UMS Law Letter

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COMMENT

UNFAIR TERMS IN CONTRACTS


At common law the general approach to the enforcement of contracts
is encapsulated in the principle ‘pacta sunt servanda’ ie all contracts
entered into voluntarily and freely are valid and enforceable even
though the contract (or a term in the contract) is unfair or may
operate harshly. A Court will not, however, enforce a contract which
is contrary to public policy. This requires a Court to analyse,
objectively, whether the contract offends the legal convictions of the
community. If it does, the contract is contrary to public policy and
void; if not, a contract entered into voluntarily and freely stands and
can be enforced, whatever reason a party may have for not
complying with its terms.

This no longer our law. In Barkhuizen v Napier 2007 (5) SA 323
(CC) the Constitutional Court stressed that all law, including the
common law of contract is subject to constitutional control. Any
clause in a contract which is inimical to the values underlying our
constitutional democracy is contrary to public policy and therefore
unenforceable. Public policy imports the notions of fairness, justice
and reasonableness and precludes the enforcement of a contractual
term if its enforcement would be unjust or unfair. In determining the
fairness of a clause, two questions must be asked. The first is whether
the clause itself is unreasonable. If the clause is objectively
reasonable, the second question arises, namely whether the clause
should be enforced in the light of the circumstances which prevented
compliance. In practical terms this means that once it is accepted that
the clause itself does not objectively violate public policy, a party to
COMMENT


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the contract may nevertheless escape the consequences of noncompliance
if it can be shown that that a good reason existed for not
complying.


The clause in question was a time limitation clause in an insurance
contract. The Constitutional Court made it clear that where a
claimant seeks to avoid the enforcement of such a clause on the basis
that non-compliance therewith was caused by factors beyond his
control, it is inconceivable that a Court would hold the claimant to
the clause. The enforcement of the clause in such circumstances
would result in an injustice and would be contrary to public policy.
According to the Court, public policy endorses the principle of
freedom of contract, but nevertheless recognises the need to do
simple justice between the contracting parties.

Simply put, it comes to this: a Court will not enforce a clause which,
viewed objectively, is unfair; neither will it enforce a clause which is
objectively fair but there happens to be a valid reason for a party not
complying with it. The ultimate aim is to do ‘simple justice’ between
the contracting parties.
Courts are therefore now empowered to declare contract terms
unenforceable on the grounds that enforcement would be unfair. Of
course, this does not mean that courts can or will do so
indiscriminately. The difficulty, however, will be to determine in
each individual case whether or not the enforcement of a particular
term would be unfair. The Constitutional Court agreed with the
Supreme Court of Appeal that ‘intruding on apparently voluntarily
concluded arrangements is a step that judges should countenance
with care, particularly when it requires them to impose their
individual conceptions of fairness and justice on parties’ individual
arrangements.’

With respect, this approach is obviously sound but the difficulty is
not confined to determining the fairness of the parties’ individual
arrangements. In terms of the Constitutional Court’s judgment a


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Court may now be called upon to decide not only whether the
parties’ individual arrangements are fair, but also whether the reason
offered for non-compliance with a particular clause is sufficiently
sound as to render enforcement unfair. Hopefully our Courts will,
over time, develop clear guidelines as to what they consider to be fair
and unfair in a contractual context. Until that occurs, however, it
could be a challenging task for legal advisors to express a firm view
on the enforceability of a particular term in a contract.

ABUSE OF JURISTIC PERSONALITY

Members of close corporations are well advised to take note of the
judgment in Airport Cold Storage (Pty) Ltd v Ebrahim and Others
2008 (2) SA 303 (C). On the facts, the Court had no difficulty in
issuing an order declaring the members of the close corporation
personally liable for the corporation’s debts. In coming to its
conclusion, the Court observed that veil piercing will not be resorted
to as a matter of course, but a Court will not hesitate to do so where it
appears that the company or close corporation was a mere front
concealing the true facts. It is not a requirement to establish that the
corporation had been operating fraudulently.

