Talking Point August 2016


A succinct discussion of selected topical, legal matters

Dear Friends and Colleagues

I take great pleasure in submitting the August 2016 edition of Talking Point to you.

Clarence Thomas (born in 1948) is a sitting Justice of the USA Supreme Court.  He was nominated for the position by then President George Bush (the first).  The subsequent Senate hearings were acrimonious, and the Senate confirmed his appointment by one of the narrowest margins ever: 41 Republicans and 11 Democrats confirmed, and 2 Republicans and 46 Democrats rejected the nomination.  He became the second African American to serve on the Court.

Justice Thomas rarely speaks when the Court is in session.  For a period of seven years, he made no such utterance at all.  He is on record as saying “My colleagues should shut up!  I think that they should ask questions, but I don’t think that for judging, and for what we are doing, all those questions are necessary.

However, he has strong views on several matters; some of them controversial (an understatement):

  • Good manners will open doors that the best education cannot.”

  • As for the matter of my judicial philosophy, I didn’t have one – and didn’t want one.  A philosophy that is imposed from without instead of arising organically from day-to-day engagement with the law isn’t worth having.  Such a philosophy runs the risk of becoming an ideology, and I’d spent much of my adult life shying away from abstract ideological theories that served only to obscure the reality of life as it’s lived.

  • What I tell my law clerks is that we write [court judgments] so that they are accessible to regular people.  That doesn’t mean that there’s no law in it.  But there are simple ways to put important things in language that’s accessible.  As I say to them, the beauty, the genius is not to write a five-cent idea in a ten-dollar sentence.  It’s to put a ten-dollar idea in a five-cent sentence.”

  • The problems faced by blacks in America would take quite some time to solve, and the responsibility for solving them would fall largely on black people themselves.  It was far more common in the seventies to argue that whites, having caused our problems, should be responsible for solving them instantly, but while that approach was good for building political coalitions and soothing guilty consciences, it hadn’t done much to improve the daily lives of blacks.”

  • Our small, soft hands blistered quickly at the start of each summer, but Daddy [actually his maternal grandfather] never let us wear work gloves, which he considered a sign of weakness.  After a few weeks of constant work, the bloody blisters gave way to hard-earned calluses that protected us from pain.  Long after the fact, it occurred to me that this was a metaphor for life – blisters come before calluses, vulnerability before maturity.”

As always, I would greatly appreciate your feedback on Talking Point. Please email me at charlt@walkers.co.za.

Regards

Charl Theron

In this issue:

  • Tripartite agreements and VAT

    • A UK Supreme Court judgment illustrates a costly error regarding VAT, and could have local implications.
  • How and how not to use a smartphone

    • Nowadays, someone taking photos (or videos) with a cell phone is a common sight. As such photos are being used in legal proceedings more frequently, we discuss an unremarkable case to make a particular point.
  • Clamping down on ‘meal ticket for life’ divorces

    • A UK Court finds against a divorced spouse who wished to be a lady of leisure post-divorce: “I do not anticipate her having a significant earning capacity nor would it be reasonable to expect her to muck out stables for the minimum wage. However, she should make some financial contribution.”
  • Corruption in High Places

    • Averments of South African high ranking public officials being guilty of corrupt activities occur with depressing frequency in the media. The USA is by no means spared the same phenomenon, but there it is not uncommon for the averments also to be dealt with in court. (Talking Point, April 2016).
  • POPI and the privilege that attaches to information disclosed to a legal practitioner

    • The Protection of Personal Information Act (POPI) has been law since 2013, but is at present not fully operative.  This is another international example of what we could expect from life under POPI.
  • Some technical facts on fingerprints

    • Criminal law is not listed under our Legal Services, but we remain informed. These technical facts serve as background for the famous legal cases in this issue.
  • Travesties of justice

    • The famous legal cases in this issue all arise from the scandal over the disputed identification in 1997 of fingerprints in a murder inquiry in the Scottish town of Kilmarnock. For some technical facts on fingerprints, refer to the preceding article.

