence; that she knew that the bear was dangerous and had been explicitly warned of such on the way to the cage. It further emerged during the trial that the defendants were in possession of the necessary permits and that a conservation officer, despite inspecting the bear cage on numerous occasions, had never cautioned that the cage was unsafe. The present matter concerns an application for absolution from the instance at the close of the plaintiff's case. Held: The defendants had kept the bear lawfully and there was no evidence that the cage had failed to comply with any statutory or regulatory requirements. There was also no evidence that the cage would have been unsafe if the plaintiff had not allowed her fingers to protrude through the fence. Further, there was no indication that the size of the cage had provoked the incident or that the bear had attempted to tear down the fence, or that the defendants should reasonably have foreseen a situation where a grown-up person would in the circumstances have allowed her fingers to protrude into the bear's cage while he was sitting close to where her protruding fingers would have been in easy reach of his mouth. The plaintiff had accordingly failed to put forward evidence on which a reasonable court might find the defendants negligent. Absolution from the instance granted with costs. 

YORK TIMBERS (PTY) LTD v NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS 2015 (3) SA 122 (GP) 

Criminal law — Statutory offences — Prevention of organised crime — Confiscation order — Benefits of crime — Sawmill company convicted of grading road on own property before obtaining environmental authorisation — Company's motives altruistic and intended to reduce environmental impact — No benefit to company proven as intended by POCA — Order set aside — Prevention of Organised Crime Act 121 of 1998, s 18.

York Timbers (Pty) Ltd, which owned and operated a sawmill plant, was convicted in a regional magistrates' court for grading a road on its property before obtaining environmental authorisation in terms of s 24 of NEMA It had been accepted as part of its guilty plea statement in terms of s 112(2) of the CPA that the grading had been undertaken by an overzealous forester who had been requested only to survey and mark out a proposed new ramp road. The new road had been planned specifically to avoid environmental harm to the residents of the neighbouring town and had taken place after the engagement of the services of an environmental affairs practitioner and an environmental impact assessment had been lodged with the authorities. After conviction the court ordered that a confiscation enquiry be held in terms of s 18 of POCA into any benefit that the appellant may have derived out of its criminal activity. The appellant was subsequently sentenced to a fine of R180 000 and a confiscation order granted in the amount of R450 000 for expenses ostensibly saved. The present matter concerns an appeal lodged against this order. A further appeal against the sentence was still pending at the time of the hearing of the present appeal.Held: The onus was on the NDPP to make out a case for the order and in the present case the evidence of York Timbers was undisputed that it had derived no benefit whatsoever from the grading operation: the grading had been done with the

noble purpose of accommodating the neighbouring community and the environment had been taken into consideration. The whole new ramp road would also have cost it a considerable sum. Moreover its premature grading activities could not be regarded as resorting under the ills which the legislature had sought to control and eliminate when enacting POCA or be compared to 'offences relating to proceeds of unlawful activities'  as defined in ch 3. The NDPP had accordingly failed to discharge the onus of proving any 'benefit' was derived by York Timbers. Appeal upheld and order set aside.

OMAR v INHOUSE VENUE TECHNICAL MANAGEMENT (PTY) LTD AND OTHERS 2015 (3) SA 146 (WCC) Company — Oppressive conduct — What constitutes — Adverse offer for shareholding — Companies Act 71 of 2008, s 163.Company — Directors and officers — Director — Personal financial interests — C Non-disclosure — Consequences — Companies Act 71 of 2008, ss 75(5) and 75(7).

Omar, Gearhouse SA (Pty) Ltd (Gearhouse) and Govender were shareholders in Inhouse Venue Technical Management (Pty) Ltd in the proportions 45%, 50% and 5% respectively. Omar, Lapid, Abbas, Govender and three others D were the directors, with Omar the managing director. Gearhouse, whose directors were Abbas and Lapid, was wholly owned by Gearhouse SA Holdings (Pty) Ltd (Gearhouse Holdings), whose directors were Abbas, Lapid and Abbas' wife, and whose shareholders were Abbas and Lapid.Despite Omar's designation as managing director of Inhouse, Abbas and Lapid E caused it to incur disadvantageous charges and rentals to Gearhouse and other companies held by Gearhouse Holdings. Ultimately relations between Omar, Abbas and Lapid broke down and Lapid caused Gearhouse to make an offer to Omar for his shareholding. The offer was open for 48 hours. Omar refused it, and Abbas later caused Omar to be accused of fraud, suspended him, and organised a disciplinary enquiry. Neither of the latter pair of actions was discussed with the board of directors.Omar ultimately applied to the Western Cape Division of the High Court for relief under s 163 of the Companies Act 71 of 2008. In issue was whether the offer (including the context in which it was made, the time granted for its consideration, and its terms) was oppressive or prejudicial.Held, that it was. Further in issue was the effect of Abbas and Lapid's non-compliance with s 75(5) G of the Act on certain of the transactions Inhouse had entered into.Held, that the effect of non-compliance with s 75(5) was that the transaction or agreement entered into would be invalid (s 75(7)) unless it was ratified by the company's shareholders or declared valid by a court. Here there had been no ratification or validation. Ordered inter alia that Omar's shareholding be acquired at its fair market value; that Abbas and Lapid had contravened s 75 by failing to declare their personal financial interest in certain transactions Inhouse had entered into; and that this was to be taken into account in determining the value of Omar's shareholding.

MAKWICKANA v ETHEKWINI MUNICIPALITY AND OTHERS 2015 (3) SA 165 (KZD) 

Local authority — Powers and duties — To regulate informal trading — Impounding E of street trader's stock for failing to produce permit — Constitutionality — Remedy.Trade and industry — Trade — Informal trading — Regulation — Constitutionality — Impounding of street trader's stock for failing to produce permit — Remedy. 

The respondent municipality was empowered, under s 6A of the Businesses Act 71 of 1991 and a municipal bylaw made under it, to impound informal traders' stock for certain transgressions. When the appellant, Mr Makwickana, a licensed street trader, had his stock of plastic sandals impounded by municipal police for allegedly failing to produce his street-trading permit, he challenged the constitutionality of s 6A and the applicable provisions of the bylaw. The KwaZulu-Natal Local Division, Durban, held that the impounding of Makwickana's goods had been unlawful and that the challenged parts of the bylaw were indeed unconstitutional. The judgment made the following points:

As to the context: Street traders were a historically disadvantaged and H mistreated group which still regularly suffered harassment and abuse at the hands of municipal authorities, of which the present case was yet another example.

As to the legality/rule-of-law challenge: Though s 6A of the Businesses Act was loosely drafted and did not strictly conform to the principle of legality, it was merely an enabling framework for subordinate legislation which could potentially cure its deficiencies, and Makwickana's legality challenge to it would therefore fail. Although a finding that the impoundment provision of the bylaw was ultra vires the Businesses Act — which it was — would have been dispositive of the entire application, Makwickana omitted to challenge the bylaw on this ground. But his challenge to the respondents' conduct in removing and impounding his goods would succeed: it was ultra vires the officials' powers under the bylaw and therefore violated the principle of legality. Moreover, doing so without affording him a hearing was also procedurally unfair. As to the constitutional challenges: The bylaw violated street traders' rights of access to the courts (by precluding judicial supervision of the impoundment and subsequent disposal of their property); to both property and freedom of trade (by arbitrarily depriving them of their stock); and to equality (by discriminating against them on grounds of socioeconomic status or race). These limitations were, moreover, disproportionate, repressive and hence unjustifiable.

BARNARD AND OTHERS v REGISTRAR OF MEDICAL SCHEMES 2015 (3) SA 204 (SCA)

Medicine — Medical aid — Medical aid scheme — Placing under curatorship — Whether appropriate — Test — Medical Schemes Act 131 of 1998, s 56; Financial Institutions (Protection of Funds) Act 28 of 2001, ss 5(1) and 5(2).

The Registrar of Medical Schemes (the registrar) is empowered to bring an application to place a medical-aid scheme under curatorship by both s 56(1) of the

Medical Schemes Act 131 of 1998 (the MSA), and ss 5(1) D and 5(2) of the Financial Institutions (Protection of Funds) Act 28 of 2001 (FIPFA).

The test under s 56(1) of the MSA is whether the registrar's subjective opinion, that the preconditions of the section are met, is held on objective grounds. (This section empowers the registrar to apply to court for the appointment of a curator if in his or her opinion it is in the interest of the beneficiaries of the scheme, or that it is desirable to do so, because of material irregularities that have come to his or her notice or because the medical scheme is not in sound financial condition.) The test under FIPFA is different: the registrar must satisfy the court that there is good cause to appoint a curator, ie the court must be satisfied on the basis of the evidence placed before it that it is desirable to appoint a curator. It also has to be considered whether there are preferable alternatives to resolve the concerns.

Applying these tests to the present case — an appeal by the board of trustees of a medical-aid scheme against a final High Court order placing the scheme under curatorship — the Supreme Court of Appeal (upholding the High Court's decision) concluded that the grounds of concern raised by the registrar, particularly when viewed cumulatively, constituted material irregularities which had to be addressed urgently to avoid possible prejudice to the members of the scheme; and that it was in the interest of the beneficiaries of the scheme, desirable, and the only practical solution to appoint a curator to the scheme.

COMBINED DEVELOPERS v ARUN HOLDINGS AND OTHERS 2015 (3) SA 215 (WCC) Contract — Legality — Contracts contrary to public policy — Specific instances — Acceleration clause in loan agreement — Not per se contrary to public policy, but draconian and unfair implementation would be — Court refusing to allow applicant to use trivial default to trigger acceleration clause in order to gain commercial advantage over respondent. Arun Holdings borrowed R7,6 million from Combined Developers. The loan agreement, which provided for repayment in monthly instalments, contained an acceleration clause (clause 7.2), which provided that in the event of default Arun would become immediately liable for the full amount outstanding. When Arun missed a monthly instalment of R42 000, Combined sent it an email stating that payment had not been received. The email, which was informal in tone, did not specify the amount in question. Arun immediately paid the missed instalment but not the R86 mora interest that had become due. Combined argued that, although the mora interest was admittedly never demanded, Arun's failure to pay it constituted an E 'event of default' that entitled Combined to invoke the acceleration clause and demand immediate repayment of the full loan amount. Combined relied on Chatrooghoon v Desai and Others 1951 (4) SA 122 (N), in which an acceleration clause in a lease agreement was successfully enforced when a written demand was not complied with.Held: Combined's application had to fail. The email could not, in view of its contents and informal tenor, be construed as a letter of demand of the kind found in Chatrooghoon, which had clearly stipulated both the principal and interest allegedly owing. But even if this conclusion were wrong, the court was for reasons of public policy precluded from giving effect to Combined's startlingly draconian and unfair interpretation of the acceleration clause. Though acceleration clauses were

not inherently contrary to public policy and unconstitutional, clause 7.2 had draconian implications, and it would run counter to public policy to allow Arun's failure to pay R86 mora interest to trigger, without proper demand having been made, the acceleration of a claim for R7,6 million.

