Employers should seriously consider taking legal advice before making a decision to dismiss employees partaking in an unprotected strike, which could lead to substantial financial consequences for the employer.

In a reported Labour Court judgment delivered on 20 February 2014, National Union of Metalworkers & Another v Lectropower (Pty) Ltd (case number JS119/13), the Court had to consider whether the dismissal of 17 employees that took part in an unprotected strike, was substantively fair.


The dispute between the parties arose after the employees provided the employer with a list of grievances, including that a manager be removed from his post.  Thereafter the union declared a dispute.  The employer set up a grievance hearing but failed to give advance notice of the meeting or its purpose to the union representatives.  The three shop stewards that attended the grievance meeting demanded that the manager be removed, failing which the employees will embark on a strike.  After the grievance meeting, the shop stewards were handed letters of dismissal.  As a result of the dismissal of the three shop stewards, the employees refused to work or leave the premises for the rest of that day.  The next morning the employer initially refused to allow the employees back onto the premises.  Later an ultimatum was given to the employees to return to work by 12:00, failing which they will be automatically dismissed.  At 13:45 the employees who had not returned to work, were handed dismissal letters.  Two of the shop stewards threatened to burn down the vehicles of those employees who did not want to join the strike.  Every day during the strike the dismissed employees gathered outside the premises where they played cards and drank beer.  During the strike an employee was arrested, and later convicted, for malicious damage to property after he punctured the tyres of vehicles belonging to members of staff.


The Court stated unequivocally that reinstatement would not be an appropriate remedy in circumstances where employees engage in misconduct, this includes violence, during a strike, and the Court held as follows:


Employees who misconduct themselves during a strike, protected or unprotected, ought not to expect this court to come to their assistance in any subsequent litigation, let alone order their reinstatement. Regrettably, intimidation, assault and damage to property have come to characterise strikes to the extent that they appear to be considered an inevitable consequence and an integral component of the exercise of the right to strike. This court should express its disapproval of any act of misconduct committed during the course of a strike and which impacts materially and negatively on the rights of the employer and those employees who elect not to participate in the strike…for the above reasons, I intend to make no order of reinstatement or compensation…

The Court found that the employer’s conduct was the cause of the strike as it failed to engage in any meaningful endeavour to resolve the crises that it had brought about and its decision to dismiss was precipitate.  The employees were reinstated, but not those who had misconducted themselves during the strike.


Lizelle Marx



Section 12 (3) of the Prescription Act 68 of 1969 provides that “a debt shall not deemed to be due until the creditor has knowledge of the identity of the debtor and of the facts from which the debt arises, provided that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable care” .

August 1999 Mr. Loni, the applicant was admitted at the Ceceile Makiwane Hospital after suffering a gunshot wound to his left Buttock, which shattered his left femur. He was given injection and later x-rays were taken. On 23 August 1999, he underwent an operation to insert a plate and screws on his femur and during the operation the bullet was not removed. He was then discharged and given painkillers and most importantly his medical file to attend to a clinic for further care. Thereafter he made several re-visits to the clinic as he was experiencing pain and the wound was oozing pus.

February 2000 he returned to the hospital, at this point he had started limping, he was informed that he was fine and should rather use a crutch instead of two. The gun wound eventually healed, however the operation took longer.

December 2000 Mr. Loni attended an initiation school and whilst there his left leg became swollen and he somehow managed to remove the bullet himself and later returned to the hospital and he was informed that he was fine, in fact he must exercise and walk more.

Forward to 2008, the applicant had secured employment and now had the ability to approach doctors in private practice regarding his condition. Three years later ,November 2011, he approached an Orthopedic Surgeon Dr. Olivier who considered his hospital file and advised him that he was infact disabled and his condition was caused by the negligence of the hospital which initially treated him.

June 2012, Mr. Loni instituted a claim for damages against the MEC for health, who then raised a special plea for prescription in terms of section 12 (3) of the Prescription Act. The High Court upheld the special Plea on the grounds that had he had previously long acquired the necessary knowledge to institute proceedings, he was in pain, the wound was oozing pus, limping and he was in possession of his medical file. He then appealed to a full bench and to the Supreme Court of Appeal. In both instances his claim was dismissed.

The Constitutional court in this matter applied the Principle formulated in the case of Links and held that “the applicant should have overtime suspected fault on the part of the hospital staff. There were sufficient indicators that the medical staff had failed to provide him with proper care and treatment, as he still experienced pain and the wound was infected and oozing pus, with that experience he could have not thought or believed that he had received adequate medical care treatment. Furthermore since he had been given his medical file, he could have sought advice at that stage. There was basis for him to actually wait for more than seven years to do so.

The court further held that the objective test applied in the lower courts and in term of section 12 (3) of the Prescription Act was properly applied and established that a reasonable person in the position of Mr. Loni would have realized that the treatment and care received was sub-standard. The judgement, further noted that Mr. Loni had all the necessary facts at his disposal by being in position of his full medical record relating to his treatment or the lack thereof. He also had personal knowledge of his maltreatment and that was at that stage in a position to determine that he had a claim. This was the very same information which propelled him to seek medical advice, and ultimately institute the legal proceedings against the MEC.

In addition the court held that, “it is clear, that long before the Applicant’s discharge from the hospital in 2001 and certainly thereafter, the applicant had knowledge of the facts upon which his claim was based. He had knowledge of his treatment and the quality or (lack thereof) from his first day at the hospital and had suffered pain on a continuous basis subsequent thereto. The fact that he was not aware that he was disabled or had developed an osteitis is not relevant consideration.”

