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CASE LAW UPDATE

14 January 2024

CONTRACT – Suspensive condition – Sale of shares – Subject to fulfilment of conditions precedent – Consent condition not fulfilled on due date – Agreement would have come to an end and be of no force and effect when consent condition was not fulfilled – Addendum "self-destructed" – Principal agreement became unenforceable – Requirements for revival of contract considered – Non-fulfilment of suspensive condition – Automatic lapsing of contract – Appeal dismissed.

Facts: Goldfields and Flaming Silver concluded a written sale of shares agreement (the principal agreement) in terms of which the shareholding of Goldfields in two of its subsidiary companies, and Goldfields’ claims in those companies and another, was purchased by Flaming Silver for R310 million. Clause 3.1 of the principal agreement provided that it was subject to the fulfilment of the "conditions precedent" set out in subclauses 3.1.1, 3.1.2 and 3.1.3. These conditions are referred to in the principal agreement as "conditions precedent". Clause 3.2 of the principal agreement specifically provided that should the condition precedent referred to in clause 3.1.1 not be fulfilled on or before 31 January 2018 or any other condition precedent not having been met by the due date thereof and the period for fulfilment thereof not be extended by the parties in writing prior to the expiry thereof, then this agreement shall lapse and be of no force and effect.


Appeal: The High Court declared that the sale of shares agreement (the principal agreement) between the appellant, Goldfields, and the second respondent, Flaming Silver, was not revived and to be "void and of no force and effect" due to the non-fulfilment of certain of its suspensive conditions. The High Court also ordered Goldfields to repay an amount of R1 million paid to it by the first respondent, Siyakhula, in terms of an addendum to the principal agreement, including the costs of the application. This is an appeal against the whole of that order with the necessary leave having been granted. The only issue is whether the principal agreement, which otherwise would have lapsed due to the non-fulfilment of certain suspensive conditions, was revived by subsequent addenda to that agreement. Goldfields contends that it was revived. Flaming Silver maintains that it was not.


Discussion: Essentially Goldfields submits that parties to an agreement, that lapsed due to the non-fulfilment of a suspensive condition, may revive the lapsed agreement if the relevant conditional term in the original agreement is amended to prevent the agreement from "self-destructing" on account of the non-fulfilment of that same condition. And that the consensus of the parties, as expressed in the second and third addenda, revived the principal agreement by incorporating terms that protected the revived contract from "self-destruction". The argument advanced on behalf of Flaming Silver and Siyakhula is that the extension of the conditions precedent in terms of the first and third addenda are in direct contravention of clause 3.2 of the principal agreement. In terms of that clause any extension of a due date is required to be agreed to in writing prior to the due date of its fulfilment. If the parties intended to revive the principal agreement as contended by Goldfields, they would have been obliged to eliminate the operation of clause 3.2 or amend it. Goldfields has not relied on a tacit term in that regard, and such a term could not be implied while clause 3.2 remained intact. Second, while there is clearly an intention to amend the principal agreement in certain respects there is no intention discernible from the second or third addenda to "revive" the principal agreement. The wording of the principal agreement, and of the addenda, is reasonably clear and unambiguous. It provides, in effect, that if the finance condition (i.e. the condition in clause 3.1.1) is not fulfilled on or before 31 January 2018, or any of the other conditions are not met by the due date stipulated in the principal agreement, the principal agreement will lapse and be of no force and effect, unless dates for the fulfilment of those conditions are extended by the parties in writing, before those expiry dates.


Findings: The payment condition was not fulfilled by the due date. In terms of the second addendum, which was concluded after the expiry date for the fulfilment of the payment condition, the parties purported to put in place a "deeming" provision. In terms of clause 3.3 of that addendum they purported to agree that the finance and the payment conditions had been fulfilled by no later than 31 March 2018. There are certain difficulties with that agreement. In terms of the authorities relied on by Goldfields, a lapsed agreement may be revived by the parties. Assuming they could do so despite clause 3.2 of the principal agreement, there is nothing in the second addendum that evinces an intention on the part of any of the parties to "revive" the principal agreement. They clearly proceeded to conclude the second addendum in ignorance of the fact that the principal agreement had in law lapsed and required specific revival. Even if one assumes that it evinced an intention to revive the principal agreement, a fatal shortfall is the fact that at the very best for Goldfields, and at the very worst for Flaming Silver and Siyakhula, the second addendum "self-destructed" when the consent condition was not fulfilled by or before 30 July 2018, as envisaged in clause 4.3 of the second addendum. The third addendum was only concluded on 2 August 2018 and could not save or bring about the revival of the second addendum, or the principal agreement. Whatever the arguments of Goldfields may be, and even if one assumes that the second and third addenda somehow managed to revive the principal agreement, ultimately, the whole of that agreement (inclusive of the addenda) would have come to an end and be of no force and effect when the consent condition was not fulfilled on its due date, i.e. on 31 October 2018.