YOUNG MING SHAN CC v CHAGAN NO AND OTHERS 2015 (3) SA 227 (GJ)

Administrative law — Administrative action — What constitutes — Ruling of rental housing tribunal — Rental Housing Act 50 of 1999, s 13(4).Electricity — Supply — Service charges — Whether landlord permitted to charge tenants its own electrical service charge in addition to municipality's electrical service and consumption charges — Unfair Practices Regulations, C 2001 (Gauteng), reg 13.

Jele and 80 others were tenants of Young Ming Shan CC in a building the corporation owned in Johannesburg. They took the corporation to the Gauteng Rental Housing Tribunal, complaining that it was engaging in an unfair practice in what it was requiring them to pay as an electricity service charge. The corporation, which was charged R337,50 a month for the building as an electricity service charge, was requiring each tenant to pay R385 a month as such a charge. The tribunal ruled that the practice was unfair and ordered, inter alia, repayment. The corporation then asked the Gauteng Local Division to review the ruling in terms of s 6 of the Promotion of Administrative Justice Act 3 of 2000. In issue was whether the ruling was administrative action. Held, that it was. Further in issue was the reasonableness of the tribunal's conclusions. Held, that the tribunal had reasonably concluded that —   (1)   the electricity services that a landlord could charge a tenant for, and that F were referred to in reg 13 of the Unfair Practices Regulations, 2001 (Gauteng), were confined to electricity consumed by the tenant, and its pro rata share of the municipality's electrical services charge   (2)   a landlord seeking to recover its own service costs (ie for the maintenance G of a building's electrical infrastructure or for the billing of tenants), could only do so by including those costs in the rental   (3)   a landlord and tenant's agreement that a landlord could levy such a service charge did not preclude the tribunal finding it to be an unfair practice. Application dismissed.

DE MONTLEHU v MAYO NO AND OTHERS 2015 (3) SA 253 (GJ)

Company — Winding-up — Claim against company in liquidation — Proof — Late proof — Statutory framework — Whether Insolvency Act 24 of 1936, s 44(1), or Companies Act 61 of 1973, s 366(2), applying to late proof of claim.

The applicant sought to set aside a decision of the master to admit a creditor's claim to proof at a special meeting of creditors held five months after the second meeting of creditors. This on the basis that the proviso to s 44(1) of the Insolvency Act 24 of 1936 applied; that the proviso required a creditor, who wished to prove a claim more than three months after the second meeting of creditors, to obtain the leave of the master or the high court to do so; and that the creditor in this instance had not received such leave.

The respondents, in defending the decision of the master, relied on Transvaal Provincial Division authority that s 366(2) of the Companies Act 61 of 1973 — and not the proviso to s 44(1) of the Insolvency Act — governed the time periods for the proof of claims in the winding-up of companies.Section 366(2) permits the master, on the application of the liquidator, to set a time period for the proving of claims; and it also provides that any claim E proved after the date that the account is lodged with the master will be excluded from the distribution under that account. No time period had been set by the master in this case.Held, that the authority was clearly wrong and that the proviso to s 44(1) governed the time periods for the proof of claims. Held, further, that the master had not given the creditor leave to prove his claim, as required by the section, and that this invalidated the master's decision to admit the claim to proof. Application consequently granted, and the master's decision set aside.

KHOZA v MEC FOR HEALTH AND SOCIAL DEVELOPMENT, GAUTENG 2015 (3) SA 266 (GJ) 

Medicine — Medical practitioner — Negligence — Proof — Secondary evidence of contents of lost or destroyed hospital records — Prima facie inadmissible in absence of acceptable explanation as to why original records not preserved — Semble: Such failure may also result in application of res ipsa loquitur doctrine in appropriate cases, or in adverse inferences being drawn — Law of Evidence Amendment Act 45 of 1988, s 3; National Health Act 61 of 2003, ss 13 and 17.

This case concerns the merits of a damages claim on behalf of a minor for a brain injury he sustained during his birth at a provincial hospital. It was the plaintiff's case that the injury was caused by the negligence — on a number of grounds — of the maternity ward's medical staff. The defendant (the MEC) conceded that the injury was caused by a prolonged constriction or blockage of blood supply to the brain but disputed that it was due to any negligence on the part of the nursing staff; and that even if they were negligent, it did not cause or contribute to the injury because it was common cause that the brain of the foetus also suffered a stroke during labour.The court confined its enquiry to the ground that medical staff had negligently failed in their duty to properly monitor or review for foetal distress during the approximately five-hour period between when Syntocinon — a scheduled drug with admittedly dangerous effects — had been administered to induce labour, and delivery. Crucially, the recordings of the cardio-topographic monitoring machine (CTG), on which the mother (the plaintiff) had been placed to monitor and record foetal distress, went missing without any explanation. This left the medical staff's (alleged) noting of the CTG data on the labour partogram — a half-hourly plotting of foetal vital signs — and A their vive voce evidence of its (alleged) content as the only evidence of foetal distress. This evidence, contended the defendant (the MEC), demonstrated that the medical staff followed proper procedures in monitoring the patient and foetus.

Held: The CTG records constituted the original and foundational documentary evidence, and the subsequent noting of the CTG data on the labour partogram and the vive voce evidence of its contents were hearsay evidence. A court would, in exercising its discretion (under s 3 of the Law of Evidence Amendment Act 45 of 1988) to admit hearsay evidence, have to take into

consideration that it would prima facie run counter to the interests of justice to condone, without an acceptable explanation, a failure on the part of a state institution to comply with a positive obligation imposed by statute — in this case the obligation under ss 13 and 17 of the National Health Act 61 of 2003 to inter alia ensure that records were preserved. This, together with the fact that no explanation for the disappearance of the CTG recordings was offered, and a high risk of unreliability (because the partogram had been tampered with and significantly altered) would render both the partogram and the nursing sister's evidence as to what the CTG in fact recorded inadmissible hearsay. And, if it were correctly to be admitted, it fell to be rejected because she (the sister) was a dishonest witness who covered up, both in her evidence and by altering the partogram, the failure to properly monitor the mother and foetus. It was not disputed that Syntocinon was per se a dangerous drug that should be administered with care and constant monitoring. Also, since the defendant accepted that there was foetal distress, it would have been evident on the CTG and the staff should have taken remedial action. Accordingly, the plaintiff had demonstrated that the defendant was negligent in failing to properly monitor and review the progress of labour at least from the time that Syntocinon was administered. The evidence moreover demonstrated that the stroke was not an independent event but rather triggered by foetal distress — the depletion of oxygen and glucose to the child's brain resulting from the mother's contractions or strangulation by his umbilical cord. Semble: The inadmissibility of hearsay testimony was not the only consequence resulting from the failure to produce the original medical records which were under a hospital's control and where there was no acceptable explanation for its disappearance or alleged destruction. Such a failure may also result in — (i) an adverse inference being drawn that the missing records support the plaintiff's case in matters where the defendant produced other contemporaneous documents that had been altered, contained manufactured data or were otherwise questionable; and (ii) the application of the doctrine of res ipsa loquitur in appropriate cases. (Here the doctrine of res ipsa loquitur did not apply because the defence was able to demonstrate that the foetus suffered a stroke which may or may not inevitably have resulted in the injury; and the court was satisfied that, even without drawing inferences from the failure to produce the CTG recordings, the defendant's nursing staff failed in their duty to monitor the mother and foetus, either properly or at all, after Syntocinon was administered.)

S v LITAKO AND OTHERS 2015 (3) SA 287 (SCA)

Criminal procedure — Evidence — Admissibility — Extra-curial statement by accused — Inadmissible against co-accused, whether classified as confession or admission — Law of Evidence Amendment Act 45 of 1988, s 3(1) not applicable.

This case deals with the admissibility of out-of-court statements made by an accused against his co-accused. The matter is governed, in the case of confessions, by s 219 of the Criminal Procedure Act 51 of 1971 and, in the case of admissions, by the common law. In each case the rule was that the statement could not be used against co-accused. But in S v Ndhlovu and Others 2002 (6) SA 305 (SCA) (2002 (2) SACR 325; [2002] 3 All SA 760; [2002] ZASCA 70) it was held that an out-of-court admission by one accused could be classified as admissible hearsay evidence against his co-accused if the interests-of-justice requirement in s 3(1)(c) of the Law

of Evidence Amendment Act 45 of 1988 were satisfied. Since then, and on the strength of it, it has been widely accepted that s 3 enabled an out-of-court admission by one accused to be admitted against his co-accused. 

Six men were convicted of murder and robbery mainly on the out-of-court evidence of one of them, the first appellant, who had made a statement to a magistrate exculpating himself and incriminating the others. His subsequent claim that the statement was coerced by police was rejected by the trial judge, who ruled it admissible against the other accused under s 3(1)(c). The judge found the statement to be corroborative of the other evidence against the accused, and stated that he could see no prejudice to the other accused because they had each been given a copy of the first appellant's statement before trial. In an appeal against conviction and sentence the state accepted that, absent the evidence contained in the first appellant's statement, the convictions fell to be set aside. Held: It was difficult to see how one co-accused's out-of-court-statement could bind another. The shifting of blame between co-accused to avoid conviction was common practice, and admitting such statements would nullify the incriminated co-accused's right, should he elect not to testify, to challenge the truthfulness of the statement. There was also no basis for distinguishing between confessions and admissions in this context. Since any out-of-court statement by an accused would compromise a co-accused's constitutional right to a fair trial, it was in all cases — s 3(1) notwithstanding — inadmissible against the latter. Convictions and sentence accordingly set aside.

SHEPARD v EMMERICH 2015 (3) SA 309 (GJ)

Practice — Pleadings — Summons — Service — Validity — Contractually chosen domicilium citandi et executandi — Where specific method of effecting service contractually agreed, that method to be strictly complied with.

Where a specific method of effecting service was contractually agreed, that method should be strictly complied with. The appeal is dismissed. The appellant is ordered to pay the costs of the appeal.

