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The law reports

Heinrich Schulze BLC LLB (UP) LLD (Unisa) is a professor of law at Unisa.

November 2012 (6) The South African Law Reports (pp 1 – 328); [2012] 4 The All South African Law Reports October no 1 (pp 1 – 120) and no 2 (pp 121 – 238)

This column discusses judgments as and when they are published in the South African Law Reports, the All South African Law Reports and the South African Criminal Law Reports. Readers should note that some reported judgments may have been overruled or overturned on appeal or have an appeal pending against them: Readers should not rely on a judgment discussed here without checking on that possibility – Editor.

ABBREVIATIONS:

SCA: Supreme Court of Appeal

Children

Access by grandparents: In LH and Another v LA 2012 (6) SA 41 (ECG) the respondent’s son was born soon after her husband was killed in a car accident. After she remarried, relations between her and the parents of her deceased husband (the applicants) deteriorated and all contact between them and their grandson ended. The applicants wanted to re-establish contact with their grandson and approached the High Court for an order granting them access. The respondent opposed the application on the basis that the initial contact with them had resulted in numerous problems that convinced her that further contact with the applicants would not be in her son’s best interests.

Smith J held that it is
usually in a child’s best interests to maintain a close relationship with his grandparents. In the present case the respondent’s attitude was motivated by her personal difficulties with the applicants rather than a consideration of her son’s best interests. Contact between the applicants and their grandson, although desirable, had to be carefully circumscribed so as not to interfere with the respondent and her second husband’s parental responsibilities. A reasonable transition period was required for the repair of the soured relationship between the respondent and the applicants.

The court ordered that the applicants be allowed to visit their grandchild at least once a week, for three hours at a time, at his home or anywhere else the respondent deemed appropriate.

As the applicants were successful, ordinarily they would have been entitled to costs; however, the court reasoned that it was inevitable that any attempt on their part to recover costs from the respondent would further strain their relationship and negatively impact their attempts to re-establish a close relationship with their grandchild. The court therefore held that such a costs order would not be in the best interests of the child and, in the circumstances, it would be appropriate for each party to pay its own costs.

Foster care order: In SS v Presiding Officer, Children’s Court, Krugersdorp and Others 2012 (6) SA 45 (GSJ) the court was asked to pronounce on whether a foster care order had to be made in respect of SS, an orphaned child of 12 who was living with his aunt and uncle (the Ls), who were providing for him from their ‘meagre’ means.

An application for such an order had been refused by the children’s court on the ground that SS was not in ‘need of care and protection’ since he was being taken care of by the Ls. Section
150(1)(a) of the Children’s Act 38 of 2005 stipulates that a child is ‘in need of care and protection’ if ‘the child has been abandoned or orphaned and is without any visible means of support’ (my emphasis). On appeal, the High Court was asked to interpret these two phrases.

Saldulker J held that
s 150(1)(a) envisaged a two-stage inquiry: The commissioner first had to investigate the abandoned or orphaned child’s living arrangements and welfare to determine whether he is in need of care or protection. Once this is established, the commissioner has to determine whether the child lacks ‘visible means of support’. ‘Visible’ means ‘evident’ and the focus is on the financial means of the child, not of the foster parent or de facto caregiver. The commissioner has to determine whether anyone, including the child’s current caregivers, has a legal duty to support him. Not all relatives owe a legal duty of support and relatives are eligible foster parents. If the child is not readily able to access any such means of support, then he is in need of foster care and the ancillary foster grant, to be accessed through the foster parent(s).

The following kin bear a duty of support: Biological and adoptive parents, whether married or not; maternal and paternal grandparents, regardless of whether the parents were married; siblings; and step-parents in exceptional, narrowly defined cases. Uncles and aunts, however, owe no duty of support to their nieces and nephews.

The commissioner had erred in finding that because SS was in the care of the Ls, who lacked a legal duty to support him, he therefore had ‘visible means of support’ and was thus excluded from foster care services. His conclusion was based on an ‘implausible interpretation’ of s 150(1)(a), which could not have been intended by the legislature. The commissioner should have found SS to be a minor child in need of care and protection and without visible means of support, and should have placed him in the foster care of the Ls. The Ls were entitled to a foster care grant for the duration of the foster care order, backdated to the date the commissioner handed down judgment.

