Home Talk Developments (Pty) Ltd and Others v Ekurhuleni Metropolitan Municipality (225/2016) [2017] ZASCA 77; [2017] 3 All SA 382 (SCA); 2018 (1) SA 391 (SCA) (2 June 2017)

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[2017] ZASCA 77
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Home Talk Developments (Pty) Ltd and Others v Ekurhuleni Metropolitan Municipality (225/2016) [2017] ZASCA 77; [2017] 3 All SA 382 (SCA); 2018 (1) SA 391 (SCA) (2 June 2017)

Links to summary

THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
no: 225/2016
In
the matter between:
HOME
TALK DEVELOPMENTS (PTY) LTD

FIRST APPELLANT
AFROPULSE
132 (PTY)
LTD

SECOND APPELLANT
KINGTRADE
INVEST 100010 (PTY) LTD

THIRD APPELLANT
and
EKURHULENI
METROPOLITAN MUNICIPALITY

RESPONDENT
Neutral
citation:
Home
Talk Developments (Pty) Ltd v Ekurhuleni Metropolitan Municipality
(225/2016)
[2017] ZASCA 77
(2 June
2017)
Bench:
Ponnan, Cachalia, Majiedt and Willis
JJA and Schippers AJA
Heard:
14 March 2017
Delivered:
2 June 2017
Summary:
Law of Delict: pure economic loss:
whether Municipality liable in
delict for pure economic loss arising out of the alleged failure by
the Municipal Manager to issue
a s 82 certificate in terms of the
Town-Planning and Township Ordinance 15 of 1986.
ORDER
On
appeal from
:
Gauteng
Local Division, Johannesburg (Nicholls J sitting as court of first
instance):
The
appeal is dismissed with costs, such costs to include those
consequent upon the employment of two counsel.
JUDGMENT
Ponnan
JA (Majiedt and Willis JJA and Schippers AJA concurring):
[1]
The first principle of the law of delict, as Harms JA pointed out in
Telematrix
,
[1]
is that
everyone has to bear the loss that he or she suffers. And, in
contrast to instances of physical harm, conduct causing pure
economic
loss is not prima facie wrongful.
[2]
Accordingly,
a plaintiff suing for the recovery of pure economic loss, is in no
position to rely on an inference of wrongfulness
flowing from an
allegation of physical damage to property (or injury to person),
[3]
because ‘
the
negligent causation of pure economic loss is prima facie not wrongful
in the delictual sense and does not give rise to liability
for
damages unless policy considerations require that the plaintiff
should be recompensed by the defendant for the loss suffered.’
[4]
This case - within an administrative law setting – represents
yet a further example in which these limits are being tested.
[5]
[2]
This appeal, with the leave of the court below (Nicholls J), is
against a judgment dismissing the appellants’ claims with

costs.
The basis of each claim is to be
found in the allegations that officials (in particular the City
Manager) in the employ of the respondent
Municipality, owed certain
duties to each of the appellants in connection with the exercise of
the Municipality’s statutory
powers and that such officials
failed to properly discharge those duties, thereby occasioning the
appellants’ loss.
[3]
The first appellant is Hometalk Developments (Pty) Ltd (Hometalk),
the owner of Portion 280 (a portion of Portion 153) of the
farm
Klipriviersberg 106, which property it proposed developing as
Meyersdal Nature Estate, Extension 7 (Ext 7). The second appellant
is
Afropulse 132 (Pty) Ltd (Afropulse), the owner of portions 282, 286
and 287 (all of them portions of Portion 153) of the farm

Klipriviersberg 106, which properties it proposed developing as
Meyersdal Nature Estate, Extensions 9, 11 and 12 (Ext 9,11 &
12).
The third appellant is Kingtrade Invest 100010 (Pty) Ltd (Kingtrade),
the owner of Portions 281 and 283 (both portions of
Portion 153) of
the farm Klipriviersberg 106, which properties it proposed developing
as Meyersdal Nature Estate, Extensions 8
and 10 (Ext 8 & 10). The
respondent is the Ekurhuleni Metropolitan Municipality (the
Municipality), a Municipality as contemplated
by s 151 of the
Constitution of the Republic of South Africa, Act 108 of 1996, read
with  s 12 of the Local Government –
Municipal Structures
Act of 1998 (Act 117 of 1998).
[4]
The disputes between the parties have their genesis in a so-called
land swap transaction, pursuant to which a land developer,
Sydney
Rean Booysen, the controlling mind of the three appellants, and the
Municipality, each transferred land respectively owned
by them to the
other. The Municipality and various interested stakeholders had
endeavoured for some time to determine a management
framework to
conserve, yet allow, the controlled development of what has come to
be described as the Meyersdal Nature area. During
July 2000, the
Municipality approved in principle, the establishment of the
Meyersdal Nature area consisting of certain portions
of land,
inclusive of land involved in the land swap transaction, which had
been acquired by Kingtrade from the Meyer Trust.
[5]
On 13 September 2004, Mr. Booysen wrote to the Municipality
requesting
‘
that a certain
portion [the Meyer Trust land] . . . which has been appropriated for
development, be hereby conserved and exchanged
for certain Ekurhuleni
land which is developable and which . . . has been regarded as more
appropriate for the development from
a conservation point of view.’
Ext 7, which was not part of the land swap, was purchased from the
Municipality on 16 February
2005. On 4 April 2005 the Corporate
Affairs Committee (CAC) of the Municipality resolved to approve the
land swap. On 23 January
2006 a written agreement of exchange was
concluded between Kingtrade and the Municipality and at that stage
the Municipality’s
land was valued at R9 401 000 and
the Meyer Trust land at R7 742 000. On 27 June 2006 the
City Development
Portfolio Committee of the Municipality resolved:
‘
1.
That the application in terms of  s 96 of the Town Planning and
Townships Ordinance,
1986 . . .  for proposed  MEYERSDAL
NATURE ESTATE EXTENSIONS 7, 8, 9, 10, 11 and 12 be approved . . .’
On
1 October 2007 the Municipality caused Extensions 7, 9, 11 and 12 to
be proclaimed as townships by publishing a notice of proclamation
in
the Provincial Gazette in terms of s 103 of the Town-Planning and
Township Ordinance 15 of 1986 (Ordinance), however, for reasons
that
remain unexplained, Ext 8 & 10 was omitted from the notice. After
approval of the townships, Kingtrade sold and transferred
Ext 9, 11 &
12 to Afropulse. Mr. Booysen then set up a professional team
consisting of an attorney, estate agent, engineers
and financiers,
with a view to developing the land. Mr. Neil Diamond, a councillor in
the Municipality, who is also an estate agent
in the area, was
approached to assist in marketing Ext 9, 11 & 12. He also took up
an offer from Mr. Booysen to acquire a 20%
interest in Afropulse and
to that end contributed start-up capital of R4,5 million.
[6]
On 1 May 2006, Mr. Patrick Flusk was appointed the City Manager of
the Municipality. During September of that year the Government

Anti-Corruption hotline received an anonymous complaint in the form
of an e-mail, which read:
‘
A
land swop transaction by the Alberton council which is part of
Ekurhuleni took place which is attracting attention.
A
councillor being Mr. Neil Diamond is involved and he is a successful
estate agent in Alberton. The details reported in the press
are that
the Alberton council approved a land swop of 55 hectares they owned
in Meyersdal, for 55 hectares of farmland also in
the area. The
values used for the transaction were based on Agricultural values and
appear to be between R8 million and R9 million.
The land the council
swopped was turned into the Meyersdal Nature Estate by the relevant
developer and yielded 330 stands sold
for a minimum R800 000 each.
It
appears the retail value of the stands are R250 million. Services for
such a number of stands would be in the order of R40 million,

resulting in a profit of R200 million. Mr. Neil Diamond and the other
parties involved may well be completely innocent, but it
just appears
too co-incidental. Apparently the Alberton council wanted to retain
some “green-belt” land and by apparent
co-incidence the
developer already owned the land the council identified that they
would want to swop for. Mr. Diamond was appointed
the estate agent
for the sale of the stands in the Meyersdal Nature Estate and I would
imagine his commissions would approximate
R12.5 million. He
apparently recused himself from this decision but it appears that the
land the council valued at R140,000 per
hectare was adjacent to land
sold for almost R1.3 million per hectare 2 years before. In my humble
opinion a town council should
not be able to preside over swopping
land worth a net R200 million when the figures in the relevant
reports are R8 million. Additionally
Mr. Diamond seemed to have such
huge vested interests and was the sole agent in the previous sales in
the area which call these
valuations into doubt? It may well be that
he had an obligation to inform the council they weren’t doing a
clever deal? In
any event my parents are poor people living in
Alberton and paying exorbitant rates, so it does concern me if
council assets were
not dealt with properly.’
[7]
According to Mr. Flusk, after his appointment as the City Manager, he
was informed by the Mayor that Pasco Risk Management (Pty)
Ltd
(Pasco) had been appointed by the Municipality to undertake certain
forensic investigations. When Pasco informed Mr. Flusk
that they had
come across the hotline complaint in one of the files during the
course of their investigation, he took the view
that the complaint
could not be ignored and accordingly extended Pasco’s mandate
to investigate those allegations as well.
In the meanwhile, Mr. Tom
Peeters, the head of the Municipality’s legal department, had
secured a legal opinion from Advocates
Wim Trengove SC and Kate
Hofmeyr appertaining to some 526 land transactions that also included
the aforementioned land swap. That
opinion concluded – as three
earlier legal opinions had done - that the Municipality did not have
the power to delegate its
function under s 14(2) of the Local
Government, Municipal Finance Management Act 56 of 2003 (the MFMA) to
its CAC. Accordingly,
so stated the opinion, such delegation was
unauthorised and thus invalid and consequently, subsequent approvals
by the CAC to transfer
the Municipality’s properties to third
parties were also unauthorised and invalid. The opinion recommended
that the Municipality
ought to take the following steps to rectify
the problem:
‘
39.1
The municipal council must reconsider the transfers in a meeting open
to the public in accordance with the
provisions of s 14(2). It is a
fresh consideration and decision and the municipal council must take
care not merely to rubberstamp
the earlier invalid decisions of its
Committee. If it decides to approve the transfers, then it should
proceed as suggested below.
If it decides not to approve of any of
the transfers, then the circumstances of each of them will have to be
reconsidered.
39.2
Once the municipal council has approved the transfers, the
municipality must apply to court to validate
them or at least to
direct that they be allowed to stand. It has to cite the parties to
whom the transfers were made and, if the
latter have subsequently
passed further transfer of the properties, the subsequent registered
owners should also be cited.
39.3
The municipality should in the first place ask for an order
validating the transfers already made or
at least directing that they
be allowed to stand. There is in our view a cogent argument to be
made that those transfers should
not be undone only to be redone for
the sake of formality.
39.4
The municipality should however in the alternative ask for an order
rectifying the deeds register by
declaring the old transfers to be
invalid and authorising the municipality to transfer the properties
again.’
[8]
The Trengove/Hofmeyr opinion served before the first ordinary council
meeting of the Municipality on 31 January 2008. The minutes
of that
meeting, to the extent here relevant, reads:
‘
Clr
PWA Pretorius, seconded by Clr MJ Mason, proposed the addition of the
following recommendation 10:
“
10.
That a quarterly report be submitted to the Corporate Services
Portfolio Committee and Council
indicating to whom Council land was
alienated and at what purchase price.”
Clr
N Diamond, seconded by Clr NA Mabena, proposed the addition of the
following recommendations 11 & 12:
“
11.
That a further report be submitted to Council after verification of
the 526 land transactions
approved by the Corporate Affairs Committee
from 1
st
July 2004, and that a legal process be undertaken by approaching the
courts to ratify the 526 land transactions and associated
decisions
taken by the various organs and committees of Council.
12.
That it be noted that recommendations may not contradict any policy
of Council or any part
of the Municipal Finance Management Act, Act
56 of 2003, or any other legislation outlining the responsibilities
of Local Government.”
Council
accepted the above proposals.’
Resolutions:
‘
5.
That Council notes the review of the disposal processes and policies
of all capital
assets, including land, post 01
st
July 2004, to ensure compliance with the provisions of the MFMA.
6.
That the City Manager or nominee be authorised to take the necessary
steps to ensure compliance with the provisions of the MFMA,
including
any necessary legal steps to protect the interests of Council, and
that periodic progress reports be submitted to Council
on such steps
taken.’
[9]
Mr. Booysen took the view that by the end of 2007 he had completed
all of the required services and was entitled to a certificate
in
terms of s 82 of the Ordinance (the s 82 certificate).
[6]
[10]
When by March 2008 the s 82 certificate had still not issued, Home
Talk and Afropulse applied to the High Court, Pretoria for
an order:
‘
That
the Ekurhuleni Metropolitan Municipality, and the Municipal Manager,
Ekurhuleni Metropolitan Municipality, Mr. Patrick Flusk,
(hereinafter
“the first and second respondents”) be and are hereby
ordered and compelled to certify within 5 days of
the date of issue
of this order –
2.1
that the first respondent will within a period of 3 (three) months
from the date of such
certificate as contemplated in s 82 . . . be
able to provide the erven in the townships of Meyersdal Nature
Estate, Extensions
7, 9, 11 and 12 . . . (hereinafter “the
townships”) with the necessary engineering services; and
2.2
that the first respondent is prepared to consider applications for
the approval of building
plans in respect of erven in the townships.
3.
In the event that the first and second respondents fails to issue the
certificates
in terms of s 82 . . . certificate as referred to in
paragraph 2.1 above, the third respondent be authorised to register
deeds
of transfer in terms of his normal duties under the
Deeds
Registries Act, 47 of 1937
in respect of erven in the townships,
notwithstanding the absence of such certificates.
4.
Directing the first and second respondents jointly and severally, to
pay the
applicants’ cost of this application on an attorney and
own client scale.’
[11]
Not only did Mr. Flusk purport to oppose the application on behalf of
the Municipality, he also launched a counter application
seeking:
‘
1.1
That the decision of the first applicant Corporate Affairs Committee
of 4 April 2005 to approve
the land exchange . . .  be set
aside.
1.2
That the agreement concluded between first applicant and third
respondent dated 23 January
2006 and which intended to give effect to
the decision referred to in prayer 1.1 be set aside.
1.3
That the 3 land sale agreements concluded between the second
respondent and the third respondent
dated 2 July 2007 . . .  be
set aside.
1.4
That the first applicant’s resolution dated 26 June 2006 . . .
to approve the township
applications in respect of . . . Extensions 7
to 12 be set aside.
1.5
That the second and third respondents be directed to transfer to the
first applicant the
properties identified as . . . Extensions 8 to
12, and that they further be directed to do all such things and sign
all such documents,
including powers of attorney, within 7 days of
date of order, to give effect to the aforegoing transfers.
1.6
That the Sheriff of the above Honourable Court be and is hereby
empowered to sign all and
any documents identified in paragraph 1.5
above, should the second and third respondents fail or refuse to sign
same.
1.7
That the record of decision by the Gauteng Provincial Government:
Department of Agriculture,
Conservation and Environment No
GAUT002/05-06/0125, the proposed change of land use of . . .  be
set aside.
1.8
That the following proclamations with regard to the aforesaid
townships be set aside, being
Local Authority Notices 2495 to 2502 as
set out in the Provincial Gazette Extraordinary for the province of
Gauteng No 273 of 1
October 2007.
1.9
That Mr Rean Booysen be ordered to subject himself to viva voce
evidence (including cross
examination) with regard to the issues
raised in the founding and answering affidavits on a date to be
determined by this court.
1.10
That first and second respondents be ordered to pay the costs of this
application jointly and severally
the one paying the other to be
absolved.’
[12]
The matter came before Legodi J who, on 20 June 2008, ordered that:
‘
9.1.1
The main application is hereby struck from the roll due to failure to
exhaust internal remedies.
9.1.2
The applicants in the main application are hereby directed to exhaust
internal remedies in terms of s 124
of the Ordinance read together
with the provisions of s 7 of PAJA.
9.1.3
The second respondent and the Municipality’s
counter-application is hereby struck off from the roll
due to the
second respondent’s lack of authority to depose to the founding
affidavit in the counter-application.
9.1.4
Each party to pay its costs.’
[13]
On 17 March 2009 the Executive Mayor wrote to Mr. Flusk informing him
that the council of the Municipality had resolved to
terminate his
employment as the City Manager with effect from that date. Mr. Johan
Leibbrand was thereafter appointed the acting
City Manager in Mr.
Flusk’s stead. On 30 October 2008, and in accordance with the
order of Legodi J, Home Talk and Afropulse
filed a notice of appeal
with the Services Appeal Board. On 22 January 2009 the parties
concluded a deed of settlement before the
Services Appeal Board. That
agreement recorded that the only ‘contentious matter remaining
in issue for determination by
the Board is the question of costs’.
On 19 February 2009 Home Talk and Afropulse filed a supplementary
affidavit with the
High Court. They contended that as they had now
exhausted their internal remedies, they were entitled to re-enrol the
matter for
the hearing of the relief originally claimed in their
notice of motion.
[14]
On 20 March 2009 the parties settled the High Court application.
Mr. Leibbrand, who served as the acting City Manager
after Mr.
Flusk’s dismissal, represented the Municipality. In terms of
the agreement, the Municipality undertook ‘immediately
upon
signature of this agreement to issue the certificates in terms of s
82 (Ordinance 15 of 1986) in respect of Meyersdal Extensions
7, 9, 11
and 12 not later than 20 March 2009.’
The
agreement also recorded that:
‘
Kingtrade
has paid a total amount of R3 881 757.81 in respect of
rates and taxes pertaining to Meyersdal Extensions 7,
9, 11 and 12 to
EMM for a period of seven months. This amount is made up by a payment
of R2 756 683.42 paid on or about
27 November 2007,
R562 537.18 paid on or about 21 February 2008 and R562 537.18
paid on or about 28 March 2008. It is
agreed that an item will be
tabled at the next meeting of the full Council of the EMM, to be held
on 26 March 2009, recommending
that a clearance certificate (which
requires no further payment from Kingtrade) in respect of Meyersdal
Extension 7, 9, 11 and
12 be issued, valid for a period of seven
months from the date that the certificates in terms of s 82 are
issued. The parties record
their understanding that this paragraph
does not bind the Council in any way.’
[15]
On 17 March 2010, Home Talk, Afropulse and Kingtrade as the first,
second and third plaintiffs respectively caused summons
to be issued
out of the South Gauteng High Court against the Municipality. The
issues of liability and quantum having been separated
in terms of
Uniform rule 33(4), the matter proceeded to trial in respect of the
former before Nicholls J who, on 30 October 2015,
dismissed the
action with costs including those consequent upon the employment of
two counsel. The appeal is with the leave of
the learned judge.
[16]
In the summons, the claim was originally founded on the allegations
that:
‘
9.
The defendant despite its approval of the third plaintiff’s
township establishment
and the instruction by the Registrar of Deeds
to do so, wilfully alternatively negligently failed to proclaim
Extension 8 and 10
of the Meyersdal Nature Estate (the third
plaintiff’s development).
10.
By December 2007:
.
. .
10.3
The plaintiffs had met all the requirements for the issue of s 82
Certificates by the Defendant in
respect of Extensions 7, 9, 11 and
12 respectively and were entitled to demand from the Defendant to
issue same;
.
. .
12.
Despite demand and the first and second plaintiffs having met the
requirements for the issue
thereof, the defendant represented by its
duly appointed employees, acting in the course and scope of their
employment, over the
period November 2007 to 20 March 2009 unlawfully
and wilfully, refused to issue the s 82 Certificates in respect of
Extensions
7, 9, 11 and 12.
Alternatively
the defendant represented as aforesaid, despite demand and the first
and second plaintiffs having met the requirements
for the issue
thereof, over the period November 2007 to 20 March 2009 unlawfully
and negligently failed to issue the s 82 Certificates
in respect of
Extensions 7, 9, 11 and 12, the defendant having been negligent in
one or more of the following respects.’
[17]
The particulars of claim underwent a series of further amendments,
the most significant of which being some three years later
on 23 May
2013 when, for the first time, Mr. Flusk was mentioned by name. It
was then contended that he had acted mala fide in
withholding the
issuance of the s 82 certificate. Common to the claims on behalf of
all three appellants were these allegations:
‘
18.
The required s 82 certificate was eventually only issued on 20 March
2009 after first plaintiff
had initiated court proceedings in this
regard and Flusk’s employment terminated on or about 18 March
2009.
19.
The failure or refusal aforesaid resulted from a decision to refuse
the issue of the said
certificate by the defendant’s then
Municipal Manager, one Flusk, who had earlier managed to procure a
resolution by the
Council that he alone was to have the power to
issue
s
82 certificates.
20.
In acting as he did, the said Flusk acted as defendant’s
designated functionary and
representative, alternatively as an
employee of defendant and within the course and scope of his
employment as such.
21.
The decision aforesaid and his resultant failure or refusal
aforesaid, constituted unlawful
and wrongful conduct.
22.
The aforesaid conduct was:
22.1
Intentional; and
22.2
Mala fide
and/or motivated by a
mala fide
ulterior
purpose.
22A.
As a direct result of the
mala
fide
conduct
aforesaid, the s 82 certificate was delayed from approximately 15
December 2007 until 20 March 2009.’
[18]
The plea of the Municipality to those allegations was:
‘
11.1
The claims . . .  are
aquilian
claims
for pure economic loss arising from the alleged delay occasioned by
the failure of the defendant to issue certificates in
terms of 82 of
the Townships and Town Planning Ordinance 15 of 1986 (“the
Ordinance”).
11.2
The operative legislation does not anticipate, either directly or by
inference, either compensation
or damages to any person aggrieved by
the failure of, or delay by, the local authority in the issue of any
such certificate.
11.3
Section 119 of the Ordinance requires the installation and provision
of engineering services to the
satisfaction of the local authority
concerned; and the provisions of Section 124 provide for an appeal to
a Statutory Services
Appeal Board by any person aggrieved by the
decision of a local authority in terms of Section 119 or the refusal
or unreasonable
delay of a local authority to give such a decision.
11.4
In addition,
alternatively
subject to such appeal provision,
persons . . . aggrieved by a failure or unreasonable delay in the
certification in terms of Section
82, have the remedies of a
mandatory interdict and judicial review.
11.5
The object of Section 82 is not to provide any right or benefit to
persons such as the plaintiff[s],
but rather to protect members of
the public who are purchasers of erven . . .  in order to
advance the public good.
11.6
The provisions of Section 82(1)(b)(ii)(cc) and Section 119 confer
upon the local authority an administrative
discretion in decision
making.
11.7
The imposition of liability for damages as claimed is likely to have
a chilling effect on performance
of the local authorities’
administrative and statutory function and the achievement of the
objects of the statutory provision.
.
. .
11.9
The defendant pleads that as a result of the aforegoing:
11.9.1
the statutory duty does not provide a basis for inferring that a duty
exists to the first plaintiff at common law;
and
11.9.2
neither public policy nor public interest favour the holding of the
alleged conduct on the part of the defendant unlawful
in the
aquilian
sense
and thus susceptible to a remedy in damages.’
[19]
Undoubtedly, the appellants were entitled to proper administrative
legal proceedings. But, that did not mean that the breach
of the
administrative duties as set out in the particulars of claim
necessarily translated into private law duties giving rise
to
delictual claims.
[7]
It must be accepted that an incorrect administrative decision is not
per se
wrongful.
[8]
It is thus
unhelpful to call every administrative error ‘unlawful’,
thereby implying that it is wrongful in the delictual
sense, unless
one is clear about its nature and the motive behind it.
[9]
Administrative law is a
system that over centuries has developed its own remedies and, in
general, delictual liability will not
be imposed for a breach of its
rules unless convincing policy considerations point in another
direction.
[10]
The breach of every legal
duty, especially one imposed by administrative law, does not
necessarily translate into the breach of
a delictual duty.
[11]
If the legal duty invoked is imposed by a statutory provision the
focal question is one of statutory interpretation.
[12]
Whether the existence of an action for damages can be inferred from
the controlling legislation depends on its interpretation and
it is
especially necessary to have regard to the object or purpose of the
legislation. This involves a consideration of policy
factors which,
in the ordinary course, will not differ from those that apply when
one determines whether or not a common-law duty
existed.
[13]
[20]
Conduct is wrongful in the delictual sense if public policy
considerations demand that in the circumstances the plaintiff has
to
be compensated for the loss caused by the negligent act or omission
of the defendant.
[14]
It is then that it can be said that the legal convictions of society
regard the conduct as wrongful.
[15]
‘Wrongfulness’, the Constitutional Court held, ‘typically
acts as a brake on liability, particularly in areas
of the law of
delict where it is undesirable or overly burdensome to impose
liability’. It elaborated: ‘[wrongfulness]
functions to
determine whether the infliction of culpably caused harm demands the
imposition of liability or, conversely, whether
“the social,
economic and other costs are just too high to justify the use of the
law of delict for the resolution of the
particular issue”.’
[16]
What is called for is ‘not an intuitive reaction to a
collection of arbitrary factors but rather a balancing against one

