The case of Babita Deokaran, a senior official at the Gauteng Health Department who lost her life after exposing tender corruption, exemplifies the shortcomings of the current disclosure framework in providing adequate avenues and procedures through which disclosures can be made without fear of retaliation and other forms of reprisal. In response, the Department of Justice and Constitutional Development has prepared the Protected Disclosures Bill, 2026 (“the Bill“) in an attempt to address these shortcomings.

The proposed Bill aims to strengthen protection for whistleblowers, provide adequate procedures through which disclosures can be made, afford employees protection from occupational detriment and other forms of reprisal, provide for the investigation of disclosures, establish a complaints mechanism overseen by a retired judge, and provide amendments to witness protection and legal aid arrangements. In certain circumstances, it permits a court-ordered award to a qualifying discloser in defined circumstances.^[1]

Core procedural requirements and timelines

According to the Bill, an authorised person must, within five days, acknowledge receipt of a disclosure and conduct a preliminary assessment and thereafter decide, within 10 days, whether to investigate or refer the matter to another authorised person. Disclosers must be updated at least every three months. An investigation must be completed within 12 months, subject to a single extension of up to six months granted by a retired judge. Suppression or concealment of evidence by an authorised person constitutes an offence.^[2]

Confidentiality, immunity, and anti-retaliation

The Bill criminalises unauthorised disclosure of a discloser’s identity, permits courts to hear evidence in camera and require redaction of identifying information, and confers civil and criminal immunity where the discloser reasonably believed they were revealing improper conduct. It prohibits occupational detriment for employee disclosers and detrimental action against any discloser or related person, reverses the evidential burden once a protected disclosure and linked detriment are shown, and criminalises retaliation.^[3]

Witness protection, legal assistance & system oversight

The Witness Protection Act applies mutatis mutandis to disclosers and related persons, and courts and tribunals may refer indigent disclosers for legal representation at the state’s expense through Legal Aid South Africa.^[4]

The Director-General must develop and maintain an electronic central database for disclosures and include anonymised disclosure data in the Department’s annual report.^[5]

Incentive Schemes

The Minister of Justice and Constitutional Development, Mmamoloko Kubayi, has stated that the government is cautious about adopting a direct cash rewards system but is open to public proposals. Broader models, including international practices, will be considered during public consultation. As a member of the International Labour Organisation (ILO), it is important for South Africa to consider international labour standards in this respect.

International practices such as qui tam lawsuits could be a suitable model to adopt. Under such lawsuits, private individuals institute legal proceedings on behalf of the state when there is alleged impropriety concerning the submission of false claims to the government.^[6] Qui tam lawsuits under the False Claims Act (“FCA“) in the United States of America allow a party who successfully alleges an impropriety to receive a cash incentive of between 15% and 30% of the proceeds.^[7] In terms of the FCA, when the action is one which the court finds to be based primarily on disclosure of information relating to allegations or transactions in criminal, civil, administrative, or other hearings, the court may award incentives as it considers appropriate, up to 10% of the proceeds.^[8] Any person bringing such an action may additionally receive an amount for any reasonable expenses incurred, including legal fees and costs.^[9] This model is based on the premise that, but for the individual blowing the whistle, the impact and consequential result of the fraud, corruption, or other impropriety would have had more dire consequences had such individual not come forward.

The introduction of awards in the Protected Disclosures Bill relates specifically to convictions of an employer who engaged in prohibited conduct or certain improprieties in the workplace.^[10] In terms of section 18 of the Bill, an individual or individuals may receive up to 25% of the monetary sanctions imposed on the employer if the information disclosed originated from the discloser(s), was not known prior to the disclosure, and proves elements of a criminal or administrative offence which ultimately leads to a conviction.^[11]

Although this is a step forward, the award mechanism is triggered only when an employer is convicted and a monetary sanction is imposed, and eligibility turns on the nature of the discloser and the information rather than on employee status. It excludes individuals who work in the public service, persons in authority in terms of section 34 of PRECCA[12], those who provide information as part of a plea agreement or who were accomplices in the concerned offence, and persons who are law enforcement agents.^[13] These exclusions substantially curtail incentives for many public-sector insiders, including public servants.

The Need for a Specialised Whistleblowing Office

Although the proposed Bill provides avenues on which people can rely to make disclosures, the need for more secure reporting channels is evident in order to enhance the confidentiality and anonymity of bona fide disclosers. The case for a specialised office rests primarily on the advantages of independent system-wide oversight and enforcement. The lack of an independent whistleblowing protective authority or specialist whistleblowing office has been identified by the Active Citizen Movement as a critical gap in the proposed amendments to the disclosure landscape in South Africa.^[14]

Similar to South Africa’s shortcomings concerning the lack of immediate protection and reporting channels available to citizens, the United Kingdom has tabled the Protection for Whistleblowing Bill (Bill 27), which is currently before the House of Lords in Parliament. Bill 27 aims to implement two key changes to the current whistleblowing regulatory framework in the UK: firstly, expanding the protection of whistleblowers beyond workers or persons in an employment relationship; and secondly, providing for a specialised whistleblowers office that deals with complaints and disclosures.^[15]

The proposed “Office of the Whistleblower” would set minimum standards, accredit organisational schemes, provide an independent disclosure and reporting service, issue information and action notices, make redress and interim orders, and impose civil penalties, with appeals to the appropriate tribunal. A comparable institution in South Africa will complement, not replace, the Bill’s framework by enhancing independence, consistency, and enforcement across sectors. A specialised whistleblowers office would broaden the involvement of bona fide disclosers with improved physical and employment protection.