But how does one simply without proper skill/ knowledge remove a bullet which would have otherwise been removed upon admission, then return to the hospital without raising any suspicions of the treatment received, only to be informed that you are fine?. This is indicative enough to raise concerns regarding the treatment received and ultimately seek sound advice.

The court applied the objective test and the principles developed in Links case and held that the applicant’s claim had prescribed and he had the acquired the necessary knowledge to institute a claim timeously. Based on this judgement is it worth noting that what constitutes deemed knowledge in terms of section 12 of the Prescription Act is determined by taking into consideration the facts and circumstances of each case.


M Kirchner


In the case of Smith v The Kit Kat Group (Pty) Ltd [2016] 12 BLLR 1239 (LC) an employee was disfigured and suffered from a speech impediment arising from an attempted suicide.

His employer initially indicated that they wanted him to return to work, but later refused to allow him to resume work on the basis that he was “cosmetically unacceptable”.

The Labour Court found that the employee was a “person with disabilities” in terms of the Employment Equity Act 55 of 1998 and was entitled to the protection it provided.

It found that the employer equated disability with incapacity and as a result thereof the employer’s conduct constituted discrimination.

The discrimination was unfair as there was no evidence that the employee was unfit to execute his duties.

Accordingly the Labour Court found that the employee had a claim for patrimonial loss arising from the salary that he did not earn as a result of the unfair discrimination.

The compensation claim would be for the humiliation and hurt the employee has suffered as a result of his unfair discrimination. The Court notes that the conduct of the employer was mala fide and that they acted to undermine the fundamental values of the labour relations in South Africa.

The Court found that a damages award for twenty four months’ salary and a compensation award for six months’ salary would be appropriate in these circumstances.


The case of Dladla comes with a very long history.  In short the applicants in the Court a quo were some 11 of 33 occupants of an interim shelter that they were relocated to after being evicted from an initial property which they illegally occupied for some 20 years.  In the initial legal battle between the occupants and the land owners the Court ordered the City of Johannesburg to find an appropriate shelter for the occupants.  In an attempt to comply with the Court order the City of Johannesburg decided not to give the applicants housing in a temporary residential area, as provided for in terms of the Emergency Housing Policy in the National Housing Code.  Instead the City concluded that the best solution entailed a facilitation of what it viewed to be an “empowered” transition that would discourage a “dependency relationship” with the City and enable the occupants to take responsibility for their own lives.  The City developed an institute accommodation, which was a “managed-care policy” or temporary accommodation provision. This is a temporary facility intended to be a step in the realisation of the applicant’s right of access to adequate housing.

When the occupants finally reached their new shelter they were informed by the Shelter that accommodation at the shelter is subject to certain strict rules.  The 2 arbitrary rules subject to the current matter was the “lockout time” rule and the “family segregation rule.

The Lockout Time Rule:

According to this rule residents of the shelter had to leave the property by 08:00 in the morning and could not return until 17:30 in the evening.  The gates were locked at 20:00 with the result that late comers were not allowed to enter the premises.

The Family Separation Rule:

This provided for separate dormitories for men and women with the result that partners were not allowed to live together.

The applicants challenged the shelter rules on the basis that it infringed on their fundamental rights to dignity, freedom, security of person, privacy and access to adequate housing.

The City argued that the rules are necessary in order for the evictees to transition from homelessness to taking responsibility for their own lives.  The City further argued that it was necessary to implement these rules in order to address the real issues of homelessness.

The Applicants in turn argued that these rules affected them adversely.  The applicants argued that it was inhumane to expect of heterosexual partners to live and sleep separately with one couple arguing that the separation felt like a divorce.  Mothers were left to care alone for boys and girls under the age of 16 during the night.  Boys over the age of 16 was not allowed to stay with the mother and was placed with the other men in the shelter thus, they argued, causing perpetuated gender stereotypes.

The argument on Lockout times were on the basis that some of the applicants who worked night shifts were not allowed to sleep in the shelter during the day.   Those who were unemployed were left outside on the street and could not shelter from rain, violence and other issues one would face on the streets.

As stated before this matter has a long litigious history.  In Summary, the matter was first heard in the Johannesburg High Court.  There the Court agreed with the applicants on the basis that the infringements on their fundamental rights were not justifiable as envisaged in terms of Section 36 of the Constitution and thus interdicted the City of Johannesburg and the Shelter from implementing these rules.

The City of Johannesburg however appealed the Court a quo’s judgment.  In the Supreme Court of Appeal (SCA) the Court, interestingly enough, sided with the City of Johannesburg.  The SCA accepted that the impugned rules infringed the applicants’ constitutional rights but held that the infringement was reasonable.  It further accepted the City’s argument that, because the Shelter was not a permanent home but temporary accommodation, the applicants could not claim to have the same rights as they would have in their homes. In reaching this conclusion, the Supreme Court of Appeal did not consider the question whether the rules were introduced by a “law of general application” as set out in section 36(1) of the Constitution.  As a result, the Supreme Court of Appeal upheld the appeal and set aside the order of the High Court.

The occupants then approached the Constitutional Court in order to set aside the order of the Supreme Court of Appeal.  The occupants firstly asked for leave to appeal the Judgment handed down by the SCA, which leave was granted.  The Constitutional Court then considered the long history of the matter and the findings of the 2 previous Courts.  It was held that the rules infringed the applicant’s rights to dignity, freedom, security of persons and privacy.   The Court dealt with each individual Fundamental right and explained how these 2 rules infringed on it.  In Summary the lockout rule was found to be cruel, condescending and degrading.  The Applicant’s arguments as previously discussed was upheld. The family separation rule was in summary found to create a “vast chasm between parents and children, between partners and between siblings. It eroded the basic associative privileges that exists in and forms the basis of the family.”

