CASE LAW UPDATE

Facts: The plaintiff is a 70-year-old female veterinarian. She leased business premises from the defendant, a dentist, for purposes of conducting a veterinary clinic. In terms of the written lease agreement, the defendant as the owner of the leased property was responsible for the repair and maintenance of the leased property, including the gate. The plaintiff alleges that the metal sliding gate in the leased property fell on her, causing her bodily injuries. She is claiming damages in the amount of R1,182,500. The plaintiff’s claim is found in delict. The defendant in his plea admitted that he owed a legal duty of care to the plaintiff and persons entering the premises through the gate. It was his duty to ensure that they were not exposed to the risk of injury. The duty of care is therefore not in dispute. The defendant denied that the incident occurred as a result of his failure to maintain the gate.

Application: The plaintiff instituted a delictual claim for damages against the defendant in respect of injuries she sustained when a metal sliding gate allegedly fell on her at her rented premises. The parties agreed that the matter will proceed on merits only in terms of Uniform Rule 33(4) with quantum to stand over. The question before the court is whether the defendant is in breach of his duty of care for failure to maintain the gate of the leased property causing the alleged injury to the plaintiff.

Discussion: On the proven facts elicited from the evidence of the plaintiff, her former employee Mrs Berker-Smit and the defendant himself, it has become clear that the remote had not been working properly from 2015. The defendant is the one who instructed the plaintiff to lift the flap on the motor to change the gate from automatic to manual whenever the remote control was not working. She would then push the gate manually to open for her clients. The motor was never changed nor was there any repair work done on the gate and motor. It is clear from the evidence of the defendant that despite all the interventions and attempts to fix the issue, the problem still persisted until the date of the incident in 2020. The plaintiff’s counsel contended that the defendant knew that the gate was the only entrance to the plaintiff’s clinic and yet he failed to find a permanent solution. His evidence, therefore, that there was no maintenance required on the motor and the gate cannot stand as it is contrary to facts placed before the court. The defendant acknowledged that the act of overriding the motor put the plaintiff at risk of injury. The defendant should have reasonably foreseen the possibility that his failure to maintain the gate, and the opening of the gate manually, could result in injury to the plaintiff and he should have taken reasonable steps to guard against such occurrence. A reasonable inference can be drawn that the reason for the gate falling was because it was in a state of disrepair and due to the malfunctioning gate motor.

Evidence of harm or injury: Having found that the defendant’s failure to maintain the gate caused the gate to fall, the plaintiff, to succeed with her claim for damages must still prove on a balance of probabilities that she suffered injuries as a result of the gate falling. The evidence of the plaintiff was that that she sustained injuries to her left shoulder, left hip and left lumbar region, that her foot was stuck under the gate, and that she had to crawl on her hands and knees from underneath the gate. Mr Bauer who saw the plaintiff after the incident confirmed that the plaintiff was distraught. The plaintiff’s counsel contended that the parties agreed to a separation of merits and quantum, thus no evidence was to be led by the plaintiff as to the injuries she sustained and the sequelae thereto. The court disagrees. Separation of liability from quantum does not absolve a plaintiff whose claim is found in delict to prove all the elements of delict on a balance of probabilities. A quantum trial concerns itself with evidence relating to the sequelae of the plaintiff’s injuries and quantification of the plaintiff’s claim, after having successfully established liability against the defendant. The plaintiff only sought medical treatment 11 months after the accident. There are no clinical notes from her treating doctor to show that she consulted with her, even if it was telephonically as alleged. The plaintiff failed to prove the prerequisite element of harm required for a delictual claim.

Order: The plaintiff’s claim is dismissed.

BHENGU AJ

Facts: In 2018, Standard Bank issued a combined summons against Mr Munsami wherein it claimed payment of various debts, including the sum of R2,486,766.52 in respect of a mortgage bond registered over Mr Munsami’s immovable residential property. The bank also sought orders declaring the property specially executable and authorising the Registrar to issue a writ of execution against the property. Summary judgment was granted in 2019 in favour of the bank. The property was eventually sold at a public auction to Mrs Knowler for the sum of R360,000 and ownership was transferred to her. Mr Munsami consequently still owes the bank more than R3 million in respect of the mortgage bond.

Appeal: When in 2022, Mrs Knowler filed an application for an order evicting Mr Munsami from the property, he launched an urgent application in the High Court seeking to set aside the sale in execution. Mr Munsami contended that: (a) the bank had failed to comply with the provisions of Uniform Rule 46A; (b) the High Court’s failure to set a reserve price vitiates the summary judgment and renders it void ab initio; and (c) there had been collusion between Mrs Knowler and the bank and she had acted in bad faith in buying the property for a price well below its market value. The High Court dismissed the application.

