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July 2015 (4) South African Law Reports (pp 1 – 328); [2015] 2 All South African Law Reports June no 1 (pp 517 – 656); and no 2 (pp 657 – 744); [2015] 3 All South African Law Reports July no 1 (pp 1 – 130); and no 2 (pp 131 – 254)

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

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:

CC: Constitutional Court

GJ: Gauteng Local Division, Johannesburg

GP: Gauteng Division, Pretoria

KZD: KwaZulu-Natal Local Division, Durban

SCA: Supreme Court of Appeal

WCC: Western Cape Division, Cape Town

 

Administrative law – damages

Administrative action exercised negligently: In Trustees, Simcha Trust v De Jong and Others 2015 (4) SA 229 (SCA); [2015] 3 All SA 161 (SCA) the court was asked to consider under which circumstances an aggrieved party will be entitled to compensation in terms of s 8(1)(c)(ii) of the Promotion of Administrative Justice Act 3 of 2000 (the Act).

The facts were as follows: The appellant, the trust, submitted building plans for a hotel for approval to the City of Cape Town (the city), which was the 18th respondent in the present appeal. After the plans were approved and the trust started with the construction work, the first 17 respondents, who were the immediate neighbours of the site where the construction work took place, successfully interdicted the trust from proceeding with the construction work. It was trite that the building control officer who approved the building plans, did not perform his duties properly and that the plans should not have been approved.

In the court a quo the trust’s claim for damages against the neighbours and the city in terms of s 8(1)(c)(ii) of the Act was dismissed.

On appeal, Navsa ADP held that parties who are aggrieved by an administrative action must adhere to the procedure and the remedies provided for in s 8(1) of the Act, before they consider instituting a claim in terms of s 8(1)(c)(ii). It explained that a court will only consider a claim for compensation in terms of s 8(1)(c)(ii) once the alternative remedies (for example, remittal of the matter for reconsideration to the relevant administrative body) have been exhausted.

The court will further only consider a claim for compensation in terms of s 8(1)(c)(ii) in exceptional cases. In this regard the court in Simcha Trust referred with approval to the decision in Gauteng Gambling Board v Silver Development Ltd 2005 (4) SA 67 (SCA) where the court explained the concept of ‘exceptional cases’ as ‘upon a proper consideration of all the relevant facts, a court is persuaded that a decision to exercise a power should not be left to the designated functionary’.

Finally, the court held that the law of delict remains at the disposal of the affected party.

The appeal was accordingly dismissed with costs.

Auctions

Vendor bidding: The decision in Hansa Silver (Pty) Ltd and Others v Obifon (Pty) Ltd t/a The High Street Auction Co 2015 (4) SA 17 (SCA) concerns the validity of sale agreements entered into pursuant to vendor bidding at a public auction.

The third to fifth appellants, the sellers, were the owners of a game lodge. The respondent, High Street, conducted business as an auction house. In 2011 the sellers gave a written mandate to High Street to sell the lodge by public auction or private treaty. In terms of the mandate a reserve price of R 25 million was fixed. In terms of the mandate the sellers appointed High Street or its agent to bid on their behalf at a public auction, up to the reserve price. The mandate was to endure until 1 January 2012.

The lodge was offered for sale at an auction held in November 2011. The auction was conducted on behalf of High Street by one Van Reenen (the auctioneer). High Street’s rules of the auction were contained in a document signed by the auctioneer. The document stated that the rules complied with s 45 of the Consumer Protection Act 68 of 2008 (the CPA) and the regulations promulgated under the Act. The following rules of the auction are of specific significance for purposes of the present discussion: ‘Unless otherwise announced, all lots are sold subject to a reserve price and to a five day acceptance period in favour of the seller ; [and] … unless otherwise announced, [High Street and the auctioneer] are entitled to bid on behalf of the seller up to the reserve price.’