It was thus confirmed that the fundamental rights of the applicants were indeed infringed on.  The Court then had to find whether the rules were “law of general application” and whether it is thus a justifiable limitation of their fundamental rights. The Constitutional Court however found that the rules under discussion were not rules of general application and therefore the City of Johannesburg could not rely on Section 36 of the Constitution to justify the limitations created by these rules.  The Court found therefore that the City has failed to show that the limitations flowing from the application of the impugned rules were reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom as required by Section 36(1) of the Constitution.


M Kirchner


In the matter of National Education Health and Allied Workers Union obo Sinxo and Others versus Agricultural Research Council 2017 CCMA (26 January 2017), the Commission for Conciliation, Mediation and Arbitration (“herein after referred to as the Commission”) had to determine whether farm-supervisors were being unfairly discriminated against in terms of the provisions of the Employment Equity Act 55 of 1998 (“herein after referred to as EEA”) because they were being paid less than the farm-foremen.

It came to light that the farm-supervisors were being paid exceptionally less than the Agricultural Research Council’s farm-foremen resulting in the dispute to arise.

The farm foremen were given a global grade (“hereinafter referred to as GG”) of nine after the farm-supervisors had already been employed for a number of years, which required a tertiary qualification.  The farm supervisors were given a GG of seven, which required a grade twelve qualification.  The Applicants in this matter were kept at a GG of five as they did not have a grade twelve qualification.

The farm-supervisors claimed that they conducted the same work as farm-foremen and therefore had been discriminated against.  The employer argued that the duties and responsibilities of the two positions were different and required different qualifications and therefore the farm supervisors could not have been discriminated against.

The Commission had regard to the provisions of the EEA as well as its regulations to determine whether the farm-supervisors had been discriminated against.

Section 6(4) of the EEA provides that:

“A difference in terms and conditions of employment between employees of the same employer performing the same or substantially the same work or work of equal value that is directly or indirectly based on any one or more of the grounds listed in subsection (1), is unfair discrimination.”

Section 6(1) of the EEA provides that:

“No person may unfairly discriminate, directly or indirectly, against an employee, in any employment policy or practice, on one or more grounds, including race, gender, sex, pregnancy, marital status, family responsibility, ethnic or social or social origin, colour, sexual orientation, age, disability, religion, HIV status, conscience, belief, political opinion, culture, language, birth or on any other arbitrary ground.”

The regulations to the EEA governing equal work for equal pay, discuss the criteria for assessing work of equal value.  A case must be made as to whether there is a difference in terms and conditions of employment, including remuneration, whether the work is of equal value, and if so, whether the difference comes down to unfair discrimination.  The regulations must be read with section 11 of the EEA.

Section 11 of the EEA provides that:

  • “If unfair discrimination is alleged on a ground listed in section 6(1), the employer against whom the allegation is made must prove, on a balance of probabilities, that such discrimination –
  • did not take place as alleged or;
  • is rational and not unfair, or is otherwise justifiable.
  • If unfair discrimination is alleged on an arbitrary ground, the complainant must prove, on a balance of probabilities, that –
  • the conduct complained of is not rational;
  • the conduct complained of amounts to discrimination; and
  • the discrimination is unfair.”

The Commission held that the work performed by the two positions were the same, or significantly the same.  The decision was based on the positions as they were at the time of the hearing.

The question here was whether the difference in remuneration was based on fair and rational criteria.  The Commission found, that although regulation 7 recognizes that qualifications may be a valid basis for differentiation in remuneration it does not automatically make the differentiation rational and fair.  A balanced analysis is required in which no single factor should be given unreasonable weight.

The introduction of the requirement of a qualification may be justified for candidates who are new entrants into employment, but not for the farm-supervisors.  There was no question that by grading the farm supervisors at a lower level merely because of their academic qualifications impeach their dignity.  The Agricultural Research Council was ordered to appoint the five farm-supervisors on the midpoint of GG seven with effect from the date of the award.

The importance of this case is that a business must have a thorough and careful analysis of its payment practices.  They must give valid and rational reasons when employees are being paid different remuneration but perform the same or substantially the same work.

The Consumer’s remedies where he has been sold defective goods after 31 March 2011 under an installment sale agreement governed by the National Credit Act with reference to the case of MFC v Botha.

Thousands of South African have experienced problems with the infamous installment sale agreement. The most common example is when a consumer buys a motor vehicle from a motor dealership. The consumer does not have the funds to purchase the vehicle cash as a result of which the all too eager motor dealership helps ensure that they sell a vehicle by assisting the consumer with getting finance from a financial institution. When a motor vehicle is financed, an installment sale agreement is concluded between the consumer and the financial institution. This seems easy enough right?

The problem comes in when the consumer starts to experiences problems with the vehicle within six months after the delivery of the vehicle. It soon becomes clear to the consumer that the vehicle is not of a good quality and the consumer cannot use the vehicle for the purpose that he initially purchased same for and he now wishes to return the vehicle and receive a refund. The question of to whom the vehicle is to be returned then comes up. The motor dealership will argue that it no longer owns the vehicle as it sold same to the bank while the bank will argue that it only financed the deal and will refer to the all too convenient  ‘no warranty as to the condition of the vehicle’ clause in the installment sale agreement. So, what does the consumer do now?

