Spartan Caselaw

SAP SE v Systems Applications Consultants ta Securinfo [2024] ZASCA 26

PROFESSION – Judge – Recusal – Reasonable apprehension of bias – Trial judge misconceiving the issue in the evidence

Preventing counsel from properly developing a line of cross-examination – Irritatedly abstracting himself from the hearing and directing that the cross-examination continue in his absence – Reasonable apprehension that judge has shown himself to have closed his mind to evidence and submissions of counsel – Belated improbable explanation by judge for his abrupt departure serves simply to exacerbate the apprehension – Test satisfied.

Facts: Systems Applications Consultants (SAC), a local software development company, caused summons to be issued out of the High Court for damages in the amount of €609,803,145 against Systems Applications Products (SAP), a German global software company involved in the development and sale of software systems application products. SAC’s assertion, denied in general terms by SAP, is that it had concluded a Software Distribution Agreement (SDA) with a German IT consulting company, in respect of a software security product that had been developed by it. The broad thrust of SAC’s case is that, subsequent thereto, SAP acquired a controlling share in the consulting company and an interest in a competing security product known as VIRSA and thereafter unlawfully interfered in the SDA.

Appeal: Tsoka J dismissed a recusal application and the matter thereafter proceeded on the separated issue to finality before Tsoka J, who delivered a written judgment, in which he declared that SAP was in breach of its legal duties to the plaintiff, SAC. SAP applied to the judge for leave to appeal in respect of both his judgment on the recusal application as well as his judgment on the merits. Both applications were dismissed in an all too brief judgment consisting of four paragraphs spanning less than two pages in the record. This despite the judge having earlier recorded in his judgment on the merits that the issues raised in the determination of the merits were not only complex but difficult as well.

Discussion: The hearing was conducted virtually on the Zoom platform in accordance with the then prevailing practice in the High Court as a result of the Covid-19 pandemic. When the trial was into its twentieth day and whilst one of SAC’s witnesses, Mr Mario Linkies, was being cross-examined by counsel for SAP, the judge asked counsel to proceed and said that the question had been answered repeatedly. An exchange then followed between counsel and the judge, which ended with the judge saying, “When you’ve finished you’ll let me know. I’m taking a break.” A further exchange occurred when counsel pointed out that the judge had walked out of court and that counsel had an issue with the conduct of the bench. The judge observed that he had become “irritated” by SAP’s counsel seeking “to force Mr Linkies to answer the already answered question”, which was formulated in less than clear language as “the repetitive asking of Mr Linkies that Mr Tattersall was breathing down his neck was continued even though the witness had already answered the question”. But, on the evidence, properly construed, the question had not been repeatedly asked and repeatedly answered. The judge appears to have misconceived the evidence. This misunderstanding on the part of the learned judge provoked the irritation and not just his summarily abandoning the hearing, but also directing that the proceedings should continue in his absence.

* See para [19] on the judge’s explanation about having to urgently go to the bathroom.

Findings: The reasonable, objective and informed person in SAP’s position would apprehend that a presiding judge who: (a) prevents its counsel from cross-examining a witness in response to a challenge from such witness to be shown why his credibility is being impugned; (b) then irritatedly abstracts himself from the hearing, without first adjourning; and (c) whilst at the same time directing that the hearing continue in his absence until counsel has “finished”, has shown himself to have closed his mind to the evidence and the submissions of counsel. The belated improbable explanation by the judge for his abrupt departure serves simply to exacerbate the apprehension. It follows, as a consequence of the cumulative factors alluded to, that the question: whether a reasonable apprehension of bias can be said to exist, must accordingly be answered in the affirmative. What results from this is that the further judgment of Tsoka J on the merits is vitiated by the nullity of the proceedings, which occurred as a result of him continuing to sit in a trial where recusal was required. The only question is whether there is a reasonable apprehension of bias: “if there is, cadit quaestio (the question falls away/the case is closed), no matter what effect this might have on the particular proceedings”.