The auction was advertised in The Auctioneer where the above-mentioned rules of the auction were published, including that the auctioneer had the right to bid on behalf of the owner.

At the auction the second appellant, Ichikowitz, bought the lodge on behalf of the first appellant, Hansa Silver, (collectively the purchasers) for a price of R 20 million after the sellers had agreed during the auction to reduce the reserve price to R 20 million. Pursuant to the auction, sale agreements were signed by the purchasers and the sellers. The purchasers later attacked the validity of the agreements and the auction and claimed repayment of the commission that it had paid to High Street. The central issue was whether the sale agreements were invalidated by bids of the auctioneer on behalf of the sellers. The court a quo held that they were not invalid.

On appeal to the SCA, Van der Merwe AJA held that so-called ‘vendor bidding’, that is, bidding by an auctioneer on behalf of the seller, is not permissible under common law in the absence of a reserve price. Vendor bidding is also prohibited in terms of s 45(4) and (5) of the Consumer Protection Act 68 of 2008, unless advance notice was given by the auctioneer to prospective bidders that the sale will be subject to a ‘reserved or upset price’ or ‘a right to bid by or on behalf of the owner or auctioneer’. Contemporaneous identification of vendor bidding is not required.

However, if the failure to identify a vendor bid as such were to constitute a misrepresentation, an auction sale may in terms of general principles of contract be rescinded if the misrepresentation were material and induced the sale.

The SCA confirmed the validity of certain sale agreements entered into pursuant to a public auction where vendor bidding took place up to the reserve price, as allowed by the rules of auction. Applying the applicable law to the circumstances of the present case, the SCA concluded that no material misrepresentation inducing the sale had been established, and therefore, that the court a quo correctly dismissed the purchasers’ case that the said agreements were invalidated by vendor bidding.

The appeal was thus dismissed with costs.

Company law

Reinstatement of deregistered company: In Newlands Surgical Clinic (Pty) Ltd v Peninsula Eye Clinic (Pty) Ltd 2015 (4) SA 34 (SCA); [2015] 2 All SA 322 (SCA) the court held that the reinstatement of a deregistered company has full retrospective effect, also in relation to corporate activities during deregistration.

The salient facts were as follows: The appellant, Newlands, sold shares to the respondent, Peninsula, and the latter paid for the shares with certain equipment. Newlands later purported to cancel the sale and the dispute was referred to arbitration, with the arbitrator upholding Peninsula’s claim to the shares. Later it came to Peninsula’s attention that Newlands had been deregistered before the commencement of the arbitration for failing to submit annual returns, and this caused Peninsula to apply to the Companies and Intellectual Property Commission (CIPRO) for the reinstatement of Newlands’ registration in terms of s 82(4) of the Companies Act 71 of 2008 (the Act). After Newlands was reinstated, Peninsula applied to the WCC for an order that the reinstatement was of retrospective effect, thus validating the arbitration proceedings. The court granted the order, but gave leave to Newlands to appeal to the SCA where the issue at stake was identified as follows: Whether the SCA had jurisdiction, on the basis of its inherent power, to examine the legality of the share sale agreement.

On appeal Brand JA held that the SCA’s inherent power did not extend so far as to allow it to assume jurisdiction over a matter where legislation gave it no jurisdiction over the matter. The SCA’s jurisdiction was governed by s 16(1)(a) of the Superior Courts Act 10 of 2013, and in terms of that section, only if the court of first instance granted leave to appeal an issue, would the SCA have jurisdiction over the issue. Here the High Court had refused leave to appeal on the legality point, and consequently the SCA had no jurisdiction to determine it.

The failure by the legislature to re-enact the express retrospectivity provision of the previous Companies Act can at most be a pointer to the interpretation of the new provision. While a change of wording usually indicates a change of intent, this is less significant where the new provision is contained in a completely new Act with its own scheme. The word ‘reinstatement’ that replaced ‘reregistration’ supports the notion of retrospectivity. Reinstatement without any retroactive effect would serve no practical purpose.

