Talking Point January 2017

A succinct discussion of selected topical, legal matters

Dear Friends and Colleagues

I take great pleasure in submitting the January 2017 edition of Talking Point to you.  This edition and the previous two editions are also on our website at  This is is the first edition for 2017.  Accordingly, I use this opportunity to wish you joy and peace throughout 2017.

Richard Posner (1939 –), an American jurist and economist, currently a judge on the United States Court of Appeals for the Seventh Circuit in Chicago, is also an academic, and a prolific author.  He is regarded as the most cited legal scholar of the 20th century.  However, due to his occasionally outrageous statements, he has not been elevated to the Supreme Court.  A book titled The Quotable Judge Posner and described as “a collection of pithy and penetrating observations and rulings by one of the most famous appellate judges in America” was published in 2010.

Some examples:

  • Fact is often stranger than fiction because most writers of fiction try to make their stories plausible.

  • The filing of an appeal should never be a conditioned reflex.  About half the practice of a decent lawyer consists in telling would-be clients that they are damned fools and should stop.

  • There would be fewer executions if the sentencing judge had to administer the lethal injection.

  • Much modern legislation involves targeting government largesse on politically influential groups and the burdens of government on politically impotent ones.  Not infrequently the legislation benefits a tiny handful of individuals or firms or even a single firm – the latter is especially common in tax legislation.”

  • Since thought, unlike sight and hearing, has no physical bounds, the state’s claim to regulate private behavior leaves no zone of protection for experiments in living; and it promotes a meddlesome, intolerant, censorious, and sectarian spirit.”

  • [C]lassical liberalism … can be summed up in seven words: ‘Your rights end where his nose begins.’  Government interference with adult consensual activities is unjustified unless it can be shown to be necessary for the protection of the liberty or property of other persons.”

  • Gilding the lily, the officer testified that he was additionally suspicious because when he drove by [the suspect] in his squad car before turning around and getting out and accosting him he noticed that [the suspect] was ‘star[ing] straight ahead’.  Had [the suspect] instead glanced around him, the officer would doubtless have testified that [he] seemed nervous …  Whether you stand still or move, drive above, below or at the speed limit, you will be described by the police as acting suspiciously should they wish to stop or arrest you.  Such subjective, promiscuous appeals to an ineffable intuition should not be credited.”

As always, I would greatly appreciate your feedback on Talking Point. Please email me at

Note that Walkers has changed the top-level domain of its email addresses to “.law“.  However, the top-level domain “” will also be delivered to the Walkers recipient.


Charl Theron


In this issue:

  • Trouble with the Neighbours

    The conflict between a landowner’s right to build, and the neighbour’s right not to be adversely affected, is a perennial theme in the High Court, Cape Town. Under the relevant legislation, a municipality, when deciding an application for the approval of building plans, must be the guardian of the owners of the neighbouring properties. We discuss a recent case evaluating the performance of the City of Cape of Town.

  • Tax puppeteering is out of fashion

    For obvious reasons, many a tax structure, usually relying on a double taxation agreement, is designed to avoid being tax resident in a harsh tax jurisdiction (such as South Africa or Australia). We report on a recent Australian tax structure that was “too good to be true”.

  • Grounds for being fired

    Employees overstating expenses, and submitting false quotations, are as old as the hills. We discuss a recent case on whether such conduct warrants dismissal, despite long service and a clean disciplinary record.

  • Nuclear power generates litigation

    The government’s controversial procurement strategy for the additional nuclear programme is currently the subject of litigation in the High Court, Cape Town. More litigation in such regard is under consideration. We report on a recent judgment concerning Koeberg nuclear power station.

  • An “agreement to agree” is not a contract

    Whilst an “agreement to agree” can be enforceable if correctly drafted, an ‘informal’ agreement to agree may create moral obligations, but cannot be enforced by legal proceedings.

  • Solicitors from Hell

    The Protection of Personal Information Act (POPI) has been law since 2013, but is at present not fully operative. We discuss a UK case involving an unhappy client and the legal profession.