There was no order as to costs.

Contract of sale

Doctrine of fictional fulfilment: The facts in Lekup Prop Co No 4 (Pty) Ltd v Wright [2012] 4 All SA 136 (SCA) were as follows. The appellant seller owned immovable property, which it sold to the respondent purchaser in April 2004. The sale agreement contained an acknowledgment by the purchaser that he was aware that the property was not yet sub-divided and the agreement of sale was subject to sub-division being formally approved and registered by 31 October 2004. It was further agreed that in the event of sub-division not being registered by this date, the agreement would be cancelled. The date was subsequently extended, but the sub-division was still not approved by the agreed date. The case was conducted on the basis that despite the reference to cancellation in the agreement, the meaning of the clause was that if the condition had not been fulfilled by the date specified, the agreement would lapse.

The seller brought an application in the court a quo on the basis that the agreement had lapsed. By consent, the matter was later referred to trial. The purchaser alleged that the seller had deliberately and intentionally failed to procure the required rezoning and sub-division of the property. In doing so, the purchaser relied on the doctrine of fictional fulfilment in contending that the relevant terms of the contract should, for purposes of the allegation that the agreement had lapsed, be deemed to have been fulfilled. The court a quo found in the purchaser’s favour and held that the agreement of sale had not lapsed and the suspensive condition was deemed to have been fulfilled.

On appeal to the SCA, Cloete JA referred to earlier case law and explained the remedy of fictional fulfilment as follows. A condition is deemed to have been fulfilled as against a person who would, subject to its fulfilment, be bound by an obligation, and who has designedly prevented its fulfilment, unless the nature of the contract or the circumstances show an absence of dolus on his part. Dolus in this context does not carry its usual meaning of deliberate wrongdoing or fraudulent intent, but carries a more specific meaning, namely ‘the deliberate intention of preventing the fulfilment of the condition in order to escape the obligation subject to it’. The doctrine focuses on intention rather than motive and negligence does not suffice.

The seller accepted that he had a tacit contractual duty to take all reasonable steps to ensure that the property was sub-divided and the sub-division registered. The doctrine of fictional fulfilment is an equitable doctrine. Equity, in turn, demands that in certain cases a contracting party should be held to a bargain where it has deliberately not performed an obligation for the purpose of avoiding the contract. In order to successfully invoke the doctrine of fictional fulfilment, the purchaser bore the onus of proving that the seller, by deliberate commission or omission, prevented the sub-division from taking place with the intention of avoiding its obligations under the agreement.

The court was not convinced that the seller acted with dolus and that it was prompted by a desire to escape the obligations it had under the agreement. Therefore, the purchaser did not discharge the onus on him. The relief sought, based on the doctrine of fictional fulfilment, which was granted by the court a quo, should have been refused.

The appeal was thus upheld with costs.

Credit agreements

Whether incidental credit agreement is subject to NCA: In Voltex (Pty) Ltd v SWP Projects CC and Another 2012 (6) SA 60 (GSJ) the plaintiff sold and delivered goods to the defendant, payment being due and payable within 30 days of date of delivery and late payment attracting interest. In an application for default judgment against the defendant, the issue was whether the agreement of sale constituted a ‘credit agreement’ in terms of s 8 of the National Credit Act 34 of 2005 (NCA), in particular whether it fell within the s 1 definition of ‘incidental credit agreement’.

Bhikha AJ held that the interest was not charged ‘in terms of’ the agreement, as required in the NCA, but was instead payable as damages in consequence of breach of the agreement.

The court concluded that the transaction was not an ‘incidental credit agreement’ and the NCA did not apply. Default judgment was thus granted.

Note: Readers’ attention is drawn to an earlier case that also involved the plaintiff in this matter, namely Voltex (Pty) Ltd v Chenleza CC and Others 2010 (5) SA 267 (KZP). In this matter there was no deferment as the entire debt was payable within 30 days. Accordingly, so the court reasoned, the agreement did not constitute a credit facility. The court further pointed out that the agreement did not constitute an incidental credit agreement or ‘any other agreement’ as there was no provision stipulating payment of a fee or interest for the deferment of payment. The mora interest claimed by Voltex was in the nature of damages suffered. It was fixed, not by the agreement, but by operation of law.