The court further held that there is no logical basis for partial retrospectivity. The only meaning s 82(4) can have is that reinstatement has automatic retrospective effect in relation to property and activities.

The administrative reinstatement of a company under s 82(4) does not affect the availability of relief under s 83(4). A court can grant relief in relation to the dissolution of a company ‘at any time’ after the dissolution of a company, even after administrative reinstatement. Any person prejudiced by the re­trospective effect of reinstatement can thus approach the court to ameliorate the consequences.

Finally, the SCA confirmed the order of the court a quo, but held that an order specifically validating the arbitration proceedings was unnecessary in view of the automatic complete retrospectivity. The appeal was thus dismissed with costs.

Construction guarantee

Effect of fraud: In Group Five Construction (Pty) Ltd and Others v Member of the Executive Council for Public Transport, Roads and Works, Gauteng, and Others (Lombard Insurance Co Ltd as third party) [2015] 2 All SA 716 (GJ) the facts were that a certain joint venture (the JV) concluded a contract of work with the first respondent, the MEC, in terms of which the JV had to build a hospital. The appellants, Group Five, are the signatories to an indemnity in favour of the second respondent, Lombard Insurance. Lombard Insurance, in turn, signed a performance guarantee for the completion of the contract by the JV, in favour of the MEC.

The relevant clause of the guarantee provides that ‘the Guarantor [Lombard Insurance] undertakes to pay the Employer [the MEC] the Guaranteed sum of the full outstanding balance upon receipt of a first written demand from the [MEC] to [Lombard] … calling up the [guarantee] stating that … [t]he agreement has been cancelled due to the [JV’s] default … The demand shall enclose a copy of the notice of cancellation’ (my italics).

The MEC sent a letter of demand to Lombard Insurance, calling up the guarantee. The MEC claimed that the JV has become dissolved and has no intention of completing the hospital. As a result, so the MEC argued, it (the MEC) had ‘tacitly accepted the repudiation of the agreement’ by entering into a new construction contract with another contractor.

The JV argued, firstly, that the MEC’s letter of demand incorrectly claimed that the contract between the MEC and the JV had been cancelled because of non-performance by the JV. Secondly, it further argued that this incorrect claim of cancellation amounted to fraud and that, as a result, the guarantee has to be set aside.

Satchwell J confirmed that the beneficiary of a guarantee must comply with the ‘absolutely clear’ conditions of the guarantee. This is also known as the ‘doctrine of strict compliance’. In the present case, the guarantee clearly requires a written notice of cancellation, since the letter of demand provides the MEC ‘shall enclose a copy of the notice of cancellation’.

The court further held that a ‘tacit acceptance’ by the MEC of the JV’s alleged repudiation of the contract did not constitute a written notice of cancellation.

The guarantee further required that the letter of demand had to claim that the agreement had been ‘cancelled due to the JV’s default’.

In the present case, the MEC presented a letter of demand in full knowledge that the contract had not been cancelled due to the default of the JV. The letter of demand contained untruths, which were known to be untruths at the time it was written by the MEC. The letter of demand was based on fraud and the guarantee was accordingly set aside.

Group Five were thus excused from their liability in terms of the indemnity. The court made no order as to costs.

Note: Although our courts had in the past in passing acknowledged the exception of fraud as a possible ground to escape liability under letters of credit and payment guarantees, the decision in Group Five Construction is, to the best of my knowledge, the first South African decision in which the court has actually applied the fraud exception against a beneficiary. Earlier South African case law merely acknowledged the existence of the fraud exception by way of an obiter dictum.

Contract

Enforcement of sale: In Venalex (Pty) Ltd v Vigraha Property CC and Others [2015] 2 All SA 645 (KZD) the facts were as follows. The applicant (the purchaser) contended it bought immovable property from the respondent (the seller). The purchaser sought orders declaring the agreement binding, directing the seller to do all things necessary on its part to bring about transfer of the property to the purchaser, and for costs.