Conclusion

An enhanced disclosure system should result in more disclosures, credible safeguards and possibly reduce the current high levels of corruption. Whistleblowing is an act of constitutional bravery that should be fostered to ensure openness, transparency, and accountability. Time will tell whether the adoption of the Bill’s stronger procedures, protections, oversight, and remedies deliver these aims. The Bill is open for public comment and submissions may be made on its content on or before 14 May 2026.

[1] Section 2 read with Sections 23 and 24 of the Protected Disclosures Bill, 2026.

[2]Section 14(1)-(4), (8)-(11) of the Protected Disclosures Bill, 2026.

[3]Sections 19, 20 and 21(1)-(8) of the Protected Disclosures Bill, 2026.

[4]Sections 22 and 23 of the Protected Disclosures Bill, 2026.

[5]Sections 3(1) and 3(7) of the Protected Disclosures Bill, 2026.

[6] 31 U.S.C. § 3730(b).

[7] 31 U.S.C. § 3730(d).

[8] 31 U.S.C. § 3730(d).

[9] 31 U.S.C. § 3730(d).

[10] Section 18 of the Protected Disclosures Bill, 2026.

[11] Section 18(1) of the Protected Disclosures Bill, 226.

[12] The Prevention and Combating of Corrupt Activities Act 12 of 2004.

[13] Section 18(2) of the Protected Disclosures Bill, 2026.

[14] ACM slams proposed Protected Disclosures Bill 2026 as ‘cold comfort’ for whistle-blowers

[15] Protection for Whistleblowing Bill (HL Bill 27).

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In the decision of African Banking Corporation of Zambia Limited and Others v Mapula Solutions (Pty) Ltd [1], the Supreme Court of Appeal (SCA) was required to determine whether the Gauteng Division of the High Court, Johannesburg, (High Court) erred in concluding that: (a) African Banking Corporation of Zambia Limited (ABC Zambia), African Banking Corporation of Botswana Limited (ABC Botswana), Standard Chartered Bank Limited – Johannesburg Branch (SCB Johannesburg), and Standard Chartered Bank of Botswana (SCB Botswana) (collectively, the Banks) breached the terms of a Debt Rescheduling Agreement (DRA) concluded with Blue Financial Services Limited (Blue) and Mayibuye Group Proprietary Limited (Mayibuye), (b) the Banks’ conduct caused Mayibuye to suffer a loss, (c) the Banks acted in common purpose, and (d) the Banks should be held jointly and severally liable to Mapula Solutions Proprietary Limited (Mapula).

Factual Background

Blue was formerly listed on the Johannesburg Stock Exchange (JSE) and had various subsidiaries which were involved in the business of micro-lending across 12 countries. Blue and its subsidiaries (collectively, the Blue Group) became financially distressed following alleged mismanagement and fraud committed by the CEO of Blue. With the hope of rescuing the company, Blue solicited bids from companies to assist with restoring its profitability. Mayibuye viewed this invitation as an investment opportunity and successfully submitted a bid to assist with the recapitalization of Blue.

As part of the recapitalization, Mayibuye subscribed for shares in Blue by making payment of an amount of R163 million. Mayibuye, Blue and the Banks (which were some of Blue’s creditors) concluded the DRA in terms of which the Banks agreed to receive payment only in respect of interest and Blue’s capital repayments to the Banks were deferred for a period of three years (Rescheduling Period). In terms of the DRA, Blue was required to collect on its loans and, within ten days of the end of the Rescheduling Period, submit a distribution plan to the Banks detailing the amounts it collected and how such amounts were to be divided among the Banks. If the amounts collected were insufficient to pay all of Blue’s outstanding debts, the Banks were afforded two options. The Banks could either convert their debt into equity or grant Blue an additional 24-month period to collect on its loans following which Blue was required to make payment of the collected amounts in full and final settlement of the debts owed to the Banks. If the amount collected after the 24-month period was still insufficient, the Banks were required to write-off Blue’s debt.

The Rescheduling Period was intended to end on 31 December 2013. However, Blue defaulted on interest payments, resulting in the end date of the Rescheduling Period being 6 September 2013. Blue was therefore required to submit its distribution plan within ten business days from 6 September 2013. Blue failed to do so timeously and instead, it submitted a distribution plan on 13 December 2013 which the Banks (through a committee established in terms of the DRA) objected to due to its non-compliance with the DRA.

As a result of Blue’s non-compliance with the DRA, each of the Banks initiated separate legal processes in various jurisdictions against Blue to recover the amounts owed to it by entities within the Blue Group. Mayibuye claimed that the actions taken by the Banks (i.e. to recover the debts owing by entities within the Blue Group) had breached the DRA and as a result, the recapitalization failed. Consequently, Mayibuye claimed that it suffered a loss of R704 968 234 which amount represented the value of its investment in Blue as at 1 November 2013 or R163 million being the amount which it invested in Blue. Mayibuye ceded this claim to Mapula who successfully sued the Banks in the High Court. The Banks appealed the decision of the High Court to the SCA.

SCA Appeal

The SCA found that the Banks did not act with a common purpose and therefore the finding of joint and several liability was unjustified. In arriving at this conclusion, the SCA took note of the fact that each of the Banks took separate steps and engaged different legal representatives to recover the amounts owed to it by Blue. By way of example, ABC Zambia sent a letter to Blue requiring payment of the original loan on 1 November 2013 (the date on which Mapula alleges the loss occurred). No other bank took such a step on that date which means that the loss had already occurred by the time when ABC Botswana, SCB Johannesburg and SCB Botswana were alleged to have breached the DRA. Furthermore, the SCA found that the High Court erred in analysing the Banks joint and several liability in the context of liability for costs and applying that finding to the Banks’ liability for the loss suffered by Mapula without examining each alleged breach and its consequence to apportion liability.