Order: The appeal is upheld. The orders of the court a quo are set aside and replaced with an order where the application for recusal is granted.

PONNAN JA (GORVEN JA, MEYER JA, KOEN AJA and BAARTMAN AJA concurring)

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Legal Practice Council v Setati [2024] ZAGPPHC 207

PROFESSION – Striking off – Attorney – Assisting with administration of deceased estate

Attorney allowing investment of estate funds in dubious investments in breach of mandate – Despite this, taking own fees and allowing fees of investment advisors – Whole of estate funds depleted – Minor as sole beneficiary prejudiced – Failing to account for these breaches and to keep proper books of account – Repeatedly practising without fidelity fund certificates – Offending conduct established – Respondent no longer fit and proper to practice law – Striking off appropriate sanction.

Facts: The respondent is a legal practitioner and was admitted as an attorney in 2010. Ms Siboyane was appointed by the Master in 2016 as the executrix of the estate of her late sister. The sole beneficiary of the estate was the deceased’s minor child. Ms Siboyane approached the respondent in March 2019 to assist her with the administration of the deceased estate. The respondent advised her to invest some R300,000 of estate funds in an investment, of which he kept the terms confidential. The funds were paid over, but Ms Siboyane, in her capacity as executrix and as the person who looked after the minor child, did not receive any quarterly payment, had difficulty to maintain the child and could not ascertain from the respondent the whereabouts of the estate funds.

Application: Ms Siboyane referred a complaint to the Legal Practice Council (LPC) who asked for an explanation from the respondent. The respondent has never disclosed to the client fully what had happened to the funds of the estate, nor has he informed the LPC and neither has he, on the papers, despite him filing even a supplementary answering affidavit, taken the court into his confidence in this regard. In 2022 this court suspended the respondent from practice pending finalization of this application for his striking off, launched by the LPC.

Discussion: From an email sent by the respondent to the LPC setting out his “records” of fees paid, it appeared that of the estate funds of some R315,000 an amount of R115,000 went to the respondent and his privies and R200,000 contributed the “Original Principal Amount” of the investment “note”. The auditor appointed by the LPC to investigate the respondent’s books of account (and who as curator in terms of the interim suspension order, furnished the court with a report) could find little trace of the R315,667. It appears that the respondent has grossly failed in his fiduciary duty (which he had accepted) in assisting the executrix of a deceased estate in administering that estate. “On his watch” so to speak, virtually the totality of estate funds had been invested in a dubious investment in respect of which the respondent (and others) had been paid fees for themselves but which investment ultimately led to a devastating loss for the estate and a minor. The offending conduct in this matter is no mere error of judgment or negligent investment, it constitutes a direct breach of an instruction to assist with the administration of a deceased estate.

Findings: The funds were not invested in a listed company and the respondent failed to disclose what steps he took to ensure the prudency or safety of the investment. He not only breached his mandate, but also the trust placed in him and the remainder of the duties to ensure his client comes to no harm. As if this was not enough, the respondent took care that he and the representatives of the investment company be handsomely rewarded. This he did without explanation or remorse. The approach by the respondent to the affairs of his client is exacerbated by thereafter attempting to withhold the truth about his conduct from the client, her subsequent attorneys and even the LPC and its auditor. Having regard to the paucity of explanations furnished in the papers, the respondent has even kept the court in the dark as to what had happened with the estate’s funds. This conduct falls woefully short of the honesty and integrity expected from a legal practitioner. The respondent is no longer a fit and proper person to practice law. There is every indication that should the respondent be allowed to resume practicing, that this kind of conduct would be repeated.

Order: The respondent, Kagisho Setati, is struck from the roll of legal practitioners (attorneys) of this court.

DAVIS J (BHENGU AJ concurring)

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Underwriters at Lloyds of London v Minister of Safety [2024] ZAGPPHC 198

CIVIL LAW – Delict – Vicarious liability – Criminal acts by employees – Subrogation

Alleges members of SAPS knowingly participated in planning, directing and executing robbery – Claim not discharged by indemnification from plaintiff – Whether delict committed as SAPS employees sufficiently closely connected to employment – Intentional criminal deviant conduct of police closely connected to Minister’s business – Judgment granted in favour of plaintiff.