The purchaser took occupation of the property. The price was secured, and transfer of the property ought to have taken place. But for some reason, which un-contradicted by the seller – the purchaser puts down to ‘seller’s remorse’ – the seller did not wish to proceed with the sale. It, accordingly, adopted the view that there was no binding agreement with the applicant because it was a company already in existence when the original agreement was signed. The seller’s argument was primarily that the signatories for the purchaser had not purported to represent the purchaser, an existing company at the time. They had sought to conclude a pre-incorporation contract as contemplated by s 21 of the Companies Act 71 of 2008 (the Act). Because the purchaser was already at the time incorporated it did not qualify as a company entitled to ratify the agreement and take on the rights and obligations of purchaser under it.

The purchaser approached the court on the basis that, while it was correct that it was intended that a company would be ‘formed’, and that it would take on the mantle of purchaser, and receive transfer of the property, there was no reason to jump to the conclusion, as the first seller had, that the relevant contractual provisions contemplated the engagement and implementation of the provisions of s 21 of the Act. The purchaser argued that on a fair and proper construction of the provisions of the contract what was contemplated was a stipulatio alteri, which envisaged the rights and obligations of the purchaser in terms of the contract being taken up either by a company already incorporated or by one not yet incorporated.

Olsen J held that the three businessmen who signed the contract on behalf of the purchaser acted in their individual capacities, but stipulated for the substitution of a company in their place if that could be achieved by a fixed date. The question as to whether the company was one which existed or did not exist at the time of conclusion of the contract was, therefore, irrelevant. The remaining question was whether the contract itself rendered it relevant, with the result that only a company incorporated after the conclusion of the original agreement could take on the rights and obligations of the purchaser under the agreement. The court could not find support for the latter contention.

The application was thus successful and the court ordered the agreements to be binding and valid.

Delict

Interference with contractual relationship: In Pick ’n Pay Retailers (Pty) Ltd v Liberty Group Ltd and Others 2015 (4) SA 241 (GP) the court was asked to consider whether the conduct of a shop owner, Masstores, unlawfully interfered with the contractual relationship between another shop owner, Pick ’n Pay, and the landlord, Liberty, of the shopping centre where Massstores and Pick ’n Pay were tenants.

Liberty leased part of its Midlands Mall in Pietermaritzburg (the mall) to Pick ’n Pay, a supermarket chain. The lease agreement stated that Liberty would not allow another supermarket or food store cipro deregistration finally to operate in the mall (the exclusivity agreement). Pick ’n Pay contended that Masstores (the fourth respondent) intended selling food from its existing Game store in the mall. Pick ’n Pay argued that this would change the Game Store into a ‘supermarket’ in violation of the exclusivity agreement, and constitute unlawful interference by Masstores in its contractual relationship with Liberty. Pick ’n Pay accordingly sought an interim interdict against Masstores (prohibiting interference) and the other respondents, including Liberty (prohibiting breach of contract).

Fourie J confirmed that it is trite that the delict of unlawful interference with a contractual relationship exists when a third party’s conduct is such that a contracting party does not obtain the performance he or she is entitled to ex contractu. Inducement and a breach of contract are not prerequisites to a successful action.

The court held that Masstores conduct would constitute at least an attempt to unlawfully and intentionally interfere in the contractual relationship between Liberty and Pick ’n Pay which, if allowed to continue, would mean that Pick ’n Pay would not obtain the performance it was entitled to ex contractu, namely to enjoy the right of exclusivity. The elements of the delict were therefore established.

The court accordingly ordered that an interim interdict be issued in terms of which Liberty was prohibited from acting in breach of its contractual obligations to Pick ’n Pay by permitting and/or consenting and/or allowing Masstores to operate a Game FoodCo within the existing Game Store at the mall. Liberty was further ordered to preserve the status quo as it was before the introduction of a Game FoodCo pending the outcome of arbitration proceedings.