another of identifiable norms.’
[17]
[21] In
Knop v Johannesburg City Council
1995 (2) SA 1
(A) at 33C-D,
Botha JA dealt at length with the general principles underlying
delictual liability. He found that considerations
of convenience
militate strongly against allowing an action for damages because the
threat of litigation would unduly hamper the
expeditious
consideration and disposal of applications by a local authority. With
that in mind he set out to interpret the statute
in question in order
to determine whether the legislature intended another result. He
concluded it did not (at 31D-E), an answer
fortified by the fact that
the legislation in question provided for an appeal procedure (at
31E-F). The importance of an internal
appeal procedure is that it may
be indicative of an intention that this is the only available remedy
for an incorrect decision.
For an incorrect decision on appeal there
is then no remedy except a judicial review.
[22]
In considering the issue of wrongfulness in the delictual sense, the
nature of the Municipality’s functions certainly
require close
scrutiny. But it must be appreciated that the nature of its functions
is but one of the circumstances calling for
consideration in the
case. As always, to determine the issue of wrongfulness, all the
circumstances of the case fall to be considered.
One of the questions
in this case is whether the legislature intended a claim for damages
in respect of loss caused in addition
to the other administrative law
remedies available to the appellants.
In
Steenkamp
(para
22), Harms JA observed:
‘
It
appears to me that if the breach of a statutory duty, on a conspectus
of the statute, can give rise to a damages claim, a common-law
legal
duty cannot arise. If the statute points in the other direction,
namely that there is no liability, the common law cannot
provide
relief to the plaintiff because that would be contrary to the
statutory scheme. If no conclusion can be drawn from the
statute, it
seems unlikely that policy considerations could weigh in favour of
granting a common-law remedy.’
[23]
As in
Knop’s
case,
here too the legislature has made provision for an internal appeal.
That is the surest indicator that it was not within the
contemplation
of the legislature that the refusal of a s 82 certificate would,
without more, be regarded as a wrong entitling an
action for damages
against the Municipality. It
must
be added that the Ordinance is there for the public good. Provisions
such as s 82, exist principally for the protection of
housing
consumers and not property developers in the position of the
appellants.
In
Knop
(at
31H), Botha JA concluded: ‘[i]n my judgment it could not have
been in the contemplation of the legislature that, apart
from the
appeal procedure, the refusal of the application was to be regarded
as a wrong to the applicant entitling him to bring
an action for
damages against the local authority.’
In
arriving at his conclusion
,
the learned Judge did point out:
[18]
‘
That
is not to say that the local authority need not exercise due care in
dealing with applications; of course it must, but the
point is that
it would be contrary to the objective criterion of reasonableness to
hold the local authority liable for damages
if it should turn out
that it acted negligently in refusing an application, when the
applicant has a convenient remedy at hand
to obtain the approval he
is seeking. To allow an action for damages in these circumstances
would, I am convinced, offend the legal
convictions of the
community.’
[24]
In comparable circumstances, other Commonwealth jurisdictions appear
to have adopted a similar approach.
In England,
Jones
v Department of Employment
[19]
expressed
the position thus:
‘
The
question thus is whether, taking all these circumstances into
account, it is just and reasonable that the adjudication officer

should be under a duty of care at common law to the claimant to
benefit. Having regard to the non-judicial nature of the adjudication

officer's responsibilities, and in particular to the fact that the
statutory framework provides a right of appeal which, if a point
of
law arises, can eventually bring the matter to this court, it is my
view that the adjudication officer is not under any common
law duty
of care. In other words, I agree with Mr. Laws that his decision is
not susceptible of challenge at common law unless
it be shown that he
is guilty of misfeasance. Indeed, in my view, it is a general
principle that, if a government department or
officer, charged with
the making of decisions whether certain payments should be made, is
subject to a statutory right of appeal
against his decisions, he owes
no duty of care in private law. Misfeasance apart, he is only
susceptible in public law to judicial
review or to the right of
appeal provided by the statute under which he makes his decision.’
In
Australia,
Kitano
v The Commonwealth of Australia
,
[20]
held:
‘
It
was conceded . . . that no civil cause of action lies on the statute
for breach of s 122. It seems to me that for the plaintiff
to succeed
in his special action on the case he must show something more than a
mere breach of the statute and consequential damage;
he must show
something over and above what would ground liability for breach of
statutory duty if the action were
available.’
And,
in Canada, it was stated in
Comeau's
Sea Foods Ltd v Canada (Minister of Fisheries and Oceans)
that:
[21]
‘
Decisions
taken in the exercise of statutory power will be subject to judicial
review, and sometimes a statutory right of appeal.
Unlawful decisions
can be nullified and the individual relieved of the consequences of
such a decision. The existence of these
remedies is regarded by the
courts as an indicator that no additional remedy in negligence need
be provided, particularly where
the judicial review or appeal is
adequate to rectify matters, and the only real damage suffered by the
individual is the delay
and possibly the expense involved in
establishing that a decision is invalid. This seems in part an
axiomatic decision on the part
of the court, that there should be a
division between public law remedies and private law remedies. Where
an
ultra
vires
decision can be set aside on appeal or review, there should not
normally be any additional liability in damages, unless the
individual
can establish misfeasance. Simple negligence is
insufficient. The fact that the decision may be set aside may also
mean that the
only damage suffered is the expense involved in
challenging the decision.’
[25]
Before leaving the foreign authorities, it needs to be mentioned that
in English law ‘duty of care’ is used to
denote both what
in South African law would be the second leg of the inquiry into
negligence and legal duty in the context of wrongfulness.
As Brand JA
observed in
Trustees,
Two Oceans Aquarium Trus
[22]
t
at 144F,
‘duty of care’ in English law ‘straddles both
elements of wrongfulness and negligence’.
[23]
Accordingly,
the
phrase ‘duty
of care’ in our legal setting is inherently misleading.
[26] On
appeal it was submitted that ‘misfeasance in public office’
is a convenient label for what we are here concerned
with
.
The following are the essential elements of the tort:
‘
First,
there must be an unlawful act or omission done or made in the
exercise of power by the public officer. Second, as the essence
of
the tort is an abuse of power, the act or omission must have been
done or made with the required mental element. Third, for
the same
reason, the act or omission must have been done or made in bad faith.
Fourth, as to standing, the claimants must demonstrate
that they have
a sufficient interest to sue the defendant. Fifth, as causation is an
essential element of the cause of action,
the act or omission must
have caused the claimants' loss.’
[24]
That
submission hardly need detain us, for, not having been raised by the
appellants on the pleadings, those requirements were neither
fully
ventilated in the evidence, nor dealt with in the judgment of the
trial court. Moreover, it must be remembered that the English
law of
torts, ‘though it is freely quoted and often followed in our
courts, is not often a safe guide for solving a problem
which arises
under Roman Dutch Law’.
[25]
[27] At
home,
Telematrix
(par
26) summed up the legal position thus: ‘In different situations
courts have found that public policy considerations require
that
adjudicators of disputes are immune to damages claims in respect of
their incorrect and negligent decisions.’ That,
seems to me to
be fatal to the appellants’ cause of action in negligence as
formulated in the original particulars of claim.
Appreciating, it
would seem,
that
‘something more’
than a mere negligent statutory breach and consequent economic loss
is required to hold [a functionary]
delictually liable for the
improper performance of an administrative function,
[26]
prompted, I daresay, the series of further amendments to the
particulars of claim. But, what that ‘something more’
is
appears to have occasioned the appellants all manner of difficulty in
this case. The formulation ultimately settled on was ‘
mala
fide
and/or
motivated by a
mala
fide
ulterior
purpose’
However,
precisely what ‘
mala
fide
and/or
motivated by a
mala
fide
ulterior
purpose’ was intended to signify, was not disclosed in the
pleading.
Before us,
respondent’s
counsel complained that the ‘greatest difficulty that the
[Municipality] had in defending the claim, was
the failure by the
appellants to commit themselves to a factual theory of their case’.
By this I understood counsel to suggest
that insufficient
particularity was given of the material facts sought to be relied
upon by the appellants to support the contention
that Mr. Flusk acted
mala
fide
and/or with a
mala
fide
ulterior purpose.
[28] In a
67 page opening address appellants’ counsel, exercising a right
under the provisions of Uniform rule 39(5) to ‘briefly
outline
the facts intended to be proved’, made no mention of the facts
intended to be adduced to establish the alleged mala
fides or
ulterior purpose.
One
knows that such address can never be a substitute for pleadings. In
any event,
it did not
serve to forewarn the respondent of the evidence that would
eventually be relied upon. What is important is that the
pleadings
should make clear the general nature of the case of the pleader.
They
are meant to mark out the parameters of the case sought to be
advanced and define the issues between the litigants.
[27]
In that
regard, it is a basic principle that a pleading should be so framed
as to enable the other party to fairly and reasonably
know the case
he or she is called upon to meet.
These
requirements in respect of pleadings are the very essence of the
adversarial system.
[28]
The prime function of a judge is to hear evidence in terms of the
pleadings, to hear argument and to give his decision accordingly.
[29]
In
Imprefed
(Pty) Ltd v National Transport Co
1993 (3) SA 94
(A) at 107G-H it was stated:
‘
At
the outset it need hardly be stressed
that:
“The whole purpose of pleadings is to bring clearly to the
notice of the Court and the parties to an action the issues
upon
which reliance is to be placed.”’
(
Durbach
v Fairway Hotel Ltd
1949(3) SA 1081 (SR) at 1082.’
[29] The
degree of precision required obviously depends on the circumstances
of each case. As a general rule, the more serious the
allegation of
misconduct, the greater is the need for particulars to be given which
explain the basis for the allegation. This
is especially so where the
allegation that is being made is of bad faith or dishonesty. The
point is well established by authority
in the case of fraud.’
[30]
With regard to fraud, a general allegation of fraud is not sufficient
to infer liability on the part of those who are said to have

committed it.
I
t
is important to record, as the following excerpt shows. that
during
the course of the trial counsel for the appellants specifically
disavowed a case based on fraud:
‘
Mr
Peter:
I
think my learned friend knows better, that when one pleads fraud one
has to plead it very carefully, and very expressly. To just
say male
fide ulterior purpose, the word fraud is not even mentioned here. But
now we hear from Mr Diamond’s evidence and
this witness for the
very first time, fraudulent and corrupt activities.
Mr
Maritz:
I
never heard mention, I never heard anyone or anybody mention fraud,
and it is not pleaded by us, it is not relied upon.
Court:
Well, it is
certainly corrupt to be saying . . . [intervene].
Mr
Maritz:
Corrupt, yes.
Corrupt and extortion as to an attempt to extract an extortion is
bribe from my client, and that is what the evidence
so far had been.
That is fully covered by the allegations. The defendant disclosed not
to seek further particulars.’
[30]
Thus, during the course of the evidence it came to be clarified that
the appellants’ case rested on extortion. In
Notaris
v R
1903 TS 484
, Innes CJ
described extortion as ‘the taking under colour of office or
authority from any person, by means of illegitimate
pressure, any
money or valuable thing which is not due from him at the time it is
taken.’
[31]
It seems to me though that for the purposes of properly pleading a
case in the context of a civil claim the distinction sought
to be
drawn by counsel for the appellant between fraud, on the one hand,
and extortion, on the other, may be a distinction without
a
difference. For,
as
Three
Rivers
(par
55) pointed out:
[32]
‘
A
party is not entitled to a finding of fraud if the pleader does not
allege fraud directly and the facts on which he relies are
equivocal.
So too with dishonesty. If there is no specific allegation of
dishonesty, it is not open to the court to make a finding
to that
effect if the facts pleaded are consistent with conduct which is not
dishonest such as negligence.’
[31] Of
course, allegations of fraud, dishonesty or bad faith must be
supported by particulars and the other party is entitled to
notice of
the particulars on which the allegations are based.
[33]
‘
The
proposition that a plaintiff claiming pure economic loss must allege
wrongfulness, and plead the facts relied upon to support
that
essential allegation, is in principle well founded. Whilst it is not
necessary, nor indeed appropriate, to plead policy considerations
or
the
boni
mores
,
it is incumbent on a plaintiff to plead all the facts on which he
wishes to rely to enable the court to decide whether policy

considerations and the
boni
mores
warrant that liability should extend to the case in question.’
[34]
In fact, the
absence of such allegations may render the particulars of claim
excipiable on the basis that no cause of action had
been
disclosed.
[35]
But, here
the respondent did not file an exception. It would thus be futile to
investigate whether an exception, if properly and
timeously taken,
would have been successful. The question is rather whether, despite
the inadequacy of the appellants’ pleadings,
sufficient facts
were adduced to enable a proper determination of the policy
considerations pertaining to wrongfulness. Conversely
stated, the
question is whether the respondent has shown prejudice in the sense
that it would have conducted its case in a materially
different way,
had the appellants’ case been properly pleaded.
[36]
Although by
no means persuaded that the respondent’s assertion of prejudice
is entirely without merit, I prefer to pass over
the issue, for it
seems to me that this court can, on the facts, such as they are,
decide whether as a matter of policy the respondent
should be liable
for the loss claimed by the appellants.
[32]
The evidence of the attempt at extortion rests solely on the say so
of Mr. Diamond.
According to Mr. Diamond, he was involved
since July 2006 in a marketing campaign for the sale of stands in Ext
9,11 &12. During
one of their last marketing events in November
of that year, Mr. Flusk visited the marketing tent at the proposed
development site
and signed an offer to purchase a stand. Mr. Diamond
testified:
‘
Mr
Maritz:
This
offer in particular, did it ever come up thereafter in your
interaction with Mr Flusk? --- M’Lady, from my position in
the
Corporate Affairs Committee and the Finance Committee there were
interactions with the city manager from time to time and the
city
manager would enquire as to the progress on the development and the
city manager would also request whether we could not do
something
better as far as the price is concerned, and more specifically ask
for a discount. Obviously this was not something I
entertained.
Initially I just ignored it and brushed it off and later it
progressed to be a more firm push from his side that he
wanted a
reduced price or a discount on his stand.
And
how did you react to those increased attempts to obtain such a
discount? --- M’Lady I, as indicated, I originally ignored
him,
I later brushed them off, but the city manager was quite firm in his
persistence in obtaining a better price.
And
what were the further developments in this regard, regarding you and
Mr Flusk? --- M’Lady, in and about January 2008 I
had a meeting
with the city manager, where the city manager indicated that he does
not just want a discount, he would in actual
fact like the stand for
free. I, at that stage, indicated to the city manager that I cannot
entertain such a request, as there
were nobody else that received any
discounts and that there were definitely no free stands that could be
handed out. I think that
such an action from my part, or the part of
Afro Pulse, would have constituted a bribe and that was definitely
not necessary for
anything with regards to this development.
Everything was on track, the development was progressing well. At
that stage the city
manager then informed me that he had certain
concerns arising from an investigation where there was an alleged
whistle blower and
that he would institute or has instituted an
investigation into the land exchange, M’Lady. The city manager
then indicated
to me that if I do not concede to his request he can
make things as easy or as difficult as he wants with regards to this
development,
M’Lady.
Was
there anything specifically mentioned by him in this regard as to
what he was referring to? --- M’Lady, the only outstanding

matter at that stage was the issue of a Section 82 certificate. To my
knowledge the Section 82 certificates are issued by junior
officials
once a developer complies with all the service aspects and
engineering aspects of a development. So I did not take much
notice
to the, and I would like to call it a threat from the city manager at
that stage as I knew that it was not delegated to
him but it was a
sub-delegation, the issue of Section 82 certificates to the HOD
Corporate and Legal, and in actual fact it was
even further down the
line where those Section 82 certificates were issued. So I did not
really regard it as a credible threat
at that stage, M’Lady.
Did
he mention anything about Section 82 at all? --- Yes, he did, M’Lady.
What
did he say? --- He indicated that he could draw out the issue of a
Section 82 indefinitely.
If
you say “draw out”, do you mean delay? --- Delay, yes,
M’Lady.
How
did you react to that? --- M’Lady, I did not engage Patrick
Flusk any further on that. I did, however, share that with
Mr Riaan
Booysen and indicated that those were the comments from the city
manager or the threats from the city manager. Mr. Booysen
assured me
that we met with all the engineering requirements for the issue of an
82 certificate and that he could not possibly
foresee how council
could refuse the issue of the 82 certificate to allow an individual
to benefit to the extent to which Patrick
Flusk wanted to obtain a
benefit, M’Lady.
’
[33]
Given the pertinence of this evidence to the enquiry, the fact that
the appellants did not respond to it by amending their
particulars of
claim conduced to all sorts of confusion.
The
parties generated a record of 24 volumes consisting of approximately
3600 pages of evidence and exhibits. As observed in
KPMG
Chartered Accountants:
‘It
is difficult to understand why the trial judge permitted all of the
evidence or overruled the objection to the leading
of some of the
evidence. Obviously, courts are fully justified in ignoring
provisionally objections to evidence if those objections
interfere
with the flow of the case. It is different if a substantive objection
is raised which could affect the scope of the evidence
that will
follow. In such a case a court should decide the issue and not
postpone it.’
[37]
In allowing
the evidence, the trial judge intimated that she would consider what
evidential weight to attach to such evidence later.
But that, with
respect, was to put the cart before the horse because, evidential
weight only falls to be considered in respect
of evidence that is
admissible.
[34]
Needless to say, the onus rested upon the appellants to establish, as
a matter of probability, the conduct complained of on
the part of Mr.
Flusk.
Foundational to the appellants’ claim
is the assertion that Mr. Flusk made an offer to purchase one of the
stands in the property
development on 17 November 2006. The evidence
in this regard is a disputed document purporting to be a signed offer
to purchase
by Mr. Flusk, which was only discovered some two weeks
before the commencement of the trial, which itself had previously
been postponed
almost a year and a half earlier. There appear to me
to be several disquieting features about the document. First, the
document
contained a home telephone number that was several years out
of date and related to Mr. Flusk’s previous residence. Second,

the telephone number contained the prefix 011 at a time prior to the
compulsory ten digit dialling coming into effect. Third, despite
the
fact that Mr. Flusk is married in community of property, none of his
spouse’s details were included on the information
sheet
accompanying the alleged offer. Fourth, unlike other such offers, Mr.
Flusk’s offer was never accepted and although
some speculation
was advanced, no evidence was proffered as to why it was never
accepted. Fifth, the original agreement has never
been produced, nor
its absence adequately explained. Sixth, Mr. Diamond produced two
lists of purchasers – the first list
did not reflect Mr. Flusk
as a purchaser, the second, provided to the mayor later, did.
Seventh, Mr. Diamond initially alleged
that Mr. Flusk had made an
offer in respect of Erf 38, later he corrected that to Erf 4 and
produced a copy of an offer to purchase
in respect of that latter
stand. Eighth, Erf 4 had in any event already been sold to another
buyer in 2007, prior to the alleged
extortion attempt.
[35]
Obviously, if it is accepted – as I think it must be –
that the offer to purchase is not genuine, then it must
follow that
the alleged extortion cannot be sustained. It bears noting that Mr.
Flusk had called for the list of purchasers in
the development in
order to prove that there was an unhealthy relationship between the
developer, on the one hand, and councillors
and officials of the
Municipality, on the other. That being so, it is incomprehensible
that he would have made such a demand in
circumstances where he knew
that he himself had made an offer to purchase and that his name would
feature on the list. There are,
in addition, several probabilities
that point away from the extortion demand having been made.
Prior to the evidence given
by Mr. Diamond, there was simply no
suggestion anywhere on the record as to the alleged extortion attempt
made by Mr. Flusk. This
attempt was also never pleaded in any of the
iterations of the particulars of claim from 2010 to the date of the
trial. In this
regard the first time that Mr. Flusk and the term mala
fides were ever mentioned was in the amendment to the particulars of
claim
in May 2013. Significantly, no mention of this was made in the
High Court application that came before Legodi J. In fact, the
allegation
first saw the light of day some seven years after the fact
during the course of the trial.
[36]
The explanation of Mr. Diamond and Mr. Booysen that they did not want
to complicate the matter with ‘side issues’
or antagonise
Mr. Flusk ring hollow. By the time the review application was
launched, their relationship with Mr. Flusk was already
antagonistic.
Furthermore, when challenged in this regard, they stated that they
had no proof other than Mr. Diamond’s say-so.
That had not
changed by the time of the trial. By then, as Mr. Booysen conceded
under cross examination, the alleged extortion
had gone from being a
side issue to the central issue in the case. By Mr. Diamond’s
own admission, he ought to have lodged
a complaint with the mayor and
speaker.  Had it been raised with them, given the extent of the
impropriety, it may have had
the effect of disqualifying Mr. Flusk
from further participation in the matter. Mr. Diamond suggested that
he could not have reported
the matter because he did not have
‘adequate proof’. Implicit in this is that his mere
say-so did not constitute ‘adequate
proof’. Why he
thought that the proof that was inadequate then had suddenly become
adequate by the time of the trial, is
not explained.
[37]
At the time that the alleged attempt was made, the land transaction
had been the subject matter of a forensic investigation
for at least
six months. A legal opinion had been sought and obtained from
counsel, which was to the effect that the land swap
transaction was
null and void for want of compliance with s 14(2) of the MFMA, which
everyone, including the members of the Municipal
Council, accepted as
correct. In fact it was then accepted by everyone concerned that the
land transaction process had to commence
de
novo
and follow all the procedures set
out in s 14(2) of the MFMA. There was a serious question mark over
the manner in which the land
was alienated – by swap –
which was unique, as opposed to a sale by public tender.
[38]
There was, as well, continuing controversy relating to the value of
the Municipality’s land. The minutes of the Corporate
and Legal
Committee of the Municipality reflect that a further property
valuation was secured, that valued the Municipality’s
land much
higher than the earlier valuation secured at the time of the swap.
Mr. Flusk persisted in demanding lists of purchasers
to demonstrate
the irregularity of the transaction and the ‘closeness’
of councillors and officials to the developer.
Mr. Diamond’s
own evidence was that his reaction to a complaint of misconduct
before the regional office of the ANC, which
he believed Mr. Flusk
had initiated, was that he was disappointed because until then (being
October 2008) he had regarded Mr. Flusk
as a man of integrity. This
evidence is completely at odds with his assertion that some nine
months earlier, Mr. Flusk had been
attempting to extort a free stand
from him under the threat of the misuse of his administrative
authority.
[39] It
is important that the alleged extortion not be allowed to add further
colour to the matter. An alternative case was advanced
before us
founded upon inference. As best as I could discern the argument, the
inference that we were asked to draw is that in
purporting to
withhold the s 82 certificate, Mr. Flusk was motivated by an ulterior
purpose. From the bar in this court, we were
pointed to the following
evidence of Mr. Diamond and other similar passages as proof that Mr.
Flusk was actuated by an ulterior
purpose:
‘
What
took place there? --- The city manager indicated to me that his main
concern was, or amongst his concerns, but his main concern
was my
involvement in the development and that the city manager felt that I
would be benefiting from this development. The city
manager then
indicated to me that should I transfer my shares in the company
[Afropulse] to an NGO of his choice he would immediately
release the
s 82 certificate.’
Mr.
Flusk’s responded to this allegation thus:
‘
What
was Mr. Diamond’s attitude when you confronted him about his
shareholding in Afropulse? --- Well, in fact, the discussion
started
from the unlawfulness of the alienation, and he was saying that it is
water under the bridge and there is nothing that
we can do about it,
other than to implement Council’s resolution in line with his
recommendation to Council. I said “Well,
you are mistaken.
There are a number of things that Council can do to rectify these
issues, particularly based on the opinion of
Wim Trengrove, including
the fact that it is an unlawful alienation and for us to rectify it.”
Mr. Diamond’s involvement,
or benefit through Afropulse? ---
Well, I am aware of what he said, My Lady, so.
Well,
let me put it to you. He said that you wanted him to transfer his
shares to an NGO. --- That is a blatant lie, My Lady, because
he was
saying to me it is water under the bridge. I said to him one of the
things Council can do is to recover, the MFMA allows
the Council to
recover undue profit that has emanated through Council’s
assets, that people unduly benefitted from, in this
case a land
alienation. The MFMA allows us to recover those costs, My Lady.’
Elsewhere,
Mr. Flusk added:
‘
I
am saying to you therefore it is totally irrelevant, it would have
been totally irrelevant whether Mr. Booysens and the township