Secondly, the SCA found that Mapula did not prove any breaches of the DRA by the Banks. Blue did not submit a valid distribution plan within ten days of the end of the Rescheduling Period therefore the obligation for the Banks to make an election in terms of the DRA to convert their debt to equity or to be non-capitalizing lenders was not triggered. The SCA held that Blue’s failure to deliver a compliant distribution plan was fatal to Mapula’s case because as the party whose claim is based on the DRA, it is required to prove its compliance with the DRA. Further, Blue’s failure to comply with the provisions of the DRA entitled the Banks to enforce compliance with DRA which includes realising the security enjoyed under the DRA. The SCA held further that the Banks enforcing their rights under the DRA cannot, at the same time, also constitute a breach of the provisions of the DRA.

Lastly, the SCA held that Mapula did not establish any causation between the conduct of the Banks and the loss suffered by Mapula. Mapula alleged that Blue’s shares were devalued as of 1 November 2013. However, only ABC Zambia requested payment on that date. Mapula claimed that Mayibuye’s investment was devalued when it instituted proceedings in 2016 and yet Mayibuye continued with its attempts to recapitalise Blue up until 2018. It was unclear to the SCA how the letter of demand from ABC Zambia could destroy Blue’s value in light of several other factors which include fraud on the part of Blue’s former CEO and Blue’s inability to produce audited financial statements. Furthermore, the letter of demand had no effect on Mayibuye’s efforts to reinstate Blue’s listing on the JSE, nor Blue’s failure to produce audited group financial statements. According to the SCA, the High Court overlooked these factors and attributed Blue’s demise to a letter of demand instead of the various unsuccessful attempts to recapitalise Blue. The SCA held that the High Court’s finding that the Banks’ conduct destroyed Blue’s share price is unsustainable and the High Court should have dismissed the action.

Concluding Remarks

The SCA held that the none of the High Court’s findings were supported by evidence and the High Court’s failure to analyse whether the alleged breaches by the Banks resulted in adverse consequences for the Mayibuye investment on 1 November 2013 undermined the soundness of its judgment. As a result the Banks’ appeal to the SCA succeeded.

[1] (766/2024) [2025] ZASCA 38 (26 March 2026)

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Gone are the days when a missing stamp or a misplaced proof of service could derail a filing. In its place is a system that appears faster, simpler and more efficient –  at least on the face of it.

In this article, we will discuss how the court online system has changed the established rules governing service.

• WHAT THE AMENDMENTS PROVIDE

Uniform Rules 1A and 1B introduce and regulate the e-Justice system in courts where it is operational.

In summary:

• The e-Justice system applies to the issuing of process, service of documents, filing, access to court files, hearings, appeals and reviews.
• Parties who are registered users agree to receive documents electronically via the system.
• Where both the party effecting service and the party being served are registered users, service (other than service by the sheriff for initiating documents or by court order) must be effected through the e-Justice system.
• Subject to limited exceptions, service is deemed to have taken place when the e-Justice system generates a notification.

The Rules also amend the definition of “deliver” to include service and filing through the e-Justice system, making it clear that electronic delivery now stands on equal footing with conventional methods.

• WHAT THIS MEANS IN PRACTICE

The practical effect is that service is no longer tied to physical delivery or email. Once a document is uploaded to Court Online and the system generates a notification, service is complete for procedural purposes. Time periods begin to run from that point.

This removes many of the inefficiencies associated with physical service and reduces disputes about when documents were served. From a litigation strategy perspective, it is likely to save time and narrow the scope for technical objections based on defective service.

• THE RISK: MISSED NOTIFICATIONS

The obvious risk under the new regime is that Court Online notifications are system-generated emails. In practice, these notifications often land in spam folders, particularly in corporate environments. The sheer volume of Court Online email notifications, including those triggered by logins and annexure uploads, creates an excessive volume of messages. This can result in critical notifications, such as document upload confirmations, being overlooked. The Rules make no allowance for these issues. Service is deemed to have occurred when the notification is generated, not when it is seen.

As a result:

• A party may be procedurally served without actual awareness.
• Deadlines may expire before documents are noticed.
• Explanations based on non-receipt are unlikely to carry much weight given the deeming provisions.

• BEST PRACTICE FOR LITIGANTS AND PRACTITIONERS

Given this paradigm shift, legal practitioners should take practical steps to manage their risk:

• Ensure that registered email addresses are monitored daily and not linked to a single individual.
• Avoid relying on personal or director-only email addresses for system notifications. Legal practitioners should consider using a dedicated Court Online email address, shared among relevant team members, to ensure effective and continuous monitoring of notifications.
• Put internal processes in place to check Court Online directly, rather than relying solely on email alerts.
• Ensure clients who are registered users understand that failure to monitor notifications may have immediate procedural consequences.

• CONCLUSION AND NEXT STEPS

The amendments to the Uniform Rules of Court significantly simplify service, but they also move responsibility for monitoring and compliance squarely onto registered users. The result is a greater administrative burden on practitioners to keep up to date with Court Online updates without being explicitly informed.  Court Online is no longer an administrative convenience. It is the primary mechanism by which service is effected and time periods are triggered.

Litigants and practitioners who adapt their systems and practices accordingly are likely to benefit from faster, more predictable litigation. Those who do not may find themselves out of time, with limited recourse.

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The South African Law Commission (as it was known at the time) published a report in August 1998 on class actions and public interest actions entitled “The recognition of class actions and public interest actions in South African Law” Project 88 (1998) (“the 1998 Report”). It was recommended in the 1998 Report that “The principles underlying class actions and public interest actions should be introduced by an Act of Parliament and the necessary procedures by rules of court. The Act and the rules should be introduced as a matter of urgency.”
Although case law to date has greatly assisted with the development and refinement of the certification process of South African class actions, the regulatory framework for the procedure and conduct of class actions is yet to be further developed, especially from a case management perspective, even if guidance could, broadly speaking, be obtained from case law in the absence of any formal legislative framework governing class actions in South Africa.

