Africa Ltd Research Articles

Navigating Reputational Risks: Cautionary Considerations for South African Banks in the Unilateral Termination of Bank-Customer Relationships

Bredenkamp v Standard Bank of South Africa Ltd (SCA) and subsequent cases that followed this precedent exhibit that banks have the right to terminate the bank-customer relationship unilaterally. This right is usually entrenched in the contract between the bank and its customer and may also have its origin in an implied term of the contract. Some major banks in the Republic of South Africa have recently been under the spotlight for unilaterally terminating the bank-customer relationship with their customers (the Sekunjalo Group) based on reputational risks. It is alleged that in terminating the relationship, these banks unfairly discriminated against Sekunjalo Group, therefore asserting that the principle of reputational risk is not attributed similarly across customers of different racial groups. Whereas the paper does not intend to decide on such allegations of racial discrimination, the paper asserts that the unilateral termination of a bank-customer relationship is both a right and an obligation. The paper adopts a qualitative research approach in analysing the contractual nature of a bank-customer relationship, the common-law principles regarding the termination of the bank-customer relationship, and the developments in the application of the principle of reputational risk by South African banks and courts in the wake of the applications lodged by members of the Sekunjalo Group.

Notes: A call for specialised foreclosure courts and a separate foreclosure roll — An analysis of South African Human Rights Commission v Standard Bank of South Africa Ltd (CC)

In South African Human Rights Commission v Standard Bank of South Africa Ltd 2023 (3) SA 36 (CC), the Constitutional Court held that a bank is not obliged to take a foreclosure matter to the magistrate’s court, even if the magistrate’s court has jurisdiction over the matter. The apex court confirmed that a court is not entitled to decline to hear a matter properly brought before it because another court has concurrent jurisdiction. Before this decision, the Gauteng and Eastern Cape Divisions of the High Court both found that the High Court was entitled to decline to hear a matter if the matter fell within the jurisdiction of a magistrate’s court. These decisions were taken on appeal to the Supreme Court of Appeal, which upheld the appeal and found that the High Court has no power to refuse to hear a matter falling within its jurisdiction on the ground that another court has concurrent jurisdiction. The Constitutional Court has now confirmed the decision by the Supreme Court of Appeal, finding that complex matters such as foreclosure applications deserve more judicial scrutiny, and ought to be heard by the High Court.

The Impact of Employee Training on Individual Performance in Samir Africa LTD

The Impact of Employee Training on Individual Performance in Samir Africa LTD

Die matigende rol van die waardes onderliggend aan die grondwet in die Suid-Afrikaanse kontraktereg

With the adoption of the interim constitution in 1993, much was made of the transformative function which the new constitution, and more particularly, the bill of rights, would fulfil. There were calls to reform the law of contract, whether by means of codification, piecemeal legislation or judicial reform. This contribution focuses on judicial reform of the law of contract and the apparent lack of change since the advent of the new constitutional dispensation. The search for a means to mitigate the strict application of the law of contract is not new. The Romans found that strict application of the law of contract could sometimes lead to unfair results. Eventually, Roman law developed a remedy, known as the exceptio doli, to mitigate the strict application of the law of contract. The courts in South Africa, from the outset, had to deal with instances where strict application of the law of contract would apparently lead to harsh results. To this end, the courts also turned to the Roman exceptio doli, but eventually, the appellate division ruled in Bank of Lisbon and South Africa Ltd v De Ornelas (1988 3 SA 580 (A)) that the exceptio doli is not part of the South African law of contract. Since then, and particularly since the advent of the new constitutional dispensation, parties have sought to rely on the values underlying the constitution, good faith, reasonableness and equity, in an attempt to seek redress from what they viewed as the harsh effects of the law of contract. Some trends began to develop: firstly, in some instances, judges displayed a shocking lack of knowledge of the law of contract; secondly, parties or the courts sometimes unnecessarily invoked the constitution when the common law of contract would have produced the same result; thirdly, a clear pattern of conservative majority and liberal minority opinions emerged in judgments of the courts; and lastly, the courts have tended to follow an all-or-nothing approach to matters dealing with contracts. However, in a minority opinion in Beadica 231 CC v Trustees, Oregon Trust (2020 5 SA 247 (CC)), Froneman J proposed a more nuanced approach in terms of which contractual matters can be resolved by proportionate adjustment of the contract. This kind of approach has been followed in Germany and it is proposed that the German concept of ergänzende Vertragsauslegung can guide the courts in South Africa to give greater effect to the values underlying the constitution, good faith, reasonableness and equity.