This appeal concerns the validity of the service of a summons at a  I contractually chosen domicilium citandi et executandi. The court a quo (Thompson AJ) found that the service was defective and, for reasons that will become apparent, dismissed the appellant's claim with costs. The appeal is against this finding and is with its leave.The domicilium clause was contained in an addendum to a sale-of-business agreement, concluded between the appellant as the purchaser, Van Oosten J (Victor J and Damalis AJ concurring) and the respondent as the seller (the agreement). In terms of the agreement the respondent chose the following address as domicilium citandi et executandi 'for all purposes hereunder':

   'Routledge Modise Moss Morris, 2 Pybus Road, Sandton (Marked for Janks 2nd floor).'The appellant issued summons against the respondent for payment of the sum of R123 867,06 based on the agreement. The summons was served by the deputy sheriff, which, according to the return of service, was effected on 'c/o Routledge Modise Moss Morris, 2 Pybus road, Sandown, Sandton being the chosen domicilium citandi et executandi of  [the respondent]' by 'affixing a copy of the combined

summons to the principal door' of the domicilium address. The service, absent service at the second floor of the domicilium address and not marked for the attention of Mr Janks, therefore, did not strictly comply with the provisions of the domicilium clause.It was accepted by the court a quo as not being in dispute that, prior to the service of summons, Routledge Modise Moss Morris, a firm of attorneys, had moved offices from the domicilium address and further that Mr Janks had resigned from the firm. In the event, the summons did not come to the attention of the respondent and judgment by default was  E subsequently sought and granted. A writ of execution was authorised and served on the respondent, which, according to the respondent, was the first intimation she had received of the pending action. Pursuant thereto the respondent launched an application for rescission of the default judgment, which was granted. The matter proceeded to trial and came up for hearing before Thompson AJ. At the commencement of the hearing the learned judge was asked, by agreement between the parties, to adjudicate, on a point in limine, whether the service of the summons was proper, which, if decided in favour of the appellant, would have interrupted prescription. Having heard argument presented by both parties, the learned judge, as I have mentioned, found that the service was defective, that prescription had not been interrupted and accordingly dismissed the appellant's claim with costs. The only issue on appeal is whether the service of the summons was valid.The learned judge a quo considered the issue to be novel and, with reference to three foreign authorities and concluded that where a specific method of effecting service is contractually agreed, that method should be strictly complied with. The authorities relied on by the learned judge are persuasive and I am in agreement with the conclusion he has arrived at.   SACR MAY 2015

S v MOGARAMEDI 2015 (1) SACR 427 (GP)Murder — Sentence — Imposition of — Factors to be taken into account — Murder committed in order to obtain human body parts for ritual purposes — To regard such killings as substantial and compelling circumstances would send out wrong message to community — Prevalence of such cases in South Africa high and continuation of such killings would create more instability in communities where such practices were rife — No compelling and substantial circumstances found to exist.

The appellant had been practising as a sangoma for ten years prior to being charged for murder, in that he had killed his younger sister in order to obtain her genital organs as part of his final initiation. He was sentenced to life imprisonment in the high court. He appealed against the sentence and contended that there were compelling and substantial circumstances which would have justified a lesser sentence, namely that he was 49 years old and a first offender; the killing was not committed for financial gain but out of a deep-rooted religious belief that such an act was necessary as part of his initiation; and that he had endured hardship in perpetrating the offence, as he had suffered emotionally subsequent to the offence.Held, that, bearing in mind the strong cultural beliefs surrounding traditional healers and the fact that muti killings were unlikely to stop in the future, it was the task of the court to deter the killing of innocent people for such purposes. To regard such killings as substantial and compelling circumstances would send out the wrong message to

the community. The prevalence of such cases in South Africa was high and the continuation of such killings would create more instability in the communities where such practices were rife. A strong message had to be sent out that such conduct would not be condoned in a civilised society. Held, further, that the present case was one of exceptional seriousness and the circumstances, cumulatively regarded, meant that a sentence of life imprisonment would be just. The appeal was accordingly dismissed.

S v DITLHAKANYANE AND OTHERS 2015 (1) SACR 437 (GJ)

Correctional services — Remand detainee — Further detention of beyond period of two years — Application in terms of s 49G(3) of Correctional Services Act 111 of 1998 — Adjudication of application for release — Purpose of s 49G was to strike balance between accused's constitutional right to liberty and interests of justice — Insufficient for applicants to blandly state that respondent's case was weak or that, thus far, state had not laid incriminating evidence against them.

The applicants brought an application in terms of s 49G(3) of the Correctional Services Act 111 of 1998 to be released from the remand detention facility in which they were being held pending the finalisation of their trial on contraventions of s 2(1)(e) of the Prevention of Organised Crime Act 121 of 1998. They had launched bail applications but these had all been refused. The applicants had all been in custody for more than two years since being arrested. As the charges against the applicants fell within the ambit of sch 5 to the Criminal Procedure Act 51 of 1977, the applicants bore the onus to show that their release from the remand detention facility would not prejudice the interests of justice. The state opposed the application and relied on an affidavit by the investigating officer who indicated that the applicants had been arrested after the discovery of a syndicate whose members had stolen R2 million from banking accounts held by the public at various post office outlets. The state contended that the applicants were charged with serious offences and faced the possibility of lengthy imprisonment, and it contended that it had a strong case against them, based on documentary evidence which showed their involvement in the commission of the offences, obtained from the post office branches where they were employed. Incriminating evidence of the particulars of the banking account holders was also allegedly found on the cellphones of the second to ninth applicants. The state alleged that the first applicant had three previous convictions for fraud, and details relating to unlawfully opened post office banking accounts were found on his cellphone. Furthermore, he had allegedly attempted after his arrest to bribe post office officials to release him.Held, that the purpose of s 49G was to strike a balance between the accused's constitutional right to liberty and the interests of justice because, pending the finalisation of an accused's trial, he or she was presumed to be innocent until proven guilty. The provision enjoined the court to conduct a proactive interlocutory judicial enquiry to determine and establish whether the continued further detention or the release of an accused, who had previously been denied bail as an awaiting trial detainee or was denied bail after his or her trial had commenced, would be in the interests of justice. Held, further, that the applicants had blandly espoused their innocence by claiming that the respondent had not yet proven a prima facie case against them. None of them had set out a probable sustainable defence against the allegations made by

the investigating officer in his affidavit. Having regard to the strength of the state's case and the probability of conviction, and the imposition of a lengthy custodial sentence, the applicants carried the burden to prove that their release would be in the interests of justice. It was insufficient for them to blandly state that respondent's case was weak or that, thus far, the respondent had not laid incriminating evidence against them. Held, further, that the interests of justice did not permit the release of the applicants in the present case.The application was dismissed.

S v MATSHOBA AND OTHERS 2015 (1) SACR 448 (ECP)

Correctional services — Remand detainee — Further detention of beyond period of two years — Enquiry under s 49G of Correctional Services Act 111 of 1998 — Enquiry not in form of bail hearing as envisaged by s 60 of Criminal Procedure Act 51 of 1977.

In an enquiry under s 49G of the Correctional Services Act 111 of 1998, to determine the further detention of an awaiting trial prisoner after a period of two years' incarceration, it is neither the object nor the effect of the section that the court reconsidering the continued incarceration be required to hold a proper bail hearing as envisaged by s 60 of the Criminal Procedure Act 51 of 1977. All that is required is to take note that the detained person has passed a certain threshold, one which puts him into a category of persons the Department of Correctional Services should be particularly mindful of. This acts as a bulwark and an oversight function against the rights of an incarcerated person being infringed without lawful cause or him being subject to arbitrary detention. It ensures that, upon reflection, there remains good reason for his continued incarceration.

SCHOEMAN AND OTHERS v NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS AND ANOTHER 2015 (1) SACR 451 (WCC)

Prevention of crime — Restraint order in terms of Prevention of Organised Crime Act 121 of 1998 — Rescission of in terms of common law — Jurisdiction of court — Applicant for rescission not limited to statutory grounds for rescission provided for by POCA, and also entitled to bring application on common-law grounds such as fraud. 

The applicants applied for the rescission of restraint orders granted in terms of s 26(3) of the Prevention of Organised Crime Act 121 of 1998 (POCA). As regards jurisdiction, the applicants indicated that they wished to rely on the common law in addition to the specific remedies granted to them by s 26(10) and s 28(3) of POCA, but they were of the opinion that they were precluded from doing so by the judgment of the Constitutional Court in Phillips and Others v National Director of Public Prosecutions 2006 (1) SACR 78 (CC) and in particular paras 35–37.Held, that, although at first blush the judgment did appear to exclude the possibility of jurisdiction for rescission outside of those grounds expressly catered for under POCA, the relevant extract of the judgment, however, needed to be read in context. It was clear that, in concluding that the high court did not have inherent jurisdiction to rescind an order granted under s 26 of POCA, the SCA had accepted in the two

earlierPhillips matters that the court did have the power to rescind an order granted in terms of s 26 under the common law. Held, further, that, were the jurisdiction to rescind the restraint order limited strictly to the requirements of s 26(10) of POCA, it would have the consequence that a respondent with financial means (and therefore unable to satisfy the requirement of s 26(10)(a)(i)) would have to abide the drastic consequences of a restraint order, even where it had been procured by fraud.This would make the court the servant of a dishonest litigant and such an anomalous consequence was unlikely to have escaped the Constitutional Court. It had to be accepted therefore that the Constitutional Court did not intend to qualify what had been held by the SCA in the previous Phillips matters. Held, further, that in the present matter, where fraud had been extensively B alleged, and was dealt with on its merits by the respondent, no substantial prejudice would be caused to the respondent by permitting the argument to proceed on this basis. Moreover the applicants sought to protect very significant interests, partly in reliance on provisions of the Constitution. It would be in the interests of justice that this aspect also be considered.Held, however, that, on the facts, the applicants had not made out a sufficient case in terms of the common law or under s 26(10) and s 28(3) of POCA and the application had to be dismissed.

DU PREEZ v MINISTER OF JUSTICE AND CORRECTIONAL SERVICES AND OTHERS 2015 (1) SACR 478 (GP)Prisons — Prisoner — Parole — Breach of parole conditions — Revocation of — For conduct that preceded prisoner's release, only came to light after release on parole — National commissioner having wide discretion in terms of Correctional Services Act 111 of 1998 in whether to revoke or not — Past conduct of parolee brought to light subsequent to release could be taken into account — Participation of prisoner in party in cell where alcohol consumed by prisoner and captured on video recorder and subsequently released to media very serious and requiring serious censure — Revocation appropriate.