developers had complied with the services agreement requirements or
anything else, because even if they had fully you would still
not
have issued that certificate. --- I just cannot see My Lady, how they
could have fully complied with the ordinance, because
there cannot be
a delink between the MFMA and the ordinance, for example. So I cannot
see how they could have had full compliance
with the ordinance.’
[40] The
process of inferential reasoning calls for an evaluation of all the
evidence and not merely selected parts. In this context
it is
important to emphasise:
notwithstanding Mr.
Booysen’s say-so that by 15 December 2007 all requirements had
been met and the s 82 certificate should
have been issued thereafter,
as at March 2008, when the high court application was launched, the
external sewer connection was
yet to be finalised. Mr. Groenewald,
the chief engineer for water and sanitation in the Municipality
testified:
‘
And
the date of his signature, can you identify that date? --- That one
was the 19
th
of August 2008.
Can
you tell us why Mr Pierson appears to have signed it only on the 19
th
of August 2008 and not in May 2008? --- My Lady, during an inspection
held on the internal network constructed, they found that
a sewer
line on the . . . just north of the southern boundary of Extension
10, had a back fall on and it was not correct and Craig
did not sign
it, because we asked them to rectify that back fall on the sewer,
before he can sign this.’
Mr.
Flusk’s evidence (irrespective of whether it might be
objectively determined that he was right or wrong in his belief)
was
that he was acting in the best interests of the municipality. One
gains the impression that having received a complaint from
national
government arising from a tipoff in relation to a land transaction,
as the accounting officer, he felt obliged to investigate
those
allegations. He appointed investigators who, again whether rightly or
wrongly, questioned the propriety of the transaction
and its value. A
legal opinion was obtained, and accepted as correct, that the land
transaction was tainted by invalidity and was
a nullity and that the
council had to reconsider the matter. The Municipal Council accepted
the legal opinion as correct and required
a process of ratification,
which, according to the legal opinion, could not amount to a mere
rubberstamping of the transaction.
[41]
The issuing of a s 82 certificate in those circumstances, even if it
were to be accepted that all the other requirements had
been met, may
have resulted in the land being transferred to third parties despite
invalidity for non-compliance with the provisions
of s 14(2) of the
MFMA. Even Mr Leibbrand accepted:
‘
I
just want to you to comment on this, is it not correct that the
moment you give a s 82 Certificate, that is the last bar that
stops
transfer happening in the Deeds Registry, that is why Mr. Booysen
wanted them? Are you aware of that? --- Ja, that is my
understanding.
On
the one hand Mr. Flusk is now launching . . . he also has in his mind
to launch a mission against setting aside this land transaction,
but
he also knows that if he issues a s 82 Certificate, setting aside the
land swop is going to be very difficult because now you
have got
hundreds of other people who just bought the land, and taken transfer
from Mr. Booysen’s company. From a managerial
practical
perspective do you see that difficulty? --- That My Lady, is a . . .
if you look at what comes first and what follows
in terms of that, I
think that is a valid argument. That he would like to first deal with
the actual transaction. My only concern
was it took very long to get
that point and then who was consulted, and whether we should have
actually cancelled the transaction
based on what? That was my only
concern, but dealing with that point first, I agree.’
[42] Any inference sought to be drawn
must be 'consistent with all the proved facts: If it is not, then the
inference cannot be
drawn’, moreover, ‘it must be the
“more natural, or plausible, conclusion from amongst several
conceivable ones'
when measured against the probabilities.
[38]
In this respect, it is important to distinguish inference from
conjecture or speculation.
[39]
Here, Mr. Diamond, a councillor in the Municipality, stood to make a
substantial profit. He was entitled to a fixed percentage
of three
per cent (of
an estimated R 181 million)
described
in the agreements as an ‘agent’s commission’. Those
agreements were prohibited by the Ordinance. In
these circumstances,
the city manager, as the accounting officer of the Municipality, had
good cause for concern. I am accordingly
not persuaded that when the
evidence is viewed in its proper context, it can be concluded by a
process of inferential reasoning
that Mr. Flusk was actuated by an
ulterior purpose. In any event, having found that the extortion does
not survive scrutiny, precisely
what that purpose is, remains
unclear.
[43]
The principal complaint of the appellants is that they have suffered
pure economic loss, for the most part, in being deprived
of
investment opportunities by reason of the delay in the issuance of
the s 82 certificate. For this, they seek to hold the respondent

vicariously liable. Throughout the period of the delay, the
appellants were, on their own version, fully aware of the alleged
extortion attempt and true motivation for Mr. Flusk’s actions
but kept this to themselves. They permitted Mr. Flusk to continue
to
broadcast his ostensible honesty to his employers. In the light of
these facts, to hold the respondent liable on the basis of
vicarious
liability when the appellants could have but
failed,
to afford the respondent the opportunity of remedying the wrong
complained of, may well be to impose an additional unwarranted
burden
on the respondent.
[40]
Basic
notions of fairness would have required the appellants to raise their
voices in complaint against the alleged conduct of Mr.
Flusk and to
afford the Municipality an opportunity of dealing with it. To shroud
his alleged dishonesty in secrecy for as long
as they did, and to
thereafter seek to hold his employer liable in damages, may well be
antithetical to notions of decency and
fairness.
[44]
The considerations of legal and public policy alluded to above
compel me to the conclusion that the Municipality did not act
wrongfully
in the delictual sense and was not in breach of any legal
duty
owed by it to the appellants.  That
means that the Municipality enjoys immunity against liability for
damages resulting from
the conduct complained of.
This
conclusion makes it strictly unnecessary to consider the further
contentions debated before us in argument. However, for the
sake of
completeness and particularly because causation also poses certain
difficulties for the appellants, I shall briefly touch
on that issue.
[45]
Causation involves two
distinct enquiries.
[41]
The first is a factual one and relates to the question as to whether
the defendant's wrongful act was the cause of the plaintiff's
loss.
The enquiry as to factual causation is generally conducted by
applying the so-called ‘but-for’ test. The
second enquiry
then arises, namely whether the wrongful act is linked sufficiently
closely or directly to the loss for legal liability
to ensue or
whether, as it is said, the loss is too remote. In this regard it is
important to recognise that broadly speaking wrongfulness
and
remoteness perform the same function. They are both measures of
control.
[42]
[46]
The summons particularised each of the appellants’ claims as
follows:
‘
First
plaintiffs claim:
7.
During approximately January 2006, first plaintiff applied for the
approval of
township development on first plaintiff’s property
aforesaid.
8.
The development was called Extension 7 of Meyersdal Nature Estate and
comprised
a mix of residential and office development on three erven
and was to comprise a townhouse development on two erven and an
office
block on the third erf.
9.
Defendant duly approved the establishment of the aforesaid township.
.
. .
11.
By December 2007, first plaintiff had either fully installed all of
the required engineering
services or had furnished proper guarantees
for the completion of outstanding items.
.
. .
13.
By December 2007, first plaintiff had accordingly satisfied all the
requirements for the
issue by Defendant of a certificate under s 82
of the Ordinance.
.
. .
16.
In the reasonable and legitimate expectation that a s 82 certificate
aforesaid would be
issued and that the building plans would
subsequently be formally approved:
16.1
First plaintiff, in January 2008, commenced with the erection of the
office block on Erf 392, which
was completed during or about the end
of September 2008.
16.2
First plaintiff, in January 2008, commenced with the erection of 47
townhouses on Erf 390, which was
completed during or about the end of
June 2008.
17.
Notwithstanding repeated demands by first plaintiff, which demands
were both oral and in
writing, defendant failed or refused to issue
the required s 82 certificate with the consequence that the building
plans were also
not formally approved.
23.
If it had not been for the
mala fide
conduct aforesaid:
23.1
The building plans in respect of the office block erected on Erf 392
would have been approved;
23.1A
Construction of the office block would have commenced by
approximately mid-February 2008 and would have been completed
by
approximately the end of September 2008.
23.2
The building plans in respect of the 47 townhouses erected on Erf 390
would have been approved;
23.2A
Construction of the 47 townhouses would have commenced by
approximately mid-February 2008 and would have been
completed by
approximately the end of June 2008;
23.3
An occupation certificate would have been issued in respect of both
the office block and the 47 townhouses
aforesaid on the completion
dates aforesaid;
23.4
First plaintiff would have transferred the land (i.e. Erf 392), by
then already sold, and would have
invested the proceeds in an
interest-bearing investment by no later than 1 March 2008;
23.5
First plaintiff would have transferred the land (i.e. Erf 390), by
then already sold, and would have
invested the proceeds in an
interest-bearing investment by no later than 1 March 2008;
23.6
First plaintiff would have been able to sell Erf 391 and to invest
the proceeds in an interest-bearing
investment by no later than 1
March 2008;
23.7
First plaintiff, on completion of the office block, would have been
refunded the construction costs
of the office block aforesaid in
terms of an oral agreement with the purchaser of the land (Erf 392)
and would have invested such
refunded amount in an interest-bearing
investment by no later than end September 2008;
23.8
First plaintiff, on completion of the 47 townhouses, would have been
paid the aggregate of the selling
prices of the 47 townhouses by then
already sold, less the price of the land in terms of an oral
agreement with the purchaser of
the land (Erf 390) aforesaid and
would have invested such amount in an interest-bearing investment by
no later than end June 2008.
24.
As a direct result of Defendant’s conduct aforesaid:
24.1
The required s 82 certificate was delayed from December 2007 until 20
March 2009 and the formal approval
of the building plans was
similarly delayed.
24.2
First plaintiff was precluded from transferring Erf 392, from
receiving the proceeds of the sale and
from investing such proceeds
as aforesaid until 13 July 2009.
24.3
First plaintiff was precluded from transferring Erf 390, from
receiving the proceeds of the sale and
investing it as aforesaid
until July 2009.
24.4
First plaintiff was, for the period 1 March 2098 to 30 June 2009,
precluded from selling Erf 391 and
from investing the proceeds in an
interest-bearing investment.
24.5
First plaintiff was in law obliged to pay the rates and taxes in
respect of all three erven for the
period from when transfer would
ordinarily and otherwise have been effected of the three erven into
the names of the purchasers
(new owners) until the dates when after
the eventual issue of the s 82 certificate, transfer could reasonably
be effected into
the names of the purchasers.
24.6
First plaintiff was precluded from receiving the refund of the
construction costs relating to the office
block aforesaid and from
investing it as aforesaid until 13 July 2009.
24.7
First plaintiff was precluded from receiving the aggregate of the
selling prices of the 47 townhouses
until July 2009.
25.
As a result of the defendant’s
mala
fide
conduct
aforesaid and the consequences thereof as set out above, first
plaintiff suffered damages in an amount of R10 406 058

calculated as set out in annexure “A” hereto.
Second
plaintiff’s claim:
‘
28.
During approximately January 2006, second plaintiff applied for the
approval of a township development
on second plaintiff’s
property aforesaid.
29.
The development was called Extensions 9, 11 and 12 of the Meyersdal
Nature Estate and comprised
a residential township development
consisting of 289 erven.
30.
Defendant duly approved the establishment of the township.
.
. .
41.
If it had not been for the
mala fide
conduct and resultant
delay aforesaid, second plaintiff would have been able:
41.1
To effect transfer of all 289 erven to the purchasers, alternatively,
and to the extent that the existing
concluded deeds of sale were void
and the purchasers were not prepared to proceed with the
transactions, to sell all the erven
and to effect transfer thereof
into the names of the purchasers;
41.2
To receive payment of the purchase price of each erf at the then
total market value for all the erven
of R181 475 000; and
41.3
To invest the proceeds in an interest-bearing investment by no later
than 1 March 2008.
42.
As a direct result of the defendant’s
mala fide
conduct
aforesaid:
42.1
Second plaintiff was, for the period 1 March 2008 to 30 June 2009,
precluded from effecting transfer
of 289 erven into the names of the
purchasers and from receiving the proceeds from the sales.
42.2
As a result of the delay aforesaid, second plaintiff suffered a loss
of interest on the sum of R181 475 000
for the period 1
March 2008 to 30 June 2009.
42.3
Second plaintiff was only able to effect transfer and so to realise
the proceeds of the development
substantially later, by which time
the market value was at least 10% lower than what it was and what
plaintiff would have received
had it not been for the delay
aforesaid.
42.4
Second plaintiff accordingly suffered a loss, the equivalent of the
10% drop in market value, in the
amount of R18 147 500.
42.5
Second plaintiff, in addition, suffered a loss in that second
plaintiff was obliged to continue paying
rates and taxes in respect
of the 289 erven over the period of delay until transfer was in each
case given to the new purchaser,
which rates and taxes would
otherwise have been payable by the new owners had there not been a
delay as aforesaid.
43.
As a result of the defendant’s
mala
fide
conduct
aforesaid and the consequence thereof as set out above, second
plaintiff suffered damages in the amount of R47 667 975

calculated as set out in annexure “C” hereto.
Third
plaintiff’s claim:
44.
At all times relevant hereto and during the period 1 October 2007 to
21 March 2009, third
plaintiff was the owner of Portions 281 and 283
(portions of Portion 153) of the farm Klipriviersberg 106 (“third
plaintiff’s
property”).
45.
Third plaintiff’s property aforesaid fell within the municipal
area of defendant.
46.
During approximately January 2006, third plaintiff applied for the
approval of a township
development on third plaintiff’s
property aforesaid.
47.
The development was called Extension 8 and 10 of Meyersdal Nature
Estate and comprised a
high density residential township development.
48.
Defendant duly approved the establishment of the township.
49.
The township register was thereafter duly opened by the Registrar of
Deeds.
50.
Notwithstanding notification by the Registrar of Deeds that the
township register had been
duly opened, defendant failed to cause the
aforesaid townships to be proclaimed as such in terms of Section 103
of the Ordinance.
51.
Defendant’s Chief Engineer had, during the course of 2007,
taken a decision that Extensions
7 to 12 be regarded as one for
purposes of the installation of services.
52.
As a result of the
mala fide
conduct set out in paragraphs 19
to 22 . . . above, it was clear that even if Extensions 8 and 10 were
duly proclaimed, the said
Flusk would similarly refuse to issue the s
82 certificates in regard to Extensions 8 and 10.
53.
In order to mitigate its damages, third plaintiff did not take any
steps to compel proclamation
by defendant of Extensions 8 and 10 as
such proclamation would have resulted in third plaintiff becoming
liable for the payment
of rates and taxes on all of the erven in the
proclaimed townships from date of proclamation onwards, under
circumstances where
the third plaintiff would, as in the case of
Extensions 7, 9, 11 and 12, not have been able to obtain the
necessary Section 82
certificates so as to enable it to effect
transfer to any purchaser.
54.
If it had not been for the
mala fide
conduct aforesaid:
54.1
The township would have been proclaimed by 1 October 2007,
alternatively by 15 December 2007.
54.2
All requirements for the issue of a s 82 certificate would have been
complied with by third plaintiff
by 15 December 2007.
54.3
The s 82 certificate would have been issued by 31 December 2007.
54.4
Third plaintiff would have been able to sell the land at the then
market value to effect transfer and
to invest the proceeds in an
interest-bearing investment, all of which would have happened by no
later than 1 March 2008.
55.
As a direct result of the defendant’s
mala fide
conduct
aforesaid:
55.1
There was such a delay with the proclamation of the township that by
the time that defendant indicated
that it was not prepared to
proclaim the township the property market experienced such a collapse
that the development was no longer
economically viable.
55.2
The third plaintiff was precluded from selling and effecting transfer
of land sold and from receiving
and investing the proceeds of sales
as otherwise would have happened.
55.3
The third plaintiff was for the period 1 March 2008 to at earliest 30
June 2009 precluded from investing
such proceeds of sales which
otherwise would have happened.
55.4
The third plaintiff consequently suffered a loss equivalent the loss
of interest which third plaintiff
would have received from such
investment.
55.5
The third plaintiff in addition suffered a loss as a result of at
least a 10% drop in market value
of land in the development
aforesaid.
56.
As a result of the Defendant’s
mala
fide
conduct aforesaid, and the consequence thereof as set out above,
third plaintiff suffered damages in the sum of R10 625 330

calculated as set out in annexure “D” hereto.’
[47]
The appellants’ pleaded case rests on several assumptions. As I
see it, at core, many of the wounds for which the appellants
seek to
hold the Municipality liable are self-inflicted.
The
first appellant’s claim was predicated on the fact that it was
kept out of its money as a result of the delay in selling
the 47
townhouses and letting the office block. According to Mr. Booysen, in
the expectation of the grant of the s 82 certificate,
he went out to
tender for the construction of the 47 residential townhouses and the
office block of approximately 5000 square meters.
When the s 82
certificate did not issue as he had anticipated, he simply decided to
proceed with the construction. At that stage
the building plans had
been submitted but had not yet – and could not – have
been approved, until the s 82 certificate
had issued.
[48]
But, it gets worse for the first appellant. Under cross examination,
Mr. Booysen admitted that in terms of an internal company
arrangement
it was not the first appellant, but rather two sister companies, that
would be entitled to the rental for the office
block and the purchase
price flowing from the sale of the 47 townhouses. In re-examination
it emerged that: (a) the first related
company, Chestnut Hill
Investment 213 (Pty) Ltd (Chestnut Hill) had purchased Erf 390, on
which the 47 townhouses were to be built,
from the first appellant on
8 November 2006 for the sum of R 7 million; and (b) the second
related company, Armadillo Developments
505 (Pty) Ltd (Armadillo),
had purchased the stand on which the office block was to be built
from the first appellant on 21 August
2007 for the sum of R 10
million. The first appellant’s claim thus changed from its
amended form
to
belatedly allege that it suffered loss in two forms: first, as a
result of the delay in the implementation of the land sale agreements

to Chestnut Hill and Armadillo; and, second, the delay in recovering
remuneration in respect of construction contracts with those
two
companies to erect the townhouses and office block. Both sale
agreements were concluded after the application for the establishment

of the township but prior to its proclamation as such in terms of s
103 of the Ordinance.
[43]
Accordingly,
both sale agreements fall foul of and are contrary to the provisions
of s 67 of the Ordinance.
[44]
The claim of
the first appellant is to be put in the same position that it would
have been in had the illegal and void agreements
been timeously and
properly performed.
[45]
The mere
expression of the proposition demonstrates its absurdity.
[49]
Insofar as the second appellant is concerned, Mr. Diamond testified:
‘
And
those cancellations as far as those properties are concerned, where
they, to what extend were they successfully resold to other

purchasers? --- My Lady, all properties were resold. The reality,
however was, that the total marketing environment change from
2006 to
2009. There was a global crash of the property market in late 2008 in
the US and in Europe, it resulted in South Africa
with the credit
crunch in 2009, so where credit was easily available and people could
very comfortably afford properties and buy
property and invest in
real estate. This resulted in 2009 that we sat with 110 properties
approximately that was very difficult
to sell. I think our marketing
exercise took us more than a year to conclude sale agreements on
those 110 properties. My Lady,
it was so difficult for our company to
actually sell these properties that we solicited the services of
other agents within our
area and in surrounds to participate and join
us in our marketing effort and we threw the net as far as wide as
possible to ensure
that we could sell these properties.
Notwithstanding, My Lady, there were many purchasers that could not
conclude transactions
due to credit that was not available to them
anymore and it was a very tough market environment in 2009, My Lady.’
However,
both Mr. Booysen and Mr. Diamond conceded that the sales of the
stands foundational to the second appellant’s claim
occurred in
contravention of s 67(1) of the Ordinance. Both were aware of the
prohibition. In that regard Mr. Booysen testified:
‘
It
is your right to decline any question which may intend to incriminate
you. Mr. Booysen, I am sure as an attorney you are aware
of that. The
other aspect, while we are on your agreement, you referred to as a
pretty harsh deposit clause, where the standard
term is that a
deposit must be paid, and it is a non-refundable deposit. --- That is
correct, My Lady.
Not
only is the deposit payable, but it is to be kept in an attorney’s
trust account, and into an interest bearing one in
terms of  s
78(2)(A) of the Attorney’s Act, and the interest is to accrued
for the developer, the seller, not for the
purchaser who pays the
deposit. --- That is correct, My Lady. My Lady, if I can just mention
while we are on the clause, I do not
think that that clause is in any
way ambiguous or that any purchaser who buys from us is confused on
what the provisions of that
clause is. So, I do not think any
purchaser is being misled by that clause. They know exactly what is
meant. So, I am not sure
what Mr Peter’s inference is by
confirming the provisions of that clause. There is no
misunderstanding if I read it, and
apparently so when Mr. Peter reads
it, there is no misleading statement in that, My Lady.
I
am just pointing out what your agreement provides, Mr. Booysen. ---
Thank you, Mr Peter.
But,
nowhere in s 19 is there any suggestion that consent was obtained.
You agree with that. --- My Lady . . . [intervene].
Clause
19 agreement. --- My Lady, I am advised that Clause 19 complies with
s 70, and I do not want to further be asked.’
Like
Mr. Booysen, when being cross examined about these agreements, Mr.
Diamond also chose not to answer questions that might incriminate

him.
[50]
Clause 2.1 of the agreement signed by prospective purchasers
reads:
‘
On
date of signature hereof by the Purchaser, the Purchaser shall pay in
full a non-refundable deposit of R40,000 (Forty Thousand)
which shall
be paid to the Seller’s conveyancers and will be invested in an
interest bearing trust account, interest to accrue
to the Seller, in
terms of Sec 78(2A) of the Attorneys Act.’
And,
clause 19.1.1 of the agreement provided:
‘
It
is recorded that the erfs are not registerable at present as the
township has not been proclaimed and the purchaser undertakes
not to
cancel the agreement at any stage, despite the provisions of s 67 of
the Township and Town Planning Ordinance 15 of 1985.’
Those
clauses appear to me to be inimical to the interests of the community
and may well be contrary to public policy.
[46]
But, it is
not necessary to dwell on this because, as with the first appellant,
these agreements are also
contra
legem
.
[51]
The third appellant’s claim stands on a slightly different
footing – it is founded on a depreciation of the value
of the
stands in an unproclaimed township. The wrongful act complained of
appears to be what can only be described as the inadvertent
failure
by the Municipality to proclaim the townships in respect of Ext 8 &
10 at the same time that the other townships were
proclaimed. It is
difficult to see the causal nexus between the failure to proclaim the
township, the s 82 certificate and the
asserted loss. Absent
proclamation, the third appellant was not entitled to a s 82
certificate. No doubt that is the reason why
the failed review
application that came before Legodi J did not relate at all to
Hometalk or Ext 8 & 10. What is more is that
Mr. Booysen chose
not to insist on the township being proclaimed because, he then
considered it financially advantageous not to
do so. In that regard
he testified:
‘
Okay.
But, your evidence was different. Your evidence was they did not
proclaim the township, nobody knows why it was not proclaimed
at this
same time as the other townships. But, you did not push the issue
because you did not want to incur rates and taxes while
you were
fighting with Mr Flusk. --- That was my evidence, My Lady.’
[52]
Applying the test formulated by Corbett CJ in
International
Shipping v Bentley,
I am by no means
persuaded that the conduct complained of was indeed the cause of the
appellants’ asserted loss. For this
reason as well, no legal
liability can arise.  But, even
assuming factual
causation in the appellants’ favour, serious difficulties with
remoteness remain.
Mr. Diamond testified:
‘
And
you will also agree with me that nobody saw the global financial
crises coming? --- Definitely not me, My Lady. You an expert
in the
[indistinct]. Okay, any other estate agents you know of, or property
experts that could see this crash coming, is going
to wack the South
African property market so badly? --- My Lady, if the US financial
gurus on Wallstreet did not see it coming
there was no ways that the
best of the best that we have locally would have envisaged that, My
Lady.’
It goes
without saying that the vicissitudes of markets are notoriously
difficult to foresee.
[53]
In the result, I would accordingly dismiss the appeal with
costs, such costs to include those consequent upon the employment of
two counsel.
______________
V
M Ponnan
Judge
of Appeal
Schippers
AJA (Majiedt JA concur):
[54]
I have had the advantage of reading the judgment of my colleague
Ponnan JA. I agree with it for the reasons he has given. I
wish
however, to add the following observations. First, the appellants
have not established causation: that the withholding of
the relevant
certificates in the circumstances, caused them to suffer loss.
Second, they have not proved damage: a basic
element of a delictual
action.
[55]
The appellants’ case, in summary, is this. By December 2007,
they had satisfied all the requirements for the issue of
certificates
under s 82 of the Town Planning and Townships Ordinance No 15 of 1986
(the Ordinance). The respondent, acting through
its City Manager, Mr
Patrick Flusk, wrongfully, intentionally and mala fide, or motivated
by a mala fide or ulterior purpose, delayed
the issue of the s 82
certificates from 15 December 2007 until 20 March 2009, which caused
the appellants to suffer economic loss.
Causation
[56]
In
Skosana
,
[47]
Corbett JA said:
‘
Causation
in the law of delict gives rise to two rather distinct problems. The
first is a factual one and relates to the question
whether the
negligent act or omission in question caused or materially
contributed to . . . the harm giving rise to the claim.
If it did
not, then no legal liability can arise and
cadit quaestio
. If
it did, then the second problem becomes relevant, viz. whether the
negligent act or omission is linked to the harm sufficiently
closely
or directly for legal liability to ensue or whether, as it is said,
the harm is too remote. This is basically a juridical
problem in
which considerations of legal policy may play a part.’
[57]
This court has held that the test for legal causation, ‘is a
flexible one in which factors such as reasonable foreseeability,