The Court’s message is clear: carrying on business in the form of a
company or close corporation is not simply a tool of convenience to
be used by shareholders or members to shield themselves from the
entity’s creditors when it suits them, while at the same time paying
scant attention to the principle of corporate governance and the
relevant statutory provisions.

EVICTION OF SQUATTERS

In City of Johannesburg v Rand Properties (Pty) Ltd 2007 (1) SA 78
(W), the High Court refused to grant the City of Johannesburg an
order to evict squatters from an unsafe building in the inner city,
pending the implementation of a comprehensive and co-ordinated

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programme to progressively realise the right to adequate housing for
people in the inner city of Johannesburg who are in a crisis situation.

The judgment gave rise to a number of questions and came in for
sharp criticism by the Supreme Court of Appeal. The SCA, in
overturning the High Court’s decision, pointed out that the
Constitution affords no person the right to housing at State expense
at a locality of that person’s choice (for example, the inner city).
Moreover, it is not correct to say that to deprive a person of unsafe
housing amounts to a denial of his or her right of access to adequate
housing.

The SCA also pointed out that a municipality’s right to issue a notice
to occupants to vacate an unsafe building is based on s 12(4)(b) of
the National Building Regulations and Building Standards Act 103 of
1997. The Section is not unconstitutional, but the decision to issue a
notice must be rational having regard to the Promotion of
Administrative Justice Act 3 of 2000. A Court has no discretion to
disregard a valid notice to vacate issued in terms of the Act and to
condone the continuance of unlawful acts by occupants of unsafe
premises.

The SCA stressed, however, that its decision did not mean that a
municipality is absolved from any constitutional obligations when
issuing notices to vacate in terms of the National Building
Regulations and Building Standards Act. A municipality has a duty
to provide a measure of relief in the form of temporary shelter.
The judgment of the Supreme Court of Appeal is to be welcomed.
The housing crisis in South Africa will not be solved by allowing
homeless persons to occupy unsafe buildings illegally.

SEIZURE OF TRAVEL ALLOWANCE
In Van der Merwe and Another v Taylor NNO and Others 2008 (1)
SA 1 (CC), a south African traveller was arrested at Cape Town


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International Airport after customs officials found an amount of
130,000 Euros and US$ 21,249 in his hand luggage, far exceeding
the permissible travel allowance in terms of the local foreign
currency regulations. The traveller’s explanation that the foreign
currency included the total allowance for a group of people who had
left two days earlier, and that he was simply carrying the foreign
currency on their behalf, made no impression on the authorities. The
money was confiscated and eventually placed in the possession of the
Reserve Bank pending a criminal trial. The traveller thereupon
instituted an action, on an urgent basis, for return of the foreign
currency, arguing that he was the owner of the money.

His case was dismissed in both the High Court and the Full Court, as
well as by the majority of the judges in the Constitutional Court. The
CC ruled that the traveller was the owner only of 20,865 Euros (his
own permissible travel allowance) but not the balance. In any event,
so the Court held, he was not entitled to get any of the money back
since there was no evidence that the money would not be required in
future criminal proceedings as contemplated in s 20 of the Criminal
Procedure Act 1977.

The message is clear: South African travellers taking with them
foreign currency in excess of the permissible allowances, do so at
their own risk. If caught, even a plausible explanation may not be
sufficient to prevent seizure of the money and an arrest, not to
mention a spoiled holiday.

SALE OF HOUSE WITHOUT APPROVED PLANS

The judgment in Nieuwkerk v McCrae 2007 (5) SA 1 (W) is of major
importance for buyers and sellers of immovable property. The
practical effect of the judgment is that when a residential property
within the area of a local authority is sold with a building on it, it is
an implied term of the sale agreement that the building has been
erected in compliance with all statutory requirements and that it an
be used to its full extent. More specifically, there is an implied term
that the improvements on the

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property have been erected in
accordance with an approved building plan. It was also held that a
voetstoots clause does not protect a seller who sells a property in
respect of which building plans have not been approved.