Regterlike herverdelingsdiskresie vir batedeling by egskeiding beleef ’n heropstanding ondanks grondwetlike bedeling téén arbitrêre ontneming sonder vergoeding

Regterlike herverdelingsdiskresie vir batedeling by egskeiding beleef ’n heropstanding ondanks grondwetlike bedeling téén arbitrêre ontneming sonder vergoeding

The Employee's Right to Freedom of Religion versus the Employer's Workplace Needs: An Ongoing Battle: TDF Network Africa (Pty) Ltd v Faris 2019 40 ILJ 326 (LAC)

The right to religion is well protected in the Constitution of the Republic of South Africa, 1996 (the Constitution) as well as attendant legislation. Section 15(1) of the Constitution provides that all persons have the right to freedom of religion. Section 31(1) of the Constitution then goes on to state that persons who belong to a religious community, amongst others, may not be denied the right to practise their religion with other members of that community. Section 9(3) of the Constitution prohibits the state from unfairly discriminating against any person directly or indirectly on several grounds, which include the ground of religion. Section 9(4) of the Constitution on the other hand prohibits any person from unfairly discriminating against any other person on the ground of religion, amongst others. These constitutional protections resonate in both the Labour Relations Act 66 of 1995 and the Employment Equity Act 55 of 1998. Despite these protections, the right to freedom of religion is still a contested subject in the workplace, inter alia. The contestation intensifies when the right to freedom of religion results in an employee not being able to comply with one or more of the employer's workplace needs. Employers' who do not understand the balance that has to be struck between the employee's right to freedom of religion and its workplace needs will often find themselves on the wrong side of our labour laws if they dismiss an employee without having due regard to the employee's religion. This is what transpired in TDF Network Africa (Pty) Ltd v Faris 2019 40 ILJ 326 (LAC).

Determining the True Reason for an Alleged Section 187(1)(c) Dismissal: A Discussion of National Union of Metalworkers of South Africa v Aveng Trident Steel (a Division of Aveng Africa (Pty) Ltd) (2021) 42 ILJ 67 (CC)

On 27 October 2020, the Constitutional Court handed down judgment in National Union of Metalworkers of South Africa v Aveng Trident Steel (A Division of Aveng Africa (Pty) Ltd) 2021 42 ILJ 67 (CC). Following the judgment, it is now commonplace that the amendment to section 187(1)(c) of the Labour Relations Act, 1995 does not preclude an employer from dismissing employees for a permissible reason, such as its operational requirements, should they refuse to accept a demand. The court confirmed that in cases such as this where they are faced with two opposing reasons for the dismissal, an impermissible reason on the one hand and a permissible reason on the other, an enquiry must be conducted into what the true reason for the dismissal is. However, the approach to be followed in conducting this enquiry caused dissent. Half of the judges were of the view that the correct approach is to follow the causation test set out in SA Chemical Workers Union v Afrox Ltd 1999 20 ILJ 1718 (LAC), while the other half disavowed reliance on the causation test. Instead, they opted to support the enquiry conducted in Chemical Workers Industrial Union v Algorax (Pty) Ltd 2003 24 ILJ 1917 (LAC). This case note seeks to establish which approach should be followed in determining the true reason for an alleged section 187(1)(c) automatically unfair dismissal.