The summary judgment: Mr Munsami did not apply for leave to appeal against the summary judgment order nor did he apply for it to be rescinded. It was at that stage that the property was declared specially executable and the provisions of Rule 46A were applicable. The order therefore remains effectual and immune to challenge by other means, such as, amongst others, interdictory relief by another court of equal standing. Mr Munsami’s argument regarding the alleged defects in the Rule 46A application and his reliance on the jurisprudence regarding the court’s discretion to set a reserve price for sale in execution of residential immovable property impermissibly seeks to impugn the summary judgment order without appealing against it. The application brought before the second judge, which is the subject of this application for leave to appeal, was an impermissible attempt by Mr Munsami to circumvent the immutable rule regarding the finality of court judgments and the adjectival law remedies available to an aggrieved litigant. He was not entitled to impugn the summary judgment order in another court of equal standing, without appealing against that order.

The sale: It is established law that a sale in execution of immovable property, as well as the consequent transfer of the property, may be impeached only in exceptional circumstances, including where the purchaser took transfer of the property in bad faith and with knowledge of a defect in the sale. And, unfortunately for Mr Munsami, he must now also contend with the consequences of a bona fide public auction and the principles of the abstract theory of transfer. In terms of the latter doctrine the validity of a transfer of ownership is not dependent on the validity of the underlying transaction. Mr Munsami alleges that the property was valued at R6 million and that Mrs Knowler was allowed to purchase the property at 6% of its approximate value. But nowhere in his founding affidavit does Mr Munsami proffer any evidence, or for that matter even allege, that there was collusion between the bank and Mrs Knowler or that Mrs Knowler took transfer of the property with knowledge of a fundamental defect in the sale. The fact that she had purchased the property at a public auction for a price well below its value cannot by any stretch of the imagination justify an inference of mala fides or fraudulent intent on her part.

Order: The application for leave to appeal is dismissed with costs.

SMITH JA (DAMBUZA JA, MOCUMIE JA, MBATHA JA and MAKUME AJA concurring)

Facts: The applicant was created to provide services and training to companies that have to comply with the Occupational Health and Safety Act 85 of 1993. Ms Van Eck (first respondent) started her employment with the applicant in 2021 and in 2022 they entered into a written agreement of employment which contained a clause pertaining to confidential information. They also entered into a restraint of trade agreement. It is alleged by the applicant that in 2024 and whilst still in the employ of the applicant, and unbeknown to the applicant, the first respondent provided a quote to the applicant’s client Langplaas, on behalf of Labour Law Group (second respondent) for similar services but at a reduced and undercut price, which was accepted and paid for by Langplaas to Labour Law Group. Ms Van Eck later resigned from her employment with the applicant.

Application: An urgent application in terms of which the applicant seeks final relief against Ms Van Eck, Labour Law Group and Mr Naude. The relief includes that the respondents be interdicted and restrained from utilising the applicants’ confidential information, from approaching the applicant’s clients, and from doing business with the applicant’s erstwhile client, Langplaas.

Discussion: It is alleged by the applicant that Ms Van Eck, whilst still in the employ of the applicant, and unbeknown to the applicant, forwarded an email to various clients of the applicant from an email belonging to Labour Law Group. It is alleged by the applicant that in this email Ms Van Eck encouraged the clients of the applicant to “move with her” to a new training company with lots of discounts. She asked that the email be kept confidential. Ms Van Eck not only has knowledge of the customer details of the applicant, but has knowledge of how discounts and charges were imposed on the applicant’s existing clients, thereby affecting the price that the applicant would charge for its services. Notwithstanding the proprietary interest the applicant had with the client Langplaas, Ms Van Eck, whilst still in the employ of the applicant, sent out an invoice to Langplaas whilst fully aware of what services Langplaas required and also what price the applicant would charge for these services.

Findings: Ms Van Eck had a duty to preserve the confidence of the information she obtained during the course of her employment with the applicant. The applicant spent a considerable amount of time and money to build up its client base. She cannot now use the contact details of the applicant to solicit its clients for the benefit of Labour Law Group and Mr Naude. A restraint agreement should not place an unreasonable restraint on an employee to seek new employment. The restraint agreement does not extend to the whole of South Africa, therefore Ms Van Eck could have applied her mind to seek employment outside the radius of 50 kilometres. The restraint agreement is merely to prevent Ms Van Eck from contacting the applicant’s clients and dispersing confidential information she derived whilst working for the applicant. As regards the issue raised by the respondents that two years is contra bonos mores, the court does not agree. Ms Van Eck was fully aware of the two years stipulated when she signed the agreement. To now state that it is contra bones mores is non-sensical. The restraint agreement is reasonable and enforceable. The misuse of confidential information to advance one’s own business interest and activities at the expense of a competitor constitutes unlawful competition.