LEGAL MATTERS

Tripartite agreements and VAT

Jerome casualby Jerome Veldsman

A tripartite agreement is a contract amongst (at least) three parties.

In general, if a value-added tax (VAT) vendor (X) supplies goods or services to another VAT vendor (Y), and X charges VAT, Y has the right to reclaim the VAT paid to X from the taxing authority, as an input tax credit.

Airtours Holidays Transport v HMRC, a judgment of the UK Supreme Court (the apex Court in the UK) delivered on 11 May 2016, dealt with a tripartite agreement and an input tax credit.

In 2002, Airtours was in financial distress, and in need of refinancing.  Its financiers required an independent review of Airtours’ business.  So, Airtours, its financiers, and an auditing firm entered into a tripartite agreement under which –

– the auditing firm would conduct the review for the financiers, to whom the firm would owe a duty of care; and

– the auditing firm would invoice Airtours, starting with a GBP 200 000 retainer, plus VAT.

Both the auditing firm and Airtours were VAT vendors, and the auditing firm charged Airtours VAT.  The main question was whether the auditing firm had supplied the relevant services to Airtours.

The main question was divided into two specific questions:

– Was there a contractual obligation on the auditing firm to make a supply to Airtours?

– If not, did the auditing firm nevertheless make a supply to supply Airtours (economic reality)?

Like so many matters on which Walkers has to advise after the fact, the problem for Airtours started with a document in “standard form, which has been poorly adapted“.  The tripartite agreement consisted of a letter and the “standard form” terms and conditions.

The majority answered the first question against Airtours, as the “standard form” simply did not state any contractual obligation on the auditing firm to make a supply to Airtours.  The minority would have found at least some implied obligation on the auditing firm.

The majority also answered the second question against Airtours:

The Contract … did reflect the economic reality, and was not in any way an artificial arrangement.  It is true that Airtours benefitted from the Contract, but the benefit which it was getting was not so much the Services from [the auditing firm], but the enhanced possibility of funding from the Institutions for its restructuring (a possibility which eventuated into reality thanks, to a substantial extent, to the Report).

The minority would have found that the economic reality was that the auditing firm did make a supply to supply Airtours.

As a court works on the basis of majority rule, Airtours lost; and consequently cannot claim an input tax credit of 17.5% of many hundreds of thousands of Pounds.

The result for Airtours may well have been different, had the tripartite agreement been professionally drafted.

As the wording of the relevant provisions in the UK VAT legislation are somewhat different to the equivalent provisions in the (South African) Value-added Tax Act 89 of 1991, it is unclear to what extent this judgment will influence a South African Court.  However, SARS will scrutinise this judgment, and it may be prudent to pay attention to local VAT consequences under tripartite agreements.

How and how not to use a smartphone

Jerome casualNosi smallby Jerome Veldsman and Nosipho Madikiza

In State v Skhosana in the Kempton Park Regional Magistrate Court, the accused was charged of housebreaking with intent to steal, and theft.

A group of individuals were caught on CCTV video surveillance entering into the complainant’s house.  The individuals must also have triggered an alarm, as officials of a security company responded.  Approximately 250 metres from the complainant’s house, an unknown person pointed the accused out to a security officer, who arrested the accused, and used his cell phone to take a photo of the accused.

The evidence against the accused included that the clothing of the accused as shown on the photo was exactly the same as that of one of the individuals on the CCTV video footage.

The accused was found guilty, and sentenced to eight years’ imprisonment.  He appealed to the High Court, Johannesburg against the finding and the sentence.  Only on appeal did he challenge the admissibility of the video footage and the photo.

The appeal was heard on 7 June 2016, and the Court handed down judgment on the same day.

The Court confirmed the general position that video footage is admissible in evidence if it is proven that the footage is an original recording, and that there exists no reasonable possibility of interference with the recordings.  The Court held that the foregoing had been proven in the trial court, and the video footage was correctly admitted in evidence.