TERMINATION OF DEBT REVIEW IN TERMS OF SECTION 86(10) OF THE NATIONAL CREDIT ACT AND THE RIGHT OF A CREDIT PROVIDER TO ENFORCE ITS CLAIM Standard Bank of South Africa Ltd v Kruger (unreported case number 45438/09 (GSJ)) and Standard Bank of South Africa L

One of the purposes of the National Credit Act 34 of 2005 (NCA) is to protect consumers by inter alia providing mechanisms for resolving overindebtedness. Section 86 of the NCA provides for such measure in that it allows a consumer to apply to a debt counsellor to conduct a debt review of the credit agreements to which he is a party and to be declared over-indebted. One of the first steps in the debt review process is therefore, a determination by the debt counsellor whether the consumer is over-indebted, likely to become over-indebted, or not over-indebted at all. Where the debt counsellor concludes that the consumer is indeed over-indebted, section 86(7)(c) requires of the debt counsellor to issue a proposal recommending that the Magistrate’s Court make an appropriate order to declare one or more of the consumer’s credit agreements to be reckless credit (if applicable) and/or to re-arrange or restructure theconsumer’s obligations. In terms of section 86(8)(b) the debt counsellor is also obliged to refer the recommendation to the Magistrate’s Court for a hearing under section 87. In Standard Bank of South Africa Ltd v Kruger (unreported case number 45438/09 (GSJ)) and Standard Bank of South Africa Ltd v Pretorius (unreported case number 39057/09 (GSJ)) the court (Kathree-Setiloane AJ)had to interpret section 86(10) of the Act which provides as follows: “If a consumer is in default under a credit agreement that is being reviewed in terms of this section, the credit provider in respect of that credit agreement may give notice to terminate the review in the prescribed manner to – (a) the consumer; (b) the debt counsellor; and (c) the National Credit Regulator, at any time at least 60 business days after the date on which the consumer applied for debt review.” The court had to determine whether the credit provider in casu was entitled to terminate the debt review in terms of section 86(10) and thereafter to proceed with the enforcement of the credit agreements in circumstances where the debt counsellor had referred the debt review matter to the Magistrate’s Court for a hearing in terms of section 87 of the Act. In what follows, the facts and decision in Kruger and Pretorius will be analysed and commented on. In addition, relevant provisions of the Act pertaining to the termination of debt review proceedings and the credit provider’s right to enforce its claim will also be interpreted and commented on. Regarding the credit provider’s right to enforce its claim the position where the debt review process is still pending whilst the matter has not been referred to the Magistrate’s Court for determination yet, will be distinguished from the position where the matter has indeed been referred to the Magistrate’s Court.

THE BANK’S RIGHT TO CANCEL THE CONTRACT BETWEEN IT AND ITS CUSTOMER UNILATERALLY Bredenkamp v Standard Bank of South Africa Ltd 2010 4 SA 468 (SCA)

Does a bank have the right to cancel the contract between it and its customer unilaterally? This was the crisp question put to the court in the recent decision in Bredenkamp v Standard Bank of South Africa Ltd (2010 4 SA 468 (SCA); 2010 4 All SA 113 (“Bredenkamp: appeal”)). Before this case reached the Supreme Court of Appeal (“SCA”), two lower courts were asked to pronounce on the same question (see Breedenkamp v Standard Bank of South Africa 2009 3 All SA 339 (GSJ); 2009 5 SA 304 (GSJ) (“Bredenkamp: interim application”)); and Breedenkamp v Standard Bank of South Africa Ltd 2009 6 SA 277 (GSJ) (“Bredenkamp: main application”). (In passing it should be mentioned that Bredenkamp’s name was spelt incorrectly in the citation of both the interim and main applications; Bredenkamp’s name was correctly spelt in the citation of the decision of the SCA). The present discussion will refer to all three these decisions.

THE MEANING OF “EXPENDITURE” FOR PURPOSES OF SECTION 11(A) AND (GA) OF THE INCOME TAX ACT 58 OF 1962 CSARS v Labat Africa Ltd [2011] ZASCA 157