Latest legislative developments effective from 19 September 2025

On 15 August 2025, 27 years since the publication of the 1998 Report, the Department of Justice and Constitutional Development published in the Government Gazette amendments to the Rules of Court which will, effective from 19 September 2025, introduce a definition for “class action” and a new Rule 11A providing for the “Certification of class actions” (“the certification rules”) .
The majority of the provisions of the certification rules appear to incorporate, with further augmentation, the class action provisions set out in the draft Public Interest and Class Actions Bill, as published in the 1998 Report (“the draft Bill”), which provisions deal with the institution of a class action, certification, the representative in a class action and notice in class actions.
The certification rules set out when an action shall proceed as a class action and provides that an application for certification of an action as a class action shall be made to court on notice of motion supported by an affidavit.

The provisions of Rule 11A(3)(a) that deal with the factors that must be set out in an affidavit in support of an application for certification encapsulate the elements which the Supreme Court of Appeal provided in Children’s Resource Centre Trust and Others v Pioneer Food (Pty) Ltd and Others that should guide a court in making a certification decision.

In terms of Rules 11A(3)(a) and 11A(3)(b), the affidavit must, in addition to setting out any other relevant factor which may have a bearing on the granting or refusal of the application for certification, specifically set out factors which establish that
(i) it is in the interest of justice to certify the action as a class action;
(ii) there is a class identifiable or definable by specified objective criteria;
(iii) there is a cause of action raising a triable issue;
(iv) the right to relief depends upon the determination of issues of fact, or law, or both, common to all members of the class;
(v) whether the relief sought, or damages claimed, flow from the cause of action and are ascertainable and capable of determination;
(vi) where the claim is for damages, whether there is an appropriate procedure for allocating the damages awarded to the members of the class;
(vii) whether, given the composition of the class and the nature of the proposed action, a class action is the most appropriate means of determining the claims of class members; and
(viii) whether the applicant is suitable to be permitted to conduct the action and represent the class. Rule 11A(4) sets out what the affidavit must indicate to support the suitability of the applicant.

The affidavit must also, in terms of Rule 11A(5), stipulate whether the class will be an opt-in or opt-out class or a combination of both and must be accompanied by a draft Particulars of Claim setting out the grounds upon which the plaintiff’s action will be based.

Rules 11A(6) and 11A(7) set out directions which the court, certifying an action as a class action, may give with regards to the nature, form and manner of the notice of the action and that such a court may make any other order which it deems appropriate in the interest of justice.

The following provisions of the draft Bill, and legislative reform as recommended in the 1998 Report, unfortunately remain unregulated: the procedure and conduct in the prosecution of class actions, appointment of a commissioner by the court to collate evidence and make recommendations, determination of damages in a class action, appeals against class action judgments and that settlement, abandonment and discontinuance can only take place upon obtaining prior approval from court. It is unclear if such provisions are still to follow as further amendments to the Rules of Court or what the legislature envisages with these provisions of the draft Bill and recommendations contained in the 1998 Report that are, after close to three decades, yet to be enacted.
The certification rules, once in effect, will assist to provide clarity and legal certainty as to the application process to have an action certified as a class action and is a welcome step towards legislative reform of class actions in South Africa but further legislative reform is still required.

There remains a dire need for clear guidance to be provided as to the procedural mechanics and conduct of class action cases to ensure its timely, proactive, cost-effective, efficient and pragmatic adjudication. Such guidance is in the interest of all parties concerned.

____________________________________________________________________________________________________________________________________

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On the 10th of October 2024 the majority judges of the Supreme Court of Appeal upheld an appeal against an order granted by the full bench of the Western Cape Division of the High Court (“the high court”). The issue on appeal was whether an agreement for the purchase and sale of an immovable property could be revived, subsequent to the lapse of a suspensive condition contained therein. While the minority judges appeared to agree with the high court’s ultimate finding that the offer to purchase could be revived and the transaction would flow, notwithstanding the lapsing of a suspensive condition contained therein, the majority judges held an opposing view and ultimately found in favour of the Appellant.

The first respondent (the seller), represented by Dingley Marshall Incorporated, who were the second respondents in the matter, concluded an offer to purchase immovable property (“OTP”) on 4 February 2020 with the third and fourth respondents (“the purchasers”) subject to a suspensive condition that they had to secure a mortgage bond by 14 February 2020. This deadline was extended to 19 February 2020 through a first addendum (“the first addendum”). The appellant undertook to provide financial assistance to the purchasers in the transaction. Despite attempts, the purchasers failed to provide the required guarantees or funds by the new deadline, causing the agreement to lapse.

On 20 February 2020, the parties signed a second addendum, amending the financial arrangements and providing a new deadline for the provision of a bank guarantee by 25 February 2020 (“the second addendum”). However, in May 2020, the purchasers faced financial difficulties due to the COVID-19 pandemic and sought to cancel the sale. The appellant, having paid R1,950,000 on behalf of the purchasers, sought the return of this amount, arguing that the agreement had lapsed and was not revived by the second addendum.

Both the high court and the minority judges found in favour of the Respondents and ordered the dismissal of the appeal, albeit for differing reasons. The minority judges found that the parties had intended to revive the agreement, that the second addendum had such effect and the second addendum amounted to a ‘fresh agreement’ incorporating the terms of the OTP as amended by the first addendum. However, the majority decision of Schippers JA (Kgoele JA and Baartman AJA concurring) held a different view (“the majority judges”).

The central issue before the SCA was whether the second addendum, signed after the failure of the suspensive condition, effectively revived the original agreement or whether a new agreement was required. The majority judges held that while it was clear from the evidence that the parties intended to ‘revive’ the OTP, the respondents had labored under the erroneous impression that they could simply extend the time for the fulfilment of the suspensive condition without appreciating that a new contract had to be concluded. The majority held that the purported revival of the OTP and the extension of the time fixed for the fulfilment of the suspensive condition, after the expiry date for its fulfilment was legally incompetent.