Order: The appeal is dismissed with costs.

COPPIN AJA (ZONDI DP, NICHOLLS JA, MEYER JA and BLOEM AJA concurring)

EVICTION – Gentrification – Temporary emergency accommodation – Implementation – Whether City acted reasonably in not delivering emergency housing in inner city – Unreasonably failed to adopt its own policy to be implemented in conjunction with emergency housing program – Fails to make provision for any temporary emergency accommodation in inner city in face of foreseeable evictions – Unreasonably compounds legacy of spatial apartheid – Appeal upheld – Constitution, s 26.

Facts: This case concerns the City of Cape Town’s implementation of an emergency housing program in relation to persons who may be rendered homeless pursuant to their eviction in Woodstock and Salt River, in the context of the gentrification of these areas which is encouraged by the City and supported with tax breaks. The B residents initially occupied the property by virtue of lease agreements with the previous owners and, in some cases, in terms of inter-generational leases going back to the era of their grandparents. The B residents, who form part of the Woodstock and Salt River communities, are one of the very few communities that managed to resist forced removals from “white” cities under apartheid. The premises constituting their homes are five adjoining cottage units situated on a single erf. The erf was then purchased for proposed development by Woodstock Hub for R3,15 million. This was all done with a view of building residential units for letting at rentals that were significantly higher than what the B residents were paying. This purchase and proposed development were part of a broader wave of gentrification in the inner city. The key issue is whether the constitutional duty of a municipality to provide temporary emergency housing extends to making temporary emergency housing available at a specific location. In this regard, the issue is whether the City has acted reasonably in not delivering emergency housing in the inner city, in circumstances where residents in these areas face eviction as a result of gentrification arising from a development policy implemented by the municipality.


Appeal: In respect of the applicants, the central question is whether the City acted reasonably in its determination of the locality of the emergency housing offered to them, which was some 15 km away from their current residences, and, importantly, outside the inner city and its surrounds. The issues surface in the application for leave to appeal by the applicants against the judgment and order of the Supreme Court of Appeal, which upheld an appeal by the City, against the judgment of the High Court. The High Court granted the applicants an order declaring the City’s emergency housing program and its implementation unconstitutional. That court also directed the City to provide the applicants with temporary emergency housing in the inner city or its surrounds. The Supreme Court of Appeal disagreed with the High Court and held that the City only bore an obligation to provide emergency housing to the applicants in a location as near as possible to the area from where they were evicted.


Discussion: The link between sections 26 and 25(5) of the Constitution recognizes that access to land is paramount in progressively realizing the right to housing. Access to land must be construed in the context of gentrification and spatial inequality. The B residents are private tenants who were in lawful occupation of the property for generations and whose loss of lawful occupation is directly linked to the policy that caused gentrification. This matter presents the court with the opportunity to develop the law such that a court can go beyond requiring merely that temporary emergency accommodation must be provided as “near as possible” to the property from which persons are evicted. It may be necessary and appropriate for a court to scrutinise the implementation of the emergency housing program to the extent that it lacks temporary emergency accommodation in a specific locality, where that locality is significant in addressing spatial inequality and past redress, and important to respect other rights of individuals. The provision of adequate housing, which is inclusive of temporary or emergency housing, is a constitutional imperative that places obligations on the State to realize this right. The realization of this right, which is closely interlinked with other socio-economic rights, is crucial in the Constitution’s attempt to address the longstanding issues of social inequality deeply embedded in our society. Section 26(2) of the Constitution provides that the State must take reasonable legislative and other measures, within its available resources, to achieve the progressive realization of this right.


Findings: The City’s failure to strike a balance between its housing development goals and situations which require urgent solutions reflects a misplaced set of priorities and a lack of responsiveness to the needs of its residents. The inconsistency in providing temporary emergency accommodation for people in informal settlements in the inner city and the B residents is palpable. There is no rational differentiation. The B residents did not settle on the land unlawfully. They were lawful rent-paying tenants who were affected by gentrification and are now expected to move 15 km out of the City. Reasonableness is the established test to assess the progressive realization of socio-economic rights, in this context, the right of access to adequate housing. The lack of an official temporary emergency accommodation policy indicates that the City has failed that leg of the test. It has a duty to have a policy in place. The City’s implementation of the National Emergency Housing Programme based on what is before court cannot be said to have been adopted according to the correct measures prescribed by legislation. It goes further to exclude a significant section of the population as it does not cater for the people in most need of it, rather the resources are directed to social housing. The decision to prioritise one housing program cannot absolve the City of its obligation in terms of another. The Supreme Court of Appeal failed to correctly assess and review the City’s implementation of the National Housing Programme and its implementation in relation to the B residents according to the constitutional standard of reasonableness. The City’s conduct is unconstitutional as its implementation of the temporary emergency accommodation policy is unreasonable and arbitrary.