A number of questions arise. Firstly, does this mean that a seller who
is unaware of the absence of an approved building plan would
commit breach of contract if he sells the property and it is later
discovered that the previous owner had made alterations without an
approved building plan? In terms of the Court’s reasoning, the
purchaser’s remedy is based on breach of contract, not
misrepresentation. Accordingly, the seller’s state of mind is
irrelevant; the question is simply whether or not the alterations were
effected in terms of an approved plan. If not, the seller commits
breach of contract.

This gives rise to another question, namely whether the seller can
exclude possible liability by a clause to the effect that he provides no
warranty in respect of the existence of approved building plans and
that the onus is on the purchaser to satisfy himself on this point. It is
submitted that such a clause would not protect a seller who is aware
of the absence of an approved building plan, but there is no reason
why the innocent seller should not be protected in this way. Such a
clause would obviously be prejudicial to a purchaser who signs the
sale agreement without reading it carefully, and then subsequently
discovers that certain improvements on the property have been
effected without an approved building plan. As a general rule, that
would be the buyer’s problem unless it can be established that the
seller had induced the buyer to sign without reading the contract,
aware of the latter’s ignorance of the exclusion clause.

In the past, many properties in South Africa have been sold without
approved building plans in respect of all of the improvements
effected on the property. It is an everyday occurrence that sale
agreements are signed by buyers without reading the terms. The risks
of doing so, for both sellers and buyers, are clear.

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LABOUR LAW : UNFAIR DISMISSAL


In Rustenburg Platinum Mines Ltd v Commissioner for Conciliation,
Mediation and Arbitration 2007(1) SA 276 (SCA, the Supreme Court
of Appeal held that the discretion to impose a sanction for
misconduct belongs in the first instance to the employer and that a
CCMA commissioner should approach a dismissal ‘with a measure
of deference’ because it is primarily the function of the employer to
decide on a proper sanction in disciplinary matters.

This approach has now, in no uncertain terms, been overruled by the
Constitutional Court in Sidumo and Another v Rustenburg Platinum
Mines Ltd and Others 2008 (2) SA 24 (CC). The CC made it clear
that there is nothing in the Constitution or the Labour Relations Act
66 of 1995 suggesting that, in determining the fairness of a dismissal,
a CCMA commissioner must approach the matter from the
perspective of the employer. In fact, all the indications are to the
contrary. The decision to dismiss belongs to the employer, but not
the determination of its fairness. Ultimately, the commissioner’s
sense of fairness is what must prevail and not the employer’s view.

Section 145(1) of the Labour Relations Act stipulates that any party
to a dispute who alleges a defect in any arbitration proceedings under
the auspices of the CCMA, may apply to the Labour Court for an
order setting aside the arbitration award. According to the
Constitutional Court the section is now suffused by the constitutional
standard of reasonableness. The standard is this: is the decision
reached by the commissioner one that a reasonable decision-maker
would not have made?

With respect, the practical implication of the CC’s judgment is that it
may now be easier said than done to appeal a decision of a CCMA
commissioner. As the Constitutional Court pointed out, decisionmakers
acting reasonably may reach different conclusions, but as
long as the CCMA commissioner’s is reconcilable with one of those
conclusions a higher court will not interfere.

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Case Digest

ARBITRATION
Requirements for a valid expert determination

This matter concerned the determination of certain accounting
disputes which were referred to an expert by agreement between the
parties. The respondent (Shoprite) had applied to the High Court for
an order declaring that the expert had failed properly to determine
some of the disputes referred to him and directing him to determine
the disputes in question.