In respect of the photo, the Court stated that a cell phone photo is admissible in evidence if it is proven that:

– it is verified as being a true image of what was captured by the person who took it;

– it is clear and not edited;

– it is presented in court to be viewed; and

– the device on which the photo was captured is reliable.

The Court held that the foregoing had been proven in the trial court, and the photo was correctly admitted in evidence.

The appeal against the guilty finding failed.  For completeness, we mention that the appeal against the sentence also failed.

Now the point we wish to make: for a cell phone photo to be admissible in evidence it has to be proven that it has not been edited.  Smart phones have in-built editing facilities, and editing apps are available for free.  Any ‘improvement’ of a relevant photo may make it inadmissible in evidence.

 

Clamping down on ‘meal ticket for life’ divorces

 Roxy 5by Roxanne Ker 

Wright v Wright, a judgement of the UK Court of Appeal on 11 February 2015, dealt with the post-divorce variation of a maintenance order.

Similar to the relevant provisions in the South African Divorce Act 70 of 1979, the equivalent legislation in the UK creates an exception to the general rule that a court order, once pronounced (and not appealed), is final and immutable.  A divorced spouse may apply to Court to rescind, suspend, or vary a prior maintenance order, and must prove sufficient reason for the change.

At the time of their marriage in 1999, Mr Ian Wright (the applicant) was an equine surgeon (a veterinarian specialising in treating horses), and Ms Tracey Wright worked as a legal secretary and administrator.  Soon after the marriage, Tracey ceased employment to be a fulltime mother.  They divorced in 2008, and Ian was ordered to pay spousal maintenance to Tracey of “periodical payments of £33 200 per annum during the parties’ joint lives or until [Tracey] remarried or until further order“.  However, the Judge made it clear that the spousal maintenance was not necessarily a meal ticket for life: “[Tracy] will use her best endeavours to develop an earning capacity in 2 to 3 years’ time to the extent that it is compatible with [the children’s] care“.

In 2012, Ian applied to Court for a decrease in the annual maintenance payments, on the ground that his financial circumstances had changed for the worse.  Tracey opposed the application.  The Court accepted Ian’s evidence on the change in his financial circumstances.  Tracey had made no attempt to find work or to retrain or prepare herself for work since the divorce in 2008.  The Court did not accept Tracy’s excuses, and found her to be an evasive witness regarding her earning capacity.  The Court ordered the scaling down of spousal maintenance over the next six years, and the termination of spousal maintenance at the end of such period (to coincide with the Ian’s retirement).

The judgement on 11 February 2015 dealt with Tracey’s application for leave to appeal such variation of the original order.  Leave was refused, but with some words of comfort: “it was open to [Tracy] to make a further application if, despite her best efforts, she failed to produce a significant financial contribution both for the present and for the future, but the onus would henceforward be on her“.

UK Divorce lawyers say that since the Wright judgment they have seen an increase in cases in which Courts order maintenance only for a limited period rather than the traditional indefinite maintenance orders.

In South Africa, in principle, the Courts are moving away from the traditional indefinite maintenance orders towards ‘rehabilitative’ maintenance for a limited period of time, to provide a window of opportunity for the relevant spouse to up-skill and re-enter the job market.  However there is scope for subjectivity; and Judges, for different reasons, have diverse views on ‘meal ticket for life’ spousal maintenance.

Corruption in High Places

Jerome casual by Jerome Veldsman

Robert Francis McDonnell, a qualified lawyer, had a sterling career in politics.  He was elected to the Commonwealth of Virginia House of Delegates in 1991, on a Republican ticket, and remained in office until 2006, when he was elected as the Attorney General of the Virginia (the third highest political office in the State, after the Governor and the Lieutenant Governor).  He served as Attorney General until shortly before being inaugurated as the Governor of Virginia in 2010.