The costs of the application were thus reserved.

Medical negligence: In Khoza (on behalf of minor child Z) v Member of the Executive Council for Health and Social Development of the Gauteng Provincial Government [2015] 2 All SA 598 (GJ) the court was asked to consider the possible medical negligence of the nursing staff of Chris Hani-Baragwanath Hospital, which is a state hospital.

The plaintiff was Khoza, who claimed damages from the defendant on behalf of her minor son. Her son suffered from a severe neurological disability. According to the plaintiff, her son’s condition was due to medical negligence during the course of his delivery in the maternity ward at the state hospital.

The issues for determination were whether there was any act or omission on the part of the medical staff during the period between 11:15 pm on 24 May 2008 until the infant was delivered at 5:20 am the following morning, which amounted to negligence, and if so, whether such negligence caused or contributed to the injury or whether the injury was due to some other cause.

It was common cause that the plaintiff was placed on a cardio-topographic monitoring machine (a CTG), which is used to detect foetal distress. Some of the fundamental aspects of this case concerned whether the CTG was in fact monitored, the relevance of the disappearance of a number of the CTG reports and whether the records that were available had been tampered with.

Spilg J held that where a CTG is used, its recordings are regarded as the key evidence. Sections 13 and 17 of the National Health Act 61 of 2003 require not only that the records of hospitals and clinics be maintained and safely stored, but also that adequate controls of access are put in place. The failure to produce the CTG records without an adequate explanation resulted in the inadmissibility of hearsay testimony. That poses a problem for the plaintiff who still bears the onus of demonstrating negligence. The court considered whether anyinference could be drawn of negligence on the part of the medical staff. It reasoned that even without drawing inferences from the failure to produce the CTG traces, the defendant’s nursing staff failed in their duty to monitor the mother and foetus, either properly or at all.

Negligence having been established, the final question was whether the failure to monitor would have averted the injury or whether it would have occurred in any event. It was found that the injury could have been avoided with proper monitoring.

The defendant was ordered to pay 100% of the plaintiff’s proven damage plus costs of suit.

Negligent omission: In The South African Hang and Paragliding Association and Another v Bewick [2015] 2 All SA 581 (SCA) the court was asked to pronounce on the potential delictual liability for a negligent omission.

While on holiday in the Western Cape, the respondent (the plaintiff), a United Kingdom citizen, decided to take a tandem paragliding flight. Arrangements were made with an entity that offered such service, and the plaintiff was paired with an experienced paragliding pilot to do a flight outside Hermanus. Just after take-off, the paraglider experienced a wing collapse. This, in turn, resulted in a collision with a hill, which left the plaintiff paralysed in a wheelchair. She instituted action in the High Court, claiming damages from, among others, the pilot and his employers, the South African Hang and Paragliding Association (the defendants).

The plaintiff’s claim against the defendants was based on the following factual averments. Paragliding within South Africa fell under the direction and control of the two defendants. Tandem paragliding for reward was illegal and the two defendants were aware that such illegal activity was going on. The defendants were under a legal duty to take reasonable steps to terminate and prevent this illegal activity, but had negligently failed to do so. Had the defendants done so, the flight during which the plaintiff sustained her injuries, would not have occurred.

The High Court found the defendants liable, jointly and severally, for such damages as the plaintiff might prove.

On appeal Brand JA pointed out that the plaintiff’s case was based on an omission or failure by the defendants to do something as opposed to a positive act. Negligent conduct manifesting itself in the form of a positive act, which causes physical injury raises a presumption of wrongfulness. By contrast, in relation to liability for omission and pure economic loss, wrongfulness is not presumed and depends on the existence of a legal duty. The imposition of this legal duty is a matter for judicial determination according to criteria of public and legal policy consistent with constitutional norms.