• See 2010 (Nov) DR 41.

Delict

Damages – trust: The decision in Raath v Nel [2012] 4 All SA 26 (SCA) concerned a medical malpractice claim. As a result of a failed pre-operation intubation procedure conducted by the appellant anaesthetist (the defendant in the court a quo) the respondent (the plaintiff in the court a quo) sued the appellant for damages. The procedure administered by the appellant resulted in the respondent spending more than a month in the intensive care unit of a hospital. His physical and mental recovery after his discharge was slow and problematic.

The respondent sought damages for the loss caused by his inability to see to the affairs of his business as a game farmer and auto dealer to the same degree as prior to the procedure; for future medical and hospital expenses; and for general damages. The appellant accepted liability for such damages that the respondent proved or as agreed, and the trial court made the awards it deemed appropriate. The present appeal was limited to specific amounts for future medical and hospital expenses; loss of income and earning capacity; and an amount for general damages.

On the issue of loss of income and earning capacity, it was argued that any loss that may have been suffered was not suffered by the respondent personally, because for estate planning and estate duty considerations, the respondent had sold all his assets, including his shares and loan account in his business to a trust.

Majiedt JA pointed out that the question was whether the loss suffered by the respondent’s business prior to the sale of assets to the trust, and by the trust thereafter, over the relevant period could be characterised as his loss. The court reasoned that the respondent was not a capital beneficiary of the trust but was, in the discretion of the trustees, a potential income beneficiary thereof. The court noted that this type of trust has become popular for estate planning and tax purposes.

The court referred to case law to the effect that a trust estate, comprising an accumulation of assets and liabilities, is a separate entity, but with no legal personality. It emphasised that the core concept of a trust is the separation of ownership or control from enjoyment. Applied to the present matter, the separateness of the trust estate had to be recognised and emphasised, despite being adverse to the respondent. What the respondent sought, in effect, was the advantage of both a reduction in estate duty and the continued retention of control and advantages of ownership of the trust assets. The appeal in respect of the claim for loss of earning capacity after the date of the sale of assets to the trust was thus upheld with costs.

Measure of damages – contractual link: In Hentiq 1320 (Pty) Ltd v Mediterranean Shipping Co 2012 (6) SA 88 (SCA) the appellant (the plaintiff in the court a quo) sued the respondent (the defendant in the court a quo) for damages in delict and in contract after the respondent had delivered three cargoes of defective rice to the appellant. It was common cause that the supplier had fraudulently misdescribed the rice on the bills of lading. The parties to the contract of sale in respect of the rice were the supplier and a Hong Kong company, Kingsburg, which had financed the deal. Kingsburg, in turn, on-sold the rice to the appellant. Although the fraud was discovered by Kingsburg and the sale cancelled, on being invoiced the appellant nevertheless felt morally obliged to pay Kingsburg for the defective rice.

The court a quo dismissed the appellant’s claim because it failed to prove that it had sustained a recoverable loss. The structure of the transactions involved back-to-back sales from the suppliers to Kingsburg and from Kingsburg to the appellant, and therefore the appellant had no contractual link with the supplier. The party to which it was entitled to look for performance of the contract was Kingsburg. The latter had agreed to sell it rice of a particular description and the rice it delivered was defective. While the supplier was the source of the problem, at the level of contract the only party against whom the appellant had a remedy was Kingsburg. It was entitled to reject the rice that was tendered for delivery for being defective, to cancel the sale and refuse to pay for the rice. Had it done so, it would have been acting in accordance with its rights and would have suffered no loss.

On appeal, Farlam JA concurred with the reasoning of the High Court, which held that the appellant, by failing to show a liability to pay Kingsburg, had failed to prove a recoverable loss.

The appeal was dismissed with costs.