The applicant applied to the court on an urgent basis for a declaratory order that the second respondent, the chairperson of the Correctional Services Parole Board (CSPB), had no jurisdiction to revoke his parole and ordering that his decision be set aside and replaced with an order that he be released under the conditions of the parole that had earlier been granted to him. The applicant's parole had been revoked after an investigation by the CSPB into the circumstances surrounding a media report that the applicant and some other inmates had smuggled alcohol into the prison shortly before his release on parole and had held a party in a cell. A video of the party was posted on YouTube and showed the applicant and a fellow inmate drinking and using a cellphone. It was contended on behalf of the applicant that the video recording, although made whilst the applicant was still incarcerated, did not amount to a violation of his parole conditions as envisaged in terms of s 70 of the Correctional Services Act 111 of 1998, as it preceded his release.Held, that the wide discretion enjoyed by the National Commissioner of Correctional Services entailed that in terms of s 70(3), s 71(1), s 75(2)(a) and (b), as well as s 75(7)(b), in deciding whether or not to revoke parole, he could take into consideration any factor which came to his attention. This included even past

conduct of the parolee brought to light subsequent to his release from incarceration, as happened in the instant case. Held, further, that the nature and gravity of the applicant's conduct in participating in the video recording were very serious and undermined the general authority of Correctional Services and demonstrated that the prisoner was not sufficiently rehabilitated to be admitted to parole. His conduct had received wide publication in the electronic and print media and the general public would lose confidence in the administration of Correctional Services and justice in general if conduct of that nature did not attract serious censure. In the circumstances it was reasonable and appropriate on the part of the CSPB to revoke the applicant's parole as it did.

S v MADIBA 2015 (1) SACR 485 (SCA)

Sentence — Imposition of — Factors to be taken into account — Cumulative effect of sentences imposed on more than one count — Court sentencing accused to life imprisonment on one count and to total of 60 years' imprisonment on three other counts but stating that sentence was effective sentence of 70 years' imprisonment — That irregularity entitling court to intervene on appeal — Sentence on two of other counts reduced.

The appellant was convicted in the high court of the attempted rape of a woman whose home he had broken into, of kidnapping her 3-year-old daughter and of raping and murdering her daughter. He was sentenced to ten years' imprisonment for the attempted rape; 15 years' imprisonment for the kidnapping; life imprisonment for the rape; and 35 years' imprisonment for the murder. He appealed against the convictions of attempted rape and rape and appealed against the sentences on all the counts. The court on appeal dismissed the appeal against the convictions. As regards the sentence, the court noted that the court a quo had wrongly added that the appellant had been sentenced to 70 years' imprisonment. Held, that the court a quo had misdirected itself when stating that the cumulative effect of the sentence imposed was that the appellant was sentenced to 70 years' imprisonment. Regard being had to the fact that one of those sentences was life imprisonment, it was incomprehensible how the court had come to this conclusion. The court on appeal was accordingly at large to reconsider the sentences imposed.

Held, further, that all of the circumstances in mitigation paled into insignificance when the brutality of the rape perpetrated by the appellant on the 3-year-old girl was considered. The court was accordingly satisfied that no substantial and compelling circumstances were present to justify the imposition of a sentence less than the prescribed minimum sentence of life imprisonment.

Held, further, that the court a quo furnished no reasons for imposing a lesser sentence for the murder of the young girl than it imposed for her rape. The murder was undoubtedly deserving of a sentence of life imprisonment but, as the state did not seek leave to appeal against the sentence and in fact H asked for the sentence to be confirmed, the court was accordingly not entitled to increase the sentence.

Held, further, that the sentences imposed for the convictions for attempted rape and kidnapping were excessive, given the cumulative effect of the sentences. The court

accordingly reduced those sentences to five years' imprisonment in respect of the attempted rape and five years' imprisonment in respect of the kidnapping.

S v TS 2015 (1) SACR 489 (WCC)

Juvenile offenders — Criminal capacity — Mens rea — Culpa — Much to be said for view that subjective frailties of child found proper place in assessment of criminal capacity — If child had criminal capacity (ie it could be held accountable as adult would), negligence was tested objectively with reference to standard of reasonable person.General principles of liability — Criminal capacity — Juvenile offender — Mens rea — Culpa — If in cases involving children, negligence judged by standard of reasonable child of same age, inevitable that threshold enquiry into delictual or criminal capacity would also have to be adapted — If child were only to be judged by standards of reasonable child of same age, criminal capacity would logically have to be directed at question whether child in question had same cognitive and conative capacities as reasonable child of same age.

The accused was a young girl who was charged in a regional magistrates' court with culpable homicide, in that she had stabbed her father, causing his death. She was just 13 when the offence was committed. She pleaded guilty and gave a full account of the incident in her statement in terms of s 112(2) of the Criminal Procedure Act 51 of 1977. She was sentenced to five years' compulsory residence in a Child Youth Centre. The reviewing judge was of the opinion that the reports of the psychologist and psychiatrist were possibly insufficient to establish that the accused had criminal capacity, as she suffered from borderline mental retardation. Furthermore, the s 112(2) statement appeared to be insufficient to satisfy the court that the accused was indeed guilty of culpable homicide. The reviewing judge requested the sentencing magistrate and the Director of Public Prosecutions to comment on these issues, as well as whether the sentence was not unduly harsh.Held, as regards the mens rea of a child such as the accused, where the form of mens rea for the offence was culpa, that, whilst it was not necessary to finally decide the issue in the present case, there was much to be said for the view that the subjective frailties of the child found their proper place in the assessment of criminal capacity. If the child has criminal capacity (ie it could be held accountable as an adult would), negligence was tested objectively with reference to the standard of the reasonable person.

Held, further, that, if in our law we were, in cases involving children, to judge negligence by the standard of the reasonable child of the same age, it was inevitable that the threshold enquiry into delictual or criminal capacity would also have to be adapted. If the child were only to be judged by the standards of the reasonable child of the same age, capacity would logically have to be directed at the question whether the child in question had the same capacities for appreciating wrongfulness and acting in accordance with such appreciation as the reasonable child of the same age. Held, further, that, despite the plea statement, s 11(2) of the Child Justice Act 75 of 2008 required the regional magistrate, in determining whether the accused had criminal capacity, to consider, inter alia, the report of the probation officer in the preliminary enquiry and the expert assessment of the child. The magistrate also

needed to take into account the facts of the matter as they appeared from the plea statement.

Held, further, that, in the light of the expert assessment and the circumstances of the case in general, the accused's admission in her plea statement was not a sufficient basis for the magistrate, without more, to conclude that she had criminal capacity. A generalised statement of her ability to distinguish between right and wrong, apart from not carrying much weight, did not focus on the important question whether she had the capacity to determine the extent to which she was entitled to use force against her father in the particular circumstances of the case, and to act in accordance with that appreciation.

Held, further, that there appeared to be no material difference between the criminal capacity required for murder and for culpable homicide. If the accused lacked criminal capacity in relation to murder (because she lacked the capacity to understand the bounds of private defence and/or lacked the capacity, in the circumstances which confronted her, to act in accordance with her appreciation of these matters), she would also have lacked criminal capacity in relation to culpable homicide. If she had the necessary criminal capacity, the question whether she was guilty of murder or culpable homicide depended on whether she actually knew she was acting wrongly or whether, although she did not, a reasonable person would have known. As the magistrate could not properly have been satisfied that the accused had criminal capacity, she should not have convicted the accused on the basis of I her guilty plea.

Held, further, that, even if one concluded that her criminal capacity had been satisfactorily established, the plea explanation, read in the context of the expert assessment, raised doubt as to whether the accused's killing of her father was unlawful. It appeared from the magistrate's response to the reviewing judge's query that she understood the plea explanation as J meaning that the accused had deliberately taken the knife with a view to seeking out and harming her father. Without further questioning, that inference was not justified. In order to assess the possible existence of private defence in the present case, it was necessary for the regional magistrate to have placed herself in the child's position. Although it could not be said that, on full examination, a prosecution would fail on the grounds of private defence, the plea explanation was not sufficient to satisfy the magistrate on that question. In the circumstances, the conviction had to be set aside and remitted to the court a quo to act in accordance with s 113 of the CPA and proceed with the trial. It was further ordered that the court a quo should determine what orders, if any, should be made in the best interests of the accused pursuant to the Child Justice Act and the Children's Act 38 of 2005, including her possible further detention or placement in a child and C youth care centre.

S v MQABHI 2015 (1) SACR 508 (GJ)

Sentence — Prescribed sentence — Minimum sentences — Imposition of in terms of Criminal Law Amendment Act 105 of 1997 — 'Substantial and compelling circumstances' — Period spent in custody awaiting trial — A factor in determining

presence of substantial and compelling circumstances — Factor not to be isolated but to be weighed with other circumstances — No mechanical formula applicable.

Sentence — Prescribed sentence — Minimum sentences — Imposition of in terms of Criminal Law Amendment Act 105 of 1997 — When period of imprisonment commences — Semble: Inability to determine that such sentence should commence on date earlier than when sentence was handed down creates hardship for accused who has been detained for lengthy period, was sentenced to life imprisonment and, in terms of s 73(6)(b)(iv) of the Correctional Services Act 111 of 1998, only became eligible for parole after serving minimum sentence of 25 years — This inability could also affect constitutionally safeguarded rights.

The appellant was convicted in a regional magistrates' court of robbery with aggravating circumstances and was sentenced to 15 years' imprisonment. Despite the fact that the appellant had been held in custody for two years prior to sentencing, the magistrate held that, on an overall assessment, there were no substantial and compelling circumstances that justified a sentence less than the 15 year minimum in terms of s 51 and part II of sch 2 to the Criminal Law Amendment Act 105 of 1997 (the CLAA). On appeal, counsel for the appellant argued that the magistrate had misdirected himself in finding that there were no substantial and compelling circumstances that warranted a lesser sentence than the 15 year minimum, and, in addition, that the sentence induced a sense of shock. The court requested argument G on the treatment of a lengthy period spent in custody awaiting trial. After considering argument the court formulated the following guidelines: (a) Pre-sentence detention was a factor to be taken into account when considering the presence or absence of substantial and compelling circumstances for the purposes of the CLAA. (b) Such period of detention was not to be isolated as a substantial and compelling circumstance but had to be weighed as a mitigating factor, together with all the other mitigating and aggravating factors, in determining whether the effective minimum period of imprisonment to be imposed was justified in the sense of it being proportionate to the crime committed. If it were not then the want of proportionality constituted the substantial and compelling circumstances required under s 51(3). (c) The reason for the prolonged period of pre-sentence detention was a factor. If the offender were responsible for unnecessary delays then this might redound to his detriment. (d) There was no mechanical formula or rule of thumb to determine the period by which a sentence was to be reduced. The specific circumstances of the offender, which might include the conditions of his detention, were to be assessed in each case when determining the extent to which the proposed sentence should be reduced. (e)Where only one serious offence was committed, and assuming that the offender had not been responsible for unduly delaying the trial, then a court might more readily reduce the sentence by the actual period in detention prior to sentencing. The court also held that the following legal principles, interests and values had a bearing on the weight to be accorded to a lengthy period of pre-sentence incarceration where the offender had not been deliberately delaying the trial: the store to be placed on the right to freedom under s 12(1) of the Constitution read with s 35(3)(d), which accorded the right to every person to have their trial begin and conclude without unreasonable delay; and the equality provisions of s 9 of the Constitution which provided for equality before the law.