The legislation that governs these types of agreements appears to be both The Consumer Protection Act 68 of 2008 (CPA) as well as the National Credit Act 34 of 2005 (NCA). The CPA was published in the Government Gazette on 29 April 2009 and came into full operation on 1 April 2011. The CPA replaced the disjointed and ineffective South African body of consumer law that was contained in several pieces of legislation prior to its enactment. The CPA is intended to serve as a comprehensive source of consumer law in South Africa together with the NCA.

Generally, in terms of section 5(2)(d), the CPA does not apply to credit agreements

falling within the ambit of the NCA. Section 5(2)(d) provides as follows:

“This Act does not apply to any transaction

. . .

(d) that constitutes a credit agreement under the National Credit Act, but the

goods or services that are the subject of the credit agreement are not excluded

from the ambit of this Act.”

Thus the CPA will govern the goods sold which in the example above is the vehicle sold as same qualifies as goods under the Act and the NCA will govern the instalment sale agreement. The question then is what remedies are available to the consumer in situations such as the one discussed above?

In terms of the CPA the remedies available to a consumer where the consumer has purchased defective goods can be found in Section 56(2) of Act. This section provides that:

“Within six months after the delivery of any goods to a consumer, the consumer

may return the goods to the supplier without penalty and at a supplier’s risk and expense, if the goods fail to satisfy the requirements and standards contemplated in

section 55, and the supplier must, at the direction of the consumer, either –

(a) repair or replace the failed, unsafe or defective goods; or

(b) refund to the consumer the price paid by the consumer, for the goods”.

On a first reading this section appears to be straightforward. However with examples such as the purchase of a motor vehicle through finance discussed above it is clear that this section is anything but straightforward. As stated above, both the dealership and the bank will deny liability and so the question of who the supplier is will be raised.

This issue has already been addressed in part by the court in MFC (a division of Nedbank Ltd) v Botha (unreported case no 6981/13) (ZAWCHC) (15 August 2013). The facts of the case are as follows:

In this matter the facts are the same as our example above. The consumer (being the respondent in this matter) purchased a vehicle from a dealership under an instalment sale agreement with the credit provider (the applicant). As is standard, the vehicle was purchased from the dealership and not the credit provider, however, the respondent after becoming dissatisfied with vehicle due to him experiencing numerous problems with the vehicle returned the vehicle to the credit provider. The respondent claimed to be returning the vehicle under section 56(2) of the CPA, however, the credit provider wished to deal with the return of the vehicle as a voluntary surrender in terms of section 127 of the NCA. Thus the court was placed in a tricky situation where it had to deal with the overlap between the CPA and NCA.

The court in paragraph 6 of the judgement held:

The term ‘supplier’ is defined in s 1 of the CPA. It means ‘a person who markets any goods or services’. The word ‘market’ is also defined in s 1 of the CPA. When used as a verb, it means ‘to promote or supply any goods or services’. In the current case it clear that the applicant did not market the vehicle; it merely financed it.’

The court further held in paragraphs 8 and 9:

The apparent object of s 5(2)(d) of the CPA is to distinguish the position of a credit provider from that of a supplier and to protect the contractual rights of a credit provider which has financed the supply of goods by a supplier to a consumer, while seeking at the same time to preserve the consumer’s statutory protection against the supplier. However, I have been unable to identify (and nor could counsel) any provision in the Act that facilitates the achievement of the second of the aforementioned apparent objectives in the readily conceivable context of the facts of the current case.

It is not plainly evident how a consumer in the position of the respondent would be able to avail of the protection offered to consumers in terms of s 56(2) of the CPA. He could not return the vehicle to the supplier against a refund of the purchase price because ownership of the car vested in the credit provider; and it was the credit provider, and not he, that had paid the purchase price.’

Thus it is clear that the court in this matter did not deem the credit provider to be the supplier as a result of which section 56(2) of the CPA was unable to provide the consumer with any relief in matters such as these.

The court suggested in paragraph 9 of the judgment, and with which Counsel in the matter agreed, that it appears that the only practical manner in which the consumer can enjoy the statutory protection provided by section 56(2) in instances such as these is by ceding the credit provider’s rights as consumer against the supplier in terms of the CPA to the consumer. The consumer will then be able to return the vehicle to the supplier against a refund of the purchase price. Alternatively, the credit provider should, when requested by the consumer, exercise its rights as consumer directly against the supplier to give the consumer the benefit of a refund of the purchase price in satisfaction or reduction of his or her liability under the installment agreement.

In this matter the court had the difficult task of determining how to deal with the overlap that exists between the CPA and the NCA in relation to instalment sale agreements. The court came to the conclusion that the dealership was the supplier and that the credit merely financed the vehicle and did not market it. This judgement has the unfortunate effect that a consumer will not be able to utilize section 56(2) as a remedy for defective goods purchased under an instalment sale agreement. The legislature is to be blamed for this situation that arises as a direct result of the confusion that exists where there is an overlap between the NCA and the CPA, and to clear up uncertainty, the legislature should amend the CPA.


  1. Otto JM, van Heerden CM & Barnard J “Redress in terms of the National Credit Act and the Consumer Protection Act for defective goods sold and financed in terms of an instalment agreement” 2014 (2) SA Merc LJ 247-281.
  2. Stoop, P “The overlap between the Consumer Protection Act 68 of 2008 and the National Credit Act 34 of 2005: a comparison with Australian law.” 2014 (77) THRHR 135-144.