  • A Cry in the Dark

    The famous legal case in this issue is the story of who/what killed Baby Azaria – the “dingo case”. Meryl Streep was nominated for an Oscar for her role in the 1988 film, which made this the internationally best known Australian criminal case. The case also illustrates why, in South Africa, the jury system should not be reintroduced.


Trouble with the neighbours

by Gunnar Dahl and Rinske Nel

Da Cruz and Another v City of Cape Town and Another, a judgment of the High Court, Cape Town on 13 January 2017, dealt with aggrieved neighbours challenging the City of Cape Town’s approval of building plans for the re-building of the Oracle building in the Cape Town CBD.  The applicants were the body corporate of and an owner in the neighbouring Four Seasons building.  Both the City of Cape Town (the Municipality) and the owner of the Oracle building opposed the application.

The National Building Regulations and Building Standards Act regulates the approval of building plans.  Note that a brief article cannot do justice to the intricacy of this Act and the relevant case law.

It was common cause in Da Cruz that:

– The Municipality had approved the building plans for the apartments in the Four Seasons building, and the apartments had been built in accordance with such building plans, long before the Municipality approved the building plans for the re-building of the Oracle building.

– The proposed re-building of the Oracle building would adversely affect owners of apartments in the Four Seasons building.  For example, the upward extension of the Oracle building would be built right up against the balconies of apartments in Four Seasons, effectively turning them into something resembling court yards.

The Municipality’s defence was that that it may approve any building plans within the applicable land use development restrictions in terms of the zoning scheme (and other legislation), and that neighbours were obliged to tolerate this, irrespective of any adverse effects on their properties.

The Court held that the Municipality was “fundamentally misguided” in its belief that it was entitled to adopt “an uncoordinated and potentially disharmonious approach … to the consideration of building plan applications.”  And further: “The functionaries failed to consider and address the question whether a reasonable and informed purchaser of a unit on the eighth floor of the Four Seasons building would foresee that the [Municipality], having approved balconies along the common boundary would permit the development of the [the Oracle building] in such a manner as to effectively destroy the utility of the balconies as such, and with the degree of overbearing intrusiveness that allowing a three storey solid wall to be built up hard against them would unavoidably occasion.”

The Court set aside the approval of the building plans for the re-building of the Oracle building, and directed that, in respect of the reconsideration of such building plans, the Municipality must appoint a different building control officer and decision-maker.

It is questionable whether an appeal by the Municipality in this matter will be prudent spending of taxpayers’ money. 

Tax puppeteering is out of fashion

Jerome casualby Jerome Veldsman

South African tax residents are subject to tax on worldwide income.  A company is tax resident in South Africa, regardless of where it is incorporated, if it “has its place of effective management in” South Africa.  There is no statutory definition of the term “place of effective management“.  Many other countries, including Australia, have similar taxation provisions.

SARS has adopted the approach:

A company’s place of effective management is the place where key management and commercial decisions that are necessary for the conduct of its business as a whole are in substance made.”

There is support for SARS’ approach in Bywater Investments Ltd v Commissioner of Taxation (Australia), a judgment of the Australian High Court (their apex Court) on 16 November 2016.

We provide a very simplified version of the facts, as this tax structure was vast.  Over several years, Bywater earned substantial profits from share dealing on the Australian Stock Exchange.  The Commissioner issued tax assessments (for almost 15 million Australian dollars) regarding the profits, and Bywater objected.

Bywater was incorporated in the Bahamas.  The directors of Bywater were a company in the Bahamas and a married couple Mr and Ms Borgas, residents of Switzerland.  All board meetings had been held in Switzerland.  Bywater averred that its place of effective management was in Switzerland, and relied on the Australian/Swiss double taxation agreement.

Ms Borgas travelled to Australia to give evidence in the Court of first instance, but to no avail.  The judge held:

I am satisfied that Mr Borgas’ evidence about this [letters signed by Mr Borgas for transactions] was false and that the document trail generated by Mr Borgas is false too.  ….  The documents which have been generated to corroborate Mr Borgas’ evidence are designed to give the impression that Mr Borgas was the decision-maker and that impression is false.”