In 2014, McDonnell was indicted on federal corruption charges, based on his averred unlawful acceptance, whilst in office as Governor, of USD 175 000 in loans, gifts, and other benefits from Jonnie Williams.  Williams was the chief executive officer of Star Scientific, a Virginia-based company that had developed a nutritional supplement, and wanted Virginia’s public universities to perform research studies on the supplement.  Williams wanted McDonnell’s assistance in obtaining those studies.

A crucial question in the case was whether McDonnell had committed an official act (see below).  The State averred five perceived official acts, including arranging meetings for Williams with other Virginia officials to discuss Star Scientific’s supplement, hosting events for Star Scientific at the Governor’s Mansion, and contacting other government officials concerning the research studies.  McDonnell conceded the acts had occurred, but averred the acts were not official acts.

The Code of Laws of the USA is the official compilation and codification of the general and permanent federal statutes of the USA.  Title 18 – Crimes and Criminal Procedure includes the General Federal Bribery Statute.  The latter criminalises certain conduct, including the conduct of both parties regarding:

Any person [the briber], directly or indirectly, corruptly giving or promising anything of value to a public official [the bribe], with intent to influence any official act.

An official act is defined as “any decision or action on any question, matter, cause, suit, proceeding or controversy, which may at any time be pending, or which may by law be brought before any public official, in such official’s official capacity, or in such official’s place of trust or profit”.

The trial judge had instructed the jury that: “official act” encompasses acts that a public official customarily performs, including acts in furtherance of longer-term goals or in a series of steps to exercise influence or achieve an end.

The jury found McDonnell guilty, and he was subsequently sentenced to two years in prison, followed by two years of supervised release.  He appealed, and has been free pending the finalisation of the case.

In Mcdonnell v United States, a unanimous judgement of the Supreme Court (their apex court) on 27 June 2016, the Court provided the appropriate interpretation of “official act”:

An “official act” is a decision or action on a “question, matter, cause, suit, proceeding or controversy”.  That question or matter must involve a formal exercise of governmental power, and must also be something specific and focused that is “pending” or “may by law be brought” before a public official.  ….  Setting up a meeting, talking to another official, or organizing an event – without more – does not fit that definition of “official act”.  …  Something more is required: … the public official must make a decision or take an action on the question or matter, or agree to do so.

The point of law was decided in favour of McDonnell, but the judgment contains a condemnation of his acts:

There is no doubt that this case is distasteful; it may be worse than that.  But our concern is not with tawdry tales of Ferraris, Rolexes, and ball gowns.  It is instead with the broader legal implications of the Government’s boundless interpretation of the federal bribery statute.

This judgment is also not the end of the matter:

A more limited interpretation of the term “official act” leaves ample room for prosecuting corruption, while comporting with the text of the statute and the precedent of this Court.  The judgment of the Court of Appeals is vacated, and the case is remanded for further proceedings consistent with this opinion.

It is likely that the Virginia will put McDonnell on trial afresh.

The (South African) Prevention and Combating of Corrupt Activities Act 12 of 2004 (POCCA) contains similar criminalisation of corrupt activities, and much more.  Under POCCA, the ‘official act’ equivalent is more widely described, and includes “the abuse of a position of authority” and to act in a manner “designed to achieve an unjustified result“.  Had McDonnell been prosecuted under POCCA, the point of law may have been decided against him.  POCCA is very severe, yet there have been few prosecutions under POCCA; and, of course, even fewer convictions.

 

 

POPI and the privilege that attaches to information disclosed to a legal practitioner

Jerome casualby Jerome Veldsman 

Under South African common law, the legal professional privilege rule determines that the content of communications between a client and a legal practitioner are protected from disclosure (as evidence in court, and otherwise), if certain requirements are met.  In brief, if the client claims the privilege, the requirements are that the legal practitioner must have been acting in a professional capacity, the client must have consulted the legal practitioner in confidence, the relevant communication must relate to legal advice, and the advice must not facilitate the commission of a crime or fraud.  The legal position in Canada is substantially similar.