Wrongfulness, in turn, depends on whether or not it would be reasonable, having regard to considerations of public and legal policy, to impose delictual liability on the defendant for the loss resulting from the specific omission. The first question was whether or not tandem paragliding for reward was indeed illegal. The court examined various legislative enactments and concluded that albeit unintended, tandem paragliding for reward, remained illegal at the time of the accident.

The next question was why the defendants would be responsible for the enforcement of those statutory provisions. The court assumed for the sake of argument, that the first defendant was statutorily obliged to suspend the licences or to refuse the annual renewal of the licences of paragliding pilots who undertook tandem paragliding for gain.

The next question was whether the defendants’ omissions were wrongful in the delictual sense. In this case, the question of wrongfulness depended on whether, in all the circumstances, it would be reasonable to impose legal liability on the defendants. The court answered that question in the negative. The extension of delictual liability in the circumstances of this case was not regarded as reasonable.

The appeal was thus upheld with costs, and the High Court’s order was replaced with one in terms of which the plaintiff’s claim was dismissed.

Euthanasia

Voluntary active euthanasia: In Stransham-Ford v Minister of Justice and Correctional Services and Others 2015 (4) SA 50 (GP); [2015] 3 All SA 109 (GP) the emotionally charged but sensitive issue of euthanasia arose for decision.

The applicant was a lawyer by profession. He had freely and voluntarily and without undue influence requested the court to authorise that he be assisted in an act of suicide. He was terminally ill and had stage four cancer. The level of cancer that the applicant suffered from was not in dispute. The applicant died on the day the present court made its order. He had suffered intractably and had a severely curtailed life expectancy of some weeks only. He applied to the court to allow him to die with dignity and painless by way of doctor-assisted suicide.

Fabricius J pointed out that the current legal position is that assisted suicide or active voluntary euthanasia is unlawful (see S v De Bellocq 1975 (3) SA 538 (T) at 539D; S v Marengo 1991 (2) SACR 43 (W) at 47 a – b; and Ex parte Minister van Justisie: In re S v Grotjohn 1970 (2) SA 355 (A)).

In a lengthy and wide ranging judgment that cut across various issues of morality, law and constitutionality, including the right to die with dignity, the court granted the applicant an order allowing a willing medical practitioner to assist him in committing suicide by the supply or administration of a lethal substance.

For space considerations I will merely list the main issues that the court addressed in allowing the present application –

  • the current legal position;
  • the constitutional imperatives that required, in the context of the relief sought, the development of the prevailing common law, in particular the right to die with dignity as an adjunct to the right to human dignity;
  • concerns about the legalisation of active voluntary euthanasia;
  • developments in foreign jurisdictions regarding the concept of euthanasia; and
  • the parties’ arguments for and against the granting of the application.

The court emphasised that its order must not be read as endorsing the proposals of the draft Bill on End of Life as contained in the Law Commission Report of November 1998 (Project 86) as laying down the necessary or only conditions for the entitlement to the assistance of a qualified medical doctor to commit suicide.

Finally, the court expressed the wish that, having regard to the importance of legal certainty regarding the present topic, it will be preferable (and no doubt this will occur in due course) that the CC pronounce on the relevant principles. At least eight judges will have sufficient time to consider all relevant aspects and they are also assisted by qualified law clerks to do the necessary research.

Law of succession

Administration of estates: In Nedbank Ltd v Steyn and Others [2015] 2 All SA 671 (SCA) 17 applications for default judgment came before the GP, in which the plaintiffs were all commercial banks. At least one of the defendants in each case was the executor/executrix of a deceased estate. In each case, the cause of action relied on was a loan to the deceased, secured by a mortgage bond. Apart from an order for payment of the amount owing under the loan agreement, the plaintiff in each case sought an order declaring the properties mortgaged executable and also applied for the issue of writs of execution in respect of the properties.