The Court found that one Mr Gould, a resident of Sydney, Australia, was the “main man” conducting the share dealing by Bywater (and ultimately owned Bywater), and the “central management and control” of Bywater was therefore situated in Australia.  Bywater appealed to the Full Federal Court, and lost again.

Bywater then appealed to the High Court, and lost again:

“… a company has its central management and control where the central management and control of the company actually abides, that being a question of fact and degree to be determined according to the facts and circumstances of each case.”

Ordinarily, the board of directors of a company makes the higher-level decisions which set the policy and determine the direction of operations and transactions of the company.  Ordinarily, therefore, it will be found that a company is resident where the meetings of its board are conducted.  But, contrary to the [Bywater’s] submissions, it does not follow that the result should be the same where a board of directors abrogates its decision-making power in favour of an outsider and operates as a puppet or cypher, effectively doing no more than noting and implementing decisions made by the outsider as if they were in truth decisions of the board.

On the same facts, the result would have been the same in a South African Court. 

Grounds for being fired

by Amien Hoosain and Daniel Botha 

Bidserv Industrial Products (Pty) Ltd v CCMA and Others, a judgment of the Labour Appeal Court on 10 January 2017, dealt with dismissal for dishonesty in the workplace.

The employer provided financial assistance to qualifying employees regarding their children’s school costs, including school uniforms.  The employee submitted a statement of costs from the school for R3 500 for the school uniform of one child.  The employer was suspicious, directed enquiries, and determined that the uniform actually cost R627.  The subsequent disciplinary enquiry found the employee guilty of dishonesty in that he procured a false statement of costs in order for the employer to pay more than it should.  The sanction was dismissal.

The employee referred an unfair dismissal dispute to the CCMA.  The CCMA found that the statement of costs may have been false and that the employee may be guilty of dishonesty, but nevertheless dismissal was not warranted because (1) the employee had 15 years of service and a clean disciplinary record, and (2) the employer did not lead evidence as to the breakdown of the trust relationship.  The CCMA awarded the reinstatement of the employee with limited back-pay.

The employer took the award on review to the Labour Court, and lost.  The employer then appealed to the Labour Appeal Court.  This Court held that:


  • The probabilities are overwhelming against [the employee] that he knowingly, in collaboration with his cohorts at the school, submitted a false quotation in the hope of claiming more than he was entitled to receive from [the employer] for his child’s uniform. He was therefore dishonest as charged.”

  • The fact that the employer did not lead evidence as to the breakdown of the trust relationship does not necessarily mean that the conduct of the employee, regardless of its obvious gross seriousness or dishonesty, cannot be visited with a dismissal without any evidence as to the impact of the misconduct.”

  • There is no question that the misconduct committed by [the employee] is of a very serious nature.  His length of service founders in the face of the weight of authority and [the facts of the case].  …  He also did not show any contrition.  On this conspectus, his dismissal was justified.”

The appeal succeeded, and the employee’s unfair dismissal claim was dismissed.

Nuclear power generates litigation

 by Jerome Veldsman

The Koeberg nuclear power station featured in Areva v Eskom Holdings and Westinghouse (Belgium), a judgment of the Constitutional Court on 21 December 2016.

Koeberg comprises two units, each with three steam generators, about 32 years old, and due for replacement at a cost of about R5 billion.  In 2012, Eskom called for expressions of interest for replacing the generators, and eventually invited only Areva and Westinghouse (Belgium) to tender.  Both tendered, but the latter did so “on behalf of Westinghouse (USA)” (a different company in the Westinghouse group).  Eskom awarded the tender to Areva.