Canada (Privacy Commissioner) v. Blood Tribe Department of Health, a judgment of the Supreme Court of Canada (the highest Court) in 2008, dealt with legal professional privilege in the context of the Canadian Personal Information Protection and Electronic Documents Act (on which POPI is to some extent based).

Following her dismissal, an employee asked to have access to her personal employment information because she suspected that the employer had improperly collected inaccurate information and used it to discredit her before its board.  The employer denied the request, and the employee filed a complaint with the Privacy Commissioner (under POPI, the “Information Regulator”) seeking access to her personal file.  The Commissioner requested the records from the employer, and the latter provided records except those over which it claimed legal professional privilege.  The Commissioner then ordered the employer to produce the averred privileged documents, which decision the employer took on review; and the matter progressed to the Supreme Court.

The Court found in favour of the employer.  It held that, absent express terms to such effect in the relevant statute, the Commissioner, as an official vested with administrative functions, did not have the right to ‘pierce’ legal professional privilege, even for the limited purpose of determining whether the privilege is properly claimed.  If the Commissioner wishes to challenge a claim of legal professional privilege, it could do so in a Court.

The position under POPI may well be similar; it is indeed so regarding search and seizure (section 87).  The Tax Administration Act, and some other Acts, undermine legal professional privilege to some extent, but still require a Court to have the final word. .

 

Some technical facts on fingerprints

Dactylography is the science of examination of primarily fingerprints, but also of other impressions made by a human body, or any other solid object – such as feet, palms, toes, shoes, and vehicle tyres.

The science of examination of fingerprints (technically the friction ridges on fingers) is based on the premise that fingerprints are unique to each human, essentially do not change, and are capable of being transferred to various surfaces.  Insofar as is known, to date no two humans have been found to have fingerprints with identical characteristics.

Sweat glands in the dermis of fingers discharge perspiration through pore openings located on the ridges.  When a finger touches a surface, the perspiration is deposited on the surface, leaving an impression of the skin on the surface.

Some impressions (patent prints) are visible to the naked eye.  Others (latent prints) are not, but can be located and visualised with chemical and powder techniques.  A three-dimensional impression in a substance, like soap or wax, is called a plastic print.

The impression on a surface can be recorded by lifting and/or photography.  Typically, an impression is lifted by applying a rubber tape with an adhesive surface, leaving an imprint of the impression (the fingerprint) on the tape.  A lifted print can be converted into digital data that can be modified to create a clearer image.

Fred Cherrill, a famous UK dactylographer in his day, titled his autobiography Fingerprints Never Lie (published in 1954).  He ‘borrowed’ the title from an earlier detective novel.  The title is catchy, but misconceived.  Fingerprints have no speech, and are analysed and commented on by humans.  The following article Travesties of justice illustrates this point.

 

Travesties of justice

In January 1997, Marion Ross, an adult female, was brutally murdered (with violence including multiple stabbings with a pair of scissors) in her home. There was no sign of forced entry to the house. The police searched for anyone with connections to the deceased, but she had been reclusive.

There had been building work at the deceased’s house the year before (1996). The police started interviewing the builders. One of them, David Asbury, a 20 year old joiner, was not available. A relative informed the police that he had disappeared, leaving a suicide note. The police “thought it a bit odd”, and a sergeant and Detective Constable Shirley McKie (more about her later) went to Asbury’s parents’ house, to asked them some questions and searched his bedroom.

In Asbury’s bedroom, the police found a tin containing £1,800 in cash. His family stated that the tin and the cash belonged to Asbury. The police lifted fingerprints from the tin, including Asbury’s fingerprints and a print identified by the (then) Scottish Criminal Records Office (SCRO) as that of the deceased.

The police also lifted fingerprints at the deceased’s house. SCRO identified a print found on a gift tag on an unopened Christmas present as that of Asbury.

Asbury was found, and questioned by the police. He initially denied that he had been in the deceased’s house since the previous year, but later stated to police that his car had broken down near her home the day before the murder, and she had let him into the house to use the telephone. The police suspected that Asbury had murdered the deceased, and stolen the tin and money from her house.