directness, the absence or presence of a
novus
actus interveniens
,
legal policy, reasonability, fairness and justice all play their
part’.
[48]
In
Fourway
Haulage
,
[49]
Brand JA cautioned that these factors, ‘should not be applied
dogmatically, but in a flexible manner so as to avoid a result
which
is so unfair or unjust that it is regarded as untenable’.
[58]
It is settled that a plaintiff needs ‘only to establish that
the wrongful conduct was probably a cause of the loss, which
calls
for a sensible retrospective analysis of what would probably have
occurred, based upon the evidence and what can be expected
to occur
in the ordinary course of human affairs rather than an exercise in
metaphysics’.
[50]
[59]
The first appellant claims that it has suffered economic loss of some
R10 million, comprising largely interest it would have
earned on
investments. The particulars of claim state that but for the mala
fide conduct of Mr Flusk, the first appellant would
have transferred
Erf 390 and Erf 392; and it would have received a refund of the
construction costs of an office block erected
on Erf 392 and the
aggregate of the selling prices of 47 townhouses erected on Erf 390.
It would have invested the proceeds from
the sales of these erven,
the aggregate of the selling prices of the townhouses, the refund of
the construction costs and the proceeds
from the sale of Erf 391, in
an interest-bearing investment. As a result of the mala fide conduct
on the part of the respondent,
the first appellant was precluded from
doing so and was obliged to pay rates and taxes on Erf 390, Erf 391
and Erf 392, between
the date on which transfer would ordinarily have
taken place and the date on which transfer could reasonably be
effected into the
names of the purchasers, after the s 82
certificates were issued.
[60]
The respondent denied these allegations and pleaded that the first
appellant entered into the relevant agreements of sale prior
to
publication of a notice under s 103 of the Ordinance, in terms of
which a township is declared an approved township,
[51]
in contravention of s 67 thereof.
[61]
Mr Sydney Rean Booysen, an attorney and a director of the first and
second appellants, testified that in January 2006 he submitted
an
application, in terms of s 96 of the Ordinance, for the establishment
of a township known as ‘Meyersdal Nature Estate
Extension 7’.
One application, called ‘Extension 7’, was submitted,
which encompassed Extensions 7, 8, 9, 10,
11 and 12; and  it
stated that the township would be phased in, as shown on the layout
plan. The township comprised,
inter alia, a total of 296 residential
1 stands in respect of Extensions 7, 8, 9, 11 and 12; and one office
stand, and high density
sites (on which townhouses could be built) on
Extension 7. Extensions 7, 9, 11, and 12 were proclaimed as approved
townships. Mr
Booysen said that he did not know why Extensions 8 and
10 had not been declared approved townships simultaneously with the
other
Extensions, but he did not insist on those declarations,
because then the third appellant would have been liable for rates and
taxes, which it wanted to avoid. I revert to these aspects below.
[62]
It is common ground that prior to proclamation of the township on 1
October 2007 in terms of s 103 of the Ordinance, the first
appellant
sold Erf 390, on which the 47 townhouses were built, and Erf 392. Mr
Booysen testified that Erf 390 had been sold to
Chestnut Hill
Investments 213 (Pty) Ltd (Chestnut Hill) in November 2006; and Erf
392, to Armidillo Developments 505 (Pty) Ltd
(Armidillo) in August
2007. Mr Neil Diamond, a director of the second appellant, said that
there were some 300 stands in the whole
development; that by November
2006, 90 per cent of these stands had been sold; that by January
2007, all had been sold; and that
all these sales were done in
contravention of the Ordinance. The first appellant’s claims
for economic loss arise from these
contracts: it would have invested
the proceeds and earned interest on those amounts.
[63]
Section 67 of the Ordinance reads:
‘
Prohibition
of certain contracts and options:-
(1) After an owner of land has
taken steps to establish a township on his land, no person shall,
subject to the provisions of section
70-
(
a
)
enter into any contract for the sale, exchange or alienation or
disposal in any other
manner of an erf in the township;
(
b
)
grant an option to purchase or otherwise acquire an erf in the
township, until such
time as the township is declared an approved
township: Provided that the provisions of this subsection shall not
be construed as
prohibiting any person from purchasing land on which
he wishes to establish a township subject to a condition that upon
the declaration
of the township as an approved township, one or more
of the erven therein will be transferred to the seller.
(2)
Any contract entered into in conflict with the provisions of
subsection (1) shall
be of no force and effect.
(3)
Any person who contravenes or fails to comply with subsection (1)
shall be guilty
of an offence.
(4)
For the purpose of subsection (1)-
(a)
“
steps”
includes steps preceding an application in terms of section 69(1) or
96(1);
(b)
“
any
contract” includes a contract which is subject to any
condition, including a suspensive condition.’
[64]
Section 70 of the Ordinance permits an owner of land who has applied
to establish a township, to apply to the Director (an
officer in the
provincial government designated to perform functions under the
Ordinance) to enter into a contract or grant an
option contemplated
in s 67(1), prior to proclamation of a township as an approved
township. Section 70 points to the manifest
purpose of s 67 of the
Ordinance: to protect members of the public from buying an erf in an
unproclaimed township; and to ensure
that township owners provide
appropriate guarantees for the installation of the requisite
engineering services contemplated in
Chapter V of the Ordinance,
before selling any erf in that township.
[52]
[65]
None of the appellants applied to the Director, in terms of s 70 of
the Ordinance, for permission to enter into any contract
prior to the
proclamation of Extensions 7, 9, 11, and 12 as townships. Indeed,
when cross examined as to whether the appellants
obtained such
consent, Mr Booysen declined to answer any further questions
regarding s 67 or 70 of the Ordinance, because, as he
put it, he was
‘not on trial for [not] complying with Section 67 or with
Section 70’. However, Mr Booysen was aware
of these provisions.
So too, Mr Diamond. He said that since he became an estate agent, 22
years before the trial, he knew that
s 67 of the Ordinance
prohibited the sale of erven in an unproclaimed township, but that
its disregard is ‘common practice
within the real estate
industry.’
[66]
Contracts concluded in conflict with a statutory prohibition are
generally void. A classic statement of the position was given
by
Innes CJ in
Schierhout
:
[53]
‘
It
is a fundamental principle of our law that a thing done contrary to
the direct prohibition of the law is void and of no effect
. . . So
that what is done contrary to the prohibition of the law is not only
of no effect, but must be regarded as never having
been done . . . ’.
[67]
The plain wording, context and purpose of s 67 of the Ordinance,
[54]
make it clear that where, as in this case, any contract of sale
entered into in respect of any erf in a township which has not
been
declared an approved township, is a nullity. The language of s 67(2)
is unambiguous and places it beyond question that invalidity
was
intended: such a contract shall be of no force and effect; and any
person who enters into the contract, is guilty of an offence.
[68]
It follows that the contracts of sale in respect of Erf 390 and Erf
392 - entered into in November 2006 and August 2007, respectively,

are null and void because they were concluded in violation of s 67(1)
of the Ordinance. So too, the contracts of sale in respect
of some
300 townhouses - the bulk of which were entered into by November 2006
and by latest, January 2007. The first appellant’s
case is that
it would have deposited the income derived from all these illegal
contracts into interest-bearing investments. But
the illegal
contracts must be regarded as never having been concluded.
[55]
That being so, any conduct on the part of Mr Flusk, even if it were
mala fide, logically, could have no effect on a contract which
the
law regards as never having been entered into. Put differently, the
demand by Mr Flusk in 2008 for a free stand in the township;
or that
Mr Diamond transfer his shares in the second appellant to a
non-governmental organisation, is not the factual cause of
the first
appellant’s loss: it did not contribute, let alone materially
contribute, to the first appellant’s loss.
[69]
And it is no answer to say that the first appellant entered into the
illegal and void contracts in anticipation that the respondent
would
issue the s 82 certificates in respect of Extensions 7, 9, 11, and
12. If this Court were to uphold such an argument it would
not only
render s 67 of the Ordinance nugatory, but this Court would also give
legal sanction to a claim founded on a transaction
that the lawgiver
has expressly prohibited. This, it cannot do. In our democratic order
the courts have a duty to apply and enforce
legislation.
[56]
[70]
In
Pottie
,
[57]
Fagan JA said:
‘
The
usual reason for holding a prohibited act to be invalid is not the
inference of any intention on the part of the Legislature
to impose a
deterrent penalty for which it has not expressly provided, but the
fact that recognition of the act by the Court will
bring about, or
give legal sanction to, the very situation which the Legislature
wishes to prevent
.
’
[71]
In
Cool
Ideas
,
[58]
a majority of the Constitutional Court held that a court of law
cannot be expected to disregard a clear statutory prohibition;
and
recognition by a court of a statutory prohibition backed by a
criminal sanction, would be contrary to public policy and amount
to
sanctioning an illegality, which is inimical to the principle of
legality and the rule of law.
[72]
Consequently, recognition of the first appellant’s claims for
loss of interest, founded squarely on contracts concluded
in
violation of an express statutory provision which declares those
contracts to be of no force and effect, would result in the
court
lending its aid to the enforcement of illegal acts.
[59]
[73]
This brings me to legal causation: whether the mala fide conduct on
the part of the respondent is linked sufficiently closely
or directly
to the first appellant’s economic loss, for legal liability to
ensue. This issue is also referred to as remoteness
of damage.
[60]
As was said in
Fourway
Haulage
:
[61]
‘
In
the final analysis, the issue of remoteness is again determined by
considerations of policy. Broadly speaking, wrongfulness -
in the
case of omissions and pure economic loss - on the one hand and
remoteness on the other, perform the same function. They
are both
measures of control. They both serve as a ‘longstop’
where most right-minded people, including judges, will
regard the
imposition of liability in a particular case as untenable, despite
the presence of all other elements of delictual liability.’
[74]
Likewise, in
Country
Cloud
,
[62]
the Constitutional Court said:
‘
So
the element of wrongfulness provides the necessary check on liability
in these circumstances. It functions in this context to
curb
liability and, in doing so, to ensure that unmanageably wide or
indeterminate liability does not eventuate and that liability
is not
inappropriately allocated. But it should be noted - and this was
unfortunately given little attention in argument - that
the element
of causation (particularly legal causation, which is itself based on
policy considerations) is also a mechanism of
control in pure
economic loss cases that can work in tandem with wrongfulness.’
[75]
The appellants’ claims fail on this basis also. A strong policy
consideration which militates against the imposition
of liability in
this case, is that the economic loss is inextricably linked to acts
done in direct contravention of a statutory
prohibition, backed by a
criminal sanction. This in itself, in my view, negates legal
causation and should non-suit the first and
second appellants. Apart
from this, the mala fide conduct on the part of the respondent is not
linked sufficiently closely or directly
to the loss that the
appellants are alleged to have suffered. And the relationship between
the respondent and the appellants is
not sufficiently proximate:
under the Ordinance, a municipality’s duties are overwhelmingly
public in nature; and those duties
are to the public at large and not
to an individual developer. Indeed, the Ordinance imposes no explicit
duties on a municipality
to a property developer. Further, the loss
is of such a kind that it was not reasonably foreseeable to a person
in the position
of the respondent, a local authority - a lost
opportunity of making an investment in an interest-bearing account,
because an official
in its employ withheld a document; and, in the
case of the second and third appellants, reduction in the value of
property on account
of a global financial crisis which nobody saw
coming. In the circumstances, the imposition of liability on the
respondent would
not only be untenable, but also give rise to
indeterminate liability.
[76]
The first appellant’s claim for interest relating to the
construction costs of an office block on Erf 392 likewise cannot

succeed, because it is directly founded on an act performed in
violation of the law. The particulars of claim state that but for
Mr
Flusk’s mala fide conduct, the building plans for the office
block would have been approved; and its construction would
have
commenced by mid-February 2008 and been completed by the end of
September 2008. On completion of the office block, the first

appellant would have been refunded the construction costs thereof in
terms of an oral agreement with the purchaser of Erf 392;
and would
have invested the refunded amount in an interest-bearing investment
by the end of September 2008. The respondent pleaded
that the
appellants were precluded from relying on these facts to claim
damage, because their conduct was contrary to s 4 of the
National
Building Regulations and Building Standards Act 103 of 1977 (the
Building Regulations and Standards Act).
[77]
It is common ground that construction of the office block commenced
in January 2008, without building plans having been approved
by the
respondent. Section 4(1) of the Building Regulations and Standards
Act provides that no person shall erect any building
in respect of
which plans and specifications are to be drawn and submitted under
the Act, without prior written approval of the
local authority
concerned. Section 4(4) makes it clear that any person who erects a
building in contravention of s 4(1) is
guilty of an offence and
liable on conviction to a fine not exceeding R100 for each day of
illegal construction of the building.
A contract in violation of a
statute which imposes a criminal sanction is void.
[63]
So, any refund of construction costs would have been made pursuant to
actual construction undertaken in contravention of the Building

Regulations and Standards Act. As already stated, a court cannot
sanction a claim which arises from a flagrant violation of the
law.
[78]
It follows that the argument of Mr Maritz, who with Mr de Koning
appeared for the appellants, that the contracts entered into
in
contravention of s 67 of the Ordinance, and the Building Regulations
and Standards Act, are ‘technically unlawful’
and that
the court should adopt a ‘pragmatic approach’ to the
appellants’ claims for damage because the illegal
contracts
were completed after proclamation of the township, is untenable.
[79]
In any event, the first appellant presented no evidence of any
construction agreement showing the construction costs which
allegedly
would have been refunded to the purchaser of Erf 392, or of any loss
occasioned by the delay in receiving payment pursuant
to such an
agreement, aside from Mr Booysen’s say-so in re-examination,
when the appellants presented a substantially different
case
regarding their alleged loss, from that originally pleaded. And it is
inconceivable that the first appellant, a company, would
have entered
into an ‘oral’ contract with another company, Armidillo,
for a refund of the construction costs of an
office block. There is
simply no evidence of such an agreement.
[80]
The appellants’ claims for economic loss in relation to rates
and taxes for the period during which the s 82 certificates
were
delayed, are incompetent. On their own showing, these claims were
finally settled with the respondent in a settlement agreement,

pursuant to the review proceedings in which the appellants sought an
order compelling the respondent to issue the s 82 certificates.

Moreover, the claims for rates and taxes were never intended to form
part of the appellants’ damages claim. That much is
clear from
Mr Booysen’s evidence:
‘
But
what we see here in Clause 3 at least, something addressing your
complaint about having paid rates and taxes over this delayed
period
--- I see that in the clause. Is there a question . . . ?
Yes,
because it seems to me that your damages claim that you are
envisaging, or that you have in mind, is something different from
the
rates and taxes --- That is correct . . .
So,
the rates and taxes and your complaint for the rates and taxes for
the period delayed, is being addressed in the settlement
agreement
--- That is correct . . . ’
[81]
Mr Booysen confirmed this in a letter to the respondent dated 27
March 2009, in which he said:
‘
We
refer to the above matter and are advised that the item confirming
that the rates and taxes be written off was referred back
and no
decision was taken at the council meeting of 26 March 2009.
We
have been handed the item and wish to record that this is in breach
of the Settlement Agreement as the item
does
not recommend that the rates and taxes be written off as agreed
.
This is not only in breach of the Settlement Agreement but also not
in the spirit of the negotiations around the settlement agreement.
We
hereby request your urgent feedback and advices as to how you intend
to rectify this breach’ (Emphasis in the original).’
[82]
In any event, the first appellant’s claim for loss of interest
in relation to rates and taxes fails, because the relevant
erven were
sold in contravention of s 67(1) of the Ordinance. Its claim for
interest regarding the aggregate of the selling prices
of the 47
townhouses that it would have received, falls into the same category.
[83]
I come now to the second appellant’s claim. It contends that it
would have been able to effect transfer of 289 erven
in the township
(all of which had been sold contrary to the provisions of s 67 of the
Ordinance) to purchasers, but for the respondent’s
mala fide
conduct. Alternatively, and to the extent that those deeds of sale
were void, the second appellant would (thereafter)
have sold all the
erven, received payment of the purchase price of each erf at the then
total market value of R181 475 000
and invested the proceeds in
an interest-bearing investment. I interpose to say that this is an
acknowledgement by the second appellant
that the relevant deeds of
sale were null and void because they were concluded in contravention
of s 67 of the Ordinance. This
underscores the fact that at the
relevant times, Mr Booysen knew that those contracts were illegal and
a nullity. To return to
the particulars of claim: as a result of the
delay, the second appellant suffered a loss of interest on the sum of
R181 475
000 for the period 1 March 2008 to 30 June 2009. Then
it is said that the second appellant was able to effect transfer and
realise
the proceeds of the development only substantially later, by
which time it suffered a loss equivalent to a 10 per cent drop in the

market value of the erven, amounting to R18 147 500. The
second appellant also claims to have suffered loss because it
was
obliged to continue to pay rates and taxes in respect of the 289
erven during the period of delay until transfer was given
to the
respective purchasers. The second appellant alleges that it suffered
a total loss of R47 667 975.
[84]
The respondent denied that the second appellant suffered any loss. In
amplification of that denial it pleaded that the second
appellant
entered into the agreements of sale contrary to the provisions of s
67 of the Ordinance; and that the drop in market
value, the changing
economic conditions and the loss alleged were neither foreseen nor
reasonably foreseeable.
[85]
The second appellant’s claim for the alleged economic loss also
fails because the 289 erven were sold in contravention
of s 67 of the
Ordinance. Its claim for loss of interest is inextricably bound up
with those sales, which are null and void. The
mala fide conduct on
the part of the respondent, was not a factual cause of this second
appellant’s loss, for the reasons
advanced above. Further, the
second appellant appears to acknowledge that the relevant deeds of
sale are indeed void, but contends
that it would have sold the 289
erven to other purchasers. However, there is no evidence to support
this. On the contrary, the
facts point the other way.  As
already stated, Mr Diamond testified that there were some 300 stands
in the whole development,
all of which were sold by January 2007
prior to proclamation of the township, in contravention of s 67 of
the Ordinance. The second
appellant’s claim for rates and taxes
likewise fails for these reasons; and because it formed part of the
settlement agreement.
[86]
Finally as regards the second appellant’s claim, there is no
evidence to support the alleged loss equivalent to a 10
per cent drop
in the market value of the 289 erven – Mr Booysen was simply
not qualified to express an opinion on this topic.
But in any event,
the alleged loss in market value does not begin to meet the test for
legal causation: it is too remote. Mr Booysen
conceded that nobody
saw the global financial crisis coming, nor its impact on the South
African property market. He said:
‘
If
the US financial gurus on Wall Street did not see coming there was no
way that the best of the best that we have locally would
have
envisaged that . . . .’
[87]
The third appellant’s claim for an alleged loss of some R11
million, relating to Extensions 8 and 10 of Meyersdal Nature
Estate
which is registered in its name, may be summarised as follows. The
respondent ‘failed to cause the aforesaid townships
to be
proclaimed as such in terms of Section 103 of the Ordinance’.
The third appellant, ‘in order to mitigate its
damages’,
did not take any steps to compel proclamation of Extensions 8 and 10,
because it would then have been liable for
rates and taxes on all the
erven in the proclaimed townships. Even if Extensions 8 and 10 had
been duly proclaimed, Mr Flusk would
have refused to issue the s 82
certificates in respect of these townships. As a result of Mr Flusk’s
mala fide conduct, there
was such a delay in the proclamation of the
township that by the time the respondent indicated that it was not
prepared to proclaim
the township, the property market experienced a
collapse that the development was no longer economically viable. The
third appellant
was precluded from selling and effecting transfer of
land sold and from investing the proceeds of those sales; and it
suffered
loss of interest from such investment as well as a loss of
at least a 10 per cent drop in the market value of land.
[88]
On the facts, the third appellant likewise did not prove causation.
The cause of whatever loss it is alleged to have suffered
cannot be
attributed to the failure to issue the s 82 certificates. Put another
way, the failure to issue the s 82 certificates
was not the
factual cause of the loss.
[64]
Mr Booysen himself testified that he could not ask for a s 82
certificate because Extensions 8 and 10 had not been proclaimed and

that he did not push for proclamation of Extensions 8 and 10, because
third appellant did not want to incur liability for payment
of rates
and taxes. So, the alleged delay in the proclamation of Extensions 8
and 10 did not come about as a result of the failure
to issue the s
82 certificates. In fact, Mr Booysen never asked for the certificates
in respect of Extensions 8 and 10. Instead,
the alleged delay was
caused by Mr Booysen’s deliberate decision not to insist upon
proclamation of the township, so as to
avoid liability for rates and
taxes. Thus, there can be no talk of ‘mitigation of damages’.
[89]
In addition, there is simply no evidence that the respondent had
indicated that it was not prepared to proclaim Extensions
8 and 10 as
townships. On the contrary, Mr Booysen testified that nobody knew why
Extensions 8 and 10 were not proclaimed at the
same time as the other
extensions in Meyersdal Nature Estate. Unsurprisingly, the third
appellant abandoned its claim for damages
for some R14.7 million
initially brought against the respondent, on the basis that the
latter had ‘wilfully alternatively
negligently failed to
proclaim Extensions 8 and 10 of the Meyersdal Nature Estate’.
[90]
Aside from this, it is common ground that there were certain issues
outstanding which prevented Extensions 8 and 10 from being
proclaimed
as townships. These issues were recorded in the settlement agreement.
They included the following. The developer (the
third appellant) had
to prove to the respondent’s satisfaction that the application
for the opening of township registers
had been properly submitted,
that those registers had indeed been opened and the third appellant
was given an extension of time
in terms of s 101(2) of the
Ordinance to comply with those requirements. A notice under s 103,
declaring a township an
approved township, can only be promulgated if
the provisions of inter alia, s 101 have been complied with.
[65]
Moreover, the third appellant acknowledged that its entitlement to
the proclamations of Extensions 8 and 10 was subject to the

conditions contained in paragraphs 9-17 of the settlement agreement.
[91]
The third appellant has also not proved legal causation, for the
reasons advanced above. On its own evidence, the alleged loss
as a
result of the collapse in the property market was not reasonably
foreseeable. Mr Booysen confirmed that nobody could have
foreseen the
2008 global financial crisis, neither its impact on the South African
property market. Mr Diamond said that the marketing
environment
changed from 2006 to 2009; and there was a global crash of the
property market in late 2008 in the United States and
Europe,
resulting in a credit crunch in South Africa in 2009.
[92]
Finally, the evidence discloses that at the time of the trial, in
July 2015, Extension 8 had not been developed at all, and
Extension
10 had been developed two years before. The third appellant did not
sell any erven in those extensions, and still has
them. Leaving aside
the remoteness and foreseeability of any theoretical loss which the
third appellant might have sustained had
it sold those erven, Mr
Booysen’s evidence was that the property market after the
global financial crisis was better; and
that any loss it might have
sustained would have been recovered by the time of the trial - six
years later. Therefore, on the probabilities,
and accepting for the
purpose of argument that it has proved causation and damage, the
third appellant has not sustained any loss.
Damage
[93]
Proof of damage is fundamental to a delictual claim.
[66]
Assessment of damage is not the same as quantifying damage. Before
quantifying damage, one must ascertain whether any loss has
in fact
been suffered.
[67]
A plaintiff
must produce sufficient evidence to enable a court to reasonably find
that it is has suffered damage.
[68]
Damage is assessed by comparing the utility value of a plaintiff’s
patrimony before and after a damage-causing event.
[69]
[94]
In its plea, the respondent denied that the appellants had suffered
damage, and they were thus required to prove that they
had suffered
loss. Common to the claims of all three appellants, is Mr Booysen’s
say-so that they had lost revenue: interest
they were expecting to
receive. His evidence as to the economic loss which the first
appellant suffered, reads as follows:
‘
As
a result of the delay, Mr Booysen, with the issuing of the Section 82
certificates what were the consequences to these three
companies,
first, second and third plaintiffs? --- M’Lady firstly in
respect of Extension 7, we . . . now had a completed
office block,
which was completed around September 2008 and we could not rent out
these buildings . . .
The
office space inside the buildings? --- Or the office space inside the
buildings and therefore . . . the damages that we suffered
is that we
had this completed building which we could not let.  [I]n
respect of the office block Extension 7. In respect of
the townhouses
on stand 390 . . . there were 47 townhouses completed in June 2008
and we could not sell or transfer those stand[s],
or those sectional
title unit[s] and therefore we lost interest on receiving the revenue
of those sales . . .
.
. .
And
had you been able to receive rental income from the letting of those
premises what would have happened to the income? ---
.
. .
Well
we would have put it in the bank and earn[ed] interest on it . . .
As
far as Extension 7 is concerned, was there any, the remainder of that
extension that was not utilised, that you were going to
deal with in
some way or another? --- M’Lady, we had a third stand . . .
and at that point in time the property market
was very buoyant and we
would have been able to sell that stand to other developers around
that time, as it was zoned for offices
and residential and we were
able, would be able to sell those stands to other developers.
And
what would you have done with the revenue received from such
transaction? --- We would also put that in the bank and earn interest

on it M’Lady.’
[95]
Mr Booysen’s evidence regarding the economic loss suffered by
the second appellant, reads:
‘
We
deal now next with the consequences relating to Extensions 9, 11 and
12? --- M’Lady, those stands were mostly sold towards
the end,
during the second half of 2007. We would have been able to transfer
those stands to its various purchasers, received the
revenue on those
stands and that revenue in a bank earns interest and that is how we
calculated the damages we suffered in that
regard. We took investment
interest, not interest one would earn if you borrowed money.’
[96]
Mr Booysen described the economic loss which the third appellant
suffered, as follows:
‘
M’Lady,
in respect of Extensions 8 and 10 . . . [t]he municipality did not
proceed to proclaim those two townships despite
that request. The
implication of that is, as stated before, the market was very buoyant
and we would have been able to sell those
stands to other developers
for substantial prices in that time. There was a very high demand in
that area, as you can see from
the rate [at] which we sold the
stands, there was a very high demand for townhouses as well, and
therefore, because it was not
proclaimed we could not ask for the
Section 82 certificate, and therefore we could not receive the
revenue on those stands to put
into the bank and receive interest on
it. . . .’
[97]
All the appellants are companies. But there is not a shred of
evidence, nor a single document or piece of paper to show any