Order: Ms Van Eck, Labour Law Group and Mr Naude are interdicted and restrained from using the applicant’s confidential information, from approaching the applicant’s clients and from doing business with, and servicing, the applicant’s erstwhile client, Langplaas. See the full order at para [74].

DOSIO J

Facts: Steinhoff is a public company incorporated in the Netherlands with its erstwhile principal place of business in Stellenbosch, Western Cape. In December 2017, Steinhoff’s external auditors in the Netherlands refused to sign off on its annual financial statements due to serious accounting irregularities. Consequently, Steinhoff was unable to release its audited consolidated financial statements for the financial year ending 2017 within the prescribed time limits. Steinhoff made a Stock Exchange News Service announcement that it had engaged PricewaterhouseCoopers Advisory Services (PwC) to conduct an independent forensic investigation into accounting irregularities within Steinhoff. It was also announced that Steinhoff would update the market as the investigation proceeded, and that its CEO, Mr Markus Jooste, had resigned with immediate effect. PwC undertook to provide Steinhoff with an independent report detailing its assessment of the allegations investigated. As a result of extensive fraud and accounting irregularities within Steinhoff, its shares plummeted in value by over 98% from December 2017. Subsequently, Steinhoff’s CEO, Mr Jooste, was ordered to report to the Hawks where he was going to be charged with fraud, racketeering and a contravention of the Financial Markets Act 19 of 2012. That did not happen, because Mr Jooste is reported to have committed suicide before he could be criminally charged.

Appeal: Tiso Blackstar requested access to the PwC report in the prescribed form. Steinhoff refused access to the report on the basis that it is legally privileged as contemplated in section 67 of the Promotion of Access to Information Act 2 of 2000 (PAIA). The Western Cape Division of the High Court ordered Steinhoff to provide the media respondents with a copy of the report. Steinhoff appeals that order with the leave of the High Court. The central issue in this appeal is the right of access by the media and the public, in terms of the PAIA, to a report on a forensic investigation into fraud and accounting irregularities within Steinhoff.

Discussion: The fraud and accounting irregularities has resulted in investors, many of them pension funds, losing more than R200 billion. The purpose of the PwC investigation was to enable Steinhoff to produce its financial statements for the 2017 and 2018 financial years. There is no hint of any litigation, actually pending or contemplated, in the engagement letter, apart from the heading which refers to privilege. The statement by Mr Lewis that the report was brought into existence, both for the express purpose of obtaining legal advice, and in relation to actual and contemplated litigation, is contradicted by the purpose and scope of PwC’s brief. The forensic investigation by PwC was not of a legal nature, nor undertaken for the purpose of providing legal advice to Steinhoff regarding contemplated litigation. Tellingly, the letter of engagement states that the details of the allegations and the quantum thereof are unknown. It is thus not surprising that when PwC was engaged, there was no litigation actually pending or contemplated: it is unlikely that any litigant would have instituted a claim against Steinhoff in a vacuum, without the basic facts concerning the accounting irregularities uncovered. PwC was employed on behalf of Steinhoff to do certain work (to investigate accounting irregularities and produce a report). But that work was not communicating with Steinhoff’s attorneys to obtain legal advice, nor in contemplation of some litigation, nor for the purpose of giving advice with reference to that litigation. Consequently, the report is not subject to legal advice privilege nor litigation privilege.

Findings: The assertion by Mr Lewis that PwC was engaged to obtain legal advice, "to deal with the immediacy of legal demands, threats, and claims, and in due course for Steinhoff to institute legal proceedings against third parties", has no foundation in the evidence. Given the dominant purpose for which the report was prepared, its disclosure is justified. Given the nature, extent and purpose of the voluntary disclosure in the overview, Steinhoff’s submission that the overview is not a summary of the report, is untenable. The effect of the disclosure was, and was intended to be, a short, clear description of the accounting irregularities and the irregular transactions in which the wrongdoers had engaged, and their impact on the Steinhoff Group, as contained in the report. The inference must in fairness be drawn that Steinhoff impliedly waived privilege in relation to the report. By publishing the overview, Steinhoff has impliedly waived any privilege that may have existed in respect of the report. That being so, the section 67 defence cannot succeed. Steinhoff used dishonest and illegal ways to maintain its businesses and deceived investors into believing that the company was more profitable than it actually was. Billions of Rands were wiped off the JSE and the pension funds of millions of ordinary South Africans suffered huge losses. Steinhoff was once regarded as one of the most successful companies in South Africa, with a strong commitment to corporate social responsibility. There is simply no basis to shield the report from public scrutiny: Parliament has decreed that the public interest override must be applied in a case such as this.

Order: The appeal is dismissed with costs.

SCHIPPERS JA (ZONDI ADP, HUGHES JA, MEYER JA and TLALETSI AJA concurring)