Asbury was charged with the murder in the High Court in Glasgow, and in May 1997 he was found guilty. He was sentenced to life imprisonment, and immediately imprisoned.

The fingerprint on the tin identified as that of the deceased played a significant role in the conviction. Another fingerprint that played a role in the trial also led to great controversy. Per standard practice, SCRO had identified the fingerprints lifted at the deceased’s house that were those of the police investigating the crime. Four experts from SCRO identified a thumbprint found on the bathroom door frame one that of Detective Constable Shirley McKie. However, McKie gave evidence at the trial that she had never entered the deceased’s house. The defence had, without success, led this evidence to prove the unreliability of the SCRO experts’ fingerprints analysis.

McKie suffered repercussions. In 1998 she was suspended, arrested, and charged with perjury. The defence consulted leading USA dactylographers. At the trial, the USA dactylographers were convincing, and McKie was acquitted.

The USA dactylographers also examined the fingerprint evidence on which Asbury had been convicted. They confirmed that the fingerprint from the gift tag (found in the deceased’s home) was that of Asbury. However, they were of the opinion that the fingerprint from the tin (found in Asbury’s home) was not that of the deceased. In August 2000, Asbury appealed against his conviction and was let out of prison pending the hearing of the appeal. In August 2002 his conviction for murder was quashed. The State had not opposed the appeal.

Despite being acquitted on the perjury charge, in 1999 Shirley McKie was dismissed (and ineligible for a pension). She sued the Scottish Government for malicious prosecution caused by dishonesty of the SCRO fingerprint experts. On the morning the case was to be heard (in 2006), the Scottish Government offered McKie a settlement of £750 000, without admission of liability. She accepted.

The four experts from SCRO also suffered repercussions. They were suspended while an investigation was undertaken. The investigation concluded that they had not been guilty of any malicious wrongdoing. Subsequently, they returned to work on restricted duties. However, prosecutors were not willing to call them as expert witnesses in legal proceedings.

SCRO had been discredited, and under a restructuring (and renaming) of the department, a new chief executive was appointed. He made it clear the four experts were not to be transferred to the ‘new’ Scottish Police Services Authority (SPSA). It seems he was unfamiliar with employment law. The four experts were accordingly transferred to the SPSA (in 2007).

One month later, one of them, Fiona McBride, was dismissed on the ground of her “inability to carry out the full range of her duties”. (The career paths of the other three are not part of public record.)

McBride took legal action. In 2009, the Employment Tribunal ruled that she had been unfairly dismissed and ordered that she be reinstated, and paid an amount for arrears of pay up to the date of reinstatement. SPSA appealed, and the Employment Appeal Tribunal revoked the reinstatement, and remitted the case to the Employment Tribunal to determine (only) compensation for loss of employment. McBride was dissatisfied, wanted her old job back, and appealed to the Court of Session (the supreme civil court of Scotland). The appeal was unsuccessful.

Ms McBride then appealed to the Supreme Court (SC) (the final court of appeal in the UK for civil cases). On 15 June 2016, in McBride v Scottish Police Authority (SPA, as the SPSA has another restructuring in 2013 – hence another name change), the SC ruled in McBride’s favour. The SC confirmed the reinstatement of McBride (now with the SPA), and remitted the case to the Employment Tribunal “to consider variation of its order relating to [the amount for arrears of pay up to the date of reinstatement] in view of the time that has passed since its order was made”. The Employment Tribunal is likely to award McBride substantial back pay, as almost a decade has elapsed since her dismissal.

The official Scottish Government enquiry (published in 2011) concluded that the thumbprint “had been misidentified as the fingerprint of Ms McKie”, and that fingerprint evidence should be “recognised as opinion evidence and not fact”. McKie received an official apology in 2012. She has emerged as the ‘hero’, and her story has been told in several books, features in several dactylography text books, and gave rise to a protest song.
The murder of Marion Ross remains unsolved.