Semble: The inability to determine that a sentence under the minimum sentence provisions should commence on a date earlier than when the sentence was handed down created hardship for an accused who, after being detained in custody for two or three years, was sentenced to life imprisonment and who, in terms of s 73(6)(b)(iv) of the Correctional Services Act 111 of 1998, only became eligible for parole after serving a minimum sentence of 25 years. This inability could also affect constitutionally safeguarded rights.

Held, that, in the present case the two year period of pre-sentence incarceration had to be deducted from the 15 year minimum, and the sentence of the court a quo had to be changed to one of 13 years' imprisonment, commencing on the date the accused was sentenced by the trial court.

S v SKHOSANA AND 21 OTHER CASES 2015 (1) SACR 526 (GJ) Trial — Presiding officer — Unavailability of to continue with trial — Resumption of where magistrate had become disabled — Magistrate in near-fatal accident, leaving him unable to preside again — Disability of magistrate renders earlier proceedings nullity and trial to commence de novo — Legislation silent on whether nullity to be declared by high court on pre-conviction matters — Nullity principle ex lege sets trial aside — Case to be resumed before other magistrate de novo without need for order to this effect from other court.

The magistrate who was presiding in the 22 part-heard criminal trials that are the subject of the present review submission was involved in a near-fatal accident which required extensive hospitalisation and his subsequent rehabilitation. He could no longer walk and was experiencing memory loss. It was accepted that he would not be able to complete the part heard matters which he had been assigned. The regional court president accordingly submitted the matters on review.Held, that s 275 of the Criminal Procedure Act 51 of 1977 provided that, where a matter had reached the stage where the conviction had been completed and the only outstanding issue was sentence, the matter could proceed before another judicial officer for sentence. Held, further, that both logic and judicial precedent indicated that the magistrate's disability rendered the earlier proceedings a nullity and they therefore F had to commence de novo. Furthermore, it was not necessary for the high court to intervene, as the nullity principle set the proceedings aside by operation of law.

ALL SA LAW REPORTS MAY 2015

City of Johannesburg Metropolitan Municipality and others v Hlophe and others [2015] 2 All SA 251 (SCA)

Constitutional law – Local government – Mandamus obliging responsible functionaries to ensure that municipality complied with court orders – Whether mandamus was justified – Decisive consideration was the principle of public accountability, which is a founding value of the Constitution of the Republic of South Africa, 1996 – As functionaries were statutorily obliged to see to the implementation of the orders made against the City, the mandamus was justified.

The 183rd respondent (“Changing Tides”) was the registered owner of property situated in the centre of Johannesburg. Although originally an office block, it was eventually abandoned and became a shelter for poor and homeless people. Changing Tides subsequently acquired the property and intended to renovate and upgrade it. The first to 182nd respondents (“the occupiers”) resided on the property unlawfully. Changing Tides obtained an order for their eviction. The eviction order was to take effect only after the first appellant (“the City”) had provided suitable temporary accommodation to the occupiers. The City was ordered to do so, but failed to comply with the order. In the meantime, the occupiers faced eviction by 15 February 2013. They therefore launched an application citing the City, the functionaries and Changing Tides. In essence, the occupiers claimed an order declaring that the functionaries were obliged to take all the steps necessary to ensure that the City complied with the order requiring it to provide the occupiers with temporary shelter, and a mandatory order obliging the functionaries to give effect to the contents of the declarator.

On appeal the issue was whether the mandamus obtained by the occupiers, obliging the functionaries to ensure compliance by the City, was justified. The City’s contention that the mandamus was wrongly granted, was based on two grounds. The first was that improper procedure was followed in respect of the functionaries and the second that policy considerations rendered a mandatory order inappropriate.

Held – The City could only act through the functionaries responsible for performing a specific function or act on its behalf. On the first ground of opposition referred to above, the Court rejected the argument on behalf of the functionaries that the mandamus could only have been granted had the functionaries been joined in the eviction application from the beginning. A party that initiates legal proceedings against a municipality cannot be expected to act on the assumption that if the litigation is successful the municipality will not comply with the order against it. Changing Tides was under no obligation to cite the functionaries in the eviction application. Only when the City failed to comply with the order, did the need arise to look to the functionaries and that was the purpose of the enforcement application.

In respect of policy considerations it was argued that the mandamus has the potential of discouraging competent persons from taking up senior positions in local government. It was also said that senior officials in local government should not have to perform their multiple complex tasks with the sword of committal for contempt of court hanging over them and that that could also unduly influence the priority in which functions are performed. The Court held that the decisive consideration is the principle of public accountability, which is a founding value of the Constitution. Constitutional accountability may be appropriately secured through the variety of orders that the courts are capable of making, including a mandamus. By 9 April 2013, the City had for a period of nearly a year consistently and without proper explanation failed to comply with court orders that it had consented to. The functionaries were statutorily obliged to see to the implementation of the orders made against the City. In granting the mandamus, the court below correctly concluded that the time had come for the functionaries to be held accountable in terms of the Constitution. The appeal against the mandamus failed.

Consequently, other than for the setting aside of a paragraph of the order which required the City to report on a wide range of detailed questions pertaining to the historic, current and future performance of the City’s general obligation to provide accommodation to evictees, the appeal was dismissed.

Firstrand Bank Limited v Nkata [2015] 2 All SA 264 (SCA)

Consumer credit – Credit agreement – Reinstatement of – National Credit Act 34 of 2005 – Section 129(4)(b) provides that a consumer may not re-instate a credit agreement after the sale of any property pursuant to the execution of any other court order enforcing that agreement – Interpretation of section – Reinstatement can only occur prior to a sale in execution at a public auction.

The appellant bank had obtained a default judgment against the respondent after she defaulted on repayment of a mortgage loan. The loan was subject to the provisions of National Credit Act 34 of 2005 (“the NCA”). On discovering the existence of the default judgment, the respondent brought an application for rescission thereof, as well as an application for the cancellation of the sale in execution of the immovable property. The High Court dismissed the application for rescission of the default judgment but, mero motu, reinstated the credit agreement, purportedly in terms of section 129(3) of the NCA. Relying on the provisions of section 129(3)(a), the court declared that the loan agreements had been reinstated because the debtor had made good her arrears and, accordingly, the default judgment and the writ in execution ceased, by operation of the law, to have any force and effect. The bank was granted leave to appeal.

Held – As the decision of the present Court was based on its interpretation of section 129(4)(b) of the NCA, it was not necessary to deal with the High Court’s reasons and its findings in respect of section 129(3)(a).

The High Court correctly concluded that, in order for a consumer to be able to re-instate a credit agreement, the debtor need not pay the full accelerated debt but merely the arrear instalments.

Section 129(4)(b) provides that a consumer may not re-instate a credit agreement after the sale of any property pursuant to the execution of any other court order

enforcing that agreement. “Execution” is not defined in the Act. At common law one could, up to the time of the sale, redeem ownership and possession by discharging the full amount of the debt. Now, under the NCA, ownership and possession can be redeemed merely by paying the amount overdue, together with charges and costs. The critical point remains the sale in execution. The NCA has not changed that. On the contrary, it has expressly provided that a consumer may not reinstate a credit agreement after the execution of a court order enforcing the agreement. Section 129(4)(b) does not refer to the completion or perfection of a sale in execution. Some kind of final, irrevocable step is envisaged, beyond which a consumer may not return. A bona fide sale in execution is such a step. Making reference to English case law, the Court confirmed its opinion that civil execution is a process-oriented concept rather than one which refers to a single event – but that the event of a sale in execution denotes finality and a point of no return. The provisions of section 129(4)(b) are peremptory. In clear terms, they provide that a consumer may not reinstate a credit agreement after the execution of any court order enforcing that agreement. Reinstatement can only occur prior to a sale in execution at a public auction. The respondent fell foul of that provision.

The High Court’s conclusion that execution only takes place when the proceeds of the sale in execution are paid over to the judgment creditor was incorrect, and was replaced on appeal with an order in terms of which the respondent’s application was dismissed.

Magwaza v S [2015] 2 All SA 280 (SCA)

Criminal procedure – Evidence – Admissibility of pointing out – Failure to warn accused of constitutional rights prior to pointing out – In terms of section 35(5) of the Constitution of the Republic of South Africa, 1996, evidence obtained in a manner that violates any right in the Bill of Rights must be excluded if the admission of that evidence would render the trial unfair or otherwise detrimental to the administration of justice.

An armed robbery at a pension payment point in April 2000 ended with a security guard being fatally wounded and dispossessed of his firearm and its ammunition, and the robbers making off with approximately R460 000. The appellant was one of the persons charged in relation to the incident. He was convicted of murder and robbery with aggravating circumstances, and was sentenced to life imprisonment. The Full Court having dismissed his appeal, the present further appeal was with the special leave of the Supreme Court of Appeal.

None of the perpetrators of the attack was identified, and the sole issue in dispute was whether the appellant had been part of the gang on the relevant day. The State’s case against the appellant consisted of a pointing out by him to a police officer shortly after his arrest, together with certain utterances during the course of that pointing out, which, according to the Full Court, amounted to a confession. The admissibility of the evidence was called into question.

Held – Our Constitution now requires criminal trials to be conducted in accordance with just those notions of basic fairness and justice. The right to a fair trial embraces the concept of substantive fairness and it is for the criminal courts hearing criminal trials or appeals to give content to the notions of basic fairness and justice which

underpin a fair trial. In terms of section 35(5) of the Constitution, evidence obtained in a manner that violates any right in the Bill of Rights must be excluded if the admission of that evidence would render the trial unfair or otherwise detrimental to the administration of justice. In determining whether the trial is rendered unfair, courts must take into account competing social interests. The court’s discretion must be exercised by weighing the competing concerns of society on the one hand to ensure that the guilty are brought to book against the protection of entrenched human rights accorded to accused persons.

In the present matter, there was no record that the appellant had been warned of his constitutional rights prior to the pointing out. Accepting that he was not properly warned of his constitutional rights, it had to follow that there was a high degree of prejudice to him because of the close causal connection between the violation and the conscriptive evidence. There was, at the time of his arrest, no other evidence that linked him to the offences. The Court concluded that the evidence should have been excluded. Upholding the appeal, the Court set aside the conviction and sentence of the appellant.