Facts: A well planned and executed robbery took place at the premises of a company named SBV. SBV conducts business by taking custody of cash on behalf of clients in the banking sector and providing secure cash handling, safekeeping, transport and related services to its clients in terms of written service contracts concluded between it and each of its clients. In terms of a policy of insurance, which was in effect at the time of the robbery, the plaintiff undertook to indemnify SBV for losses of cash under the control or in the custody of SBV on behalf of its clients. The robbers broke into SBV’s premises and stole R101,207,456.28 in cash which had been secured in a vault by SBV. At all material times, detective constable Khubeka and warrant officer Lekola were employed as members of the South African Police Service by the Minister.

Application: The plaintiff alleges that at all relevant times before, during and after the robbery, Khubeka and Lekola, whilst acting in the course and scope of their employment and duties as members of the SAPS, knowingly participated in planning, directing and in executing the robbery and in preventing the detection and proper investigation of the robbery, as well as preventing and frustrating lawful attempts to recover the stolen cash. It is the plaintiff’s case that the Minister became vicariously liable to each of SBV’s clients who suffered loss due to the robbery. Alternatively, the Minister became vicariously liable to indemnify SBV for its own loss, further alternatively, for the loss SBV suffered having indemnified its clients and their retail customers. The Minister does not concede that he is vicariously liable for the delicts committed by Khubeka and Lekola.

Discussion: The Minister contends that Khubeka and Lekola were acting on a frolic of their own, hence he could not be held vicariously liable for their participation in the robbery. Several of the gang of robbers were apprehended, tried, and convicted (including Khubeka and Lekola) in a criminal trial on various charges in relation to the robbery. The plaintiff sought certain admissions from the defendant in terms of Uniform Rule 37(4). The defendant admitted that both Khubeka and Lekola were each on duty at any one or more time or times before, during and after the robbery. Several other admissions were made. The attempted withdrawal by the defendant of the admissions became the subject of several applications by the parties. Ultimately, the defendant failed in withdrawing the admissions it made and as such, they stand in trial. When the robbery was executed, Nedbank, as the host bank, suffered the loss for which it had a primary delictual claim against the defendant, as the wrongdoer, and a contractual claim against SBV, as the indemnifier. When SBV indemnified Nedbank for its loss, Nedbank’s cause of action against the defendant was not extinguished or discharged. SBV’s claim was not discharged by indemnification from the plaintiff.

Findings: The service agreements expressly render SBV liable for the loss for any reason, including liability at common law. During the trial, the plaintiff led uncontradicted evidence which showed that Nedbank, as the host bank, was the owner of all the cash in the SBV depot. Nedbank was the party that suffered the Ioss, SBV indemnified Nedbank only, not the other banks. SBV was strictly liable to Nedbank for the loss that the latter suffered in the robbery. It was for this reason that Nedbank settled the claims of the other banks and the retail clients for all the uncleared deposits that were stolen. The Minister disputes liability and contends that the requirements for vicarious liability have not been established because certain necessary evidence was not led by plaintiff. In F v Minister of Safety and Security and Another 2012 (1) SA 536 (CC), the Constitutional Court described the general principles of vicarious liability. Thus, when intentional criminal deviant conduct of the police is closely connected to the Minister’s business, he may be held vicariously liable in a delictual claim for damages. That is the case here and the Minister is liable on that basis.

Order: Judgment is granted in favour of the plaintiff for payment by the defendant of the sum of R93,919,298.47.

RANCHOD J

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ABOUT SPARTAN CASE LAW

Louis Podbielski spent ten years at Juta working on various law reports and has read many thousands of judgments for case selection. He has considerable experience in writing flynotes and headnotes, compiling case annotations, and in refining subject indexes.​ During his four years at LexisNexis he was involved with legal data, analytics and in developing various legal tech solutions. He now runs his own case law service Spartan Case Law

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