The High Court ordered all the applications for default judgment to be removed from the roll, in order to enable the plaintiffs to comply with the provisions of the Administration of the Estates Act 66 of 1965 (the Act). The effect of that order was that the plaintiffs would have to start proceedings all over again and that, in consequence, the applications were effectively dismissed. The appellant, Nedbank, in the present matter was the plaintiff in six of the applications.

In refusing to grant default judgment, the court below held that Nedbank had instituted action against the executors or executrixes in the deceased estates under common law, instead of adopting the claims procedure provided for by ss 29, 32, 33 and 35 of the Act. That decision was in direct conflict with the conclusion arrived at in Nedbank Ltd v Samsodien NO 2012 (5) SA 642 (GSJ), which case the court a quo held was wrongly decided.

The issue on appeal was whether the provisions of ss 29, 32, 33 and 35 of the Act preclude a creditor from its common-law right to institute action against the deceased estate for payment in terms of a loan agreement.

Brand JA pointed out that in the Samsodien case, Samsodien was also the executrix in a deceased estate. When Nedbank instituted action against the estate by way of summons, she raised the special plea that the procedure adopted by Nedbank was incompetent in that it should have followed the claims procedure laid down in the Act instead. However, the court held that the claims procedure does not deprive a creditor of its common law right to enforce a claim against the deceased by way of action against his estate, with the result that the special plea was unfounded. Brand JA agreed with that view, confirming that the procedure laid down in the Act does not preclude the plaintiff from instituting an action in common law against the estate.

The six appeals were upheld and the High Court’s orders set aside. No order as to costs was made.

Trusts

Removal of trustee: The crisp facts in Kidbrooke Place Management Association and Another v Walton and Others NNO 2015 (4) SA 112 (WCC) were that Walton and Badenhorst were the trustees of a trust that owned land in Hermanus. The trust was indebted to a bank and Walton and Badenhorst executed a scheme to settle it. They procured the establishment of a company whose shares they owned in their personal capacity; as trustees they caused the trust to sell erven to the company on favourable terms and at below market value. The company then on-sold the erven to third parties and settled the trust’s debt to the bank with the proceeds, keeping what remained as profit. This and other indiscretions caused the beneficiary of the trust – a management association – and one other person to apply for the removal of Walton as a trustee. Badenhorst had by then resigned. The removal was sought in terms of s 20(1) of the Trust Property Control Act 57 of 1988 (the Act) and the common law, for breach of fiduciary duty.

At stake were the following three issues:

  • whether only a beneficiary of a trust could claim the removal of one of its trustees;
  • whether a trustee’s purchase of immovable property from a trust needed to be confirmed by a court; and
  • under which circumstances does the common law permit a court to remove a trustee from his or her office.

Binns-Ward J decided theseissues as follows. First, s 20(1) of the Act permitted any person with an interest in the trust property to apply for the removal of a trustee. In terms of the common law any person with a sufficiently direct interest in the subject of the litigation would also have standing to apply for this relief.

Secondly, a trustee’s purchase of immovable property from a trust indeed needs to be confirmed by a court.

Thirdly, a court can remove a trustee where this would be for the welfare of the beneficiaries and in the interests of the trust estate. It was not necessary for there to be a finding of dishonesty, gross inefficiency or untrustworthiness on the part of the trustee concerned.

The application for the removal of Walton as a trustee was granted. Walton was to pay the costs of suit.

Other cases

Apart from the cases and topics that were discussed or referred to above, the material under review also contained cases dealing with champerty, civil procedure, constitutional law (the separation of powers and the review of rulings by the Speaker), contempt of court, criminal procedure, discoveries, evidence, insolvency, labour law, marriage, medical aid schemes, motor vehicle accidents, practice and revenue.

This article was first published in De Rebus in 2015 (Sep) DR 42.


Source: http://www.derebus.org.za/the-law-reports-7/


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