It is trite that a taxpayer may deduct, from his/her gross income, any expenditure or losses that were actually incurred, in the year of assessment, in relation to the taxpayer’s trade and in the production of income, provided that the expenditure is not of a capital nature. Section 11(a) does not require that the expenditure must have been incurred in the year of assessment. The courts have, however, interpreted this provision as restricting the deductibility of expenditure to expenses incurred in the year of assessment. It often happens that a taxpayer will engage in a transaction where goods are exchanged for services, or services for other services, or goods for rights. Conversely, barter, or agreements akin thereto, are still a common phenomenon in modern-day business. The question often arises whether or not payment in kind satisfies the requirement of “expenditure” actually incurred to determine the deductibility of the “expense” in terms of the general-deduction formula. The term “expenditure” is not defined in the Act. The Supreme Court of Appeal was recently called on in CSARS v Labat Africa Ltd to interpret the meaning of “expenditure” and to determine whether or not the allotment and issuing of shares in a company in exchange for intellectual property rights, satisfies the “expenditure” requirement in terms of the general deduction formula (or in terms of s 11(gA)), and if so, what value would be attached to such expenditure. This case discussion will also critically discuss the application of the judgment on modern-day barter transactions or where substitutive performance is made to satisfy an obligation.

Judicial Guidance on the Application of Section 49 of the Consumer Protection Act, 2008 – Van Wyk t/a Skydive Mossel Bay v UPS SCS South Africa (Pty) Ltd [2020] 1 All SA 857 (WCC)

In South Africa, the legislature’s response to the negative consequences resulting from the pervasive use of disclaimers by suppliers has been to regulate the use of these terms through the enactment of a number of provisions in the Consumer Protection Act 68 of 2008 (CPA), including sections 48, 49 and 51. A number of publications have considered the meaning of these provisions and the impact they may have on the use of disclaimers in consumer contracts. As a consequence of the widespread use of disclaimers and the adverse consequences they may hold for consumers, any judicial pronouncement on the impact of the CPA on these clauses is significant. In Van Wyk t/a Skydive Mossel Bay v UPS SCS South Africa ([2020] 1 All SA 857 (WCC) (Skydive v UPS)), the Western Cape High Court was afforded the opportunity to consider the impact of aspects of section 49 specifically on the use of a clause in a consumer agreement excluding the risk or liability of suppliers (referred to as an “exemption clause” in this note).Section 49 of the CPA applies to four distinct types of clause enumerated in section 49(1) – namely, clauses limiting the risk or liability of suppliers in respect of any other person; clauses constituting an assumption of risk or liability by the consumer; clauses imposing an obligation on the consumer to indemnify the supplier for any cause; and clauses requiring a consumer to acknowledge a particular fact. As indicated, in Skydive v UPS, the contentious clause was one excluding the risk or liability of the supplier. The focus of this note then is on the interpretation and application by the court in Skydive v UPS of the relevant provisions of section 49 of the CPA to an exemption clause.

The Contest Between Religious Interests and Business Interests ‒ TFD Network Africa (Pty) Ltd v Faris (2019) 40 ILJ 326 (LAC)

The right to freedom of religion is one of the fundamental human rights. This is evident from several sections of the Constitution of the Republic of South Africa, 1996 (the Constitution), including sections 9, 15 and 31. Section 9(4) prohibits unfair discrimination (whether direct or indirect) against anyone on one or more of the grounds listed in section 9(3), which includes religion. Section 15(1) states that everyone has the right to freedom of conscience, religion, thought, belief and opinion, while section 31(1)(a) provides that persons belonging to a religious community may not be denied the right to practise their religion with other members of the community.In line with the Constitution, labour legislation such as the Labour Relations Act 66 of 1995 (LRA) and the Employment Equity Act 55 of 1998 (EEA) also protects this right. Section 187(1)(f) of the LRA provides that if an employee is discriminated against and is dismissed based on religion, among other grounds, such a dismissal will be deemed to be an automatically unfair dismissal. Section 6(1) of the EEA prohibits unfair discrimination, whether direct or indirect, in any employment policy or practice based on prohibited grounds such as religion. It is evident from all the above provisions that the right to freedom of religion is vital to people’s lives, including employees’ lives.Although an employee has the right to practise religion, he or she also has the common-law duty to render services or to put his or her labour potential at the disposal of the employer as agreed in terms of the contract of employment – except during the employee’s annual leave, sick leave and maternity leave. An employee may therefore be in breach of this duty if he or she refuses to work or deserts his or her employment or absconds from his or her employment or is absent from work without permission. In addition to the above duty, employees have a duty to serve the employer’s interests and to act in good faith.
 Often, employees’ right to freedom of religion collides with their duty to render services and to serve the employer’s interests; employees present various reasons related to their religious practices for their failure to render services. As a result, employers are regularly required to be lenient and make efforts to accommodate employees’ religious beliefs in the workplace. At times, this becomes a burden to employers as they have to accommodate employees with diverse individual religious interests, but also ensure that their businesses remain operational. Religion remains one of the most contentious and problematic areas for employees and employers to deal with in the workplace.The discussion that follows evaluates the court’s finding in view of relevant constitutional provisions, labour law legislation and common law. It further considers the position under American law regarding religion and reasonable accommodation in the workplace.