Westinghouse (Belgium) was aggrieved, and instituted a review application in the High Court, Gauteng, averring that the tender process was procedurally unfair, and that it (Westinghouse (Belgium)) should be awarded the tender.  Areva and Eskom denied that the tender process was procedurally unfair.  Areva also averred that Westinghouse (Belgium) lacked standing to litigate (locus standi – a sufficient connection to and harm from the action challenged to support its participation in the case), as it had submitted the tender on behalf of Westinghouse (USA), and not in its own name.  The High Court ruled against Westinghouse (Belgium), on the basis that the tender process had been procedurally fair, and accordingly did not consider the question whether (or not) Westinghouse (Belgium) had standing to litigate.

Westinghouse (Belgium) appealed to the Supreme Court of Appeal (SCA).  The SCA (unanimously) held that Westinghouse (Belgium) had standing to litigate, and that the tender process had been procedurally unfair; and accordingly set aside the award of the tender to Areva.

Areva appealed to the Constitutional Court (CC), with success.  In the CC, the majority (8 of 10 Judges) held that Westinghouse (Belgium) lacked standing to litigate, accordingly found it unnecessary to consider whether (or not) the tender process had been procedurally fair, and found in favour of Areva.  The minority (2 of 10 Judges) were of the view that Westinghouse (Belgium) had standing to litigate, but that the tender process had been procedurally fair.

Note the toing and froing from Court to Court.  The question of standing is a pure legal question.  But the fairness (or otherwise) of the tender process is primarily a factual question.  Based on exactly the same written record, the SCA and the CC made directly opposing findings.  The eventual outcome of litigation is often unpredictable.


An “agreement to agree” is not a contract

Jerome casual by Jerome Veldsman and Simonne Dahl

An “agreement to agree” is technically an agreement (now) to negotiate and agree on and conclude a further agreement (on a future date).  For decades, an agreement to agree was regarded as too uncertain to be enforceable, unless it included a deadlock-breaking mechanism (such as arbitration or expert determination) in the event of failure to agree on the terms of the further agreement.

In Everfresh Market Virginia v Shoprite Checkers (2011), Shoprite tried to enforce an “agreement to agreewithout a deadlock-breaking mechanism on constitutional grounds (the value of ubuntu, and the like), but the Constitutional Court disagreed.  Yet, in Makate v Vodacom, the “Please Call Me” case of last year, the Constitutional Court described such an agreement as “a grey area of our law” (perhaps because the Everfresh judgment is rather subtle).

Loggenberg and Others v Maree and Others, a judgment of the Free State, Bloemfontein on 23 December 2016, was mainly about questionable dealings between a law firm and its clients, but also dealt with an agreement to agree without a deadlock-breaking mechanism.  This Court unpacked the judgment in Everfresh properly, and held that such an agreement is not enforceable.

So, whilst an “agreement to agreewithout a deadlock-breaking mechanism may create moral obligations, it cannot be enforced by legal proceedings.  However, there is no guarantee the Constitutional Court will not change its mind in future.


Solicitors from hell

Jerome casualby Jerome Veldsman 

One Rick Kordowski was dissatisfied with the services of a law firm, and the response of the Law Society to his complaint.  So, in 2005 Kordowski started the website “”.  The home page featured a demon in a suit surrounded by flames, and a statement describing the website’s aim as: “to expose these shameless, corrupt, money-grabbing, incompetent specimens of humanity“.  He invited the public to post complaints against legal practitioners.  The website had a lot of traffic.  Legal practitioners could have posts removed – for a fee.

Many legal practitioners successfully sued Kordowski for libel, but, as he was an unrehabilitated insolvent, this did not deter him.  Eventually, the legal profession applied for injunctions (interdicts) ordering Kordowski (1) to cease publication of the website in its entirety, and (2) restraining him from publishing any similar website.  The causes of action relied upon are libel, harassment, and breach of the Data Protection Act 1998 (DPA).  The latter is the UK equivalent of our Protection of Personal Information Act (POPI).

Kordowski’s freedom of expression defence was rejected.  It was apparent that he was ‘guilty’ of libel, harassment, and breach of the DPA.  Regarding the DPA, he was guilty of unlawful collection, dissemination, processing, retention, and use of personal information.