Husband and wife

Settlement agreement: PL v YL 2012 (6) SA 29 (ECP) concerned an application for leave to appeal by both parties against an order made in an unopposed divorce. The gravamen of the complaint was that Alkema J refused to make a specific paragraph of the deed of settlement – which dealt with the division of the parties’ ownership in an immovable property – an order of court. The issue was therefore not so much what the court ordered, but rather what it failed to order.

The High Court has a discretion in divorce proceedings to make a settlement agreement an order of court. The discretion is conferred by s 7(1) of the Divorce Act 70 of 1979 (the Act), which empowers the court to make or refuse to make a settlement agreement relating to maintenance or the division of assets an order of court. The suggestion that the complete settlement agreement should in all cases be made an order of court as a matter of course would remove the element of discretion. The discretion is given by s 7(1) of the Act and no rule of practice, however firmly established, can remove such a discretion.

Alkema J referred to his earlier judgment in Thutha v Thutha 2008 (3) SA 494 (Tk), where the principle was established that, instead of courts battling to find ways of dealing with problems when disputes arise between litigants in respect of private agreements that had been made an order of court, such problems should rather be prevented by refusing to make such an agreement an order of court.

Should disputes subsequently arise between the contracting parties, they must be allowed to resolve these under the law of contract in the normal way.

The court accordingly granted leave to appeal against its order, but only on the basis of whether, generally, the earlier decision in the Thutha matter was correctly decided (including the nature of the discretion to be exercised) and, if so, whether or not the guidelines stipulated in that decision on when to make a settlement agreement an order of court are a proper exercise of the court’s discretion and should be followed in the Eastern Cape High Court.

• See 2008 (Aug) DR 41.

Praedial servitude

Right of aqueduct: The facts in Zeeman v De Wet en Andere NNO 2012 (6) SA 1 (SCA) were as follows. The respondents were the trustees of the De Wetshof Landgoed Trust, which owned the farm De Wetshof in the Robertson district. In 2003 the appellant, Zeeman, and the respondents concluded an agreement of servitude that provided that De Wetshof, in order to facilitate the planting of new vineyards, would be entitled to relocate a pipeline. The pipeline formed the object of an existing servitude of aqueduct over De Wetshof to Zeeman’s neighbouring farm. The subsequently executed notarial deed of servitude specifically provided for reasonable access by Zeeman and his labourers to De Wetshof for the exercise of the servitude. The agreement provided that De Wetshof would, at its own expense, maintain the pipeline and, at the request of Zeeman remove any obstructions.

Zeeman was, however, dissatisfied with his access to the works and applied for an order directing De Wetshof to clear a two-metre-wide strip along the pipeline through its new vineyards to facilitate exercise of the servitude. According to Zeeman, the new vineyards and ancillary irrigation works prevented him and his labourers from walking along the pipeline, meaning they had to circle the vineyards to inspect it at intervals and had to take a detour to clear an often-blocked sluicegate. However, in contrast to these allegations, it appeared from the evidence that Zeeman had not inspected the pipeline once between 2002 and 2010. Zeeman’s application was dismissed by the court a quo.

On appeal, Malan JA held that the principal issue was what constituted a reasonable right of access for the exercise of the servitude. The agreement, in amending the common law by transferring the duty of upkeep from Zeeman to De Wetshof, had also amended Zeeman’s common law right of access to the works, since it was thereafter only necessary for him to visit De Wetshof to inspect the sluicegate, for which purpose the detour past the vineyards was adequate. Although Zeeman’s failure to exercise his rights under the servitude did not affect its existence, it did serve to illustrate what constituted reasonable conduct in the circumstances. It was clear that, in the event of an interruption of the water supply, Zeeman could simply have phoned De Wetshof to demand that it comply with its duty of upkeep. Since there was no indication it was unwilling to so comply, there was, all things considered, no grounds for the granting of Zeeman’s application.

The appeal was dismissed with costs.

Prescription

Prescription – interruption: In Village Freezer t/a Ashmel Spar v CA Focus CC 2012 (6) SA 80 (ECG) the respondent (the plaintiff in the court a quo) was deregistered after rendering certain services to the appellant (the defendant in the court a quo). The respondent issued summons against the appellant while it was deregistered, although it was later reregistered. Unless prescription had been interrupted by the issue of summons, the respondent’s claim would have prescribed while it was deregistered.