In this regard, the court relied on the principle applied in Fairoaks Investment Holdings (Pty) Ltd and Another v Oliver and Others[1]  (“Fairoaks”) and Pangbourne Properties Ltd v Basinview Properties (Pty) Ltd[2] (“Pangbourne”), that upon the failure of a suspensive condition, a contract lapses and is of no force or effect. These judgments, along with the judgment in Abrinah 7804 (Pty) Ltd v Kapa Koni Investments CC[3] (Abrinah) were considered by both the majority and the minority judges. In Abrinah, the issue before the court was whether, an ex post facto waiver of a suspensive condition could revive an agreement which had already lapsed due to the non-fulfilment of the suspensive condition. Notwithstanding that the issue had been subject to conflicting judgments, the court in Abrinah held that a contract that had lapsed due to the non-fulfilment of a suspensive condition could not be revived by waiving the suspensive condition at that stage.

Despite the unambiguous precedent set in previous cases, the high court and minority judges were of the view that the facts in the current circumstances were distinguishable from the prior authorities in that Abrinah dealt with whether a condition could be waived after a contract had lapsed, Fairoaks dealt with whether a “revived” agreement required compliance with the formalities of the Act and McPherson v Khanyise Capital (Pty) Ltd[4] (“McPherson”) dealt with whether a contract which the parties sought to revive, would self-destruct as the date for fulfilment of the suspensive condition was not amended, and had already passed.

Both the high court and the minority judges seem to have placed a significant amount of reliance on the parties’ intention in coming to their respective decisions, while erroneously disregarding the principle applied in Pangbourne. The high court held that the Appellant, in signing the second addendum gave expression to the intention of the parties substantially on the same terms and conditions in the OTP, save that clauses 7.1 and 7.2 were varied. This could never have been the case as clause 7.2 could not be varied after the expiry date for the fulfilment of the suspensive condition. Further to this, the majority judges held that “neither could the parties to the OTP extend its validity in accordance with the terms of the second addendum- the OTP was invalid and unenforceable on 20 February 2020. For this reason, the respondent’s argument that the purchaser sought to ‘provide additional time for fulfilment of the suspensive condition’, is unsustainable.”

While the minority judges were at pains to interpret the second addendum in a manner that makes “commercial sense and does not lead to absurd results“, placing reliance on the trite principles set out in Natal Joint Municipal Pension Fund v Endumeni Municipality[5] (“Endumeni”), the majority judges held that the unitary exercise of interpretation enunciated in Endumeni applies only to a valid contract, not to an unenforceable contract that is purportedly “revived’ or “extended” in terms of a right that does not exist .

Having considered the abovementioned jurisprudence, the majority judges affirmed the position that a suspensive condition cannot be waived or extended after the time for the fulfilment of the condition has passed; that an agreement which has lapsed due to non-fulfilment of the condition cannot be ‘revived’; and finally, that in such circumstances, the parties are required to enter into an entirely new agreement. This judgment serves as a cautionary tale to all contracting parties who fail to adhere to the suspensive conditions related to the particular transactions therein, in the hopes that such an agreement may be revived at a later stage simply through an addendum without properly concluding a new agreement. Once an agreement has lapsed, regardless of the parties’ intentions, it becomes unenforceable and as such, the transaction cannot flow.

[1] [2008] ZASCA 42; [2008] 3 All SA 365 (SCA); 2008 (4) SA 302 (SCA)

[2] [2011] ZASCA 20

[3] [2017] ZANCHC 63; 2018 (3) SA 108 (NCK)

[4] [2009] ZAGPHC 57

[5] [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA)

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Over a decade ago, the national department of communications recognised that the lack of always- available, high speed and high quality bandwidth required by businesses, public institutions and citizens, negatively impacts upon South Africa’s development and global competitiveness. The South Africa Connect: Creating Opportunities, Ensuring Inclusion, South Africa’s Broadband Policy (“the SA Connect”), was gazetted, with the aim, amongst others, to ensure that all public institutions at the national, provincial and municipal level including, the communities which they serve, benefit from broadband connectivity. The SA Connect was aligned with the National Development Plan, which provided for the vision of an ICT sector and which would underpin the development of a dynamic and connected information society.

On 11 April 2006, the Electronic Communications Act (“ECA”) was promulgated. In accordance with section 22 of the ECA, all electronic communications network service licensees (“ECNS licensees”) are empowered to enter upon any land, construct and maintain electronic communications networks or facilities and to alter or remove its electronic communications facilities, and to do so with due regard to applicable law and the environmental policy of the Republic.

Section 24 of the ECA in turn requires of ECNS licensees, in giving effect to their section 22 rights, to give 30 working days’ notice, in the manner specified, of any construction and maintenance contemplated to any local authority or person owning or responsible for the care and maintenance of any street, road or foot path.

The scope of the right conferred upon ECNS licences in terms of section 22 was interpreted by the Constitutional Court in the landmark decision of the City of Tshwane Metropolitan Municipality v Link Africa (Pty) Ltd and Others [2015] ZACC 29, as a right which entitles ECNS licensees to select and access premises for purposes of constructing, maintaining, altering or removing their electronic communications networks or facilities. The selection of such property must be done in a civilised and reasonable manner which includes, giving reasonable notice to the owner of property where the licensee intends locating their works and that the proposed access must be determined in consultation with the owner.

Most importantly, the Constitutional Court determined that the ‘applicable law’ referred to in section 22 of the ECA, includes the common law and the Constitution. Accordingly, all ECNS licensees are bound, in exercising their section 22 rights, by laws made with the authority of national, provincial and local government.