Minister of Home Affairs and others v Somali Association of South Africa, Eastern Cape (SASA EC) and another [2015] 2 All SA 294 (SCA)

Administrative law – Administrative decision – Requirement of the rule of law that the exercise of public power should not be arbitrary, with the result that decisions must be rationally related to the purpose for which the power was given.

Immigration – Processing of applications of asylum seeking refugees – Refugees Act 130 of 1998 – Decision to close Refugee Reception Office – Where decision was not preceded by consultation with interested parties in circumstances where such consultation was necessary, it was held to be arbitrary and thus unlawful.

Since 2011, three of the six Refugee Reception Offices (“RRO”) in South Africa were closed. Litigation challenging the lawfulness of each of those decisions followed. In each of the challenges to the decision to close the relevant RRO, the decision was held by the High Court to be unlawful. The present appeal concerned the closure of the RRO in Port Elizabeth. The High Court reviewed and set aside the decision by the second appellant (“the DG”) to close the office, and directed that pending the outcome of any further appeal, the order that a fully functional RRO be opened and maintained, not be suspended. Nevertheless, the office remained closed to new applicants. The DG subsequently indicated that the order had been overtaken by events as a fresh decision had been taken to close the RRO (“the second decision”). The respondents challenged the second decision. The matter went before the High Court, which set that decision aside. It also ordered the relevant authorities to ensure that an RRO was open and fully functional within the municipality, but granted leave to the relevant authorities to appeal to the Supreme Court of Appeal.

Held – In terms of section 21 of the Refugees Act 130 of 1998, every person who wishes to obtain asylum must apply in person to a Refugee Reception Officer (“the Officer”) at any RRO. To that end, the Officer must ensure that the application form is properly completed and where necessary assist the applicant in that regard. The Officer may conduct such enquiry as is deemed necessary in order to verify the information furnished by the applicant and, thereafter submit the application together

with such information as may have been obtained to a Refugee Status Determination Officer (“RSDO”). Pending the outcome of that application the Officer must, in terms of section 22 of the Act, issue such applicant with an asylum seeker permit allowing him or her to sojourn in the Republic temporarily. Until the issuance of a section 22 permit (also described as an asylum seeker permit), such person is considered an illegal foreigner and subject to apprehension, detention and deportation in terms of the Immigration Act 13 of 2002. Importantly, in terms of the Immigration Act, no person may employ (section 38), or save for humanitarian assistance and aid, abet, assist, enable or in any manner help an illegal foreigner (section 42).

It was accepted by the parties that the DG’s decision constituted executive action. The broad thrust of the respondents’ case was that the decision of the DG fell short of constitutional legality for want of consultation with interested parties and rationality. Each of those contentions was considered in turn by the Court.

The Court found that the second decision by the DG was not preceded by consultation with interested parties. A duty to consult will arise only in circumstances where it would be irrational to take a decision without such consultation, because of the special knowledge of the person or organisation to be consulted. The failure to consult with the respondents when deciding whether to close the RRO was not founded on reason and was held to be arbitrary and thus unlawful.

While the above conclusion would be dispositive of the matter, the Court thought it might be desirable, particularly considering the remedy sought by the respondents, for a view to be expressed on their other challenge.

An incident of legality is rational decision-making. It is a requirement of the rule of law that the exercise of public power should not be arbitrary. Thus, decisions must be rationally related to the purpose for which the power was given. The respondents’ explanation for the decision to close the Port Elizabeth RRO was that it was to be replaced by a new RRO at a border post. The respondents were granted leave to place new evidence before the court, of a recent disclosure by the first appellant in Parliament, that there would not be a new Refugee Reception Office (“RRO”) established at a border post. The second appellant sought to interpret that response as meaning that the new RRO would not be opened in the forthcoming financial year, but the Court rejected such interpretation.

Although when a court reviews and sets aside a decision of an administrative body it almost always refers the matter back to that body to enable it to reconsider the issue and make a new decision, it occasionally does not give the administrative organ a further opportunity, and makes the decision itself. Due to the DG’s stubborn adherence to his original decision, the Court deemed this to be a case where it should make its own decision.

Dismissing the appeal, the Court ordered the respondents to restore the Port Elizabeth RRO to full functionality by 1 July 2015, and the DG was to report to the applicants in writing on progress in that regard.

Newlands Surgical Clinic (Pty) Ltd v Peninsula Eye Clinic (Pty) Ltd [2015] 2 All SA 322 (SCA)

Company law – Deregistration of company – Retrospective effect of the appellant’s reinstatement as a company under section 82(4) of the Companies Act 71 of 2008 – Reinstatement of deregistered company by virtue of section 82(4) has complete retrospective effect, including validation of corporate activities during period of deregistration – Parties prejudiced by complete reinstatement afforded the opportunity to seek relief under section 83(4) of the Companies Act.

The appellant operated a surgical clinic, the facilities of which were used by the respondent. The latter was essentially an incorporated association of ophthalmic surgeons. A dispute between the parties arose over the appellant’s claim for payment of R570 000 arising from the parties contractual relationship. The dispute was referred to arbitration where the arbitrator upheld the respondent’s claim. The appellant’s appeal to an arbitration panel of three members was dismissed. At that point in time, it came to the respondent’s notice that before the commencement of the arbitration proceedings, the appellant had been deregistered as a company, in terms of section 73 of the Companies Act61 of 1973. As that would mean that the arbitration proceedings were null and void, the respondent brought an application for the reinstatement of the appellant in terms of section 82(4) of the Companies Act 71 of 2008. The application was successful, leading the respondent to bring an application in the High Court, inter alia, for an order declaring that the appellant had been reinstated as a company retrospectively as from the date of its deregistration. The issues in that court were whether the reinstatement of a company by the Companies and Intellectual Property Commission (“CIPC”) under section 82(4) operates retrospectively so as to validate actions performed on behalf of the company during its period of deregistration, and if not, whether such reinstatement can be afforded retrospective effect by the court in the exercise of its powers in terms of section 83(4). The High Court decided on the first issue that, in the main, the effect of reinstatement under section 82(4) is not automatically retrospective. On the second issue it held, however, that the court has the power under section 83(4) to render the reinstatement of the company retrospective to the extent that it is just and equitable and thereupon proceeded to exercise that power in favour of the respondent.

Held – The appeal turned on the interpretation of section 82(4) of the Companies Act 71 of 2008 as juxtaposed with section 83(4) of the Act.

Before addressing the main issue in dispute, the Court defined the ambit of the appeal. When a High Court has limited the grounds of appeal, as it did in this case, the present Court has no jurisdiction to entertain an appeal on grounds which had been specifically excluded. Therefore, the appellant’s attempts to include in the ambit of the appeal, grounds which had been specifically excluded by the High Court, were unsuccessful.

The only issue arising from the ground upon which leave to appeal was obtained related to the retrospective effect of the appellant’s reinstatement as a company under section 82(4) of the Act. That issue had to be understood in the context of the established principle that deregistration puts an end to the existence of a company. All subsequent actions purportedly taken on behalf of the deregistered company are consequently void and of no effect. Therefore, unless the reinstatement of the appellant was afforded retrospective effect, the arbitration proceedings, the associated court proceedings, and the orders and awards that were made in favour of the respondent against the appellant in those proceedings, would simply be null

and void. Examining the authorities, the Court found that the construction that a reinstatement undersection 82(4) has complete retrospectivity is not borne out by any fully reasoned authority. The concept of partial retrospectivity, on the other hand, was supported by the court a quo. That view is that, while reinstatement brings in its wake retrospectivity to the extent of revesting the company with its former assets, it does not validate corporate activity purportedly conducted on behalf of the company during its period of deregistration.

Finding that view untenable, the Court dismissed the appeal with costs. The Court held that the wording of section 82(4) leaves no room for that construction. Once reinstatement in section 82(4) is construed as indicating retrospective operation, there is no justification for construing it to mean that retrospective operation must stop halfway, in the sense that it pertains to revestment of the company’s property only.

Mncube and others v Januarie NO and others [2015] 2 All SA 338 (GJ)

Company law – Insolvency – Meeting of the creditors of a university in liquidation – Powers of liquidators – Companies Act 61 of 1973 – Section 1(1) – “liquidator . . .  includes co-liquidator and any provisional liquidator so appointed” – All statutory powers conferred on the liquidator remain within the grasp of the provisional liquidator – Court found that the issues which the applicants wished to raise at the meeting were critical insofar as the respondents had decided to close the university pending the final adjudication of the winding-up application, despite the fact that another entity had placed an offer to acquire the university as a going concern.

In response to an urgent application, the court ordered the third respondent to convene a meeting of the creditors of a university (“CIDA”) in liquidation. The purpose of the meeting was defined in the court’s order. Reasons for the order were now furnished.

Held – The university was indebted to various entities in the amount of R41 700 000. It was unable to pay those debts and if it was finally liquidated, the creditors would not recover all of the monies owed to them. The applicants, who were all employees of the university and who had not been paid their salaries for some time, might have to suffer the fate of not recovering all that was owed to them.

The Court examined the specific provisions of the Companies Act (old and new) dealing with the general powers of the liquidators. The respondents argued that as “provisional liquidators” they are not the appointed liquidators and therefore are incapable of hosting a meeting of the creditors. Looking at the definition of “liquidator” in terms of section 1(1) of the Companies Act 61 of 1973, the Court held that a “liquidator . . .  includes co-liquidator and any provisional liquidator so appointed.” Therefore, all statutory powers conferred on the liquidator remain within the grasp of the provisional liquidator.

It was within the powers of the respondents to call the meeting in question, and the Court found that the issues which the applicants wished to raise at the meeting were critical insofar as the respondents had decided to close the university pending the final adjudication of the winding-up application, despite the fact that another entity had placed an offer to acquire the university as a going concern.

Rose v Rose and others [2015] 2 All SA 352 (WCC)

Marriage – Islamic marriage – Validity of – Effect of prior existing civil marriage on rights arising from Islamic marriage – Plaintiff was challenging the legal effect of the talaq (divorce), in particular by seeking to have the proprietary consequences of her Islamic marriage regulated under the Divorce Act 70 of 1979 – Court held that a marriage as contemplated by the Divorce Act must be considered or interpreted to include a Muslim marriage as it would be unconstitutional to afford protection to spouses in monogamous Muslim marriages but not those in polygamous Muslim marriages – First defendant’s prior civil marriage, although it might have the consequence that the plaintiff’s subsequent Islamic marriage to the first defendant was to be considered to be polygamous, could not be held to constitute a bar to any claim the plaintiff might have to the relief sought by her.