Amarinth partners with RentCo Africa to finance pumps

Amarinth has signed a strategic alliance with RentCo Africa Ltd to provide and finance centrifugal pumps and associated equipment on attractive financing terms for capital projects across Africa.

A critique on privately prosecuting the holder of ‘after the fact’ environmental authorisations: Uzani Environmental Advocacy CC v BP Southern Africa (Pty) LtdA critique on privately prosecuting the holder of ‘after the fact’ environmental authorisations: Uzani Environmental Advocacy CC v BP Southern Africa (Pty) Ltd

There has been much debate about ‘after the fact’ environmental authorisations and the ability to privately prosecute environmental-law offences in South Africa. These two issues came to a head in Uzani Environmental Advocacy CC v BP Southern Africa (Pty) Ltd. This case is the first known private prosecution of environmental-law contraventions in South Africa. BP Southern Africa (Pty) Ltd (‘BPSA’) was privately prosecuted for constructing filling stations without environmental authorisations, allegedly between 1998 and 2005. BPSA submitted ‘rectification’ applications in 2005, paid administrative fines, and was issued with ‘after the fact’ environmental authorisations. Nevertheless, in 2019 BPSA was convicted for contravening the related environmental-law requirement. This article discusses the applicable legislative context, the complex and frequently changing environmental laws, and their interpretation and application in a criminal context. Criticisms of the Uzani judgment include that the court did not sufficiently deliberate or determine the applicable law at the time of the offences for which BPSA was indicted; the public or environmental interest served by the private prosecution; strict liability in relation to the offence; policy and other considerations for not prosecuting these offences; constitutionality and admissibility of the evidence; and the potentially far-reaching consequences of such prosecutions. These issues all act as reminders of the importance of clear and precise legislative drafting, and contextual interpretation.

Gallo Africa Ltd v Sting Music (Pty) Ltd 2010 (6) SA 329 (SCA) — Revisiting the justiciability of cross-border copyright infringement in South African courts

This contribution examines the basis for and implications of the strictly territorial approach of South African courts in cross-border copyright infringement cases, requiring litigants to bring separate infringement suits in every country where infringement is alleged. This position by the courts loosely hinges on principles of effectiveness, locality and comity, as well as the classification of all intellectual property — copyright in this case — as immovable incorporeal property. In this belated case note, the Roman-Dutch law origins from which this classification is inferred to be derived from the English common law precedent with which it is paralleled and private international law principles applicable are briefly interrogated in light of prevailing constitutional prescripts. This complete bar on the authority of local courts on what is a ubiquitous concern for rights holders is a matter with far-reaching consequences.

A critical appraisal of Uzani Environmental Advocacy CC v BP Southern Africa (Pty) Ltd 2019 (5) SA 275 (GP)

ABSTRACT The recent court judgment of Uzani Environmental Advocacy CC v BP Southern Africa (Pty) Ltd 2019 (5) SA 275 (GP) found BP Southern Africa (Pty) Ltd (BP) guilty of environmental offences. The Court held that BP commenced with listed activities related to upgrades and construction work of filling stations without the necessary environmental authorisations (EAs) required by the National Environmental Management Act 107 of 1998 (NEMA) and the Environmental Conservation Act 73 of 1989 (ECA). Section 24 G of NEMA, however, allows for the rectification of the unlawful commencement or continuation of a listed activity conducted in the absence of the required EAs. Section 24 G therefore permits the ex post facto legalising or retrospective authorisation of the unlawful acts. In the case at hand, BP was found guilty, despite having applied for an ex post facto authorisation. This paper engages with the arguments put forward by the court, reflects on insights brought about by the foreign law, and provides possible recommendations for the retrospective environmental authorisation regime in South Africa.