The High Court granted the order sought, whereupon the appellant
(SAB) lodged an appeal with the Supreme Court of Appeal. The
SCA upheld the appeal. The Court found, on the facts, that the expert
had made a valid determination. The legal principle relied upon may
be summarised as follows:

  • In general, the requirements for a valid arbitral award are equally
    applicable to an expert determination. What is required is that all
    the issues submitted must be resolved in a manner that achieves
    finality and certainty. The award or determination may therefore
    not reserve a decision on any issue before the arbitrator or expert
    for someone else to resolve. The award must also be capable of
    implementation. On the other hand, what must be determined are
    the matters submitted and no more.
  • Depending on the questions, therefore, the determination may not
    necessarily result in a final resolution of the dispute between the
    parties. Generally, a court will be slow to find non-compliance
    with the substantive requirements. An award or determination

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    will also be construed liberally and in accordance with the
    dictates of common sense.

    SA Breweries Ltd v Shoprite Holdings Ltd 2008 (1) SA 203(SCA)

    COMPANY LAW
    Personal liability of directors

    This was a claim by S for an order declaring B personally liable, in
    terms of s 424 of the Companies Act 61 of 1973, for payment of the
    sum of R164 653.55 being the amount of a default judgment granted
    in favour of S against company P. The question for decision was
    whether or not S had proved, on a balance of probabilities, that B had
    knowingly been a party to the carrying on of the business of the
    company ‘recklessly or with intent to defraud creditors of the
    company’ as contemplated in s 424 of the Act.

    The facts, briefly stated, were that B had engaged a firm of auditors
    to form company P. Q was to be its sole director. The underlying
    purpose was to obtain the benefits of black economic empowerment
    initiatives. B had never been a director of the company, but had
    signed documentation enabling him to be appointed as such. This
    was never submitted to the Registrar of Companies. Nevertheless, all
    contracts between P and third parties were concluded by B,
    representing the company. No directors’ meetings were ever held,
    nor were any shareholders’ meetings held. B had never informed Q,
    the sole director, that the company had commenced operations. B had
    known all along that he was the only individual with intimate
    personal knowledge of the financial affairs of the company and the
    only individual with the ability to keep proper books of account. It
    was reasonable to infer from the facts that B had failed to keep
    proper financial records or had failed to disclose their whereabouts,
    or had destroyed some books of account.

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    B had persuaded S to extend the terms of credit available to P for a
    period of ten months. However the only payments made by P during
    this period were for COD purchases. In 2002 B decided, without
    consulting Q, to cease trading. At that stage P owed S R164 643.55
    in respect of goods delivered on credit. P failed to pay, whereupon S
    issued summons. B, represented P but closed the company’s case
    without leading any evidence. Default judgment was granted in S’s
    favour but the debt remained unpaid, following which S sought to
    hold B personally liable in terms of s 424 of the Companies Act.

    The Court found in favour of S, and the reasoning was as follows:

  • The carrying on of any business of a company ‘recklessly’means
    carrying it on by actions which evidence a lack of any genuine
    concern for the company’s prosperity. On the facts, the actions of
    B evidenced just that.

  • The indebtedness of company P to S was incurred by B on behalf
    of P while he conducted the affairs of the company recklessly.
    The inability of P to pay the debt was caused by such conduct.

  • The true facts were within the exclusive knowledge of B, but he
    chose not to testify. In the circumstances, less evidence sufficed to
    establish a prima facie case against him. B’s failure to furnish
    an explanation also weighed heavily against him.

    The Court further directed that the matter be referred to the Director
    of Public Prosecutions for consideration of a contravention of ss 250,
    284 and 424 of the Companies Act.

    Section 284 deals with the failure
    by a company to keep proper accounting records, while s 250 makes
    it an offence for any person to conceal or destroy financial records or
    statements of a company. An order was also made referring the
    matter to SARS for consideration of a possible failure to pay income
    tax and VAT.

    Strut Ahead Natal (Pty) Ltd v Burns 2007 (4) SA 600 (D)

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    CONTRACT
    Specific performance of an employment contract

    N sought an order to enforce an employment contract between it and
    R and to hold the latter to the three-month notice period stipulated in
    the contract. R, a Boeing 767 pilot, had given the applicant notice on
    3 October 2005 that he was terminating his services and that his last
    day of employment would be on 3 November 2005.