On 21 May 2014, the Electronic Communications Amendment Act 1 of 2014 was promulgated, which revised the wording of section 21 of the ECA obliging the Ministers of Cooperative Governance and Traditional Affairs, Rural Development and Land Reform, Water and Environmental Affairs, the Independent Communications Authority of South Africa (“ICASA”) and other relevant institutions, to develop a policy and policy directions for the rapid deployment and provisioning of electronic communications facilities, following which ICASA must prescribe regulations.

Following this, on 24 February 2023, the then Minister of Cooperative Governance and Traditional Affairs, Dr Nkosazana Dlamini Zuma, gazetted the Standard Draft By-Laws for Deployment of Electronic Communications Facilities (“Standard Draft By-Laws”). Although these Standard Draft By- Laws are merely a guide to municipalities, they reinforce national government’s commitment to the policy on the rapid deployment of infrastructure and electronic communications infrastructure.

Despite national government’s commitment to the rapid deployment policy, these Standard Draft By- Laws are flawed in a number of respects:

Firstly, the Standard Draft By-Laws suggest that they are applicable to all persons seeking to deploy or operate electronic communications facilities. However, section 7 of the ECA contains a prohibition on the provision of any service without a licence. “Persons” is also not defined in the Standard Draft By- Laws, which creates confusion regarding whom the Standard Draft By-Laws are applicable to.

Secondly, the Standard Draft By-Laws provide for the processing of wayleave applications within 30 working days, allowing a municipality that requires additional time an opportunity to notify the applicant of an extension of the period for a further 15 working days. The ECA specifically provides for a licensee providing the local authority with a 30 working day notice period. This period of time is further exacerbated by the requirement that ECNS licensees must obtain any necessary approval from all relevant authorities and providers affected by the deployment of the infrastructure prior to submitting the application. Practically, this would mean that all ECNS licensees must plan in excess of a 90 working day period for the approval of wayleave applications.

Thirdly, ECNS licensees will be required to enter into Municipal Land Use Agreements containing at a minimum the provisions of Schedule A to the Standard Draft By-Laws. Schedule A, amongst others, provides for the payment of ongoing charges and escalations. Considering the policy to ensure the rapid deployment of electronic communications facilities and the need to bridge the digital divide, it is unclear what these payments and ongoing charges refer to. Moreover, in accordance with the ECA, licensees are only obligated to pay the reasonable expenses incurred as a consequence of the construction, alteration or removal of electronic communications facilities and networks.

Despite a year a few months having passed since the Standard Draft By-Laws were gazetted, it appears only three municipalities have incorporated the provisions of the Standard Draft By-Laws into their wayleave bylaws. Bearing in mind that the Standard Draft By-Laws were presumably only published after the Minister consulted with organised government representing local government nationally or the Member of the Executive Council for local government and organised government, it is unclear why other municipalities have failed to adopt the Standard Draft By-Laws.

Notwithstanding the disconnect between national and local government on the Standard By-Laws, on 31 March 2023, the National Policy on the Rapid Deployment of Electronic Networks and Facilities (“the National Policy”) and the Policy Direction on Rapid Deployment of Electronic Communications Networks and Facilities (“the Policy Direction”) were published. The National Policy details the process to be followed by licensees to access property for the deployment of electronic communications networks and facilities and the rights of property owners and any other persons whose rights or legitimate expectations may be materially and adversely affected by the deployment of electronic communications facilities and networks.

In contrast to the Standard Draft By-Laws, the National Policy makes it clear that licensees are only required to give 30 days’ notice of their intention to deploy infrastructure and emphasises that the compensation charged by property owners to licensees for the deployment of property ought to be

reasonable in that it must be proportionate to the disadvantage suffered and may not enrich the property owner or exploit the licensee.

The Policy Direction has directed ICASA to prescribe regulations in accordance with the ECA for the deployment of electronic communications and facilities with particular reference to the manner, costs of and time within which a decision for access must be made, the implementation and publication of decisions made in terms of a dispute resolution procedure and how reasonable compensation must be determined.

ICASA has since published an invitation to bid for the appointment of a service provider to assist in determining the reasonable compensation and fees for the deployment of electronic communications networks and facilities.

It remains to be seen whether these regulations will provide much needed certainty for ECNS licensees and the industry as a whole on the rapid deployment of electronic communications networks and facilities including, whether there will be cohesion between national and local government on the processes and compensation for deployment, for the benefit of the Republic as a whole.

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Generative AI has exploded into the public consciousness and into widespread use with the emergence of language processing tools (or large language models (LLMs)) such as ChatGPT. The objective is to mimic human-generated content so precisely that the artificially generated content can be indistinguishable.

This is achieved by assimilating and analysing original content on which the tool has been trained, as supplemented by further learnings from prompts and its own generated content – essentially by learning patterns and relationships between words and phrases in natural language to repetitively predict the likeliest next word in a string based on what it has already seen and continues these predictions until its answer is complete[1].

A curious feature of LLMs is that they sometimes produce false and even damaging output. Instances of lawyers including fictitious AI-generated case law in their submissions to court are already well known, but LLMs can and do go further.

Outputs can generate false and defamatory content that has the potential to cause a person actual reputational damage. This can even include fabricating non-existent “quotes” purportedly from newspaper articles and the like.

This tendency to make things up is referred to as hallucination, and some experts regard it as a problem inherent in the mismatch between the way generative AI functions and the uses to which it is put. For the time being, at least, it is a persistent feature of generative AI[2].

This inevitably raises the question of where legal liability rests when LLMs generate false and harmful content.