investments by the appellants in any interest-bearing accounts, to
indicate that they probably could, let alone would, have made
an
investment, but that they were deprived of that opportunity and of
earning interest; and consequently that they suffered damage.
In this
regard, the appellants have produced no evidence of their assets,
more specifically, cash invested in short- or long-term
investments,
to show a policy or track record of interest-bearing investments that
points to actual damage suffered. Indeed, there
is no evidence to
show that the amounts which the appellants expected to receive from
rental (which turned out to be wrong), or
the proceeds from the sales
of the 47 townhouses or erven, constituted surplus cash which they
could have invested, to begin with.
The demand for proof in a case
such as this, in my opinion, is more exigent – the appellants
claim that they would have deposited
funds into interest-bearing
investments, instead of utilising those funds elsewhere, or in their
ordinary business operations.
[98]
De Klerk
v Absa Bank
[70]
is instructive on proof of damage. De Klerk, an attorney, sued Absa
Bank based on a fraudulent or negligent misrepresentation,
which
caused him to make a poor investment with an assurer. His claim was
based on his averment that, had he put the money invested
with the
assurer in some alternative investment, he would have been much
better off. The damage which he claimed was the difference
between
what his investment with the assurer had yielded and the return that
he would have received had the money been otherwise
invested. The
court a quo granted absolution from the instance on the basis that De
Klerk did not adduce any evidence to prove
his loss, more
specifically that he did not prove that he would have invested
elsewhere had the money been available to him.
[71]
[99]
After analysing the evidence presented by an actuary called by De
Klerk, who concluded that De Klerk would have invested two
thirds in
growth stocks (unit trusts or shares), one sixth in taxable
interest-bearing investments and one sixth in redemption
of an
interest-bearing debt such as a mortgage bond; and that he had
suffered a loss of R111 800,
[72]
Schutz JA then turned to De Klerk’s evidence as regards proof
of damage. He said:
‘
[21]
From the nature of his practice as an attorney he had to invest his
clients’ money daily, in transactions generally,
including
those related to property and deceased estates. Some of the
investment would be in call accounts, others in notice deposits,
and
others in deposits for fixed terms of various durations. Concerning
his own affairs, he had life policies, endowment policies
and
annuities, the latter two payable when he turned 60 or 65. An old
friend was his broker and each year before 28 February, they
would
review his affairs so as to ensure that he took out insurance and
annuities in a way that would minimise his tax liability.
He had
insurance policies other than the one with Commercial Union. Then
comes a passage which Mr Maritz, De Klerk’s counsel
(who did
not appear in the court below), emphasised heavily in argument. Some
time in 1996, to his great shock, he learned for
the first time that
Commercial Union intended paying him much less then he believed he
had been promised. In a letter to United
Bank dated 15 November 1996
he said, with reference to the scheme:
‘
Ek
het die skema by u aanvaar met die
uitsluitlike
bedoeling om my aftredingsannuïteit te versterk’
( my emphasis added).
De
Klerk confirmed this intention in his evidence. This statement, said
Mr Maritz, expressly tells us that his client was bent on
investment
and, he submitted, it is reasonable to infer that had he not invested
in the scheme he would have invested similar amounts
elsewhere.
Generally annuities, he said, are not speculative investments. Add to
this that not only did De Klerk in fact invest
in the scheme but he
saw the matter through for the whole of ten years, notwithstanding
that in 1996 he found it difficult to keep
up its payments. Indeed,
by 1998, when the ten years had run he had not only paid all the
interest but had repaid some R10,000
of the loan, without any
obligation to have done so.
[22]
Two arguments are raised by the respondents. One is that the fact
that De Klerk’s circumstances were straitened in 1996
indicates
that he would not, in all likelihood, have invested the full
R199 230,42 elsewhere. The other is that it was Du
Toit’s
active marketing that caused De Klerk to invest, so that it is not to
be assumed that, Du Toit absent, he would have
invested. As I shall
seek to explain later these points may be relevant when it comes to
quantification of the damages, but they
do not in themselves negate a
reasonably possible inference that De Klerk would have invested
elsewhere.’
[100]
Consequently, Schutz JA found that the statement by the court a quo
that there was no evidence to support a conclusion
that De Klerk
would have made alternative investments was wrong: the evidence
showed that De Klerk was a knowledgeable and active
investor; and the
actuary’s evidence could reasonably be interpreted to mean that
he had considered a spread of investments.
The appeal was upheld, and
the order granting absolution from the instance was set aside.
[101]
In the instant case, the appellants, by contrast, presented no
evidence to show that they have a history of investing
generally, let
alone investing the proceeds from the sales of property in
interest-bearing investments. Neither did they place
any facts before
the court from which an intention to invest such proceeds may be
inferred. There is also no evidence of any of
the appellants’
assets or liabilities to show any cash surplus capable of being
invested. Their evidence, at its highest,
is Mr Booysen’s
say-so that they would have invested in interest-bearing investments.
[102]
In any event, on his own showing, Mr Booysen’s evidence as to
the economic loss which the appellants suffered,
is unreliable,
opportunistic and improbable. As appears from his evidence quoted
above, the first appellant’s claim was prosecuted
on the basis
that it was the landlord of the completed office block and the vendor
of the 47 townhouses; and that it was deprived
of rental and the
proceeds from the sale of the 47 townhouses, for the period during
which the issue of the s 82 certificates was
delayed. However, in
cross-examination Mr Booysen conceded that the first appellant was
not a landlord, neither a vendor of townhouses.
Instead, Armidillo
was the landlord and Chestnut Hill, the vendor. In short, the first
appellant’s initial claim was roundly
refuted. The particulars
of claim were then amended to claim loss of interest on the proceeds
of the sales of Erf 390 and 392,
and a refund of construction costs
of an office block. Mr Booysen knew that the appellants’ claims
for rates and taxes could
not, and did not, form part of their
damages claim: they were settled in accordance with the settlement
agreement. The claims for
rates and taxes are opportunistic and
contrived. As regards the second appellant, Mr Booysen knew that the
sale of the 289 erven
were null and void, hence the alternative claim
that if they were void, that the second appellant would thereafter
have sold those
erven and invested the proceeds in an
interest-bearing investment. As already stated, there is no evidence
that the 289 erven were
subsequently sold to new purchasers, which
demonstrates the unreliability and improbability of the second
appellant’s version.
The third appellant’s claim outlined
above, on the facts, is plainly untenable: there is no evidence that
the respondent
refused to proclaim Extensions 8 and 10 as townships;
and, on the probabilities, the third appellant suffered no loss.
[103]
Finally as regards proof of damage, a plaintiff with no right to earn
lost income from an illegal act, cannot
prove that it has suffered
damage in delict. In this regard, Neethling and Potgieter say:
[73]
‘
Reinecke
correctly argues that the existence of damage does not depend on
wrongfulness, but adds that the frustration of an expectancy
to earn
income from an illegal activity (caused by bodily injuries) cannot be
seen as
damage
, since an expectation of a benefit which is
contrary to law is not recognised. Although criticism has been
expressed that his approach
implies that wrongfulness is elevated to
a prerequisite for damage, Reinecke’s theory appears to be
sound. In this kind of
situation, it is not only damage that is
absent, but also wrongfulness, as the plaintiff had
no right to
earn
the lost income. However, the reason for the absence of
damage is not because wrongfulness has not been proved; it is because
no
asset of the plaintiff’s patrimony (estate) has been
impaired.’ (Emphasis in the original.)
[104]
The first and second appellant’s claims for economic loss -
interest they would have derived from the proceeds
of illegal and
unenforceable contracts - cannot be regarded as damage: it is an
expectation of a benefit which is contrary to law
and, in the
circumstances, cannot be recognised.
[105]
In conclusion, the appellants have not established causation: that
the alleged conduct on the part of the respondent
caused them to
suffer economic loss. They have also not proved that they suffered
damage.
[106]
I would accordingly dismiss the appeal.
______________
A
Schippers
Acting
Judge of Appeal
Cachalia
JA (Dissenting Judgment)
[107]
I have had the benefit of reading the judgments of Ponnan JA (‘the
first judgment’) and Schippers
AJA (‘the second
judgment’). The first judgment concludes that the appellants
have not established that the Municipality
acted wrongfully in
delaying the issue of the s 82 certificates, nor suffered any loss as
a result of the delay. The second judgment
also concludes that no
loss was established. I regret that I am unable to agree with their
conclusions. I would uphold the appeal.
[108]
The appellants, to whom it shall be convenient to refer collectively
as ‘the developer’, seek to hold
the Municipality
vicariously liable in delict for pure economic loss caused by its
City Manager, Mr Flusk. The essential allegation
in the particulars
of claim is that he intentionally and mala fide – and
therefore, wrongfully – withheld the issue
of s 82 township
certificates in a township development. Their case is that Mr Flusk
did so, on spurious and dishonest grounds,
over a period of 15 months
thereby causing them to suffer patrimonial loss. The certificates
were ultimately issued after the Municipality
dismissed him.
[109]
In addition, the developer seeks to prove that Mr Flusk was motivated
by an ulterior purpose in that he had attempted,
in return for the
issue of these certificates, to extort:
(a)
A bribe by demanding that Mr Diamond gave him a stand in one of the
developments without
paying for it;
(b)
The production of a sales list of people who had bought property in
these developments;
and
(c)
A transfer of Mr Diamond’s shareholding in the second appellant
to a non-governmental
organisation (NGO) of his choice.
[110]
The facts upon which these allegations were founded were not pleaded,
which caused the Municipality to complain
– both in the court a
quo and in this court – that it had difficulty defending the
claim. The contention has some merit,
but it does not avail the
Municipality in this case. For, the Municipality did not seek further
particulars to prepare for trial,
as it was entitled to, under rule
21 of the Uniform Rules. The factual disputes were thus widened and
canvassed fully in the evidence.
It therefore behoves this court to
deal with the appeal on this basis and not only on the pleaded
case.
[74]
[111]
It is important to understand the significance of s 82 certificates
in the township development process before
considering the disputes
in this appeal. Once a developer has secured land and completed
environmental impact studies, approval
is sought for the approval of
a township in terms of The Town-Planning and Townships Ordinance 15
of 1986 (The Ordinance). (Here,
the township approval for various
extensions, namely extensions 7 to 12, was granted in June 2007.) The
developer must then comply
with the pre-proclamation conditions, the
most important of which is to secure a general plan from the
surveyor-general. A certificate
in terms of s 101 of the Ordinance is
then obtained from the Municipality indicating such compliance. The
Registrar of Deeds notifies
the Municipality that a township register
has been opened and that the township may be proclaimed in the
provincial gazette. Once
proclaimed the developer becomes liable for
rates and taxes. In this case the townships, with the exception of
extensions 8 and
10, were proclaimed on 1 October 2007. The omission
in respect of the two extensions was apparently an oversight on the
part of
the Municipality.
[112]
Following upon the proclamation, s 116 of the Ordinance provides for
necessary internal and external engineering
services in a
development. Internal services, which are the responsibility of the
developer, are those inside the boundary of the
development such as:
roads and storm water; water and sewerage; electrical installation
and reticulation. External services are
those outside the boundary,
such as the bulk sewer line, main electricity and bulk water supply
and are generally the responsibility
of the Municipality.
[113]
In regard to the installation of internal services, the procedure is
that the developer’s engineer submits
the design and diagrams
to the Municipality’s chief engineer for approval. Here, the
Municipality accepted the designs and
confirmed that there were
sufficient bulk services available for the proposed township
development to go ahead. The developer then
procured contractors to
provide the services.
[114]
From February 2007, various services were installed and meetings held
with municipal officials, who were kept
abreast of developments. By
11 October 2007 the water, sewerage and roads were 100 per cent
complete with only minor snags needing
correction. Electrical
reticulation was incomplete but all extensions were to be completed
by the end of November 2007. By 15 December
2007 the services were
practically or substantially completed. The developer had provided a
guarantee that the installation would
be complete by mid-April, 2008.
There was therefore no legal impediment to the s 82 certificates
being issued. The court a quo
was clearly correct in making this
finding and in this court the Municipality did not take issue with
it.
[115]
It is important to note that until the s 82 certificate is issued, a
developer cannot register its ownership of
an erf in a township.
Registration may only take place, in the words of the Ordinance, once
the Municipality has ‘certified
that it will within a period of
three months from the date of the certificate, be able to provide the
erf with such services as
it may deem necessary and that it is
prepared to consider an application for the approval of a building
plan in respect of the
erf’. Only then may a developer transfer
erven in a development to purchasers. It is evident therefore that
any delay in
the issue of certificates may potentially have serious
financial implications for a developer. It is the developer’s
case
that this is precisely what happened here.
[116]
Mr Flusk became the City Manager on 1 May 2006. For present purposes
I accept that Mr Flusk initiated the Pasco
investigation into the
circumstances by which the developer acquired the land in issue in
this appeal after he became aware of
an anonymous tip-off that raised
questions concerning the probity of a land swap transaction by which
the developer acquired land,
which is the subject of the present
dispute, from the Municipality in 2005. And that some of the steps he
took afterwards, including
obtaining an opinion from senior counsel
regarding the Municipality’s failure to comply with s 14 of the
Municipal Finance
Management Act 56 of 2003 (the MFMA), were actuated
by this concern. I accept too that he probably believed that
Mr Diamond
had acquired an interest in the development
improperly, although this was never proved. These matters are dealt
with in some detail
in the judgment of the court a quo and in the
first judgment. However, what is in issue in this appeal is whether
Mr Flusk’s
conduct in withholding the s 82 of the certificates
was mala fide, despite his initial concerns.
[117]
On Mr Flusk’s own evidence, but unbeknown to the developer, he
had decided, by the end of December 2007,
not to issue the
certificates because of these concerns. However, as will become
apparent from what follows, the evidence, in my
view, showed that in
withholding these certificates he unlawfully abused his authority.
What followed over the next fifteen months
was wilful and mala fide
conduct by him to prevent the certificates from being issued. In so
doing he realised that his conduct
would cause harm to the developer.
[118]
It is beyond dispute that by the end of December 2007, the developer
had met the requirements for the certificates
to be issued. In
January 2008 the developer, represented by Mr Booysen, who was
unaware that Mr Flusk had initiated investigation
into the probity of
the 2005 land transaction, wrote to the Municipality to issue the
certificates urgently. The delay, he pointed
out, was ‘causing
substantial financial losses daily’. On 31 January 2008 the
Municipality’s Council passed a
resolution authorising the City
Manager to regularise the land transaction following a legal opinion
(the Trengove opinion), that
the position be reconsidered and that
the courts be approached to validate the transaction. Mr Flusk did
not act on the resolution,
even though, as Mr Leibbrandt, the Deputy
City Manager testified, he was obliged to.
[119]
Mr Leibbrandt was an excellent witness and had no reason not to tell
the truth. None of his evidence was impugned
in cross-examination. He
was aware of Mr Flusk’s concerns regarding the land
transaction and Mr Diamond’s interest
in the development. His
advice to Mr Flusk was to ring-fence these issues and not to make
them a condition for granting the certificates.
In other words, if Mr
Flusk wished to pursue these matters he should do so through a
separate process. Mr Flusk denied that Mr
Leibbrandt had given him
this advice, but he cannot be believed, for it can hardly be disputed
that he was not a credible witness.
[120]
Mr Booysen pressed on trying to secure the certificates and met with
Mr Flusk and his staff on 26 February 2008.
He arrived at the meeting
with documentation from the Municipality showing that the
requirements for the issue of the certificates
had been met. Despite
this, Mr Flusk was not prepared to issue the certificates. The only
reason given on this occasion was that
he had a problem with the land
valuation. Mr Booysen’s view was that the developer had
acquired the land from the Municipality
properly and that the
certificates could not be withheld for an unrelated and
unsubstantiated reason. It is also apparent that
whatever Mr Flusk’s
concerns with the land valuations were, he now had an obligation,
following the Council resolution, to
regularise the land transaction.
Mr Booysen was, therefore, justified in insisting that if Mr Flusk
did not issue the certificates
he would have no option but to seek
relief in court.
[121]
The developer’s threat to seek relief in court only emboldened
Mr Flusk. On 28 February 2008, he procured
an extraordinary
resolution from Council authorising only him to issue s 82
certificates. Until then an official below the City
Manager had
delegated authority to perform this function; for good reason: the
determination of whether engineering services were
practically
completed was a technical question hardly warranting the attention of
the City Manager. It is apparent that Mr Flusk
took this unusual step
to obstruct the developer’s attempts to obtain the
certificates. Mr Flusk’s evidence was
that he had done
this because Mr Booysen was putting the officials under pressure to
issue the certificates. But there is, however,
no suggestion that Mr
Booysen had done anything untoward. His approach to various officials
was aimed at expediting the issue of
the certificates to which the
developer was lawfully entitled.
[122]
On 14 March 2008, Mr Booysen filed papers in the North Gauteng
Division of the High Court to compel the Municipality
to issue the
certificates. He alleged that all the requirements for the issue of
the s 82 certificates had been met and that Mr Flusk
was abusing
his powers by withholding them. Mr Flusk opposed the application and
filed a counter-application without having obtained
the authority of
the Council to do so. Despite being aware of his officials’
advice that the requirements for the issue of
the certificates had
been met he suggested, falsely, that the services had not been
satisfactory completed. His main grounds for
opposing the order
sought on the merits related to the two irregularities in the land
transaction: the first was that the transaction
had been approved by
the Municipality’s Corporate Affairs Committee irregularly as
it had no power to make this decision,
and secondly, that the s 14(2)
of the MFMA had not been complied with. These were also the main
grounds upon which he relied to
have the transaction set aside. Both
these matters were dealt with by the Trengove opinion of November
2007 in which the Municipality
was advised how to proceed to
regularise the transaction. The Council of the Municipality, as I
have mentioned, authorised the
City Manager (Mr Flusk) to take the
necessary steps towards this end. This was a crucially important fact
that Mr Flusk was
obliged to have disclosed in his papers, but
did not, which is probably why he attempted to institute the
counter-application without
having obtained the authority of
Council.
[123]
Mr Flusk also opposed the relief claimed on the ground that the
developer had failed to use internal appeal remedies
in terms of s
124 of the Ordinance. As I will demonstrate below, this defence was
also not bona fide. In the result, on 20 June
2008, the court
dismissed the application because of the developer’s failure to
use the internal appeal appeal remedies,
and Mr Flusk’s
counter-application for lack of
authority.
[124]
The developer then began pursuing an internal appeal before the
Services Appeal Board (SAB), established in term
of s 123 of the
Ordinance. The SAB may decide various services-related disputes. The
appeal was under s 124(1)
(c)
,
which concerns decisions made under s 119 pertaining to whether
engineering services have been installed to the satisfaction of
a
local authority. To prepare for the appeal Mr Booysen needed specific
details for why the installed services were deficient and
did not
satisfy the Municipality. This is because the grounds of appeal must,
in terms of s 124(1)
(c)
of the Ordinance, relate to a decision made in terms of s 119, and
not to any other dispute.
[125]
Thus on 1 July 2008, Mr Booysen secured a meeting with Mr Flusk to
establish why he had stated in his affidavit
before the high court
that the services were incomplete. At the meeting Mr Flusk told him
to put his complaint in writing and assured
him that he shall respond
by 8 July 2008. Mr Booysen’s attorneys delivered the
letter to him later that day. It said
that the developer had been
directed to comply with the internal appeal procedures. Pursuant
thereto it was requesting confirmation
of the decision to refuse to
grant a certificate for Extension 7 and the reasons for the refusal
to enable their client to lodge
the appeal.
[126]
On 8 July 2008, Mr Flusk responded in a manner that can only be
described as obscurantist. The letter stated tersely
that the reasons
provided in his affidavits before the high court remain the same. The
attorneys responded the following day saying
that neither what he had
averred in his affidavits, nor in his letter clarifies what is still
required in respect of the ‘Section
82 Certificate, the
services agreement, the stakeholder’s agreement . . . , the
status of the services and the reasons for
not issuing same . . . .’
Mr Flusk was put on terms to furnish proper reasons by 11 July 2008.
The letter further stated
that the content of his letter is ‘once
again an indication of mala fides in dealing with this matter and
your failure to
work towards the finalisation hereof’. In this
regard the observation in the first judgment that the first time that
the
developer mentioned mala fides in connection with Mr Flusk was in
an amendment to the pleadings is, with respect, not correct.
[127]
Mr Booysen testified that, in the light of Mr Flusk’s obscure
response, he was still not in a position to
proceed with the internal
appeal. So he set up a further meeting with Mr Flusk shortly
afterwards. He took his attorney along in
the hope that Mr Flusk
would provide a more reasonable response this time. Mr Diamond also
attended the meeting. Mr Diamond testified
that when Mr Booysen asked
for the reasons for refusing to issue the certificates, Mr Flusk
responded by saying that he had already
arranged to have them typed
and that they were only awaiting his signature. Both Mr Booysen and
Mr Diamond testified that Mr Flusk
told them that some officials and
councillors may have bought land in this development and that he
would only issue the certificates
that were awaiting his signature if
they gave him the sales list indicating who had bought land in the
development. Mr Booysen
responded that his request for the sales
list was not a requirement for the issue of the s 82 certificate, and
he was therefore
not prepared to give it to him. Mr Diamond felt
that the request for the list was a ‘witch-hunt’ on Mr
Flusk’s
part.
[128]
In his testimony, Mr Flusk admitted asking for the sales list,
because, as he said, he wanted to uncover the ‘unhealthy