    N’s case was that this purported notice was ineffective since it was
    contrary to the employment contract concluded between the parties
    which obliged R to give three months’ notice of termination of
    services. R’s reply was that, in terms of the law governing
    employment contracts, N was barred from claiming specific
    performance, which would, in effect, compel R to work a threemonth
    notice period.

    The Court found in favour of N and the reasoning was as follows:

  • The general rule in our law is that a party to a contract is entitled
    to enforce the contract. A Court has a discretion whether or not to
    grant specific performance. In the case of an employment
    contract a Court will, in the exercise of its discretion, not
    normally grant specific performance. However, this is not a hard
    and fast rule. It is a misconception to say, without qualification,
    that specific performance of an employment agreement will never
    be permitted.
  • Various factors may play a determining role in deciding whether
    or not specific performance of an employment contract should be
    granted. Such factors may, for example, be:
    (a) the particular relationship between the employer and the
    employee;
    (b) the nature of the employment contract;
    (c) the nature of the work or service to be performed; and

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    (d) the prejudice or hardship to be suffered by the innocent party
    should specific performance not be ordered, compared to the
    prejudice that would be suffered by the employee if granted.

    R was a highly qualified professional pilot. He had entered into the
    employment contract freely and voluntarily, and in terms thereof he
    had agreed to a three months’ notice period. If one considered the
    nature and circumstances of the agreement between the parties, the
    particular relationship between them and the nature and type of
    service rendered by R, one had to conclude that this was a case where
    specific performance should be granted.

    Another factor to be considered was the potential harm that N would
    suffer should R not be held to the three-month notice period. It would
    take N at least two or three months to replace R if he were permitted
    to terminate the employment contract prematurely. The possibility
    existed that flights would have to be cancelled because N might not
    have someone to pilot the aircraft. N’s loss could be in the region of
    R1 million per flight.

    Nationwide Airlines (Pty) Ltd v Roediger and Another 2008 (1) SA
    293 (W)

    MVA LAW – Amendment of claim

    M was injured in a motor vehicle accident on 9 December 2000. She
    instituted an action for damages on 26 June 2003, based on the Road
    Accident Fund Act 56 of 1996. The particulars of claim were limited
    to past medical expenses, future medical expenses and general
    damages.

    Subsequently, on 16 October 2006 and 15 March 2007, M sought to
    amend her particulars of claim by the introduction of two additional
    heads of damage, namely past loss of earnings and future loss of
    earnings. The RAF, in turn, amended its plea by introducing a special

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    plea to the effect that M’s claim for past and future loss of earnings
    had become prescribed in terms of s 24 of the Act.

    The question for decision was whether or not the summons served in
    June 2003 interrupted the running of prescription in respect of past
    and future loss of earnings, even though these two heads of damage
    were not originally claimed.

    The Court found in favour of M and dismissed the prescription plea
    by the RAF. The reasoning was as follows:

  • M’s right to recover past and future loss of earnings formed part
    of her original cause of action to claim compensation. The
    original summons interrupted prescription and endured for the
    benefit of the entire right of action or claim.

  • The single wrongful act of the insured driver triggered for M one
    cause of action for all the loss or damage she suffered in
    consequence of the accident, including the loss of her past and
    future earnings. The claim set out in the amended summons was
    not separate and distinct from the claim set out in the original
    summons. The right of action relied upon in the particulars of
    claim, as amended, was recognisable as the same or substantially
    the same as that relied upon in the original particulars of claim.

    Mntambo v Road Accident Fund 2008 (1) SA 313 (W)

    PROPERTY LAW – Fencing off a right of way

    M and G owned adjoining farms in Knysna. The only access to their
    farms was a gravel road leading from the N2 national road and to get
    to his farm M had to make use of this road which crossed G’s
    property. M did not have a registered servitude over G’s farm, but
    had launched proceedings for an order declaring that he had acquired

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    a right of way through prescription. These proceedings were still
    pending at the time of the present dispute.