Taking care of the care takers – a nursing issue

Doctors often emphasize that it is the aftercare, subsequent to surgery or any other major medical procedure that determines the success of any medical intervention or treatment. In many cases classified as medical negligence matters it is sometimes not the treating doctor that caused the harm, but actually the nurses on duty at the time of the patient’s hospital stay and involved with the patient’s after care that are to blamed for subsequent injuries and harm.

A “nurse” is defined as a person registered as either a professional nurse, midwife, staff nurse, auxiliary nurse or auxiliary midwife in terms of section 31(1) of the South African Nursing Act 33 of 2005 (“the Act”), which registration enables such a person to practice nursing or midwifery. The Act further defines the profession of “nursing” as a caring profession practiced by a person registered as aforementioned, who supports, cares for and treats a health user (also known as a patient) to achieve or maintain health and where this is not possible, cares for a health care user so that he or she lives in comfort and with dignity until death. One of the main purposes of the Act is to establish a Nursing Council that must serve and protect the public in matters involving health services generally and nursing services in particular and to uphold and maintain professional and ethical standards within nursing (sections 3(a) and (i)). The Nursing Council must further ensure that registered nurses behave towards patients in a manner that respects their constitutional rights to human dignity, bodily and psychological integrity and equality and that disciplinary action is taken against persons who fail to do so (section 4(f)). This Council must further investigate complaints against registered nurses and take appropriate disciplinary action against such persons in accordance with the provisions of the Nursing Act in order to protect the public (section 4(g)).

Thus when faced with sub-standard nursing care the Act allows for a complaint to be lodged with the Nursing Council. Upon lodgement of such a complaint the Council may appoint a preliminary investigating committee to investigate all matters of alleged unprofessional conduct based on evidence and determine whether the case should be referred for a professional conduct inquiry (section 47(3)).

In consideration of whether the acts or omissions of the respective nurses are of such a nature as to discipline them reference will be made to the Regulations Setting out the Acts or Omissions in Respect of which the Nursing Council may take Disciplinary Steps, issued in terms of the Act and published on 1 October 2014 in the Government Gazette. Regulation 5(a) and (f) specifically determines that the failure to maintain the health status of a patient under the relevant nurse’s control through preventing accidents, injury or other trauma and providing specific care and treatment of the ill and the vulnerable and high risk patients are actions justifying disciplinary steps to be taken against the nurse.

The South African Nursing Council further compiled a Code of Ethics for Nursing Practitioners in South Africa which is a biding document and nurses must comply with its content. This document specifically requires nurses to do good and to choose the “best option” of care under given circumstances and act with kindness at all times – a principle called beneficence. This principle gives expression to compliance with nurses’ “duty of care” as a professional practice imperative. This code is based on and further obliges nurses to treat patients with respect, dignity and kindness, acknowledge the uniqueness of individual patients as well as the diversity of people in their care, the right to access to quality nursing and healthcare for all and the integrity of persons in their care within a culture of safety (amongst others).
Prior to instituting any actions against nurses, it is recommended that a formal complaint be filed with the nursing council.

By Marietjie Botes
Twitter: marietj72675939

Important new amendments to the Institution of Legal Proceedings against certain Organs of State Act 40 of 2002 – as amended by the Judicial Matters Amendment Act 8 of 2017, which came into effect on 8 August 2017.

With the new amendments to the Institution of Legal Proceedings Against Certain Organs of State Act, it seems creditors will have to gear themselves for more delays in recoveries against the State.

Litigation against the State can be a tedious time consuming process. As Attorneys who specialise, inter alia, in Insurance law and specifically recoveries for insurers we understand that “turnaround time” on claims is a very important issue. It is all part and parcel of client satisfaction and the “Treating Client’s fairly” standards to which the insurer must account.

Unfortunately recoveries against the State is not so simple and usually take much longer than normal recoveries. This causes massive frustration for the Attorney, who has to account to the insurer (Attorneys’ client) but also in turn causes frustration for the insurer who has to account to the broker and the broker who in turn has to account to the insured.

In order to minimise this chain of frustration it is important to take note of the provisions of Act 40 of 2002 and the new amendments to the act, which might cause even further delays in these types of recoveries.

Notice in terms of Act 40 of 2002:

Commonly referred to as the “Section 3 Notice” – this notice is a Letter of Demand in which the creditor will state the facts on which it bases the claim against the state, why the state is liable for it and how much the state owes the creditor.

In order to avoid delays after litigation it is imperative to note that the Act specifically states that this Notice MUST be served on the relevant state department within 6 months of the incident which gives rise to the creditor’s claim. In Insurance motor vehicle recovery matters this will typically be 6 months after the motor vehicle collision occurred.

If this notice is not delivered within 6 months, the creditor may apply to Court to condone the late filing of this notice. This causes a massive delay in the recovery process. It is not a simple application to be taken lightly, it is a substantive application in which the applicant must persuade the court to grant it leave to proceed with the matter. The application may also be opposed by the State Attorney.

In the very recent matter of HL v MEC for Health of the Freestate Provincial Government [2018] 1 All SA 522 (FB) the court was asked by the Applicant to condone the late filing of her “Section 3” Letter of demand. It is interesting to note that in this matter the notice was served on the State after legal proceedings were already instituted and some 2 years after the incident. The Applicant was claiming from the MEC for Health in her capacity as mother and legal guardian of her minor son. She claimed that her son had suffered substantial brain damage due to her prolonged labour and the MEC’s employees’ failure to give her proper medical attention. The application for condonation for the late filing of the Section 3 Letter of demand was brought at the day of the trial. The State Attorney wrote to the Attorney for the applicant before the proceedings to indicate that the application will not be opposed. It seems on the day of the hearing the State Attorney received instructions to indeed oppose the application.