Case Note: Locus standi to institute a private prosecution of environmental offences in South Africa: Uzani Environmental Advocacy CC v BP Southern Africa (Pty) Ltd

In Uzani Environmental Advocacy CC v BP Southern Africa (Pty) Ltd, in the first ever private prosecution under section 33 of the National Environmental Management Act, British Petroleum (BP) was prosecuted and convicted for constructing filling stations without the necessary authorisation. The judgment deals mostly with the issue of locus standi to institute a private prosecution for environmental offences. The purpose of this note is to highlight the issues that emerge from the judgment. The note also discusses the role that could be played by the National Director of Public Prosecutions should they decide to take over a private prosecution instituted under section 33 of NEMA.

Credit Risk Management and Financial Performance: A Case of Bank of Africa (U) Limited

The study was meant to establish the relationship between credit risk management and financial performance of Bank of Africa (U) Ltd. The study adopted a case study approach and adopted both quantitative and qualitative approaches. The study established that the Bank has tried to diversify geographically not only within the country even though the majority of loans are granted to different regions within the country but also into neighboring countries like Tanzania. The bank has over 35 branches within the country among which 21 branches are in the central and 14 branches up country. Strong Credit Appraisal puts the milestones for an effective management of credit risk and gives the firms a competitive advantage in the market place. Hence it can be concluded that credit appraisal defines a bank’s survival and profitability. The value of adjusted R Square was 0.978, an indication that there was a variation of 97.8% on performance of the bank due to changes in client appraisal, credit risk control, and risk diversification at 95% confidence interval. The study recommends that the management of the Bank should continuously assess their risk management practices to see if they are still practical in the face of a continuously changing operating environment, for instance the new regulatory regimes. The products should be tailored towards the local language for easy understanding of the products. The study makes the original contribution by suggesting that there is a positive relationship between credit risk management and performance of the bank. These insights are useful for academic understanding and policy formulation by the decision makers of the bank.

The Application and Interpretation by South African Courts of General Renvoi Clauses in South African Double Taxation Agreements

General renvoi clauses in DTAs based on article 3(2) of the OECD MTC provide that an undefined term in a DTA shall have the meaning that it has in the domestic law of the contracting state applying the DTA unless the context otherwise requires. All South African DTAs include such a clause.
 Many interpretational issues remain with regard to the application and interpretation of general renvoi clauses. This article considers four of these issues in the light of South African cases in which general renvoi clauses were referred to. The following cases are considered: ITC 789 (1954) 19 SATC 434, Baldwins (South Africa) Ltd v Commissioner for Inland Revenue (1961) 24 SATC 270 and Commissioner for the South African Revenue Service v Tradehold Ltd 2012 3 All SA 15 (SCA).
 The first of the issues considered in the article is relevant in those cases where a DTA includes a general renvoi clause based on the pre-1995 version of article 3(2) and where amendments were made to a relevant domestic meaning after the conclusion of the particular DTA. These clauses do not expressly state whether the relevant domestic meaning is the domestic meaning existing at the time of the conclusion of the DTA, or at the time of the application of the DTA.
 The second issue arises if the expression used in the domestic law is not identical to the undefined treaty term. The question is whether the expression in the domestic law can be used to give meaning to the treaty term under the general renvoi clause.
 Another interpretational issue considered in the article concerns deeming provisions in the domestic law. The issue is whether a meaning that a term is deemed to have under a provision in domestic legislation can be used under the general renvoi clause to give meaning to the undefined term in the DTA.
 The last issue deals with the meaning of the phrase "unless the context otherwise requires". The question raised is whether this phrase means that the domestic meaning should be given only as a "last resort", or whether it should apply unless "reasonably strong" arguments to the contrary are made

Contract Law and the Constitution: Bredenkamp v Standard Bank of South Africa Ltd (SCA)

Case Note