Order: The appeal is upheld. The orders of the Supreme Court of Appeal and the High Court are set aside and substituted. The City of Cape Town’s implementation of the National Housing Programme is declared to be unconstitutional. The City of Cape Town is directed to develop a reasonable Temporary Emergency Accommodation Policy to be implemented together with the National Emergency Housing Programme, in a reasonable manner.

MATHOPO J (majority) at paras [1]-[116]

BILCHITZ AJ (dissenting in part) at paras [117]-[205]

LABOUR – Discrimination – Language, culture and race – Indian social worker at school for disabled – Most learners Black – Assistant appointed because of alleged language barriers – Alleged that plaintiff did not understand the children and their culture – Plaintiff ostracised and hostile and intimidating work environment created – Abuse of power by officials constituted discrimination, in the form of harassment, based on race, culture, ethnicity and language – Employment Equity Act 55 of 1998, ss 6(1) and 50.

Facts: The plaintiff, Ms Padayachee, is a woman employed as a social worker by the Gauteng Department of Education. Since 2013, she has been posted to the Ezibeleni School for Physically Disabled Children in Katlehong township. Given its location, the vast majority of learners are Black and African. The plaintiff, on the other hand, is the only person of Indian descent at the school. In 2022 the recently appointed head of department, Ms Gabasiane, advised the plaintiff that she intended to appoint an auxiliary social worker to assist the plaintiff to overcome “language barriers” which prevented her from properly performing her duties. Gabasiane told the plaintiff she did not understand “our children and their culture”. Gabasiane did not explain how she had reached those conclusions. Thereafter, two of the foundation phase educators refused to refer learners to the plaintiff and they too said: “You do not understand our children and their culture”. Sometime later, the department indeed appointed a social worker, ostensibly to assist the plaintiff. The plaintiff states that this individual (whose fixed-term contract has since expired) had no job description, little experience, performed few functions, and was of little assistance.


Claim: The plaintiff seeks compensation or damages from the defendant for the discriminatory conduct by its senior managers and officials, in terms of section 50 of the Employment Equity Act 55 of 1998. The plaintiff testified that these events wounded her emotionally, psychologically, and even caused her physical harm. She states that the conduct of the defendant’s officials have caused her sleepless nights, and caused or aggravated inflammation in her joints. The plaintiff states that she has been forced to seek the help of a psychologist.


Discussion: One may assume that educators prefer to teach in their mother tongue, and learners prefer to learn in the language of their choice, but to dismantle racist ideologies and practices, the State promotes diversity among both learners and educators. The plaintiff testified that, since her meeting with the defendant’s officials during 2022, she been regularly ridiculed and belittled for allegedly not understanding the culture of the learners. In addition, says the plaintiff, she has been fed false information in order to undermine her ability to perform her duties. As a result of this harassment, the plaintiff says, she considered resigning, but decided against it, because she enjoys assisting and counselling learners.


Findings: The facts of this matter demonstrate that the conduct of the defendant’s officials was unwanted, such conduct was of a persistent, and serious nature, which had the effect of humiliating the plaintiff and undermining her dignity. In addition, the impact of the offensive conduct was to ostracise the plaintiff and create a hostile and intimidating work environment. The abuse of power by the officials constituted discrimination, in the form of harassment, based on race, culture, ethnicity, and language. The conduct of the officials was not only unprofessional, but also incompatible with the values of our constitutional order based on values of non-racism, equality and dignity. The defendant, despite being invited to address the unlawful conduct of its officials, far from taking steps to address the issue, shirked its responsibilities. By so doing, the defendant is itself guilty of, and liable for, having unfairly discriminated against the plaintiff.


Order: The defendant is ordered to pay the plaintiff R50,000. The defendant is ordered to investigate, and thereafter take appropriate action, into the grievances of the plaintiff, such investigation to be completed within 60 days of receipt of this order. The defendant is ordered to pay the plaintiff’s costs.

DANIELS J

PROPERTY – Body corporate – Defaulting owners – Arrears for levies and electricity – Respondent owing over R100,000 – BC seeking to disconnect electricity to property – Dependent on recovery of levies and municipal charges – Obliged to pay Eskom, failing which remainder of owners will be left without electricity – Judgment is granted for R107,940.63 plus interest – BC authorised to engage electrician to disconnect electricity supply if payment not made – Sectional Titles Schemes Management Act 8 of 2011.