The Court was thus asked to decide whether the State Attorney was entitled to withdraw from its undertaking and whether the condonation application should be heard on an unopposed basis. Secondly if the Court found that it was entitled to oppose the application then, was a proper case made out for the condonation.

On the first issue Murray AJ held that the letter from the State Attorney did not create an agreement from which the respondent could not withdraw. The application thus proceeded on an opposed basis.

When considering the merits of the application and the question whether a proper case was made out for the condonation to be granted the Court exercised its discretion, but held that its discretion is “not unfettered”. Section 3(4)(b) allows the Court to grant condonation when it is satisfied that:

  1. The Applicant has established that the debt has not been extinguished by prescription;
  2. That good cause exists for the failure by the creditor and
  3. The organ of state was not unreasonably prejudiced by the failure.

The first question is a factual question which is easily established, however the second and third factors are not as uncomplicated.

The Court referred to the matter of Premier, Western Cape Provincial Government NO v BL [2012] 1 aLL sa 465 (SCA) where the Court found that the applicant’s socio-economic background and the difficulties she faced in ascertaining the facts on which her case is based is a good consideration of “good cause” which exists for the failure to give the notice. Interesting on this issue that it seems to move away from the stringent mind-set that “ignorance of the law is not a defence in law”.

With regards to the final consideration to be made by the Court the Court held that the Prejudice suffered by the State was not so unreasonable that the applicant and her minor child should be penalised for that by depriving them of the opportunity to state their case in Court. Condonation was thus granted as prayed for.

It is thus confirmed by the above case law that it is possible for a Claimant to bring an application for condonation even in circumstances where no notice was served prior to litigation commencing. I think, though, that litigants must be wary to make this the norm rather than the exception especially in order to avoid delays and costly applications.

Important new amendments to Act 40 of 2002 to take note of:

There has been two further amendments to Act 40 of 2002 which must be noted:

  1. Section 5(2) of the Act prior to amendment, barred a Plaintiff from issuing a Summons within 30 days after the Section 3 Letter of Demand was delivered to the relevant organ of state. The new amendment to Section 5(2) bars a Plaintiff for 60 days, unless if the Organ of State repudiates the Claim or denies liability in writing before expiry of the 60 days, then the Plaintiff may proceed with the Summons before expiry of the 60 days. Effectively thus after the Section 3 Letter of demand was served on the relevant state organ a Plaintiff must wait 2 months before it issues the Summons.
  2. Prior to the amendments to Act 40 of 2002 a Plaintiff could, as allowed by the Court Rules, issue a Summons in the jurisdiction either:
    • Where the course of action arose or
    • The Defendant has its principal place of business.

The Amendments to the Act however now included a Section 5(4) to the Act which bars a Plaintiff from issuing a Summons anywhere other than where the course of action arose, unless if the State Attorney consents to another jurisdiction in writing.

So in order to comply with the provisions of Act 40 of 2002 and in order to avoid unnecessary delays one must:

  1. Serve a letter of demand on the relevant state department within 6 months of the incident occurring;
  2. Wait for 60 days before you issue the Summons, if the state does not deny liability before the expiry of the 60 days;
  3. Ensure that you issue the Summons out of the Court with jurisdiction over the course of action.

By Marguerite Kirchner

Restraint of trade clauses: are they practical to enforce?

Many employment contracts, especially in the software design industry, contain so-called Restraint of Trade clauses to protect a company’s trade secrets and specialised know-how from being exploited when a former employee leaves or is head hunted by a competitor. But in a super connected world where information is a currency one should seriously consider whether restraint of trade clauses are still practically enforceable

Restraint of trade clauses protects confidential information. Whether information is confidential in the sense of being a protectable interest is basically a factual enquiry and is there no limit to the potential categories of information which may be regarded as trade secrets, which trade secrets are often specified and listed in employment contracts.

Under the influence of the English law, restraint of trade clauses were regarded as against the public policy and as such invalid until approximately 1994. However, the appeal case Magna Alloys and Research (SA)(Pty) Ltd v Ellis 1984(4) SA 874 (AD) brought dramatic change in this regard when it held that:

“’n Mens kan dus met veiligheid aanvaar dat daar in ons gemenereg niks is wat verklaar dat ‘n bepaling in ‘n ooreenkoms wat die handelsvryheid van ‘n party inkort, bloot om daardie rede ongeldig of onafdwingbaar is nie.”

the court further held that:

“…dit in die openbare belang is dat persone hulle moet hou aan ooreenkomste wat         hulle aangegaan het…”

and that:

“…dit in die belang van die gemeenskap is dat iedereen vir sover moontlik toegelaat moet word om hom vrylik in die handelswereld of in sy beroep te laat geld.”    

These two values became the corner stones against which the enforceability, or otherwise, of a restraint of trade was thereafter judged.

However, the court has a general discretion to narrow down a restraint of trade which was phrased in too wide terms and as such, having been found to be against public norms (contra bones mores) in order to enforce it – National Chemsearch (SA) v Borrowman & Another 1979(3) SA 1092 (T). In the referred case it was held that courts must consider the prevailing circumstances at the time when someone wants to enforce the restraint of trade clause and that courts may also decide to only partially enforce such clauses. Although this case has not received the seal of approval from the Constitutional Court it has been followed by numerous Provincial Courts and reaffirmed in the Court of Appeal in Sunshine Records (Pty) Ltd v Frohling & Others 1990 (4) SA 782 AD.