    In 2006, G decided to fence off its property and to erect a gate on
    each side through which M would still be able to gain access to the
    road and to his property. M was duly notified and the work was
    completed by the end of June 2006. The gates were electronically
    operated by means of remote control units. Additionally, a touch pad
    had been erected and a special code could be entered via the touch
    pad which opened the gates. A pedestrian gate had been installed on
    both sides of the fence and G offered keys to M to enable pedestrians
    to open the gate. A signboard had also been erected displaying M’s
    contact numbers should any persons wishing to gain access to his
    farm not have a remote control unit, a key to the pedestrian gate or
    the code to the touch pad. The system had a battery back-up, with the
    result that, in the case of a power failure, persons could still enjoy
    unhindered access to both properties.

    M objected to the installation of the gates. His contention was that he
    had been wrongfully deprived of his right to use the road. He alleged
    that the touch pad could only be reached with difficulty by a person
    in a motor vehicle; this constituted not only an inconvenience but a
    grave security risk which never existed prior to the installation of the
    gates. He claimed an order that unrestricted access to the road be
    restored to him. The crucial question was whether or not M had
    indeed been despoiled, ie unlawfully deprived of the use of the road.

    The Court dismissed the application. The legal principle referred to
    by the Court may be summarised as follows:

  • Where a person has been wrongfully deprived of possession, he
    may through spoliation proceedings claim restoration of such
    possession. In such proceedings the Court does not concern itself
    with the rights of the parties, whatever those rights may have
    been before the spoliation took place. The Court merely enquires
    whether or not there has been a spoliation; if there has been, it

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    restores the possession. The question whether an act, omission or
    the conduct of a party amounts to spoliation has to be determined
    with reference to the facts and circumstances of each and every
    case individually.

    In this case, the Court found that M was unnecessarily difficult and
    unreasonable towards the needs of G. In these days when violence is
    so rife on farms, it is not unreasonable to expect farming
    communities to take measures to reduce access their properties by
    unknown and uninvited intruders. The measures taken by G in this
    instance were definitely designed to provide not only some measure
    of safety for its members, but also for M. Safety measures will often
    be inconvenient to those subjected to them, but only for a short
    period of time. As soon as all the parties adopt a positive frame of
    mind and grow used to the protective measures, life becomes normal
    again.

    M was not correct in saying that the system installed by G did not
    sufficiently provide them, their visitors or service providers with free
    and unhindered access to his farm. This was simply a question of
    attitude. M had apparently taken a conscious decision to oppose
    whatever changes G intended making which would affect use of the
    road in a way which was different from what had obtained in the
    past. This was unacceptable. The owner of a right of way has a duty
    to display reasonableness whenever he exercises such right.

    Malan and Another v Green Valley Farm Portion 7 Holt Hill 434 CC
    2007(5) SA 114 (E)

    TAX – The meaning of ‘gross income’

    P had operated an illegal pyramid scheme for some years,
    commencing in 1998. He had persuaded gullible ‘investors’ to part
    with their money by promising them irresistible returns on various
    forms of investment. He paid the returns for a while to some


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    investors and then the scheme finally collapsed – owing many
    millions. It had been conducted by way of successively creating legal
    entities, both incorporated and unincorporated. They were all
    eventually insolvent, and the High Court ordered on 4 February 2002
    that these entities, for ease of administration and legal practicality, be
    consolidated into a single entity named MP Finance Group CC (in
    liquidation).


    The Commissioner, SARS, presumably pursuant to this order,
    regarded the CC as a taxpayer liable for the taxes due by the original
    entities. Accordingly, he assessed the CC for tax in respect of the tax
    years 2000, 2001 and 2002. The liquidators objected on behalf of the
    CC, contending that the investment amounts or ‘deposits’ were not
    ‘received’ within the meaning of ‘gross income’ as defined in the
    Income Tax Act 58 of 1962. The Commissioner disallowed the
    objection, whereupon the CC appealed to the Tax Court. The appeal
    was dismissed and a further appeal was lodged to the Supreme Court
    of Appeal. The liquidators main argument was that the investors’
    deposits were in fact loans which were illegal and therefore void.
    Thus the pyramid scheme was liable in law to refund the deposits to
    the investors immediately, with the result that there was no basis on
    which it could be said that the deposits were ‘ received’ within the
    meaning of the Income Tax Act.