In the USA, much of the debate has centred around whether the creator of the LLM – such as OpenAI in the case of ChatGPT – can be held liable in light of the statutory protection afforded to the hosting of the online content of other content providers under the U.S. Code 230, although it appears that the generally held view is that Generative AI tools do not fall within the protection afforded under this law, as it generates new code and does not merely host third party content.

In the EU, the European Commission’s proposed AI Liability Directive, currently still in draft form, will work in conjunction with the EU AI Act and make it easier for anyone injured by AI-related products or services to bring civil liability claims against AI developers and users[3].

The EU AI Act, also currently in draft form, proposes the regulation of the use and development of AI through the adoption of a ‘risk-based’ approach that imposes significant restrictions on the development and use of ‘high-risk’ AI.

Although the current draft of the Act does not criminalise contravention of its provisions, the Act empowers authorised bodies to impose administrative fines of up to 20,000,000 EUR or 4% of an offending company’s total worldwide annual turnover, for non-compliance of a particular AI system with any requirements or obligations under the Act.[4]

In the UK, a government White Paper on AI regulation recognises the need to consider which actors should be liable, but goes on to say that it is ‘too soon to make decisions about liability as it is a complex, rapidly evolving issue'[5].

The position in South Africa is governed by the common law pertaining to personality injury.

The creator of the LLM would presumably be viewed as a media defendant, meaning that a lower level of animus iniuriandi – namely negligence – would be required to establish a defamation claim than if the defendant were a private individual. What would constitute negligence in the case of a creator of an LLM that is known to hallucinate is an open question, which may depend on whether reasonable measures to eliminate or mitigate the known risks could have been put in place by the creator[6].

What is clear is that disclaimers stressing the risk that the output of the LLM will contain errors – which AI programmes often contain – would not immunise AI owners from liability, because they could at most operate as between the AI company and the user, but would not bind the defamed person.

But on a practical level, the potential liability of the AI creator would be of less importance to a South African plaintiff, because the creator would have to be sued in the jurisdiction where it is located (except in the unlikely event that it had assets in SA capable of attachment to found jurisdiction), rendering such claims prohibitive.

The potential liability of the user of the LLM, who then republishes the defamatory AI-generated output, is another matter.

Firstly, it is no defence to a defamation action to say that you were merely repeating someone else’s statement. Secondly, the level of animus iniuriandi required would depend on the identity of the defendant.

If the defendant was a media company – for example, an entity that uses AI to aggregate and summarise news content – then only negligence would be required, and that might consist of relying on an LLM known to hallucinate without putting the necessary steps in place to catch false and harmful output.

If on the other hand the defendant was a private individual using the AI to generate text, then the usual standard of intent would apply, which would obviously make a claim much harder to establish. Intent however includes recklessness.

It remains to be seen whether our Courts would consider it reckless to repeat a defamatory AI-generated statement in light of the caveats that AI creators have published against the use of their AI tools.

For example, OpenAI has provided users with a number of warnings that ChatGPT “can occasionally produce incorrect answers” and “may also occasionally produce harmful instructions or biased content”.[7]

It remains to be seen what approach the Courts will adopt regarding false and defamatory AI-generated content.

We anticipate that in dealing with these questions, the Courts will have to engage with questions of public policy, such as balancing the competing interests of reputational rights with not imposing undue burdens on innovation and the use of new technologies.

As LLMs are increasingly integrated into larger platforms (e.g. search engines), so their content will be published more widely and the risk of reputational harm to individuals referred to will increase[8].

This area of delictual and product-related liability can be expected to develop rapidly in coming while.

Footnotes

[1] Natasha Lomas, “Who’s liable for AI-generated lies?”, 1 June 2022

[2] Matt o’ Brien, “Tech experts are starting to doubt that ChatGPT and A.I. ‘hallucinations’ will ever go away: ‘This isn’t fixable'”, 1 August 2023

[3] Womble Bond Dickinson, “AI and liability 2023: a guide to liability rules for Artificial Intelligence in the UK and EU”, 9 May 2023. The Directive will inter alia include a presumption of causality, i.e. a rebuttable presumption that the action or output of the AI was caused by the AI developer or user against whom the claim is filed.

[4] Regulation of The European Parliament and of The Council

[6] Volokh op. cit. discusses the following possible precautions which may or may not be technically feasible: quote-checking; avoiding quotes altogether; double-checking output; notice-and-blocking mechanisms for reported falsehoods; and discontinuing earlier versions of the LLM when new versions prove materially more reliable. The last-mentioned is particularly interesting, because leaving an earlier and admittedly less reliable version in the market, and making it free to use, could reasonably be construed as negligent in and of itself.

[7] What is ChatGPT?

[8] Farrer & Co, “Can ChatGPT and other generative AI tools be liable for producing inaccurate content?”, per Ian de Freitas and Thomas Rudkin, 6 July 2023

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In the recent case of Firstrand Bank Limited v the Master of the High Court and others  handed down on 29 September 2023, Potterill J in the Pretoria High Court core principles relating to the proving of a claim in circumstances where a concursus creditorum had been established, as well as the importance of lodging of claims within a 24 hour period prior to the convening of the first meeting of creditors were confirmed on review.

In a nutshell, and in the period after a provisional sequestration order had been obtained in respect of the insolvent estate of Mr Willem Abraham Nel (“Mr Nel”) in February 2022 by FNB, several parties came forward and made payment collectively of the FNB indebtedness. Despite payment, which FNB was not able at the time to accept at face view on the basis of concerns expressed as to the origin and basis of such payments and the risk which acceptance of such a payment would pose to FNB if the payors (or their representatives or custodians (trustees, liquidators or the like)) sought recovery of the sums so paid on the basis of there being no causa or if other creditors of Mr Nel’s sequestrated estate were to challenge it on the basis that same constituted an undue preference, FNB obtained the final sequestration order in May 2022.