Thus the general yardstick applied to establish whether enforcement of the restraint of trade clause will be against public interest is reasonableness. In Reeves & Another v Marfield Insurance Brokers CC & Another 1996 (3) SA 768 (AA) the court held that:

“In general, the enforcement of an unreasonable restraint of a person’s freedom to trade will be contrary to the public interest. The principle enquiry therefore is whether, having regard to all the circumstances of the case, the restraint can be said to be reasonable. The onus of proving unreasonableness is upon the party seeking to avert the enforcement of the restraint.”

It is thus clear that the two constitutional values that enter the framework in deciding whether a restraint of trade is reasonable and therefore enforceable or not, is the “freedom to trade” and exercising one’s profession on the one hand and the principle of “pacta sund servanda” on the other hand and did the court state the following in guidance in Reddy v Siemens Telecommunications (Pty) Ltd 2007 (2) SA 486 (SCA) as to how courts must exercise their value judgement in this regard:

“A court must make a value judgement with true principal policy considerations in mind in determining the reasonableness of restraint. The first is that the public interest requires that parties should comply with their contractual obligations, a notion expressed by the maxim pacta sund servanda. The second is that all person should in the interest of society be productive and be permitted to engage in trade and commerce for the professions. Both considerations reflect not only common law but also constitutional values. Contractual autonomy is part of freedom informing the constitutional value of dignity, and it is by entering into contracts that an individual takes part in economic life. In this sense freedom to contract is an integral part of the fundamental right referred to in section 22 of the South African Constitution, which guarantees ‘every citizen … the right to choose their trade, occupation or profession freely’, reflecting the closeness of the relationship between the freedom to choose a vocation and the nature of a society based on human dignity as contemplated in the Constitution.”  

The Constitutional Court in Barkhuizen v Napier 2007 (5) SA 323 subsequently held that:

“…the proper approach to the constitutional challenges to contractual terms is to determine whether the term challenged is contrary public policy as evidenced in the constitutional values, in particular, those found in the Bill of Rights. This approach leaves space for the doctrine of pacta sunt servanda to operate, but at the same time, allows courts to decline to enforce contractual terms that are in conflict with the constitutional values, even though the parties may have consented to them.”

This was also confirmed in Den Braven SA (Pty) Ltd v Pillay & Another 2008 (6) SA 229 (D&CLD).

As the law presently stands it is clear that a convenant in restraint of trade (or of a person’s profession) is prima facie valid and enforceable unless the covenantor can prove that it is against public policy and therefore unenforceable. The onus to prove that would be on the covenantor. It will normally be against public policy and invalid if the restraint is unreasonable if weighed against the principles enshrined in the Constitution as referred to above, which principles include: the kind of work that can be performed; the area within which the restraint is to be enforced and the time period limited to the restraint.

Retraint periods of up to twleve months stipulated in contract clauses of the employment contract and the restraint being applicable to specific kind of work the employee may or may not be performing, considering that your company may be directly competing with another who will now employ your former employee, seem to be reasonable, valid and not against public policy.

However, the specification contained in some clauses that stipulates that a restraint is applicable to “any geographic territory in which [a company] does business” seems far too restrictive considering a person’s constitutional right to choose to exercise his or her profession freely. This may have the practical effect that an employee will be barred from exercising his or her profession anywhere in the RSA, which is obviously unreasonable and may render the enforcement of the restraint of trade clause either invalid or only partially enforceable. Restraint of trade clauses usually determine a particular area (x km radius for example) within which a previous employee may not exercise his profession, but does not exclude an entire country or countries.

The practical outcome of any restraint of trade clause in a specific matter will all depend on the extent that a company is willing to actively enforce same.


Marietjie Botes
Twitter: marietj72675939

Electronic signatures worth the screen they are signed on

People sometimes opine that contracts aren’t worth the paper it is written on, and considering paper’s evolution since it was made by the Chinese in 105 A.D. it is clear that the anticipated contractual consequences must have been worthless indeed. But paper, times and technology change. These days’ people may wonder if contracts are worth the screen it is displayed on. Long gone are the days when your inability to find a pen will prove to be an obstacle to the signing of an agreement. But let’s start at very beginning … (with apologies to The Sound of Music)

Common law principles of contract

A contract is an agreement between parties in which they reach a “meeting of the minds” in respect of certain rights and obligations between the parties that is recognised and enforceable by law. The three basic essentials of a contract is: 1) agreement; 2) contractual intention and 3) consideration. Accordingly a contract, unless legislation provides extra requirements, such as that the agreement must be in writing, is validly and legally concluded if parties reach an agreement containing these essentials.

For contracts concluded in the above circumstances it is clear that a “normal” electronic signature would be sufficient.

Electronic signatures

The Electronic Communications and Transactions Act 25 of 2002 (ECTA) defines an electronic signature as data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature.

Thus considering the above contractual essentials, signing an electronic pad with your finger at the pharmacy will create a binding agreement.

However, section 13(1) of the ECTA provides that:

“Where the signature of a person is required by law and such law does not specify the type of signature, that requirement in relation to a data message is met only if an advanced electronic signature is used.”

Only property and option agreements are (for the time being) legally required to be in writing and therefore requires a signature by law, as contemplated above, which signature will require a so-called advanced electronic signature. All other contracts may thus be signed by merely affixing an electronic signature by attaching data to, or incorporating data in, or logically associating data with other data and which is intended by the user to serve as a signature to the contract – with other words signing on the electronic signature pad and trust the software to do its magic. A contract signed with an electronic signature will have the same legal validity and enforceability as a “physical” or old school paper based contract or even a verbal agreement. The main challenge, as with a verbal agreement, lies with proving the actual agreement reached between the parties and the integrity or authenticity of the signature attached to such a contract.