    This appeal was also dismissed. The Court pointed out that in s 1 of
    the Income Tax Act ‘gross income’ means the total amount ‘received
    by or accrued to or in favour’ of a taxpayer during a tax year. The
    entities run by P had made their money by swindling the public. That
    was their income. It followed therefore that the amounts that were
    paid to the entities were ‘received’ by them within the meaning of the
    Income Tax Act. The funds had been accepted by P with the
    intention of retaining the money for his own benefit. It thus
    constituted receipts within the meaning of the Act, notwithstanding
    the fact that in law it was immediately repayable to investors. The
    assessments had therefore been correctly raised by the
    Commissioner.


    MP Finance Group CC v Commissioner, SARS 2007 (3) SA 521 (SCA)

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    INTERNATIONAL REVIEW

    MEDIA LAW

    Undercover investigation concerning bank account
    and credit card fraud

    In 2007, an undercover reporter engaged by the BBC applied for a job with
    a company operating call centres in Scotland. The company’s customers
    included banks, insurance companies and telecommunication companies.
    The call centres were given access to the operating systems of their
    customers and to extensive information about the financial affairs of the
    customers of these institutions. The reporter in due course signed an
    employment contract which included a clause whereby she agreed not to
    disclose any trade secrets or other confidential information. She also
    undertook not to remove documents containing any confidential
    information from her employer’s premises without authorisation. More
    specifically, she agreed not to communicate with any employee of any
    media organisation regarding the business of the call centre company.

    The reported used a concealed camera to record video footage within the
    company’s premises. She wrote down details of bank accounts of
    customers and took these away with her. She gave this material to a BBC
    presenter and the BBC subsequently intended to broadcast some of the
    material in a television programme. Litigation followed, but the Court
    refused to grant the call centre company an interim interdict restraining the
    broadcast. The Court pointed out that the purpose of the broadcast was to
    expose bank account and credit card fraud which constituted a major
    criminal activity. There was considerable public interest in the television
    programme, and the kind of material which was disclosed was not highly
    confidential or highly sensitive. The Court did not accept that material
    obtained by an unlawful act necessarily became so tainted that it could
    never be used under any circumstances. See 12.4 2007 Communications
    Law 140.

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    TRAVEL LAW
    Airline’s liability for defective seat

    In Krum v Malaysian Airline System Bhd [2004] VSC 185, the
    Supreme Court of Victoria, Australia, awarded an airline passenger
    AU$120 000 general damages and AU$26 000 for medical expenses
    for the loss suffered by him in consequence of injuries to his spine
    that were caused by a defective airline seat.

    The plaintiff had been a passenger on an 11-hour flight from Kuala
    Lumpur to Paris with Malaysian Airlines. He flew first class. After
    dinner, he reclined the seat to sleep but found that the lumber support
    was protruding from the middle of the seat. The cabin crew refused
    to move him to another seat, even though spare seats were available.
    Instead, they gave him blankets and cushions to make him as
    comfortable as they could, given the problem caused by the
    protruding lumbar support.


    The plaintiff slept in the seat for approximately eight hours. He
    awoke feeling pain in his left leg. This was subsequently diagnosed
    as having been caused by a damaged disc at the base of his spine,
    commonly known as sciatica. In due course he claimed damages
    from Malaysian Airlines under article 17 of the Warsaw Convention.
    Expert medical evidence showed that the defective seat had at least
    contributed to the sciatica, which appeared to be a new condition and
    not the aggravation of a pre-existing condition. The Court found, on
    the facts that the passenger’s injury had been caused by an ‘accident’
    as required under article 17 of the Warsaw Convention and that there
    had been no contributory negligence on the plaintiff’s part.

    2008 International Travel Law Journal 24

    Page  19

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