relationship’ between some municipal officials, councillors and
the developer. Under cross-examination he denied having told
them why
he wanted the sales list. His explanation for this, which I find not
only improbable but untruthful, was that that they
knew why he wanted
the list. Neither Mr Booysen’s nor Mr Diamond’s
evidence to the effect that Mr Flusk had told
them that he would
issue the certificates once they gave him the sales list was
challenged under cross-examination. It was only
when Mr Flusk was
cross-examined, did he, for the first time, deny it. In the light of
the rule relating to cross-examination that
it is not open to a
litigant to argue a proposition that was not put to the opposing
witnesses, it must accordingly be found that
the meeting did take
place and that Mr Flusk made the statements attributed to him.
[75]
[129]
Both Mr Diamond and Mr Booysen testified that a week or two later,
but unknown to Mr Booysen at the time, Mr Diamond
gave the list to Mr
Flusk, but still, no certificates were forthcoming. Mr Flusk had no
authority to demand the production of a
sales list as a condition for
issuing a certificate. The unavoidable conclusion is that Mr Flusk
was mala fide and abused his power
by extorting the production of the
sales list from the developer and Mr Diamond. In its judgment, the
court a quo mentions the
meeting, but other than noting that Mr Flusk
denied it, does not deal with the evidence, which in my view
constitutes a material
misdirection. The first judgment also
disregards this evidence even though the issue was fully ventilated
in this court.
[130]
I return to the chronology. Nothing further happened in July 2008.
Mr Booysen, as the court a quo observed,
had now become
desperate and turned to the new Mayor, Ms Ntombi Mekgwe, for
assistance. Mr Booysen took her on a site visit in
August 2008 to
show her that the engineering services had been completed. They were
accompanied by officials who were familiar
with the development and
had also confirmed this earlier. Still, Mr Flusk would not issue the
certificates. Mr Booysen then
phoned the Mayor to assist with
the conundrum. She was unable to help him but advised him to set up
another meeting with Mr Flusk,
and to request the then Deputy City
Manager, Mr Sibeko, to attend the meeting.
[131]
The meeting took place on 15 August 2008. Mr Flusk, Mr Sibeko and
Mr Booysen were present. According to Mr
Booysen, Mr Flusk
repeated the issues he had previously mentioned: that some
councillors, particularly Mr Diamond, had an interest
in the
development and the reduced price that the developer had paid for the
land it had acquired from the Municipality in 2005.
Again, he gave no
specific details. The meeting left Mr Booysen none the wiser on what
was required to make a case to the SAB.
[132]
On 12 September 2008, Mr Flusk wrote to the Mayor purporting to
provide a summary of the discussion he had had
with Mr Booysen on the
15
th
of
August. The letter was not shared with Mr Booysen, and he was not
aware of its existence until it was discovered before the trial.
[133]
The letter, as emerged in Mr Booysen’s testimony, and Mr
Flusk’s cross-examination, is littered with
demonstrable
falsehoods and the non-disclosure of material facts. It says, for
example, that the Municipality’s officials
had advised him that
there are ‘several material reasons’ why the certificates
cannot be issued. And that his officials
had advised him that the
services had not been installed to the satisfaction of the
Municipality. Mr Leibbrandt, he said, had only
advised him two weeks
earlier that the services had been satisfactorily installed.
[134]
Mr Leibbrandt denied this and his testimony in this regard was not
challenged. When cross-examined on this aspect,
Mr Flusk accused Mr
Leibbrandt of lying. The evidence, however, was that not a single
official had given Mr Flusk such advice.
On the contrary, several
officials, including Mr Leibbrandt, had advised him that there were
no legal grounds to withhold the certificates.
The documentary
evidence also supports this. For the reasons given earlier pertaining
to the rule regarding the failure to put
Mr Flusk’s version to
Mr Leibbrandt, it must be accepted that his evidence in this respect
was also untruthful and that what
had he reported to the Mayor in
this regard was, likewise, false.
[135]
The letter also says that the land exchange transaction had, as the
Trengove opinion had advised, contravened
the MFMA and the
Municipality’s land exchange policy. But what it omits is a
reference to the Council resolution of 31 January
2008, which
required Mr Flusk to regularise the transaction. It was not a ground
that could legitimately be relied upon to prevent
the issue of the
certificates. Further, the letter states, misleadingly, that
Mr Diamond was a member of the Committee, which
had authorised
the land alienation, the suggestion being that he had a non-disclosed
conflict of interest when the decision was
made. But Mr Diamond had
in fact recused himself from the deliberations of the Committee.
[136]
The letter further makes a very serious allegation that two unnamed
councillors acquired interests in these developments
without payment.
Apart from the fact that he did not name the councillors, Mr Booysen
was emphatic that the allegation was untrue.
His evidence in this
regard was not disputed.
[137]
The letter concludes by saying that the developer has consistently
refused to pay market related prices for the
land it ‘unlawfully
obtained’ or to comply with the provisions of the MFMA. And, it
adds, again misleadingly, that
it continues to put pressure on the
Municipality to irregularly issue the certificates. It also gives the
assurance that he will
try to settle the dispute with the developer.
It bears mentioning, however, that Mr Flusk had never made a specific
demand for
any market related payment to be made as a condition for
the issue of the certificates, which would also have been improper.
Nor
did he make compliance with the MFMA such a condition. Moreover,
instead of engaging in bona fide attempts to settle the matter
and
issue the certificates as was his obligation, his conduct was one of
obstinate resistance.
[138]
What the content of the letter indicates is that he gave false
reasons to the Mayor, which he also withheld from
the developer, in
the hope of misleading her regarding the delay with the issue of the
certificates. Once again this is indicative
of mala fides on his
part.
[139]
Mr Leibbrandt testified that, in August or September 2008, the Mayor
asked him for a progress report regarding
the 31 January 2008 Council
resolution, which required the City Manager to take steps to
regularise the land swap transaction.
The Mayor’s request, he
said, left him and other officials ‘red faced’ because
they were unable to comply. He
advised the Mayor, as he had Mr Flusk,
that the certificates had to be issued and that the other matters
should be ring-fenced
so as not to prevent this. The Mayor passed the
information on to Mr Flusk.
[140]
When Mr Flusk discovered that Mr Leibbrandt had given this advice to
the Mayor it provoked a backlash from him.
He wrote to Mr Leibbrandt
on 3 October 2008 accusing him of, among other things, communicating
with the Mayor without informing
him and also of creating tension
between himself and the Mayor. Mr Flusk informed him that he intended
suspending him and invited
him to respond within three days, failing
which he would do so. On 6 October 2008 Mr Leibbrandt met with Mr
Flusk and told him
that that there was no basis to suspend him. Among
the reasons he gave to Mr Flusk was that the City Manager may only
suspend the
Deputy City Manager after consulting the Mayor, which he
had not done.
[141]
To protect himself Mr Leibbrandt informed the Mayor of his threatened
suspension. The Mayor responded by sending
him a text message
indicating that she had informed Mr Flusk that if he suspended Mr
Leibbrandt, she would in turn suspend him.
In the result Mr Flusk had
no option but to abandon his unlawful attempt to suspend Mr
Leibbrandt.
[142]
What this exchange shows is that Mr Flusk’s vindictive
behaviour extended beyond the developer to a senior
official who was
only trying to do his work professionally. It is also apparent that
the Mayor was having difficulties with Mr Flusk’s
conduct
and the manner in which he was dealing with the developer.
[143]
In October 2008, Mr Booysen secured yet another meeting with Mr Flusk
at the request of the Mayor to resolve the
outstanding issues. Mr
Booysen’s attorney was present, as was a Mr Mokoena from Mr
Flusk’s office. The purpose of the
meeting, once again, was to
establish in which respects the developer had not complied with s 82
of the Ordinance.
[144]
According to Mr Booysen, Mr Flusk was not only unhelpful, but made a
new demand of them. In addition to the land
valuation issue, Mr Flusk
now said that he was prepared to issue the certificates if Mr Diamond
transferred his shareholding in
the development to an ‘NGO’.
Mr Booysen was perplexed, he said, because he did not know what an
NGO was. So he asked
Mr Flusk to explain it to him. When Mr Flusk
explained that it referred to a non-governmental organisation, Mr
Booysen, understandably,
became indignant. He told Mr Flusk firmly
that Mr Diamond’s shareholding was irrelevant to the issue of
the certificates,
and that if he wished to discuss this issue further
he would have to do so in Mr Diamond’s presence as he (Mr
Booysen) was
not in a position to transfer Mr Diamond’s
shareholding to anybody. This evidence was not challenged in
cross-examination.
[145]
The meeting agreed that Mr Flusk would prepare a list of ‘exhaustive’
reasons specifying why he was
refusing to issue the certificates. The
agreement was confirmed in a letter to Mr Flusk and was copied to the
Mayor. Mr Booysen
made no mention of the NGO issue because, as he
testified, he ‘did not want to become involved in a personal
battle with
Mr Flusk’. He therefore recorded that the meeting
had agreed on the way forward in relation to the issue of the
certificates.
[146]
On 24 October 2008 Mr Mokoena replied to the letter ‘on
instruction from the City Manager’. His letter
did not provide
any specific reasons why the certificates were not being issued.
Instead, it adopted the same unresponsive stance
that had
characterised Mr Flusk’s conduct throughout. The crux of the
response is contained in the concluding paragraph,
which reads: ‘The
reasons for not issuing the s 82 certificates were contained within
the affidavit related to our counter
application (in response to)
your application and clearly explains our position on all issues you
have raised in your correspondence.’
[147]
It is convenient at this stage to deal with the evidence pertaining
to the attempt to extort a transfer of Mr
Diamond’s
shareholding in the second appellant to an NGO of his choice, as this
is one of the grounds relied upon by the
developer to prove Mr
Flusk’s mala fide conduct.
[148]
Mr Leibbrandt testified that at a meeting between himself and Mr
Flusk sometime during 2008 – the month
was not mentioned –
Mr Flusk had said that his main concern with issuing the certificates
was Mr Diamond’s
interest in the development, and that the
problem would be removed if Mr Diamond was prepared to transfer his
shareholding to an
NGO. This evidence was not challenged in
cross-examination.
[149]
Mr Diamond’s evidence was that in a meeting between him and Mr
Flusk in August or September 2008, Mr Flusk
also told him that his
main concern with issuing the certificates was Mr Diamond’s
interest in the development, and that
he would immediately release
the certificates if he transferred his interest in the second
appellant to an NGO of Mr Flusk’s
choice. When Mr Diamond was
cross-examined the following was put to him:
‘
At
some stage Mr Flusk wanted you to give up that interest because he,
as far as he was concerned you had unduly benefitted and
that was Mr
Flusk’s attitude?’
And
later:
‘
You
see your version to Mr Flusk was that the land transaction is water
under the bridge and could not and should not be reversed
and Mr
Flusk said well the public you should not have  personally
benefitted as a public official from the land swop.’
And
further:
‘
That
was the dispute. It was not that you had to give this up to an NGO.’
[150]
It is apparent from the statement put to Mr Diamond, that Mr Flusk
did discuss his interest in the development
with him, that he was
unhappy with it and that he wanted him to forego it. The only dispute
was over whether he had to give it
up to an NGO. However, in the
course of Mr Flusk’s evidence in chief, and when referred to
Mr Diamond’s evidence
above, he dismissed it as a ‘blatant
lie’. No mention was made of Mr Leibbrandt’s evidence,
nor of Mr Booysen’s.
[151]
Under cross-examination Mr Flusk denied having had any discussion
with Mr Diamond about his shareholding,
which completely
contradicted what was put to Mr Diamond. He also dismissed both Mr
Leibbrandt’s and Mr Booysen’s testimony
in this regard as
untrue.
[152]
It can therefore hardly be disputed that Mr Flusk’s evidence on
this aspect must also be rejected as false:
First, it is at odds with
what was put to Mr Diamond in cross-examination; secondly, and as I
have found in relation to the sales
list, because neither Mr
Leibbrandt’s nor Mr Booysen’s evidence was disputed under
cross-examination, it must be accepted;
thirdly, Mr Diamond’s
evidence is corroborated by both these witnesses, and finally, it is
clear from the evidence that Mr
Flusk had a huge problem with Mr
Diamond’s shareholding. The probabilities therefore support the
developer’s case.
[153]
I conclude, therefore, as I did regarding the sales list, that Mr
Flusk abused his power by attempting to extort
a transfer of Mr
Diamond’s shareholding in the second appellant to an NGO of his
choice. This constitutes an independent
ground for holding, as I do,
that his conduct was mala fide, and was exercised for an ulterior
purpose. The court a quo wrongly
disregarded this evidence.
[154]
I once again return to the chronology. Following receipt of Mr
Mokoena’s unresponsive letter on 24 October
2008, Mr Booysen
applied for a hearing to the SAB on 30 October 2008. The hearing was
scheduled for 28 November, but it was postponed
at the instance of
the Municipality’s attorneys, without the developer’s
knowledge.
[155]
On 26 November 2008 the developer’s attorneys wrote to the
Municipality’s attorneys to register its
protest at the fact
that the matter had been postponed without its knowledge. The letter
reiterated that all the engineering services
had been installed and
the maintenance guarantees given by December 2007. It stated further
that the Municipality had refused to
furnish any reasons for
withholding the certificates and was constantly delaying the matter
being finalised, which was mala fide.
It reminded the Municipality
that the delay was causing a loss to the developer of R100 000
per day. I point out that this
is another reference to Mr Flusk’s
mala fides preceding the issue of the summons.
[156]
The SAB hearing was set down for 22 January 2009. The Municipality’s
attorneys wrote to the developer’s
attorneys on 13 January 2009
regarding the issues that would be disputed before the SAB.
Significantly, the Municipality accepted
that the issues that had
been raised in the counterclaim in respect of the land swap and
alienation of land in April 2005 were
not a bar to the proceedings
before the SAB. It, however, reserved the Municipality’s right
to pursue the counterclaim ‘at
some later stage.’ It is
noteworthy that this had been Mr Leibbrandt’s advice from the
very beginning.
[157]
On 14 January 2009, for the first time since the judgment of the
North Gauteng High Court on 20 June 2008, and
no doubt acting on
legal advice, Mr Flusk attempted to obtain a Council resolution
authorising him to pursue the counterclaim.
Unsurprisingly, the
attempt failed.
[158]
The SAB hearing took place, as scheduled, on 22 January 2009. The
Municipality did not oppose the relief claimed.
Both parties agreed
that a further Services Agreement was unnecessary as the levels and
standards of the services have been agreed
on and completed to the
satisfaction of the Municipality. On the following day the
developer’s attorneys then wrote to the
Municipality noting
that ‘it was indicated by your legal team that you are still
refusing to issue a Section 82 Certificate
and advise that your
action is unlawful’. The Municipality was also alerted to the
fact that the sales agreement the developer
had entered into with
buyers would lapse on 31 March 2009, 18 months after proclamation.
This would result in damages amounting
to a further R180 million in
respect of 241 sales, which would then lapse. In the circumstances it
was demanded that the certificate
be issued by no later than 30
January 2009.
[159]
On 23 January 2009 Mr Flusk made a second unsuccessful attempt to
reverse the 31 January 2008 Council resolution.
He was placed on
leave in February 2009, and on 17 March dismissed as City Manager.
According to Mr Leibbrandt, whose evidence
I have indicated was
unimpeachable, Mr Flusk was dismissed because of his persistent
refusal to issue the certificates. Mr Leibbrandt
was appointed to act
in his stead. On 20 March 2009 the Municipality capitulated and
issued certificates for Extensions 7, 9, 11
and 12 soon after. The
proclamations for Extensions 8 and 10 took place on 30 September
2009, but no certificates were issued then.
[160]
To summarise the position thus far: The developer established that Mr
Flusk wilfully and mala fide delayed issuing
the certificates over a
period of 15 months. During this period he:
(i)
instituted a counterclaim to set aside the 2005 land swap transaction
without
the authority of Council and in the face of a Council
resolution on 31 January 2008 to regularise the transaction;
(ii)
defended the application to compel the issue of the s 82 certificates
in the high
court on the false ground that the developer had failed
to install the engineering services to the satisfaction of the
Municipality;
(iii)
Improperly procured the striking-off from the roll of the developer’s
application
on the ground that that it had failed to prosecute an
appeal to the SAB regarding the alleged deficiency with the
installation
of the engineering services;
(iv)
ignored the advice of municipal officials, particularly Mr
Leibbrandt’s, to issue
the certificates because there was no
lawful basis to withhold them;
(v)
threatened to suspend Mr Leibbrandt because he had given the same
advice to the Mayor;
(vi)
improperly procured a Council resolution giving him the sole
authority to issue s 82 certificates
for the purpose of preventing
the developer from obtaining them;
(vii)
misled the Mayor and the developer by giving false reasons for
withholding the certificates;
(viii)
was unresponsive and obstructionist when asked by the developer
repeatedly to provide proper reasons
for not issuing the
certificates;
(ix)
caused the delay in the SAB hearing without good reason;
(x)
improperly, and for an ulterior purpose, demanded a sales list from
Mr Booysen
and Mr Diamond in return for the issue of the
certificates;
(xi)
improperly, and for an ulterior purpose, demanded that Mr Diamond
give up his shareholding
in the second appellant before he would
issue the certificates;
(xii)
generally abused his public power by obstructing the developer from
acquiring the certificates
and by giving false and spurious reasons
for doing so.
[161]
In the light of the overwhelming evidence of mala fides on the part
of Mr Flusk, it is not strictly necessary
to deal with the
further allegation that he also improperly attempted to extort the
bribe of a free stand in the development in
return for the issue of
the certificates. However, both the court a quo and the first
judgment treat this allegation as pivotal
or foundational to the
developer’s allegation of mala fides. In my respectful view it
was not. The first judgment confirms
the finding of the court a quo
that the allegation was untrue and therefore that the developer had
not proved that Mr Flusk’s
conduct, which is imputed to the
Municipality, was wrongful. I shall for the sake of fullness deal
with it as well.
[162]
Mr Diamond’s evidence was that during January 2008, Mr Flusk,
told him that he wanted a stand in the development
without having to
pay for it and that he would delay the issue of the certificates
indefinitely until he acceded to his request.
Mr Diamond shared
this information with Mr Booysen, who assured him not to worry about
the threat because the Municipality
could not withhold the
certificates simply because Mr Flusk wished to benefit from it. Mr
Booysen corroborated Mr Diamond’s
evidence in this regard. The
attempted bribe has its genesis in another allegation, which is that
Mr Flusk signed an ‘Offer
to Purchase’ (OTP) a stand in
the development on 17 November 2006, long before he had apparently
become concerned about the
probity of the land transaction. Mr Flusk
denied signing the OTP. Both the court a quo and the first judgment
implicitly conclude
that the witnesses who testified on behalf of the
developer conspired to forge a document purporting to be the OTP. In
the case
of Mr Diamond, the court a quo found that he had committed
fraud by forging the document.
[163]
The evidence as to what occurred on 17 November 2006 was given nine
years after the incident. On behalf of the
developer, Mr Diamond
testified that Mr Flusk attended one of his sales marketing
events, which was held in a marketing tent
in the late afternoon.
There were about ten people, including Mr Booysen, in attendance. Ms
Martha Boshoff, who worked for Mr Diamond
as an estate agent,
assisted Mr Flusk to choose a stand. He then concluded an OTP, which
he signed in Mr Diamond’s presence.
The offer was to purchase
Erf 4 in Extension 12 for the sum of R710 000. After concluding
the OTP, Mr Diamond offered him
a glass of wine, which he accepted.
Mr Flusk remained at the event for some time and even made ‘friendly
advances to some
of the people’ meaning that he had flirted
with the guests. They all left at about 21h00.
[164]
Mr Diamond testified that in response to a query from the African
National Congress (ANC), of which he is a member
and Councillor, and
which had become aware of the dispute between Mr Flusk and himself,
he submitted a written report and the original
OTP to them on 28
October 2008. On 3 November 2008 he submitted a further document
correcting the erf description from Erf 38 in
the report to Erf 4.
[165]
Under cross-examination he testified that the offer was turned down
‘administratively’ because Mr
Flusk had not paid the
deposit. However, when it was put to him that the clause relating to
the payment of a deposit was deleted,
which meant that this could not
have been the reason for the sale being turned down, Mr Diamond
maintained that it was. Later,
he testified that Mr Booysen was aware
that the deposit clause was deleted and that only he had the
discretion to cancel the deposit
requirement. He also testified that
the OTP was not processed because of Mr Flusk’s insistence on a
discounted price. It
was also put to him that there was no
explanation why Mr Flusk had left the space on the offer providing
for the details of the
buyer’s spouse blank because he was
married in community of property.
[166]
In her testimony, Ms Boshoff recalled the incident vividly. She said
it was a Friday evening at about 18h00, before
dusk when Mr Flusk
arrived at the event in a gold-coloured Mercedes Benz motor-vehicle.
She was standing at a model of one of the
stands and asked if she
could help him while he was looking at a township model. Mr Flusk
asked her whether these were all
the stands, at which point
Mr Diamond approached them and introduced Mr Flusk to her as the
City Manager. She testified that
she did not actually see him filling
out the paperwork but she did see him and Mr Diamond sitting at one
of the tables where the
paperwork for these offers was done. Mr
Diamond did the paperwork. She recalled specifically when Mr Flusk
left the event
because he departed in his motor-vehicle just before
she did.
[167]
Under cross-examination she described Mr Flusk as a ‘bit
taller’ than counsel, Mr Peter, that he spoke
in English, that
his complexion was ‘coloured, but not dark’. When asked
whether he was not dark, she responded: ‘Ja,
quite fair’.
She recalled that Mr Flusk and Mr Diamond sat at the table for ‘quite
a while’ while doing the paperwork.
And that Mr Diamond had
offered him something to eat and a glass of wine. It was put to her
that Mr Flusk declined the offer of
wine to which she responded that
she saw him with a glass of wine in his hand. When asked whether
anything that evening stuck out
in her memory – a case of one
question too many – she said that he had made sexual advances
to Ms Irene Botha, who
was present at the event. The incident annoyed
Ms Botha’s son. Mr Flusk left about three quarters of an hour
after Mr Diamond,
but she was not sure of the time.
[168]
Mr Booysen testified that he was present that evening and recalled
being introduced to Mr Flusk and congratulating
him on having bought
a stand, which was a reference to his having signed the OTP. He said
that he had had numerous discussions
with him that evening. As to how
the deposit clause came to be deleted, he testified that he could not
remember why this had happened.
But, he explained the way they
managed the process, administratively, was that once the documents
had been signed, they were evaluated
at Mr Diamond’s office,
and then sent over to his office. His father, Mr Syd Booysen, who is
a retired banker, was responsible
for signing these OTP’s on
behalf of the seller, which explains why his father’s signature
was on the document. If
the document needed amendment this would be
discussed with him personally. It was not unusual for the deposit
clause to be deleted,
because it was a rather harsh non-refundable
provision, but this would be done subsequently and not on site. Under
cross-examination
it was put to Mr Booysen that Mr Flusk denied
having signed the OTP.
[169]
Ms Karen Pienaar was the last witness for the developer on this
issue. She testified that Mr Diamond faxed the
OTP through to her
office on 29 January 2009. She gave the original document, which
was filed with the ‘not accepted
offers’, to Mr Diamond
in October 2008. She also testified that the inscription ‘P
Flusk’ at the top right-hand
corner of the OTP was the
handwriting of Mr Syd Booysen. She did not keep a copy of the
agreement because it had not been
accepted and there was no need to
keep it. Under cross-examination it was put to her that there never
was any signed original agreement.
Her response was emphatic that she
had seen the original. She also testified that she had tried to find
it in her office and had
also phoned the ANC because she was aware
that Mr Diamond had given the document to them.
[170]
Mr Flusk was the only witness for the Municipality. He testified in
chief that he had attended the function in
November 2006, very
briefly. He left after ten minutes when he realised that this was not
a meeting of Mr Diamond’s constituents,
which Mr Diamond
had led him to believe was the nature of the function he was
attending. He had nothing to drink that evening,
did not spend any
time there – no more than ten minutes – and did not sign
an OTP before leaving.
[171]
He also testified that the telephone number on the OTP was one that
he had last used in 2002, and is not one he
presently uses. He
described his complexion as being dark. The court was asked to note
that Mr Peter was ‘considerably taller’
than Mr Flusk.
And he confirmed that he was married in community of property.
[172]
He was cross-examined at length on the incident. He testified that
even though he does own a gold-coloured Mercedes,
he was with his
driver that evening and was using a white kombi, and not his own
vehicle. He was on his way home from another function
that was nearby
Mr Diamond’s. Mr Diamond approached him outside the tent and
invited him in to meet his political constituents.
When he walked
into the tent he noticed that there were drinks and alcohol and that
this was a marketing event for the sale of
properties, and not a
meeting of Mr Diamond’s constituents. There were three or four
people there. He immediately realised
that Mr Diamond had
‘actively misled’ him as to the nature of the function,
but he did not mention this to him.
He denied having had a look at
the model of the township at all. Mr Diamond offered him a glass of
wine, which he declined, and
then left, ‘almost immediately.’
[173]
When asked to say for how long he had been there, he answered that it
was ‘not more than five minutes’.
When it was put to him
that in his evidence in chief, he said that he had been there for ten
minutes, he insisted, incorrectly,
that he had said five to ten
minutes. He was then asked what he had done at the event for the
truncated period of five minutes
while he was there. His answer,
which contradicted his earlier evidence, was that he said to Mr
Diamond: ‘this is not your
constituents . . . where are the
people?’ to which Mr Diamond responded that they were ‘coming
and going’.
[174]
He testified further that he had not sat at any table to fill out
documentation. And that Ms Boshoff’s evidence
in this regard
was a lie. It was put to him that Ms Boshoff had testified that
she had spoken to him that evening to which
he responded that he
could not recall this. But, he added, ‘it might have happened’.
When asked whether he had looked
at one of the township models he
insisted emphatically that she was ‘lying’. As to why
none of this evidence was disputed
with the witnesses, he could not
explain. As to whether he had made advances to Ms Botha, he said
that this was another lie.
And regarding his introduction to
Mr Booysen that evening or having had a discussion with him he
repeated: ‘Another
lie’. He had never met Mr Booysen
before December 2007. There was, however, no denial that Mr Booysen
had been there.
[175]
When it was put to Mr Flusk whether he was suggesting that Mr Booysen
and Mr Diamond were party to a conspiracy
to discredit him by
forging the document, he answered in the affirmative. He added that
Ms Pienaar, whose evidence was to the effect
that she had also seen
the original document, was also part of the conspiracy, as was Ms
Boshoff. Regarding the apparent differences
in his signatures on some
of the documents he was asked whether he accepted that his signature
sometimes dipped instead of rising
in the last line, while at other
times the opposite occurred. To this he agreed. And finally, in
response to Mr Flusk’s evidence
that he had not used the
telephone number on the OTP after 2002, it was put to him that it
appeared from a ‘Consumer Trace
Report’ dated 13 August
2015, that he was  using this number even in 2013. His response,
once again was: ‘that
is a lie’.
[176]
The nub of the factual dispute between the parties is whether Mr
Flusk had signed the OTP on the 17 November 2006.
To decide where the
truth lies, a court must have regard to all the evidence and make
findings (a) on the credibility of the witnesses;
(b) their
reliability; and (c) the probabilities of each version.
[76]
The process of reasoning is integrated with credibility and
reliability being assessed, not in isolation, but in the light of the