The Court granted the injunctions.  Notwithstanding, Kordowski continued his ‘lawyer-baiting’ through websites notionally owned by proxies, and the like.  But he was a spent force.


A Cry in the Dark

Dingoes are Australian wild dogs descended from domesticated dogs that became feral several thousand years ago.  In appearance and size, dingoes are rather similar to our local Africanis dogs.  Ayers Rock, also known as Uluru, is a large sandstone rock formation in central Australia – the ‘heart’ of the Outback, rather similar in appearance to the Great Karoo – and prime dingo territory.

The married couple Lindy Chamberlain and Michael Chamberlain took their two young sons (aged 7 and 4) and two month old daughter, Azaria, on a camping trip to Ayers Rock, and pitched their tent near a barbecue area.  At some stage the next evening, Azaria was sleeping in the tent, and the couple were at the barbecue area.  Lindy was alerted to someone having heard a baby cry, went immediately to check on Azaria, and shouted “That dog’s got the baby“.

Azaria was not in the tent, and, despite an immediate massive search, could not be found.  A few days later, the jumpsuit she had been wearing was found about 4 km from the campsite, near a dingo lair, and heavily blood-stained.  An inquest into Azaria’s assumed death found that she had been killed by a dingo, and was very critical of the police investigation.  The state successfully took the inquest on review.  Subsequent to a second inquest, Lindy was charged with Azaria’s murder, and Michael was charged with being an accessory after the fact.

The couple fared badly in the “trial by media”.  They were members of the minority Seventh-day Adventist religion, and this resulted in bizarre rumours of religious infanticide.  Lindy was described as showing little emotion during the legal proceedings, and not behaving like a stereotypical grieving mother.  They were also criticized for taking a new-born baby to a remote desert location.

The trial by jury was presented with the direct evidence of Lindy that Azaria had been killed by a dingo, corroborating evidence from other persons at the campsite, and circumstantial evidence from an army of forensic experts on animal tracks, blood stains, chemistry, fabrics, and the like.  Lindy’s evidence included that at the time Azaria had also been wearing a jacket, which she described in great detail, but no jacket had been found.  The prosecution used this to discredit her.  At the end of the trail, the jury preferred the evidence of the prosecution’s expert witnesses, and both Lindy and Michael were found guilty as charged.  Lindy was sentenced to life imprisonment.  Michael was sentenced to 18 months’ imprisonment, suspended for three years.

Lindy was immediately imprisoned, but once the couple appealed to the Full Federal Court, she was granted bail.  This Court dismissed the appeal, Lindy’s bail was revoked, and she was again imprisoned.

The judgment in their appeal to the High Court (the apex Court) in February 1984 makes for chilling reading.  It seems obvious from the evidence that the guilt of neither Lindy nor Michael had been proven.  Yet, three of the five judges dismissed the appeal, mainly on technical grounds in respect of deference to a jury finding.  Lindy was again imprisoned.

In early 1986, a backpacker went missing near Ayers Rock.  Police searched the area for him, and during the search found, close to dingo lairs, a jacket designed for a new-born, and exactly matching the jacket Lindy had described in her evidence.  To their credit, the police processed this new evidence.  Lindy immediately recognised the jacket, and was released from prison.

A Royal Commission was appointed in 1986, and heard 92 days of evidence, at which 145 witnesses testified.  The Commissioner reported on the serious mistakes made by the expert witnesses for the prosecution, and the serious risk of injustice as a result of the poor scientific evidence adduced against the couple.  In 1988, the convictions of Lindy and Michael were overturned.

The couple divorced in 1991.  In 1992, they each received substantial compensation for their wrongful convictions.  The government also reimbursed the Seventh Day Adventist church, which had paid the legal costs of the couple’s defence.

This case is a serious indictment of the jury system (and overzealous prosecution).  It is simply irrational to entrust the understanding, analysis, and evaluation of complicated scientific evidence to laypersons.