In 1975, the first defendant entered into a civil marriage solemnised in terms of the Marriage Act 25 of 1961. That marriage was still in existence when the first defendant entered into an Islamic marriage with the plaintiff in March 1988, and was only terminated by a decree of divorce in June 1998.

The marriage between the plaintiff and first defendant was annulled on 20 July 2009 by the Muslim Judicial Council. The plaintiff issued summons against the first defendant, claiming certain relief in respect of the proprietary consequences of their Islamic marriage.

The questions of law to be adjudicated were whether the Islamic marriage entered into between the parties was validly contracted notwithstanding the prior marriage in terms of the provisions of the Marriage Act; and whether the first defendant’s prior existing civil marriage would act as a bar to the plaintiff being entitled to claim certain relief in respect of the proprietary consequences of her Islamic marriage to the first defendant.

Held – The plaintiff’s entitlement to the relief set out in the stated case was not dependant on a determination of the validity or invalidity of the Islamic marriage entered into with the first defendant. While there had not been any pronouncement on the constitutional validity of polygamous Muslim marriages, the Constitutional Court had proceeded on the basis that Muslim or Islamic marriages are not recognised as legally valid in our law. Adopting that approach, the Court held that for the purposes of South African law, the plaintiff’s marriage to the first defendant was not considered to have been validly contracted.

The second question of law to be decided was whether the first defendant’s pre-existing civil marriage would act as a bar to a claim by the plaintiff for relief in respect of the proprietary consequences of the Islamic marriage. The relief in question was payment by the first defendant of monthly maintenance in the amount of R1 000 from the date of divorce and or expiration of the iddah (waiting) period until the plaintiff’s death or remarriage as contemplated in section 7(2) of the Divorce Act 70 of 1979; that the first defendant’s pension interests in the third defendant as at 23 October 2008 be declared to be part of his assets; and that the third defendant be required to pay over to the plaintiff half of the first defendant’s pension fund as valued at 23 October 2008 when any pension benefits accrue to the first defendant in relation thereto.

In deciding the second question, the Court held that what the plaintiff was essentially seeking to do was challenge the legal effect of the talaq, in particular by seeking to have the proprietary consequences of her Islamic marriage regulated under the Divorce Act. The dissolution of the Islamic marriage by the Muslim Judicial Council was therefore no bar to the current divorce action. A marriage as contemplated in the Act is not limited to one solemnised under the Marriage Act but would, for example, include a marriage solemnised under the laws of a foreign state, which may potentially be at odds with South African common law. Based on the authorities, the Court held that a marriage as contemplated by the Divorce Act must be considered or interpreted to include a Muslim marriage. And the court held further that it would be unconstitutional to afford protection to spouses in monogamous Muslim marriages but not those in polygamous Muslim marriages. That being so, the first defendant’s prior civil marriage, although it might have the consequence that the plaintiff’s subsequent Islamic marriage to the first defendant was to be considered to be polygamous, could not be held to constitute a bar to any claim the plaintiff might have to the relief sought by her.

Young Ming Shan CC v Chagan NO and others [2015] 2 All SA 362 (GJ)

Housing – Rental property – Levying of electrical service charge by landlord – Lawfulness – Applicant did not have a licence to sell or supply electricity and in terms of the electricity by-laws and Electricity Regulation Act 4 of 2006, was therefore prevented from making a profit – Applicant should have factored its administrative costs into the rental when it determined rentals for tenants and it could not levy its own service charge in addition to the rental and the cost of consumption of the electrical services by the tenant.

The applicant sought the review and setting aside of the Gauteng Housing Rental Tribunal’s ruling in which the levying of an electrical service charge by the applicant on its tenants (the second respondent) was declared an “unfair practice”, as contemplated in the Gauteng Unfair Practices Regulations. The applicant owned a block of flats in Hillbrow, Johannesburg. Each apartment had its own electricity meter and the tenants were each liable to pay to the applicant the amount charged for the electricity consumed by them. In about May 2009, the applicant started levying an electricity service charge in the amount of about R385 per month on each of the tenants in its building. That was in addition to the costs of the electricity consumed by each of the tenants. The applicant’s justification for the charge was that it was being charged a service charge for the entire building by the Johannesburg City Council, or “City Power”, the utility service provider, which supplied electricity to the building. The service charge by City Power was in an amount of about R337,50 per month for the entire building. However, the applicant charged each tenant an amount of about R385 as an electricity service charge The tenants brought an application in the Tribunal for a declaration that the charge contravened the Gauteng Unfair Practices Regulations.

Held – The service charge levied by the applicant in respect of each tenant bore little resemblance to the utility provider’s charge and was not the recovery by the applicant of that charge, but the applicant’s own charge levied against each of the tenants for the services it alleged it provided to the tenants, such as for billing and

the maintenance of the electricity network, etc. The applicant did not have a licence to sell or supply electricity and in terms of the electricity by-laws and Electricity Regulation Act 4 of 2006, was therefore prevented from making a profit. It should have factored its administrative costs into the rental when it determined rentals for tenants. However, it could not levy its own service charge in addition to the rental and the cost of consumption of the electrical services by the tenant.

The test on review was not whether the Tribunal was right or wrong, but whether its decision was so unreasonable that no reasonable person, or more specifically, Rental Tribunal, could have come to that conclusion in the circumstances. The Court held the Tribunal’s finding not to be so unreasonable that no reasonable person or tribunal would have come to the same conclusion as it. The application was dismissed with costs.

Minister of Transport NO and another v Prodiba (Pty) Ltd [2015] 2 All SA 387 (SCA)

Administrative law – Procurement – Agreement with service provider signed by Director-General without approval of Minister – Absence of authority on part of Director-General and failure to adhere to constitutional procurement principles leading to decision being declared unlawful – Court held that if agreement was upheld it would mean that following upon the award of a single tender in 1997 one service provider would have had a monopoly in the production of drivers’ licences for over 20 years – Director-General’s approach flouted imperative statutory and treasury requirements and militated against constitutional principles of transparent and accountable government.

In 1997, the Department of Transport awarded a tender for the provision of a bureau service that would produce a personalised new style South African drivers’ licence, administer the production process and keep the licences safe until they were delivered to the licencing authority. Shortly after the award of the tender, the rights vested in the successful tenderer were ceded to the respondent (“Prodiba”). Pursuant thereto, Prodiba provided services until 28 February 2014.

In February 2013, an erstwhile Director-General of the Department (whose authority to contract with Prodiba was later challenged by the appellants) signed an agreement which was at the centre of the present dispute. That agreement purported to bind the Department and South Africa to migration from the initial card system to a smart card microchip-based driving licence system, with Prodiba being responsible for its production. Subsequent to the conclusion of the agreement, and in anticipation of it being implemented, Prodiba placed orders with suppliers for the necessary materials and equipment to enable it to comply with its contractual obligations. But in April 2013, when Prodiba sought to obtain payment from the Department of three invoices totalling some R38,5 million, it met with resistance. The Department then purported to cancel the agreement. Prodiba launched an application in the High Court for an order declaring the decision to cancel the agreement unlawful and directing the Department to comply with its obligations in terms of thereof.

The High Court considered the appellants’ defences that the relevant Director-General failed to obtain the Minister’s approval; that in terms of the Public Finance Management Act 1 of 1999 (“PFMA”), approval had to be obtained from National Treasury as the effect of the agreement was to increase the value of the existing contract in excess of 15%; and that the Director-General had failed to obtain the approval of a Bid Committee as required by the Department’s supply chain policy. The failure by the appellants to mention in the letter of cancellation, the absence of the necessary approvals from National Treasury and Bid Committee, counted against them. The court considered Prodiba to be an innocent party that would be prejudiced in the event that the Department was permitted to rely on non-compliance with its internal procedures. It also held that there was no provision in the PFMA requiring the Director-General to obtain the Minister’s approval before binding the Department by concluding the agreement.

Held – If Prodiba were to succeed it would mean that following upon a single tender process during 1995–1997, a single contractor would have had an uncontested monopoly in the production of drivers’ licences for a period of more than 20 years. Questioning whether our constitutional norms and values countenance such a situation, the Court answered the question in the negative.

The Court identified several fundamental flaws in the approach of the court below. Policy decisions such as those to migrate to a new style drivers’ licence system fall within the province of the Legislature or the Executive. The High Court’s failure to understand that Cabinet approval would be required for the Director-General’s decision showed a lack of appreciation of where the power to make policy resides and of the fact that the Director-General operated within the Minister’s department and was subject to the latter’s authority. Whether a person has authority is a question of fact. It was clear from the facts that the Director-General had no such authority.

More fundamentally, the court below failed to pay sufficient attention to the procurement principles set out in the Constitution. Section 217of the Constitution was designed to ensure transparency and accountability on the part of organs of State. Those prescripts were not adhered to by the Director-General.

The appeal was upheld.

Pricewaterhousecoopers Incorporated and others v National Potato Co-operative Ltd and another [2015] 2 All SA 403 (SCA)

Civil procedure – Prescription – Prescription Act 68 of 1969 – Section 12(3) – Knowledge of facts giving rise to claim – Debt becoming due from date of acquisition of such knowledge – Knowledge of directors to be attributed to entity – No special rule of attribution when claim arising from auditor’s alleged failure to report properly to members of entity.

Contract – Auditor and client – Alleged breach of duty – Claim for damages on ground that audit was conducted negligently – Causation element to show the causal link between loss and contents of auditor’s reports – Court unable to find that auditors breached their contractual obligations or caused client to suffer loss as it

was shown that the losses arose from trading and were therefore not recoverable from the auditor.

Evidence – Hearsay evidence – Opinion evidence – Legal principles restated – Need to establish facts on which expert’s opinion is based – Qualifications and duties of expert witness – Provide independent assistance to the court by way of objective unbiased opinion in relation to matters within his expertise – An expert witness in the High Court should never assume the role of advocate.

The second to fifth appellants (“PWC”) acted as auditors of the first respondent (“NPC”) from 1984 to 1997. Alleging that its annual financial statements throughout that period failed to make adequate provisions for bad and doubtful debts that had arisen through on-going reckless mismanagement of its affairs in regard to the extension of credit to its members, NPC said that PWC should have identified this reckless mismanagement in the course of the audits and either insisted on changes to the financial statements to reflect the true position, or disclosed the under-provisions in their auditors’ reports. It was alleged that PWC’s failure in that regard resulted in NPC writing off substantial sums as bad debts causing it to suffer loss, which it sought to recover from PWC.