proven facts and the probabilities.
[77]
The final step is to determine whether the party burdened with the
onus of proof has discharged it.
[177]
The court a quo found that the OTP was not genuine but, rather, a
‘clumsy and amateurish fraud concocted
by Diamond in late 2008
when facing disciplinary charges by his political party’. And
that there were no probabilities pointing
to the attempted extortion
for a free stand. There are, with respect, some serious difficulties
with the learned judge’s
reasoning. First, to sustain this
finding there would have to have been a conspiracy between all the
witnesses who testified on
behalf of the developer to fabricate what
happened on the evening in question, as Mr Flusk insisted there was.
But no such suggestion
was made to any of the developer’s
witnesses. Second, her finding that Mr Diamond was a poor witness
while Mr Flusk’s
evidence, though not without fault, was
consistent on this aspect is, with respect, not borne out by the
record, as I shall demonstrate
below. Third, in determining the
probabilities, what was required was a weighing of all the evidence,
without disregarding any
of it. It is, however, apparent, as I shall
also demonstrate, that the court a quo failed to analyse the evidence
of all the witnesses,
in particular that of Mr Flusk, and
ignored material evidence.
[178]
I turn to an evaluation of the competing versions. To have signed the
OTP Mr Flusk would have had to have
spent some time at the
event. It is apparent from the evidence of all the developer’s
witnesses that Mr Flusk spent at least
two hours there having arrived
at about 18h00 and departed closer to 21h00. They remembered several
important details regarding
his presence. Both Mr Diamond and Ms
Boshoff remembered him having a glass of wine and that he had flirted
inappropriately with
one of the guests. Significantly, Ms Boshoff’s
recollection of the incident, which was very clear, was prompted by a
question
that was put to her in cross-examination.
[179]
Ms Boshoff remembered too that Mr Flusk had sat at one of the tables
with Mr Diamond and filled out documents,
and that he had
arrived and departed alone in a gold-coloured Mercedes. Mr Booysen
recalled congratulating Mr Flusk on his purchase
and then having had
several discussions with him. His evidence was not impugned, and
there are no grounds to disregard it or disbelieve
him.
[180]
Other than disputing the evidence that Mr Flusk had taken a glass of
wine, none of the other details were disputed.
In particular no
suggestion was made to any of the witnesses that he had left after
spending only five to ten minutes there. The
developer’s
evidence regarding the considerable time that he had spent at the
event must therefore be accepted.
[181]
By contrast Mr Flusk’s evidence was clearly not credible. He
first testified that he had been at the event
for only ten minutes.
When cross-examined on what he had done during this period, he
adjusted his evidence to having been there
for five to ten minutes.
When it was put to him that his earlier evidence was that he had been
there for ten minutes, he insisted
that his answer had been five to
ten minutes, which was incorrect. The impression gained from his
evidence was that he was attempting
to reduce the time he had spent
at the event, in order to decrease the likelihood that he was present
for long enough to sign the
OTP. He also contradicted himself on
whether he had mentioned to Mr Diamond that the event was not a
constituency meeting. The
contradiction gives the lie to his evidence
that he thought he was attending a meeting of Mr Diamond’s
political constituency.
If Mr Diamond had deliberately misled him as
to what the purpose of the event was to secure his presence there and
was the reason
he left promptly when he realised this was the case,
this assertion would have featured pertinently in Mr Flusk’s
evidence
in chief and in Mr Diamond’s cross-examination. But no
mention was made of it.
[182]
Also noteworthy is his evidence that he had been driven to the event
by his driver in a different motor-vehicle,
and not in his Mercedes.
Ms Boshoff, having met him for the first time, would have had no
reason to identify his vehicle as being
the gold-coloured Mercedes.
The fact that she remembered this important detail shows that it is
probable that he did arrive and
depart in this vehicle and that his
evidence in this regard also falls to be rejected, as does his
evidence pertaining to the glass
of wine and the fact that he had
flirted with one the guests. Ms Boshoff’s evidence regarding
the Mercedes was also not challenged.
[183]
One of the points of criticism that the court a quo made relating to
Ms Boshoff’s evidence was that
her description of Mr
Flusk’s appearance, nine years later, was inaccurate. The
criticism is, with respect, unfair. Ms Boshoff’s
evidence was
not rejected, nor was any credibility finding made against her. She
was a good witness and her detailed recollection
of what transpired
that evening was impressive. And as I have previously mentioned most
of her evidence was unchallenged.
[184]
As far as the signing of the OTP itself is concerned, Mr Diamond’s
evidence was that Mr Flusk had signed
the document in his presence.
Ms Boshoff had not seen the document but her evidence that the two
men were sitting and doing some
paper work at one of the sales tables
was also not questioned. Her evidence had a ring of truth to it. She
could quite easily have
adjusted her evidence to suggest that she had
seen Mr Flusk signing the document. Again, I think her evidence in
this regard should
have been accepted.
[185]
Ms Pienaar confirmed that she had seen the original OTP. Her evidence
was given clearly and without hesitation.
It was not suggested to her
that she was party to a conspiracy to forge the OTP, but this is the
necessary implication from the
court a quo having disbelieved her.
Her evidence was rejected on the ground that her memory that she had
handed the original document
to Mr Diamond in October 2008 was
irreconcilable with her evidence that she had searched the office a
few days before she testified
to try to find it. But this finding
overlooks her explanation that she had left her employment with Mr
Booysen for a period of
eight months and that she therefore thought
that the document may have been returned in her absence. Her evidence
that she had
phoned the ANC to establish whether they still had the
document, which was also overlooked, is also consistent with her
version.
In my view her testimony also supports the existence of the
OTP.
[186]
In regard to the content of the OTP, Mr Diamond’s evidence as
to why the deposit clause had been deleted,
was unclear and not
satisfactory. The court a quo’s criticism of this aspect of his
evidence is not without merit. However,
Mr Booysen’s testimony
as to how OTP’s were managed, first through Mr Diamond’s
office and then by his father,
Mr Syd Booysen, and why the deposit
provision was usually deleted, overcame some of the difficulty. The
true reason for why the
offer had been refused was, however, not
clarified. Also not clarified in the evidence was when Mr Flusk
became aware that
his OTP had been rejected.
[187]
The court a quo considered it significant, as pointers to the OTP’s
questionable authenticity, that the
telephone numbers on the document
‘supposedly’ given by Mr Flusk were out of date and that
the space for the purchaser’s
marital status was left blank,
whereas he was married in community of property. However, in regard
to the telephone numbers it
was pointed out in cross-examination that
the telephone numbers were not out of date. Importantly, this
allegation was not put
to Mr Diamond. And the fact that the space for
marital status was not filled in is itself not significant, much less
indicative
of fraud. There are often innocent explanations for
inaccuracies and omissions on pro forma documents. I do not think it
fair or
justified for the court a quo to have made a far-reaching
finding of fraud on these grounds.
[188]
One of the ‘difficulties’ pointed out by the court a quo
regarding Mr Diamond’s allegation that
Mr Flusk signed the OTP
was the confusion as to whether he had purchased Erf 4, in Extension
12, as appeared from the OTP, or Erf
38, which was the allegation Mr
Diamond made to the ANC in October 2008. Mr Diamond then
informed the ANC that Mr Flusk had
in fact signed for Erf 38 and not
for Erf 4. There is, however, nothing improbable in Mr Diamond’s
explanation for the error
in the description of the two
properties.
[189]
Neither party led expert evidence on the authenticity of the
signature purporting to be Mr Flusk’s on the
OTP. However, an
important indication of the authenticity of the OTP is the
confirmation of Mr Syd Booysen’s signature on
a copy of the
document, by both Mr Booysen and Ms Pienaar, which the court a quo
overlooked. There can be no gainsaying the fact
that that Mr Syd
Booysen’s signature on the document is authentic. The
authenticity of the document is further demonstrated
by the fax
particulars on the document dated January 2009, which refutes the
court a quo’s finding that the document was
fabricated after
summons was issued in March 2009. The document’s authenticity
was therefore proved on a balance of probabilities.
It follows that I
am unable to agree that the document was not genuine.
[190]
However, it does not follow that because the OTP was genuine that the
developer had also proved the attempt to
extort the bribe. I turn to
consider the evidence on this aspect. Mr Diamond’s evidence was
that after Mr Flusk had signed
the OTP, he, from time to time, asked
for a discount on the stand, which he brushed aside. Then, at a
meeting in January 2008,
for the first – and apparently the
only – time he demanded the stand ‘for free’
adding, that if Mr Diamond
did not accede to the request, he would
make it difficult for the development to go ahead. Mr Diamond
testified that he informed
Mr Booysen, who advised him to ignore this
as there was no basis for the Municipality to legitimately prevent
the development from
going ahead. Mr Booysen confirmed this
communication during the course of his testimony. As I have mentioned
earlier, Mr Booysen
was a good witness and there was no reason to
reject his evidence in this regard. Mr Flusk emphatically denied
Mr Diamond’s
evidence.
[191]
Among the reasons that the court a quo rejected the bribery
allegation was because, if true, it would have featured
in the
application before the North Gauteng High Court. The developer’s
explanation for not making the allegation in the
papers that it did
not want to complicate the case with side issues, was rejected as
implausible. But, with respect, it is not
implausible for the
developer to have decided to omit this issue from the application to
compel the Municipality to issue the certificates.
Mr Booysen
believed, correctly, that there no proper grounds for the
Municipality to withhold the issue of the certificates.
Furthermore,
Mr Diamond was not party to the proceedings. The developer was
represented by eminent counsel in those proceedings.
It is clear that
all that would have happened had the bribery allegation been made in
the papers was that Mr Flusk would have
denied it. This would
have resulted in a dispute of fact on the papers and could only have
further delayed the issue of the certificates.
[192]
I also do not find it improbable that Mr Flusk would have signed the
OTP, and also demanded a sales list of the
buyers when his name would
have appeared on the list. That was the very question that was put to
Mr Booysen in cross-examination.
But, with respect, I do not find his
demand for the sales list difficult to understand. The list was
sought, according to Mr Flusk,
to uncover the ‘unhealthy
relationship’ between councillors and the Municipality. It is
clear from what I have found
earlier that he had extorted the list
for his own ulterior purpose: the false promise that he would issue
the certificates if the
list was given to him. It is equally
plausible that he wanted the sales list to confirm whether his name
was still on it, bearing
in mind that he would have learnt at some
stage that his offer had been rejected. There is, however, no
evidence that the list
was to be publicised or made available to
anyone else within the Municipality.
[193]
The court a quo also made contradictory findings concerning when and
why the bribery allegation first surfaced.
The one explanation given
was that it was a ‘recent fabrication’ as the plaintiff’s
case developed through various
amendments, in other words as the
trial proceeded. The other explanation was that the fraud was
concocted late in 2008 in response
to disciplinary charges from Mr
Diamond’s political party. The finding of a ‘recent
fabrication’ is, in my view,
not sustainable in light of the
evidence that Mr Diamond had already mentioned to the investigators,
Pasco, early in 2008, that
Mr Flusk had bought a stand in the
development. That allegation, which appeared in the Pasco report in
May 2008, could only have
been made if Mr Flusk had in fact signed an
OTP. The evidence that he had made the same allegation to the ANC in
October 2008 and
had given the original document to them also negates
this finding. Furthermore, as I have pointed out earlier, the fax
particulars
on the document dated January 2009, two months before
summons was issued, fully refutes the suggestion that the document
was a
recent fabrication.
[194]
Mr Diamond’s evidence was not unblemished. He testified that
until October 2008, when he was called to a
disciplinary hearing of
his political party concerning the allegation against Mr Flusk, he
considered Mr Flusk to be a man of integrity.
The court a quo found
this irreconcilable with his having demanded a bribe in January that
year. There is some merit in this criticism.
However, to reject his
version one would also have to reject Mr Booysen’s evidence,
and there are no proper grounds for doing
so. Another difficulty with
the bribery allegation is that it was made on one occasion and never
repeated, unlike the allegations
pertaining to the demands for the
sales list and the shareholding being given up to an NGO. But this is
explained by the fact Mr
Flusk made several reprehensible demands at
different times. And at first blush, while it may seem improbable
that Mr Flusk would
have made this demand when he was apparently
concerned with the probity of the land transaction and Mr Diamond’s
possibly
benefitting improperly from the development, it is not
improbable that he would have made this demand, when he made other
similar
disgraceful demands. The evidence demonstrated that Mr
Flusk’s behaviour was erratic and his conduct capricious.
[195]
Mr Diamond’s evidence did not stand alone. His evidence
regarding the bribe was corroborated by Mr Booysen,
whose evidence I
accept. On the other hand Mr Flusk was the only witness for the
Municipality, and his evidence, mendacious
as it was, could simply
not be accepted. Having weighed both versions, which perforce
required an assessment of their credibility
and reliability, and the
probabilities, I am persuaded, on balance, that the developer proved
the extortion attempt.
[196]
Although the court a quo found that Mr Flusk had deliberately
withheld the issue of the certificates and was ‘disingenuous’

– in other words untruthful and dishonest – in the
explanations he gave for his conduct, it found that the ‘real

reason’ for refusing to issue the certificates was his concern
with the ‘allegations of corruption surrounding the
development
and what he believed to be an illegitimate land alienation, which did
not comply with the provisions of s 14(2) of
the MFMA’. It
rejected Mr Diamond’s allegation that Mr Flusk had attempted to
extort a stand in one of the developments
from him in return for the
issue of the certificates, and found, as I mentioned previously, that
the documentation produced to
support the allegation was probably a
‘clumsy and amateurish fraud concocted by Diamond’. And
further, that even though
Mr Flush had intentionally and dishonestly
withheld the certificates, the appellants had not shown that he had
been ‘motivated
by greed and financial gain’. It thus
concluded that his mala fide conduct – though blameworthy –
was not wrongful
because it did not include ‘an element of
fraud and financial gain.’
[197]
The learned judge found support for her conclusion that Mr Flusk’s
conduct was not wrongful in
Country
Cloud Trading CC v MEC, Department of Infrastructure Development.
[78]
The facts, which arose in a contractual setting, briefly, were these:
Country Cloud lent R12 million to a company, iLima, to enable
it to
perform its contract obligations with the respondent. iLima agreed to
repay Country Cloud after it had received payment from
the respondent
in terms of a loan agreement. The respondent was aware of this
arrangement, but before the payment was made one
of its officials
cancelled the agreement despite being aware that he was not entitled
to do so.
[198]
The Constitutional Court accepted
[79]
as did this court
[80]
that the official concerned acted with intent – at least in the
form of
dolus
eventualis
– when he cancelled the contract without legitimate grounds,
but nevertheless reconciled himself with this possibility and

continued to do so regardless of the consequences. It transpired that
the official had come under pressure from within the department
and
from the media for not having put the contract between it and iLima
out to tender, and was desperately looking for an excuse
to cancel
the contract; and that the grounds he had advanced for taking this
action were unfounded.
[81]
[199]
Referring to
Minister
of Finance v
Gore,
[82]
which Country Cloud had relied upon to support the contention that
the official concerned had wilfully – and therefore wrongfully

– interfered in the contractual relationship between it and
iLima, the Constitutional Court said that in
Gore
,
damages were granted against State entities whose employees had
through ‘fraudulent conduct’ prevented the award of
a
tender of a contract to the plaintiffs. It characterised their
dishonesty ‘as going to the root of the defendant’s

conduct’. By contrast, the official’s dishonesty, in
Country
Cloud
,
went no further than the reasons he gave for cancelling the contract,
and did therefore not rise to the level of dishonesty or
corruption
that was present in
Gore.
The
official was merely a ‘bungling public functionary, not one
bent on illicit gain’, the court said. So the policy

considerations that motivated the imposition of liability in
Gore
were
not present in
Country
Cloud
.
[83]
However, by distinguishing
Gore
in
this manner the Constitutional Court did not lay down a rule that
State entities can only be held liable when the impugned conduct

amounts to fraud or an attempt to secure some illicit financial gain.
To the extent that the court a quo held that
Country
Cloud
had
done so, it erred. Before us counsel for the Municipality properly
conceded that the court a quo had ‘gone too far’
in its
holding.
[200]
The first judgment appears to conclude that the appellants had not
established that Mr Flusk’s conduct was
wrongful mainly on the
ground that the attempt to extort the bribe – the free stand –
was not proved. But this was
only one aspect of the mala fide case
the developer had made out. There are four, separate, mutually
reinforcing grounds for establishing
the mala fides case. The first
was that Mr Flusk wilfully delayed the issue of the certificates
for a period of 15 months.
His conduct was mala fide, it is
contended, because he gave the developer dishonest and spurious
reasons for withholding the certificate.
The second, third and fourth
grounds all relate to the ulterior purpose sought to be achieved by
his mala fide conduct: namely
the attempt to extort a bribe in return
for a free stand, the attempt to extort a transfer of Mr Diamond’s
shareholding in
the second appellant to an NGO of his choice, and the
extortion of the sales list in return for the issue of the
certificates.
The developer’s case, as I understand it, is that
it established each of these grounds, but that any one of them would
have
been sufficient to prove that the wrongfulness element of the
delict. We are therefore concerned simply with whether the developer

had established wrongfulness on the part of Mr Flusk. In this regard
the question is whether considerations of public and legal
policy
dictate that his conduct should attract delictual liability.
[201]
Public policy is, of course, informed by constitutional norms,
including and particularly the norm of public accountability.
Closely
allied with this norm is the duty to act fairly, transparently and
responsively. The duty to act accountably in this broad
sense
requires the State not merely to remain passive but to take positive
steps, through its officials, to fulfil the obligations
the
Constitution imposes upon it.
[84]
It follows that where the State fails to take these steps or abuses
its power it violates the principle of public accountability,
which
may found a claim for damages against it.
[85]
[202]
Of course, as Nugent JA pointed out in
Minister
of Safety and Security v Van Duivenboden
,
whether the norm of accountability translates this constitutional
duty into a private law legal duty enforceable by an action
for
damages must depend on the circumstances of each case.
[86]
In this regard an important question is whether there are effective
remedies, including judicial remedies, other than an action
for
damages, to vindicate the norm. Where the State’s impugned
conduct occurs in circumstances that offer no such effective
remedy
the courts will ordinarily recognise a legal duty unless there are
countervailing considerations affecting the public interest
that
outweigh that norm. In other words they would find the impugned
conduct wrongful. In
Country
Cloud
,
for example, the plaintiff’s reliance on the accountability
norm failed mainly because it was a stranger to the contract
between
the state entity and iLima, and it was thus not able to show that any
legal duty was owed to it.
[87]
In addition the conduct of the official in cancelling the contract,
even though done intentionally, did not raise similar public-policy

concerns that arose from the conduct that was in issue in
Gore.
[88]
[203]
Van
Duivenboden
involved the negligent failure by police officers to deprive a person
of firearms in circumstances where they had information that
he was
unfit to possess them. The court found that the imposition of a legal
duty on the police to prevent harm would not have
required additional
resources or impeded the effecting functioning of the police service.
The constitutional norm of accountability
therefore required a legal
duty to be recognised as there was no other effective way to hold the
State accountable other than through
an action for damages.
[89]
In
Gore
it
was not even necessary to consider whether there were remedies other
than an action for damages because ‘the cost to the
public of
exempting a fraudulent perpetrator from liability for fraud would be
too high.’
[90]
[204]
The abuse of public power is what we are concerned with in this
appeal. The nature of the abuse must enter into
a consideration of
whether the impugned conduct was wrongful. In England, the abuse of
power – misfeasance as it is called
– by a public
official is a recognised tort on its own. Lord Millet explained the
‘core concept’ of the abuse
of power in
Three
Rivers DC v Bank of England (No 3)
[91]
as follows:
‘
[T]he
core concept is abuse of power. This … involves other
concepts, such as dishonesty, bad faith, and improper purpose.
These
expressions are often used interchangeably; in some contexts one will
be more appropriate, in other contexts, another. They
are all
subjective states of mind . . .
…
Every
power granted to a public official is granted for a public purpose.
For him to exercise it for his own private purposes, whether
out of
spite, malice, revenge, or merely self-advancement, is an abuse of
power. It is immaterial in such a case whether the official
acts
exceeds his powers or acts according to the letter of the power: see
Jones
v Swansea City Council
[1990]
1 WLR 1453.
His deliberate use of the power of his office to injure
the plaintiff takes his conduct outside the power (and) constitutes
an
abuse of the power…’
[92]
[205]
The relevance of this dictum of the House of Lords to the present
appeal is evident. The abuse of power is antithetical
to the
principle of public accountability. When a public official acts for a
private purpose, whether out of spite, revenge, malice
or simply
self-advancement, he abuses his power. It is immaterial whether or
not he derives any personal gain from his conduct:
it remains an
abuse of power. Under the core concept of the abuse of power are the
related concepts of dishonesty, bad faith and
improper purpose or
ulterior purpose. Once the abuse of power is established liability
would usually follow. In the language of
wrongfulness, considerations
of public or legal policy will generally compel the imposition of
delictual liability to loss resulting
from the abuse of power.
[93]
Moreover as Lord Millet emphasised, liability cannot be avoided by
showing that the official acted not for his personal purposes
but for
the benefit of the public.
[206]
In the instant case the evidence established, and the court a quo
found, with respect correctly, that Mr Flusk
intentionally withheld
the certificates for fifteen months, and was dishonest (and mala
fide) with both the developer and the court
in explaining his
conduct. The fact that in doing so he may have been acting not for
his own personal purposes, but in the belief
that he was preventing a
corrupt land transaction, as the court a quo also found, does not
negate his wrongful conduct. Once it
is established that he used the
extraordinary power given to him as the City Manager not for a public
purpose, but for another
improper purpose, he abused his power.
[207]
Assuming, in Mr Flusk’s favour, that he genuinely believed that
he was a preventing a massive public fraud,
an accountable City
Manager, acting reasonable and not capriciously, would have disclosed
to the developer in December 2007 that
he had decided not to issue
the certificates. And, he would have disclosed the factual basis and
the true reasons to the developer
and the Council for not allowing
the development to proceed. He would then have promptly taken
appropriate steps to have the entire
process, commencing with the
land transaction in 2005, reviewed and set aside. Instead, with full
knowledge that the developer
was incurring huge expenditure to comply
with s 82 of the Ordinance, he not only adopted an unresponsive
stance to its entreaties,
but was deceitful in his dealings with the
developer, ignored the proper advice of his officials and misled the
Mayor.
[208]
The developer’s numerous attempts – which increasingly
became desperate – to obtain the certificates,
were met by
obdurate resistance on the part of Mr Flusk. He was unable honestly
to point out any deficiencies with the engineering
services because
there were none, which is why his allegations in his court papers
before the high court that the services were
deficient and his
submissions pertaining to the developer’s failure to use
internal appeal remedies were not bona fide. His
letter to the Mayor
on 15 August 2008 was replete with falsehoods. Instead, as the court
a quo observed, he kept on reverting,
impermissibly, to the illegal
land swap and the fact that some councillors may have unduly
benefitted from the development. This
is a textbook case of the mala
fide abuse of public power, not the actions of a ‘bungling
official’ merely trying to
prevent the consummation of a
corrupt land deal. In the absence of any other countervailing public
interest considerations, his
conduct was wrongful on this basis alone
and ought to attract liability.
[209]
But, as I have found, Mr Flusk’s conduct was even worse. He
acted for an ulterior purpose by extorting the
sales list from Mr
Diamond in return for which he promised to issue the certificates,
demanded that Mr Diamond transfer his interest
in the second
appellant to an NGO of his choice and attempted to extort a bribe
from Mr Diamond. This is irreconcilable with the
central finding of
the court a quo that Mr Flusk had a genuine belief throughout
that he was preventing a massive public fraud.
These are all
additional grounds for finding that his exercise of public power was
mala fide and therefore wrongful. No considerations
of public or
legal policy can deny the developer delictual remedy in these
circumstances.
[210]
What remains is causation. The quantification of the damages stood
over for later adjudication. The developer
contends that Mr Booysen’s
evidence that damages were suffered under various heads was
established and not really disputed.
And that there was a direct
causal connection between the mala fide withholding of the
certificates, the resultant delay in the
township development process
and the loss suffered by the appellants.
[211]
As appears from the two previous judgments the first appellant’s
claim arises from the delay in implementing
the land sale agreements
to Chestnut Hill and Armadillo; and second, the delay in remuneration
for the construction contracts with
those two companies to erect the
town houses and office block. Both judgments hold that because the
sale agreements were concluded
before the township was proclaimed in
terms of s 103 of the Ordinance, and thus contravened s 67 of the
Ordinance they were null
and void. And that by upholding the claim
the court would impermissibly be enforcing these agreements.
[212]
In regard to the first appellant’s claim for construction costs
pursuant to the construction of an office
block, the second judgment
holds, similarly, that because the construction was undertaken
without approved building plans as the
National Building Regulations
and Building Standards Act 103 of 1977 (Building Standards Act)
requires, the court cannot sanction
it.
[213]
The second appellant’s claim relates to the delay in receiving
payment pursuant to the sales of properties
it had effected and the
loss arising from the ten percent drop in the market price in
2008. Here too the two judgments hold
that because the sales were
completed prior to proclamation and thus null and void by virtue of s
67 of the Ordinance the claim
should fail, as should the claim for
rates and taxes, which it was obliged to pay during the period of the
delay. The second judgment,
in addition, holds that the claim arising
from the ten percent drop in the value of the property as a result of
the global financial
crises fails because it was not foreseeable.
[214]
The third appellant’s claim is for the depreciation in value of
the stands in the un-proclaimed townships
of Extensions 8 and 10 of
the Meyersdal Estate. The Municipality had erroneously not proclaimed
these townships at the time it
proclaimed the other extensions. When
the third appellant discovered this it decided not to compel the
proclamation in terms of
s 103 of the Ordinance because Mr Flusk
would have simply refused to issue the certificates for these
extensions. As a result of
the delay, by the time the Municipality
had indicated that it was not prepared to proclaim the township, the
market experienced
such a collapse that the development was no longer
viable. The third appellant was thus precluded from selling land at
the then
market value and investing the proceeds before the market
collapse. This loss of the value of the land to the tune of ten
percent
and the loss of interest that would have been received is the
measure of the loss claimed.
[215]
The first judgment holds that there was no ‘causal nexus
between the failure to proclaim the township, the
s 82 certificate
and the asserted loss’, and that the loss that resulted from
the market failure was not foreseeable. Put
simply the third
appellant’s claim fails because neither factual nor legal
causation was established. The second judgment
concurs in this
reasoning.
[216]
There is no dispute that the sale agreements, which are the subject
of the first and second appellants’
claims, were invalid for
want of compliance with s 67 of the Ordinance. Section 67(2)
expressly says so, providing that these agreements
have ‘no
force and effect’. Section 67, read with s 70, has as its
purpose, to protect members of public from unscrupulous
developers
seeking to sell properties in un-proclaimed townships. However, the
appellants are not seeking to enforce these admittedly
illegal
agreements against any purchasers, much less take advantage of
unsuspecting buyers, who need the court’s protection.
Their
claim is in delict and the award of damages they seek is to be
compensated for the difference between the position that arose
as a
result of the delict and the hypothetical situation that would have
obtained but for Mr Flusk’s wrongful conduct. In
other words
what is sought to be recovered is the amount by which their patrimony
has been diminished by reason of Mr Flusk’s
refusal to issue
the certificates when he should have done. Their case is that but for
Mr Flusk’s mala fide conduct the townships
would have been duly
proclaimed by December 2007, the appellants would have transferred
properties to their purchasers and they
would not have suffered any
loss.
[217]
Once that had occurred and the parties had settled their contractual
obligations between them it would not follow
that a purchaser could
seek to undo the transaction on the ground of the invalidity of the
agreement. That principle was enunciated
more than a century ago by
Innes J in
Wilken
v Kohler
:
[94]
‘
It
by no means follows that because a court cannot enforce a contract
which the law says shall have no force, it would be bound
to upset
the result of such a contract which the parties had carried through
in accordance with its terms. Suppose, for example,
an underhand
unconditional agreement of sale of fixed property for a definite
price, a payment of the purchase price and due transfer
of the land.
Neither party would be able to upset the concluded transaction on the
mere ground that the
causa
stated in the deed of transfer was called a contract of sale, whereas
it was in reality an agreement to sell, invalid and unenforceable
in
law, but which both seller and purchaser proposed to carry out. No
good ground of action could be alleged in such a case; neither
in the
shape of a
restitutio in integrum
,
nor by way of a
condictio
could relief be claimed. Neither party could say that he had been
enriched at the expense of the other; and the
traditio
duly made with knowledge of all the facts and with the intent to pass
the
dominium
,
and the price duly paid with similar knowledge and with the object of
acquiring the
dominium
would bind the respective parties.’
[218]
Now suppose, on the facts of this case, that the townships had been
proclaimed by December 2007, without delay,
and that the properties
duly transferred to the purchasers in return for payment of the
contract price. It seems clear that the
parties would not be able to
undo the agreement notwithstanding its invalidity. This means that a
purchaser, who received fair
value, would not be able to extricate
himself from the sale agreement by demanding that the seller take
back the property. And
the developer would, notwithstanding the
invalidity of the sale agreement, also not be required to repay the
purchase price.
[219]
Once it is accepted that a contracting party is unable to undo the
consequences of an invalid contract where the
parties have carried
out their obligations, it must follow that a third party is in an
even weaker position to impugn its validity.
[95]
In the present case, as I have mentioned, we are not even concerned
with the enforcement of the contractual obligations flowing
from an
invalid contract. Instead, we have an attempt by a third party –
the Municipality – to invoke the invalidity
of the sale
agreements in a delictual dispute involving it and the developer to
avoid the consequences of the mala fide conduct
of its most senior
official, the City Manager. Section 67 of the Ordinance can
manifestly not serve that purpose. To the extent
that the first two
judgments come to a contrary conclusion, I respectfully disagree with
them, as I do with the second judgment’s
additional reliance on
the Building Standards Act.
[220]
I turn to consider the third appellant’s claim. In regard to
whether factual causation was established the
first judgment holds
that there was no causal nexus between the failure to proclaim the
township and the asserted loss. I respectfully
disagree with this
conclusion. It is correct that the two extensions in issue here,
Extensions 8 and 10 were inadvertently not
proclaimed at the time the
others were. But this is not the issue. It is clear from the evidence
that there were two reasons that
the developer did not insist on the
proclamation. First, it would have unnecessarily incurred further
rates and taxes. Secondly,
and more importantly, there was no purpose
in proceeding with the proclamation in the face of Mr Flusk’s
resolute determination
not to issue the certificates. In my view the
delay in the proclamation of Extensions 8 and 10, which was directly
attributable
to Mr Flusk’s wrongful conduct, was established as
the factual cause of the loss.
[221]
In regard to legal causation the question is whether the Municipality
should be held liable for the harmful consequences or
loss of Mr
Flusk’s conduct. Put differently was Mr Flusk’s mala fide
conduct sufficiently closely linked to the loss
for legal liability
to ensue, or was it too remote?
[96]
The first two judgments hold that if Mr Flusk’s conduct
was mala fide, the Municipality should nevertheless not be held

liable because the loss or harm was the result of the unforeseen
market crash of 2008, which caused the market value of the
un-proclaimed
township to depreciate.
[222]
However, my colleagues, I think, conflate the nature of the loss with
the extent of the loss. Remoteness is concerned with
whether the
nature – not the extent – of the loss is too remote or
reasonably foreseeable to incur legal liability.
The Municipality
(and Mr Flusk) was aware that the delay was causing harm to the
developer; it was drawn to their attention. Once
that is established,
as I think it clearly was, the Municipality cannot complain that the
loss was far greater than expected because
of the unforeseen market
crash. In other words once the nature of the loss is reasonably
foreseeable or not too remote for liability
to ensue, the extent of
the loss is immaterial. If it were otherwise it would mean that a
smaller loss of, say, a five percent
decrease in the market value of
a property is compensable, because that is always reasonably
foreseeable, but not a ten percent
decrease because such a decrease
is never foreseeable. That would be an unwieldy horse to saddle.
Given the egregious nature of
Mr Flusk’s mala fide conduct, I
do not think that there are any policy considerations, based on
reasonableness, fairness
and justice for not holding the Municipality
liable in this case.
[223]
In the result I would uphold the appeal with costs, including the
costs of two counsel.
______________
A
Cachalia
Judge
of Appeal
APPEARANCES:
For
Appellants:

MC Maritz SC (with him LW De Koning SC)
Instructed
by:
Mills
& Groenewald Attorneys, Vereeniging
Phatshoane
Henney Attorneys, Bloemfontein
For
Respondent:

J Peter SC (with him C Georgiades and L Stroom)
Instructed
by:
Nozuko
Nxusani Inc., Johannesburg
Matsepes
Inc., Bloemfontein
[1]
Telematrix
(Pty
)
Ltd t/a Matrix Vehicle Tracking v Advertising
Standards Authority SA
[2005]
ZASCA 73
; SA
2006 (1) SA 461
(SCA);
[2006] 1 All SA 6
(SCA) para 12.
[2]
Itzikowitz
v Absa Bank Ltd
[2016] ZASCA 43
;
2016 (4) SA 432
(SCA) para 8.
[3]
Knop v Johannesburg City
Council
1995 (2) SA 1
(A)
at 26G-H.
[4]
Steenkamp
NO v Provincial Tender Board, Eastern Cape
[2005]
ZASCA 120
;
2006 (3) SA 151
(SCA);
[2006] 1 All SA 478
para 1.
[5]
Ibid.
[6]
Section 82 headed ‘
Prohibition
of registration of certain deeds of transfer’, reads:
‘
(1)
Subject to the provisions of subsection (2), the Registrar shall not
register a deed of transfer by which the ownership of
an erf in a
township –
(
a
)
is transferred before the township has been declared an approved
township in terms of section 79;
(
b
)
which has been declared an approved township in terms of section 79,
is transferred by the township owner –
(i)
if the Director has notified the Registrar in writing that any
condition set out in the schedule contemplated in section 79,
other
than a condition requiring the transfer of land or the payment of an
endowment in cash to the State or a local authority,
has not been
complied with;
(ii)
until such time as –
(
aa
)
the provisions of section 81 in respect of the transfer of land to
the State or a local authority have been complied with,
where any
conditions set out in the schedule contemplated in section 79
requires such transfer;
(
bb
)
the Director or the local authority has notified the Registrar in
writing that the provisions of section 81 in respect
of the payment
of an endowment in cash to the State or a local authority have been
complied with, where any condition set out
in the schedule
contemplated in section 79 requires such payment;
(
cc
)
the local authority within whose area of jurisdiction the township
is situated has certified that it will, within a period
of 3 months
from the date of the certificate, be able to provide the erf with
such services as it may deem necessary and that
it is prepared to
consider an application for the approval of a building plan in
respect of the erf.
(2)
The provisions of –
(
a
)
subsection (1)(
b
)(i) shall not apply to the transfer of an
erf, if the Director has authorised the Registrar in writing to
register the deed of
transfer concerned;
(
b
)
subsection 1(
b
)(ii)(
bb
) shall not apply to the
transfer of an erf to the State or a local authority by virtue of a
condition set out in the schedule
contemplated in section 79;
(
c
)
subsection 1(
b
)(ii)(
cc
) shall not apply to –
(i)
the transfer of an erf in a township for the establishment of which
application has been made in terms of a repealed
law and the
registration of the deed of transfer would not have been in conflict
with the provisions of that law;
(ii)
the transfer of an erf contemplated in paragraph (
b
).
‘
Subject
to the provisions of subsection (2), the registrar shall not
register a deed of transfer by which the ownership of an
erf in a
township –
(
a
)
is transferred before the township has been declared an approved
township in terms of s 79;
(
b
)
which has been declared an approved township in terms of s 79, is
transferred by the township owner;
(ii)
until such time as –
(
cc
)
the local authority within whose area of jurisdiction the township
is situated has certified that it will, within a period of
three
months from the date of the certificate, be able to provide the erf
with such services as it may deem necessary and that
it is prepared
to consider an application for the approval of a building plan in
respect of the erf.’
[7]
Steenkamp
para
30.
[8]
Telematrix
(Pty) Ltd v Advertising Standards Authority SA
2006
(1) SA 461
(SCA);
[2006] 1 All SA 6
(SCA) para 23.
[9]
Steenkamp
para
24.
[10]
Steenkamp
para
27.
[11]
Steenkamp
para
19.
[12]
Steenkamp
para 20.
[13]
Steenkamp
para
21.
[14]
Minister
van Polisie v Ewels
1975
(3) SA 590
(A) 597A-B: ‘dat die gelede skade vergoed behoort
te word’. In
Olitzki
Property Holdings v State Tender Board & another
2001
(3) SA 1247
(SCA) para 12, Cameron JA observed: ‘
Where
the legal duty the plaintiff invokes derives from breach of a
statutory provision, the jurisprudence of this Court has developed
a
supple test.  The focal question remains one of statutory
interpretation, since the statute may on a proper construction
by
implication itself confer a right of action, or alternatively
provide the basis for inferring that a legal duty exists at
common
law. The process in either case requires a consideration of the
statute as a whole, its objects and provisions, the circumstances
in
which it was enacted, and the kind of mischief it was designed to
prevent. But where a common law duty is at issue, the answer
now
depends less on the application of formulaic approaches to statutory
construction than on a broad assessment by the court
whether it is
“just and reasonable” that a civil claim for damages
should be accorded. “The conduct is wrongful,
not because of
the breach of the statutory duty per se, but because it is
reasonable in the circumstances to compensate the plaintiff
for the
infringement of his legal right”. The determination of
reasonableness here in turn depends on whether affording
the
plaintiff a remedy is congruent with the court’s appreciation
of the sense of justice of the community. This appreciation
must
unavoidably include the application of broad considerations of
public policy determined also in the light of the Constitution
and
the impact upon them that the grant or refusal of the remedy the
plaintiff seeks will entail.’
[15]
Minister
van Polisie v Ewels
1975
(3) SA 590
(A) 597A-B.
[16]
Country Cloud Trading CC v
MEC, Department of Infrastructure Development, Gauteng
[2014]
ZACC 28
;
2015 (1) SA 1
(CC);
2014 (12) BCLR 1397
(CC) para 20.
[17]
Minister
of Safety and Security v Van Duivenboden
[2002] ZASCA 79
;
2002 (6) SA 431
(SCA);
[2002] 3 All SA 741
(SCA)
para 21.
[18]
Knop v
Johannesburg City Council
1995 (2) SA 1
(A) 33D-E.
[19]
Jones v
Department of Employment
[1989]
Q B 1
(CA) at 22 B-D;
[1988] 1 All ER 725
at 736.
[20]
Kitano
v The Commonwealth of Australia
[1974] HCA 31
;
(1973) 129 CLR 151
at 174-175.
[21]
Comeau's
Sea Foods Ltd v Canada (Minister of Fisheries and Oceans)
[1995] 2 FC 467, 1995 CanLII 3576 (FCA).
[22]
Trustees
for the Time Being of Two Oceans Aquarium Trust v Kantey &
Templer (Pty) Ltd
(545/2004)
[2005] ZASCA 109
;
[2007] 1 All SA 240
(SCA) (25 November
2005)
[23]
McIntosh
v Premier, KwaZulu-Natal & Another
[2008]
ZASCA 62
;
2008
(6) SA 1
(SCA);
[2008]
4 All SA 72
(SCA) para 12
,
where Scott JA stated: ‘As is apparent from the much-quoted
dictum of Holmes JA in
Kruger
v Coetzee
1966
(2) SA 428
(A) at 430E-F, the issue of negligence itself involves a
twofold inquiry. The first is: was the harm reasonably foreseeable?

The Second is: would the
diligens
paterfamilias
take
reasonable steps to guard against such occurrence and did the
defendant fail to take those steps? The answer to the second
inquiry
is frequently expressed in terms of a duty.’
[24]
Three Rivers District
Council and others v Bank of England (No 3)
[2001] UKHL 16
;
[2001] 2 All ER 513
para 41.
[25]
Perlman
v Zoutendyk
1934
CPD 151
at 155.
[26]
Steenkamp
para
30 citing the judgment of Mason J in
Kitano
v The Commonwealth of Australia
[1974] HCA 31
;
(1973) 129 CLR 151
at 174-175, which was referred to with approval
in
Dunlop
v Woollahra Municipal Council
[1981] 1 All ER 1202
(PC) at 1208F-G. The case concerned the
liability of a local authority in tort for passing of an
ultra
vires
resolution.
[27]
Robinson
v Randfontein Estates GM Co Ltd
1925 AD 173
at 198.
[28]
Yannakou v Apollo Club
1974
(1) SA 614
(A) at 623-4.
[29]
Above
.
[30]
Three Rivers District
Council and others v Bank of England (No 3)
[2001] UKHL 16
;
[2001] 2 All ER 513
par 51. As long ago as
Wallingford
v
Mutual
Society
(1880) 5 App Cas 685
at 697 Lord Selborne LC said:
‘
.
. . general allegations, however strong may be the words in which
they are stated, are insufficient even to amount to an averment
of
fraud of which any Court ought to take notice.’
In
a similar vein in
Nedperm Bank Ltd v Verbi Projects CC
1993
(3) SA 214
(W) at 220B, Zulman J stated:
‘
At
the outset one has to observe that it is trite that fraud is a most
serious matter and the type of allegation which is not
lightly made
and which is not easily established. What is important is that a
factual basis must be laid for an allegation of
fraud, and it is not
sufficient . . . merely to put up speculative propositions or to
raise submissions or to advance arguments
on probabilities which
might indicate a fraud. What is essential is that there should be
hard facts, as it were, upon which the
court can exercise the
discretion.’
[31]
Cited with
approval in
R v
Mahomed
1929 AD 58
at 67.
Gardiner and Lansdown
Criminal
Law and Procedure
(1970)
vol 2 at 1709 describes it thus: ‘A person is guilty of the
crime of extortion who from improper motives, and by
inspiring fear
in the mind of another, demands from, and compels the latter to
render some advantage which is not due.’
[32]
Three Rivers District
Council and others v Bank of England (No 3)
[2001] UKHL 16; [2001] 2 All ER 513.
[33]
Three
Rivers
para
55.
[34]
Trope v
South African Reserve Bank & Another
1992 (3) SA 208
(T) at 214D.
[35]
Fourway
Haulage SA (Pty) Ltd v South African National Roads Agency Ltd
[2008]
ZASCA 134
;
2009 (2) SA 150
(SCA);
[2009] 1 All SA 525
(SCA) para 14.
[36]
Shill v
Milner
1937
AD 101
at 105;
Robinson
v Randfontein Estates Gold Mining Co Ltd
1921
AD 168
at 198.
[37]
KPMG
Chartered Accountants (SA) v Securefin Limited & another
[2009]
ZASCA 7
;
2009 (4) SA 399
(SCA);
[2009] 2 All SA 523
(SCA) para 38.
[38]
[zRPz]South African
Post Office v De Lacy & another
[2009] ZASCA 45
;
2009 (5) SA 255
(SCA);
[2009] 3 ALL SA 437
(SCA)
para 35.
[39]
S v Essack
1974
(1) SA 1
(A) at 16D.
[40]
Fourway
Haulage
par 26.
[41]
In
International
Shipping Company (Pty) Ltd v Bentley
[1989]
ZASCA 138
;
1990 (1) SA 680
(A);
[1990]
1 All SA 498
(A)
para
64-66, Corbett CJ expressed the position thus: ‘. . . i
n
the law of delict causation involves two distinct enquiries. The
first is a factual one and relates to the question as to whether
the
defendant's wrongful act was a cause of the plaintiff's loss. This
has been referred to as "factual causation".
The enquiry
as to factual causation is generally conducted by applying the
so-called "but-for" test, which is designed
to determine
whether a postulated cause can be identified as a
causa
sine qua non
of the loss
in g[q]uestion. In order to apply this test one must make a
hypothetical enquiry as to what probably would have happened
but for
the wrongful conduct of the defendant. This enquiry may involve the
mental elimination of the wrongful conduct and the
substitution of a
hypothetical course of lawful conduct and the posing of the question
as to whether upon such an hypothesis
plaintiff's loss would have
ensued or not. If it would in any event have ensued, then the
wrongful conduct was not a cause of
the plaintiff's loss;
aliter
,
if it would not so have ensued. If the wrongful act is shown in this
way not to be a
causa sine
qua non
of the loss
suffered, then no legal liability can arise. On the other hand,
demonstration that the wrongful act was a
causa
sine qua non
of the loss
does not necessarily result in legal liability. The second enquiry
then arises, viz whether the wrongful act is linked
sufficiently
closely or directly to the loss for legal liability to ensue or
whether, as it is said, the loss is too remote.
This is basically a
juridical problem in the solution of which considerations of policy
may play a part. This is sometimes called
"legal causation".’
[42]
Fourway
Haulage
para 231.
[43]
103. Notice
declaring township an approved township
(1)
After the provisions of sections 72, 75, 99 and 101 have been
complied with and the authorised local authority to which

application has been made in terms of section 96(1) is satisfied
that the township is situated within its area of jurisdiction,
such
local authority shall, by notice in the
Provincial Gazette
,
declare the township an approved township and it shall, in a
schedule to such notice, set out the conditions on which the

township is declared an approved township.
(2)
After an authorised local authority has published a notice as
contemplated in subsection (1), it shall forward a copy
of –
(
a
)
the notice;
(
b
)
the schedule to the notice; and
(
c
)
the general plan of the township, as approved, forthwith to the
Director.
[44]
67.
Prohibition of certain contracts and options
(1)
After an owner of land has taken steps to establish a township on
his land, no person shall, subject to the provisions
of section 70 –
(
a
)
enter into any contract for the sale, exchange or alienation or
disposal in any other manner of an erf in the township;
(
b
)
grant an option to purchase or otherwise acquire an erf in the
township,
Until
such time as the township is declared an approved township: Provided
that the provisions of this subsection shall not be
construed as
prohibiting any person from purchasing land on which he wishes to
establish a township subject to a condition that
upon the
declaration of the township as an approved township, one or more of
the erven therein will be transferred to the seller.
(2)
Any contract entered into in conflict with the provisions of
subsection (1) shall be of no force and effect.
(3)
Any person who contravenes or fails to comply with subsection (1)
shall be guilty of an offence.
(4)
For the purposes of subsection (1) –
(
a
)
“steps” includes steps preceding an application in terms
of section 69(1) or 96(1);
(
b
)
“any contract” includes a contract which is subject to
any condition, including a suspensive condition.
[45]
In
Schierhout
v Minister of Justice
Innes
CJ said:
‘
It
is a fundamental principle of our law that a thing done contrary to
the direct prohibition of the law is void and of no effect
. . .
(
Code
1.14.5). So that what is done contrary to the prohibition of the law
is not only of no effect, but must be regarded as never
having been
done — and that whether the lawgiver has expressly so decreed
or not; the mere prohibition operates to nullify
the act.’
[46]
Sasfin
(Pty) Ltd v Beukes
1989
(1) SA 1 (A);
[1989]
1 All SA 347 (A).
[47]
Minister
of Police v Skosana
1977 (1) SA 31
(A) at 34E-G. See also
International
Shipping Company (Pty) Ltd v Bentley
1990 (1) SA 680
(A) at 700E-I;
Mashongwa
v Passenger Rail Agency of South Africa
[2015] ZACC 36
;
2016 (3) SA 528
(CC) para 65.
[48]
Standard
Chartered Bank of Canada v Nedperm Bank Ltd
[1994] ZASCA 146
;
1994 (4) SA 747
(A) at 764I-765A.
[49]
Fourway
Haulage SA (Pty) Ltd v SA National Roads Agency Ltd
[2008] ZASCA 2009
(2) SA 150 (SCA) para 34.
[50]
Minister
of Safety and Security v Van Duivenboden
2002 (6) SA 431
(SCA) para 25.
[51]
Section
103(1) of the Ordinance reads:
‘
After
the provisions of sections 72, 75, 99 and 101 have been complied
with and the authorised local authority to which application
has
been made in terms of section 96(1) is satisfied that the township
is situated within its area of jurisdiction, such local
authority
shall, by notice in the
Provincial
Gazette
, declare the township an
approved township and it shall, in a schedule to such notice, set
out the conditions in which the township
is declared an approved
township.’
[52]
The
relevant provisions of s 70 of the Ordinance read as follows:
‘
(1)
After an owner of land has applied in terms of section 69(1) to
establish a township, he may apply to the Director for
consent to
enter into any contract contemplated in section 67(1) or to grant
any option contemplated in the latter section, and
the Director may-
(
a
)
in the case where the owner applied to establish a residential
township, in consultation
with the local authority concerned;
(
b
)
in any other case, in his discretion,
consent
to the entering into of such contact or the granting of such option
subject to any condition the Director may deem expedient,
and
thereupon the Director shall notify the owner and, where applicable,
the local authority in writing thereof and of any condition
imposed.
(2)
On receipt of a notice contemplated in subsection (1) the applicant
shall, before entering into the contract or granting
the option, but
within a period of 6 months from the date of the consent, furnish to
the local authority a guarantee of such
type and for such amount as
the local authority may determine and which is otherwise to its
satisfaction that he will fulfil
his duties in respect of the
engineering services contemplated in Chapter V, and if he fails to
do so the consent shall lapse.’
[53]
Schierhout
v Minister of Justice
1926 AD 99
at 109;
Panamo
Properties 103 (Pty) Ltd v Land and Agricultural Development Bank of
South Africa
[2015] ZASCA 70
;
2016 (1) SA 202
(SCA) para 22.
[54]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012] ZASCA 13
;
2012 (4) SA 593
(SCA) para 18.
[55]
Schierhout
fn 3 above.
[56]
Cool
Ideas 1186 CC v Hubbard & another
[2014] ZACC 16
;
2014 (4) SA 474
(CC) para 99.
[57]
Pottie v
Kotze
1954 (3) SA 719
at 726H.
[58]
Cool
Ideas
fn 10 above paras 53, 55, 61 and 98-99.
[59]
Cool
Ideas
fn 10 above para 77.
[60]
Skosana
fn 1 above at 34G;
Fourway
Haulage
fn 3 above para 30.
[61]
Fourway
Haulage
fn 3 above para 31.
[62]
Country
Cloud Trading CC v MEC, Department of Infrastructure Development,
Gauteng
[2014] ZACC 28
;
2015 (1) SA 1
(CC) para 25.
[63]
Metro
Western Cape (Pty) Ltd v Ross
1986 (3) SA 181
(A) at 188G.
[64]
International
Shipping Company
fn
1 above at 700E-I.
[65]
See s
103(1) of the Ordinance, fn 5 above.
[66]
Neethling
et al
Law
of Delict
(2015) 7ed at 221;
Evins
v Shield Insurance Co Ltd
1980 (2) SA 814
(A) at 838H-839A.
[67]
J C Van der
Walt and J R Midgley
Principles
of Delict
(2016) 4ed at 304.
[68]
De Klerk
v Absa Bank Ltd & others
2003 (4) SA 315
(SCA) para 26.
[69]
Neethling
fn 20 at 246.
[70]
De Klerk
fn
22.
[71]
Ibid
para
2.
[72]
Ibid
paras
16-19.
[73]
Neethling
fn 20 at 227, footnotes omitted.
[74]
Shill v
Milner
1937
AD 101
at 105. (See noter-up for repeated application of this
authority.)
[75]
President
of the RSA v South African Rugby Union
2000
(1) SA 1
(CC) paras 58-72.
[76]
Stellenbosch
Farmers’ Winery Group Ltd & another v Martell et Cie &
others
2003 (1) SA 11
(SCA) para 5.
[77]
Santam
BPK v Biddulph
2004
(5) SA 586
(SCA) para 5.
[78]
Country
Cloud Trading CC v MEC, Department of Infrastructure Development
2015
(1) SA 1
(CC) para 47.
[79]
Ibid para
37.
[80]
Country
Cloud Trading CC v MEC, Department of Infrastructure Development
2014
(2) SA 214
(SCA).
[81]
Ibid, paras
21 and 22.
[82]
Minister
of Finance v Gore
2007
(1) SA 111 (SCA).
[83]
Country
Cloud Trading CC v MEC, Department of Infrastructure Development
2015
(1) SA 1
(CC) para 47.
[84]
Minister
of Safety and Security v Van Duivenboden
2002
(6) SA 431
(SCA) para 19-20.
[85]
Compare
Country
Cloud Trading CC v MEC, Department of Infrastructure Development
2015
(1) SA 1
(CC) para 45.
[86]
Van
Duivenboden
(supra)
fn 11.
[87]
Country
Cloud Trading CC v MEC, Department of Infrastructure Development
2015
(1) SA 1
(CC) para 48.
[88]
Ibid paras
46 and 47.
[89]
Van
Duivenboden
(supra)
fn 11 para 22.
[90]
Gore
(supra)
fn 9 para 88.
[91]
Three
Rivers District Council & others v Governor and Company of the
Bank of England (No 3)
(CA
and HL(E)) [2003] 2 AC.
[92]
Ibid at
235-236.
[93]
In
Gore
(supra)
fn 9 the court said that dishonest conduct will usually attract
legal liability;
In
Telematrix
(Pty) Ltd v Advertising Standards Authority SA
2006
(1) SA 461
(SCA) para 26 Harms JA said: ‘Decisions made in bad
faith are . . . unlawful and can give rise to a claim for damages’.
[94]
Wilken v
Kohler
1913
AD 135
at 144; See also
Taljaardt
v T L Botha Properties
[2008] ZASCA 38
;
2008
(6) SA 207
(SCA) para 7;
Country
Cloud Trading CC v MEC, Department of Infrastructure Development
2015
(1) SA 1
(CC) para 168.
[95]
Aussenkuhr
Farms (Pty) Ltd v Trio Transport CC
2002
(4) SA 483
(SCA) para 26.
[96]
Minister
of Safety and Security v Carmichele
2002
(6) SA 305
(SCA) 332. See generally J Neethling et al
Law
of Delict
5 ed (2006) at 171-174.