The respondent contended that the summons was cured by the subsequent restoration of registration and that its claim against the appellant had accordingly been revived.

Makaula J pointed out that although the SCA in Insamcor (Pty) Ltd v Dorbyl Light & General Engineering (Pty) Ltd; Dorbyl Light & General Engineering (Pty) Ltd v Insamcor (Pty) Ltd 2007 (4) SA 467 (SCA) had held that a restoration order validated the institution of legal proceedings on behalf of a company that did not exist, the judgment did not go so far as to say that where debts owed to the company have been extinguished by prescription, such debts would be revived.

A summons issued by a company after deregistration is a nullity. A right was created in favour of the appellant as at the time when the debt was extinguished by prescription. Thus it was an existing right at the time of reregistration. The debt could not be revived once so extinguished by a legislative fiction that deemed the respondent to have been in existence at the time of issue of summons.

The appeal was thus allowed with costs.

Property

Spoliation order – search warrant: The facts in Ivanov v North West Gambling Board and Others [2012] 4 All SA 1 (SCA); 2012 (6) SA 67 (SCA) were as follows. The first respondent was a provincial gambling board (the board). In January 2010 the third respondent, an inspector employed by the board, inspected the business premises of the appellant, Ivanov. Suspecting that gambling activities were taking place in contravention of the North West Gambling Act 2 of 2001 (the Act), the inspector applied and was issued with a search warrant. When the warrant was executed, it was confirmed that the appellant was in possession of gambling equipment.

In an urgent ex parte application in the magistrate’s court, Ivanov sought an order cancelling the search warrant and directing the members of the South African Police Service to restore possession of his business premises to him, averring that the warrant was invalid. The magistrate granted an order for the restoration of his business premises, but made no order that affected the validity of the warrant.

The appellant was charged with illegal gambling and the police and members of the board returned to his premises and seized machines and equipment that appeared to be gambling machines. The appellant instituted an ex parte application in the High Court against the first to fifth respondents. He attacked the validity of the search warrant and sought an order directing the respondents to restore the machines to him with immediate effect. This was granted and the machines were returned to the appellant pending the return day.

On the return day the court discharged the rule nisi in part. It declared the warrant invalid for being too general and vague and accordingly set it aside. However, the search and seizure were held not to be unlawful because although the search warrant was invalid, it had not yet been set aside when the police executed it and it had empowered the police to conduct the search and seizure. It was further held that the appellant was not entitled to a spoliation order and had adopted the incorrect procedure and relied on a wrong cause of action. The court ordered the return of the machines to the respondents with the qualification that the appellant was only entitled to the return of the items he might lawfully possess. Leave to appeal to the SCA was granted.

Two issues were raised on appeal. First, whether the declaration of invalidity of the search warrant could transform a bona fide search that was executed under a warrant into a spoliation; and whether, as a result of the declaration of invalidity of the search warrant, the appellant was entitled to unqualified restoration of the machines, the possession of which without a licence is prohibited by the Act.

Mhlantla JA held that the aim of spoliation is to prevent self-help. An applicant who applies for a spoliation order must prove that he was in possession of the spoliated thing. The cause of possession is irrelevant; that is why possession by a thief is protected. The applicant must further prove that he was wrongfully deprived of possession. The principle is simple: Possession must first be restored to the person spoliated, irrespective of the parties’ actual rights to possession. Questions of illegality or wrongfulness of the spoliator’s possession are irrelevant.

The appellant had succeeded in establishing that he had been in peaceful and undisturbed possession of the machines and that he had been unlawfully deprived of that possession. He had no duty to prove the lawfulness of his possession and the issues raised on behalf of the respondents relating to the lawfulness of the possession were irrelevant for the purposes of the application.

The appeal was accordingly upheld with costs and the respondents were ordered to restore the machines to the appellant.

Other cases

Apart from the cases and topics referred to above, the material under review also contained cases dealing with administrative law, amendment of pleadings, appeals, civil procedure, company law, constitutional law, consumer credit, criminal law, criminal procedure, education, insolvency, interdicts, labour law, pension funds, sale in execution and unlawful occupation of land.

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