At the first meeting of creditors, FNB sought to prove its claim, but was precluded from  doing so on the basis that (in the face of a challenge raised) the presiding office, deemed that because payment of the debt had had been made, and that the funds had been retained in the bank account, no claim existed for proof despite FNB having explicitly noted its position insofar as the payment was concerned.

The position with respect to the assessment of a claim by the Master or presiding officer in an insolvent estate is not that the claimant must be critically examined, but that the presiding officer has to be satisfied that the claim is prima facie proved[1] .

On review, Potterill J found that the presiding officer did not consider if there was a prima facie claim, but he took into consideration surrounding facts and made a finding that because FNB knew where the money came from and kept the money in the bank account, FNB had accepted payment.

The decision of the Master to reject FNB’s claim was set aside.

Also an issue in the review proceedings was the question of the timing of the lodgement of certain other claims which were lodged and proved before the presiding officer at the same meeting of creditors.

It is to be borne in mind that the effect of an order of sequestration (or liquidation) is to establish a concursus creditorum, and that thereafter, nothing can be done by the creditors to alter the rights of the other creditors[2].

Section 44(1) of the Insolvency Act provides that a party seeking to make a claim in an insolvent estate must prove the claim in the manner provided, in relation to a cause of action which arose before the sequestration of that estate.

A claim for proof must be lodged within a period of 24 hours prior to a meeting of creditors in accordance with section 44(4), and the reason for this, is to afford other creditors an opportunity to inspect and consider claims lodged and submitted by others in order to enable them to object and interrogate those claims in terms of section 44(7).

It appeared from the record before the review court that the other claims as presented and which were queried by FNB at the meeting of creditors (where its claim had been rejected as outlined above) that the claims of creditors 3 to 10 (purportedly employees of the sequestrated estate) had no stamp or evidence before the presiding officer to suggest that the claims had been timeously lodged.

The legal representative for FNB had however checked before the meeting and been informed that there were no claims.

This fact notwithstanding, the presiding officer took at face value the oral submissions of the legal representative appearing for the creditors in question that they had indeed been lodged on 19 September 2022, and allowed and proved the claims in question.

Subsequent to the meeting, versions of these claims materialised reflecting date stamps of 20 September 2020 stamped by a clerk at the family court. 

No explanation was afforded concerning the difference in version concerning the date of submission of the contentious claims, suffice it to note that these date stamps did not materialise for discussion at the actual meeting of creditors itself where the question of the date of submission was hotly contested.

The review court against the aforegoing backdrop and relying on the dicta that the provision (section 44(4))

“…is clearly peremptory, it is expressly directed that “failing which the claim shall not be admitted to proof at the meeting”. “The presiding officer has no discretion save where the delay is shown to be through no fault of the creditor”[3]

held that no explanation for the lateness was provided in circumstances where the date of the lodgement of the claim was disputed and that the presiding officer had no discretion to accept the word or say so of an individual in the absence of no objective proof of the date of lodgement at the time of proving.

The review court therefore held that the claims were too late and should not have been lodged and in consequence that the first meeting of creditors, and thereby the appointment of the provisional trustee had to reversed and undertaken afresh.

Let this be a reminder to all that

• claims paid after the date of concursus creditorum, cannot be regarded as settled and are incapable of being interfered with, unless that sequestration (or liquidation) application or order has been discharged, as the affairs of the estate are from that date effectively under the hand of the court and the Master from that date; and

• strict adherence to the protocols and requirements for the submission of claims must be followed. It would in all circumstances be prudent and advisable to try and ensure the lodgement of any claims at least two days prior to the conduct of a meeting of creditors.

[1] The Master of the High Court Kimberly (20537/2014)[2015] ZA SCA166 (26 November 2015) at paragraph 23

[2] Vather v Dhavraj 1973(2) SA 232(N) 236A-E

[3] Darby Shirt Manufacturers (Pty) Limited v Nel N.O. and another N.O. 1964(2) SA 59(D) 602E

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In circumstances where a debt arises and the interest rate is not specified, either by contract of by operation of law,  the debt in question will attract interest at  the prescribed rate of interest in terms of  Prescribed rate of Interest Act 55 of 1975 (“the Act”).

Section 3 of the Judicial Matters Amendment Act 2015 (“the Amendment”) which amends section 1 of the Act, and which took effect on 8 January 2016, is that the prescribed rate of interest is linked to the repo rate. On our interpretation of the Amendment is that the gazetting of any change to the repo rate by the minister is not required, despite the direction that same is undertaken..

Section 2(1) of the Amendment states that

for the purposes of subsection (1)[1], the rate of interest is the repurchase rate as determined from time to time by the South African Reserve Bank, plus 3.5% p.a.

The change in the prescribed legal rate does not appear at all to be conditional upon the Minister’s compliance with the instruction to Gazette the change in rate,  that change is automatic in terms of section 1(2)(c) of the Act which states:

the interest rate contemplated in paragraph (b) is effective from the first day of the second month following the month in which the repurchase rate is determined by the South African Reserve Bank”.

Regardless, the  Minister does not appear in any event to have consistently and rigorously adhered to the business of Gazetting every change to the repo rate such that this formal requirement is met.

It matters not. What matters is that practitioners consistently pay close attention to those changes so that the correct rates are applicable to the debts of clients as and when they fall due. The date a debt falls due, is the date when the applicable legal rate of interests attracts to the debt[2], and that rate is then fixed forever, until the debt is paid or in duplum is reached.

To that end, the following handy table provides a snapshot of the rate:

[1] Being the provision addressing the circumstances in which the legal rate of interest applies
[2] Davehill (Pty) Ltd and Others v Community Development Broad 1988 (1) SA 290 (A) & Crookes Brothers Ltd v Regional Land Claims Commission for the Province of Mpumalanga and Others [2013] 2 All SA 1 (SCA)

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