Facts: The Body Corporate alleged that the respondent, Mr Katisi, had breached his obligations regarding the payment of the levies and utilities due over a period of 25 months from 2021 to 2023. During that period, the respondent’s arrears escalated to R107,940.63, of which R16,610.68 was in respect of unpaid and arrear electricity consumption charges. The respondent conceded his indebtedness to the Body Corporate. The respondent explained that the effects of the Covid-19 pandemic impacted him negatively as the breadwinner in his household and that a lack of income had placed him in an unfavourable position since 2020. The respondent tendered a payment arrangement on the basis that he would pay R8,000 per month to extinguish the outstanding levies and utilities. The respondent has conceded his indebtedness to the Body Corporate.


Application: The Body Corporate (applicant) approached the opposed motion court for a monetary judgment against the respondent. It sought judgment for R107,940.63 in respect of the unpaid and arrear levies and electricity charges together with interest and costs. Coupled with the request for monetary judgment, the Body Corporate sought authorisation to engage the services of an electrician to disconnect the electricity supply to the respondent’s residential property until the judgment amount was paid for in full.


Discussion: The respondent contended that the Body Corporate is not entitled to cut the electricity without a prior agreement between themselves and that such relief would affect his constitutional right against the “arbitrary deprivation of property in terms of section 25(1) of the Constitution” and “the public law right to receive electricity from the municipality”. The Body Corporate has paid the respondent’s electrical charges in respect of February 2021, on a monthly basis, up to an including March 2023. It is contended that the electricity consumption charges are the most prejudicial to the Body Corporate if they are not recovered, as the Body Corporate is obligated to, on a monthly basis, to effect payment of electricity consumption in respect of every unit to Eskom.


Findings: The Body Corporate is a non-profit association and precluded from deriving income from sources outside the scope of the Sectional Titles Schemes Management Act 8 of 2011. It is dependent on the recovery of the levies and municipal charges for its survival. It is obliged to pay Eskom, failing which the remainder of the owners of units of the Body Corporate will be left without electricity. The recovery of the electrical charges is therefore critical. The respondent continues to benefit from electricity without paying his dues, which is detrimental to the financial stability of the Body Corporate and the other owners. The disconnection of the respondent’s supply of electricity can operate as a preventative measure to safeguard other owners by ensuring that the financial responsibility is shared equally and proportionately to avoid financial hardships and the repercussions thereto. In the absence of such a safeguard, the respondent enjoys the benefit of electricity without paying his dues, at the expense of the other owners.


Order: Judgment is granted for R107,940.63 plus interest. The applicant is authorised to engage the services of an electrician to disconnect the electricity supply to the respondent’s unit, in the event of the respondent not effecting payment of the outstanding electricity charges within 10 days of this order. The electricity supply shall remain disconnected until such amount plus interest is paid. The respondent is to pay the costs of the application on Scale B.

WINDELL J


* See also Body Corporate of Balboa Park v Skeyi [2024] ZAGPJHC 361.

RESIGNATION OR UNFAIR DISMISSAL?

The employee informed the manager that she has accepted an offer of employment with a higher salary from a direct competitor of the company. The employee was giving the company one week’s notice, as opposed to a month’s notice in terms of the employment contract. Given the fact that the employee was joining a direct competitor, the Group Managing Director held the view that the employee had become a high risk to the business. To mitigate the risk, the employee was required to leave the applicant’s premises immediately with the promise that she would receive payment in lieu of notice. The employee referred a dispute to the CCMA, claiming that she was unfairly dismissed. In the employee’s view, the company was not entitled to request her to leave without having served her notice period. The fact that the manager convened the meeting with programme managers to inform them that the employee had resigned, and the fact that the employee was required to leave the premises immediately, is indicative of the company’s unconditional acceptance of the employee’s resignation. The company did not dismiss the employee, but she resigned on her own accord.

CONFLICT OF INTEREST AT WORK

The joint venture agreement which gave rise to the relationship between SBV and VWT was not a license for the applicant to divest himself of his own obligations to VWT, and nor did it afford him the unfettered right to act in his dealings with VWT in a manner which disadvantaged it whilst advantaged the interests of his daughter’s business. It was VWT’s case that the applicant had procured piping from SBV in circumstances in which such piping could readily have been purchased at a greatly reduced price from two other businesses, KFC and Builders. The evidence amply demonstrated that the applicant involved himself in the business of SBV beyond that which could have been construed as mere assistance rendered by a father to his child. His dismissal was found to have been fair.

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