Contracts in terms of the National Credit Act 34 of 2005

For example: Micro lending agreements are regulated by the National Credit Act 34 of 2005 (NCA) in which an agreement is defined as:

“…an arrangement or understanding between or among two or more parties, which purports to establish a relationship in law between those parties”.

Strangely enough section 2(3) of the NCA does not require a specific method of signature, but provides an option between a “normal” electronic signature OR an advanced electronic signature (the difference which is discussed above) and detailed as follows:

2(3) if a provision of this Act requires a document to be signed or initialed by a party:

(a) an advanced electronic signature, as defined in the Electronic    Communications Act, 2002 (Act No. 25 of 2002); or

(b) an electronic signature as defined in the Electronic Communications Act,

2002 (Act No. 25 of 2002), provided that:

(i) the electronic signature is applied by each party in the physical presence of    the other party or an agent of the party; and

(ii) the credit provider must take reasonable measures to prevent the use of the consumer’s electronic signature for any purpose other than the signing or initialing of the particular document that the consumer intended to sign or initial.

Although the NCA does not per se require a small credit agreement to be in writing or signed, sections 116–119 of the NCA specifically provides for initialling in the margin next to any changes effected to a small credit agreement, if a consumer has already signed a credit agreement, and that under these circumstances changes must be reduced to writing and signed by both consumer and credit provider, even if the changes were initially agreed upon orally between the parties.

It thus seems that the NCA, like other legislation, also aims towards the requirement that agreements must be reduced to writing and signed by all involved parties, even though the NCA currently provides the option to choose between an electronic and an advanced electronic signature at this stage. (Draft Regulations to the Medicines and Regulated Substances Control Act are currently also calling for all electronic signatures on medicine prescriptions to be advanced electronic signatures.) Should the NCA in future be amended to also require the signature of small credit agreements, such a change will then be in line with the stipulations of the ECTA which stipulates that if legislation require the signature of a person without clearly stipulating the type of signature, an advanced electronic signature must be used.

At this stage only a “normal” electronic signature is legally required to conclude a valid small credit agreement.

Signing of blank documents

Further considering concerns regarding the signing of a blank document, the National Credit Regulator specifically warned against this in Volume 1 of their NCA information booklet, because additional terms may be added to an electronic credit agreement after signing thereof. In this regard it should be noted that in terms of section 2(3)(b)(ii) above the credit provider must take the necessary:

“…measures to prevent the use of the consumer’s electronic signature for any purpose other than the signing or initialing of the particular document that the consumer intended to sign or initial.”


The main difference between an electronic signature and an advanced electronic signature as defined in the ECTA is that an advanced electronic signature results from a process that has been accredited by the Director General of the Department of Communication via the South African Accreditation Authority (SAAA) as prescribed in section 34 of the ECTA. Section 38 of the ECTA further stipulates the criteria needed to satisfy the Director General before authentication may be accredited, which criteria mainly involves reasonable software, hardware capabilities and infrastructure of the service provider.

Should you wish to provide a service that can also authenticate the signature it is advisable to apply for accreditation of any so-called authentication services or products.

How to obtain accreditation

  1. the process of applying for accreditation is described in detail in Chapter II, Regulations 5–12 of the Accreditation Regulations issued in term of section 41 of the ECTA that was published in the Government Gazette No.29995 Vol. 504 Regulation Gazette No. 8701 on 20 June 2007;
  2. the SAAA appointed KPMG and PWC to their panel of auditors and must an applicant select one of these auditors, prior to application, to do an audit of the applicant’s procedures, technology, people and facility (which will include an inspection) by following the principles and criteria of the WebTrust Program for Certification Authorities developed by the American Institute of Certified Public Accountants and the Canadian Institute for chartered accountants;
  3. the applicant will be responsible for payment of the audit fee in paragraph b. above;
  4. the chosen auditor will also sign an NDA with the applicant fro accreditation;
  5. the applicant must then complete the Application for Accreditation form (regulation 6(1)) enclosed herewith and pay a non-refundable fee of R20 000-00. It seems that this is a once of fee for the processing of the said application;
  6. the application in e. above must contain all the prescribed information as per regulation 7and supporting documentation as requested in the enclosed form;
  7. as per regulation 8 the application, including the following must only be delivered by hand  to:

    The Deputy South African Accreditation Authority,
    Department of Communication,
    Iparoli Office Park,
    399 (Duncan) Jan Shoba Street, Hatfield:
  • Complete and detailed audit report and comments;
  • Completed application form
  • Proof of payment of the application fee;
  • Signed NDA;
  • Any other prescribed information;
  1. regulation 4(a)(ii) provide for the accreditation of products and services by type and class;
  2. once the application has been processed and granted, the accreditation will be published in terms of regulation 4;
  3. please note that annual audits will need to be submitted to the SAAA and will the applicant/service provider be responsible for those audit fees.

Encryption services

If you also provide encryption services in respect of the ECTA, section 29 of the ECTA requires the Director-General of the Department of Communications to maintain a register of cryptography providers which contains detail like the name, address of the cryptography provider and a description of the type of cryptography services (excluding any confidential information) provided. Section 30 of the ECTA strictly prohibits the rendering of any encryption services or encryption products in the Republic of South African, unless the aforementioned details have been recorded in the said register.

Thus, make sure your contract is worth the screen it is displayed on and read the small print.


Marietjie Botes
Twitter: Marietj72675939