The main appeal lay against the judgment in the court below, holding PWC liable in damages and against the quantum of the damages.

Held – The core issue was whether PWC breached their contractual obligations as auditors, thereby causing NPC to suffer damages.

There was no allegation that the auditors were in any way involved in granting credit to the debtors concerned. Nor did they have any responsibility for the collection of debts. The bad debts arose because NPC, acting through its own staff and management, extended credit to debtors who either were not creditworthy when the debts were incurred or had become unable to repay them by the time the action commenced. No allegations were made connecting the auditors to the granting of credit to these debtors or to the inability to recover these amounts from them. Although that was a deficiency in the pleadings, no exception was raised.

The issues which arose from the parties averments included whether the relationship between NPC and PWC was contractual, and if so, what obligations were assumed by PWC thereunder; whether officials of NPC recklessly mismanaged credit as alleged; whether PWC breached any of its contractual obligations, and if so, whether those breaches caused NPC to suffer any loss; and whether the whole, or any part, of the claim prescribed before the institution of this action.

NPC’s contention was that the reason for the high level of bad debts was mismanagement of the function of granting credit and recovery of debts by its officials, who were acting recklessly or dishonestly and irregularly, through deliberate breaches of the statute of NPC and its credit policy, and that that was either known to the auditor or should have become apparent to him had he undertaken a proper audit. The Court found that the relationship between PWC and NPC was contractual.

NPC relied on the evidence of a person (“Collett”) who had investigated the role of PWC and advised NPC that it had a claim based on negligence. However, the Court found some of Collett’s evidence to have been hearsay and inadmissible. Furthermore, setting out the status of expert evidence, the Court held that Mr

Collett’s evidence did not measure up to the relevant standards. His evidence went far beyond that of an expert witness in auditing matters. The Court found that he was not an expert in any of the various areas in which he gave evidence, namely, accountancy standards, the proper conduct of an audit, the agricultural economy or the proper conduct of the business of an agricultural co-operative and in particular the administration of credit. His evidence was of little or no value in this case and no finding adverse to PWC could or should have been based thereon.

The Court went on to find that NPC had failed to prove that there was reckless mismanagement of credit. On that ground alone, its claim should have failed and the appeal had to succeed. But additionally, NPC failed to show that it had suffered any loss flowing from deficiencies in PWC’s reports to members.

Finally, the Court turned to the issue of prescription. Identifying when the directors of NPC had knowledge of the facts underlying the claims, the Court found that the plea of prescription should have succeeded in relation to the claims against the second, third and fourth appellants and at least in part against the fifth appellant.

The success of the appeals of PWC entitled them to an order of costs including the costs of two Counsel.

Klassen v Blue Lagoon Hotel and Conference Centre [2015] 2 All SA 482 (ECG)

Delict – Personal injury – Plaintiff sued the defendant hotel for damages suffered by him when he slipped and fell in the defendant’s bathroom as a result of which he sustained an injury to his ankle – Liability – Alleged negligence – Test for negligence – Whether a reasonable person, in the same circumstances as the defendant, have foreseen the possibility of harm to the plaintiff; would have taken steps to guard against the possibility; and whether the defendant failed to take those steps – Evidence established that the defendant had a properly functioning cleaning system in place, and that it took reasonable precautions in ensuring that the toilet facilities were kept in a clean and dry condition and that they did not pose a danger to its guests.

The plaintiff sued the defendant hotel for damages suffered by him when he slipped and fell in the defendant’s bathroom as a result of which he sustained an injury to his ankle.

At the request of the parties, the issues of liability and quantum were separated, and the Court was called upon to determine the question of liability only, leaving that of quantum to be determined at a later stage.

The defendant disputed liability, alleging that the plaintiff was drunk at the relevant time. It also relied on a disclaimer notice to guests, indicating that the hotel would not be responsible for any personal injury to guests whether such injuries or loss were sustained by the negligent or wrongful act of anyone in the employment of or acts on behalf of the defendant.

Held – The Court was satisfied on the evidence before it, that the plaintiff had injured his ankle when he slipped and fell in the defendant’s toilets. It also accepted that when the plaintiff checked in at reception, he completed and signed a registration card and that the said card contained the exemption clause relied on by the

defendant. Furthermore, the disclaimer notices were displayed at the motor vehicle entrance and the guardhouse.

The test for negligence is whether a reasonable person, in the same circumstances as the defendant, have foreseen the possibility of harm to the plaintiff; would have taken steps to guard against the possibility; and whether the defendant failed to take those steps. The evidence established that the defendant had a properly functioning cleaning system in place, and that it took reasonable precautions in ensuring that the toilet facilities were kept in a clean and dry condition and that they did not pose a danger to its guests. Finding no negligence, the Court dismissed plaintiff’s claim.

Motsetse v Motsetse [2015] 2 All SA 495 (FB)

Divorce – Joint estate – Division of – Inclusion of pension interest – Court pointed out that when a plaintiff sues for divorce and prays for division of a joint estate and the matter is then not defended, there is no need for any reference to pension funds or any evidence in regard thereto as the legal effect is that each of the parties is entitled to half of the joint estate – Regarding the applicability of the order of division to any pension fund of which the respondent was a member at the time, it was open to the appellant to submit such order to such pension fund in terms of section 37D(4)(a) of the Pension Funds Act 24 of 1956 – In casu, the appellant’s application was premature as it was brought before he even tried to give effect to the order by submitting it to the relevant pension fund.

In a divorce action between the parties, the respondent obtained a decree of divorce and ancillary relief granted in the absence of the appellant. In accordance with the respondent’s prayer, the court granted division of the joint estate of the parties with the exception of the house and car. The appellant applied for rescission of the order. Essentially, the appellant sought amendment of the decree of divorce so as to include settlement negotiations in the order. He also raised the questions of whether a pension interest of a party forms part of the joint estate of the parties, and whether it is necessary that a claim in regard to such pension interest be specifically pleaded.

Held – The evidence established that no valid and binding settlement agreement came into being pursuant to the negotiations referred to by the appellant. He was therefore not entitled to amendment of the divorce order as prayed.

On the remaining issues, the Court pointed out that it often happens that a plaintiff sues for divorce and prays for division of a joint estate and the matter is then not defended. In such a matter, there is no need for any reference to pension funds or any evidence in regard thereto. The legal effect is clear – namely that each of the parties is entitled to half of the joint estate. In the determination of the benefits, the pension interest of the parties shall be deemed to be part of the assets. Regarding the applicability of the order of division to any pension fund of which the respondent was a member at the time, it was open to the appellant to submit such order to such pension fund in terms of section 37D(4)(a) of the Pension Funds Act 24 of 1956. The appellant did not do that. His application was therefore premature – being brought

before he even tried to give effect to the order by submitting it to the relevant pension fund.

The appeal was dismissed with costs.

Seevnarayan v Garlicke and Bousfield Inc [2015] 2 All SA 503 (KZD)

Delict – Action against attorneys – Prescription of client’s claim – Failure to advise client of prescription – Prescription Act 68 of 1969 – In terms of section 12(1) and (3) of the Prescription Act, prescription did not begin to run until the plaintiff was informed that his claim had prescribed, he had no reasonable prospects of success on appeal and that he could proceed against his attorneys for the recovery of losses he had suffered – Issue was what a reasonable attorney in the position of the defendant, faced with a similar case under similar circumstances, would have done – Court held that the defendant was obliged either personally or through others, to exercise the knowledge, skill and diligence to be expected of an average practising attorney.

In terms of a contractual arrangement, the plaintiff had appointed a third party (“Essack”) as its agent to lend money to third party borrowers on terms approved by the plaintiff. In breach of such mandate, Essack lent the said money to two other entities, without the plaintiff’s prior knowledge or consent and without first having obtained adequate security. That resulted in plaintiff’s claiming damages against Essack. In that regard, the plaintiff appointed a firm of attorneys (“Ditz Inc.”) to prosecute its claim. In accepting such a mandate from the plaintiff Ditz Inc. was represented by Mr Colin Cowan (“Cowan”), who was now deceased. In March 2002, with the consent of the plaintiff, the defendant firm assumed all the obligations of Ditz Inc. in terms of the mandate referred to above. In breach of its mandate from the plaintiff, the defendant allegedly failed to take steps necessary timeously to prosecute the plaintiff’s claim against Essack for damages, only instituting action against Essack on 2 October 2002. According to the defendant, it had received the instruction from the plaintiff to prosecute an action against Essack in September 2002 and at the time the plaintiff’s claim had already prescribed. However, it was undisputed that on receipt of the mandate the defendant did not inform the plaintiff that his claim had prescribed and failed to dissuade him from instituting a worthless action against Essack. Consequently, the matter went to trial, where the action was dismissed on the ground that it had prescribed. The plaintiff sued the defendant for damages arising from the defendant’s failure to execute the attorney-client mandate.

Held – The bone of contention between the parties related to when the defendant firm took over the mandate from Ditz Inc. According to the plaintiff it was in March 2002, and according to the defendant, that the file of the plaintiff’s matter against Essack was opened by the defendant firm on 11 September 2002, and it was only then that the plaintiff became a client of the defendant firm.

The Court could not find that the plaintiff had yet become a client of the defendant at the time his claim against Essack prescribed. The claim for damages in the amount of the claim against Essack was thus dismissed.

However, the Court then turned to examine the consequences of the defendant’s failure to inform the plaintiff that it would be futile pursuing his claim against Essack as it had prescribed. In so doing, the Court had to decide whether the plaintiff’s claim

against the defendant had also prescribed. In terms of section 12(1) and (3) of the Prescription Act 68 of 1969, prescription did not begin to run until the plaintiff was informed that his claim had prescribed, he had no reasonable prospects of success on appeal and that he could proceed against his attorneys for the recovery of losses he had suffered. The prescription of the plaintiff’s claim against Essack for the resulting damages therefore commenced in October 2010. It was only then the plaintiff understood that his claim against Essack had prescribed and that the defendant firm would lodge a claim with its professional insurers, so to recover the losses he had suffered. The question which arose was what a reasonable attorney in the position of the defendant, faced with a similar case under similar circumstances, would have done. The attorney is by profession an adviser upon litigation, and other contestations and it is his duty to advise the client upon the prospects of success or failure and upon the impact of costs. The Court held that the defendant was obliged either personally or through others, to exercise the knowledge, skill and diligence to be expected of an average practising attorney. However, the unchallenged evidence established that the defendant firm failed to maintain that standard. The defendant was therefore ordered to pay to the plaintiff the sum of R411 443,60, being the legal costs and disbursements he paid to the defendant firm in respect of his claim against Essack, together with interest thereon.

END