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Metro Western Cape (Pty) Ltd. v Ross (20/85) [1986] ZASCA 36; [1986] 2 All SA 288 (A) (26 March 1986)

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METRO WESTERN CAPE (PTY) LIMITED Appellant

and

DENNIS ROBERT ROSS Respondent

THE SUPREME COURT OF SOUTH AFRICA

(APPELLATE DIVISION)

In the matter between:

METRO WESTERN CAPE (PTY) LIMITED Appellant

and

DENNIS ROBERT ROSS Respondent

Coram: Rabie, CJ , Jansen, Trengove, Viljoen et

Boshoff, JJ A

Heard: 20 February 1986

Delivered: 26 March 1986

JUDGMENT

BOSHOFF, J A :

This is an appeal against the judgment of

KRIEGLER /2

2

KRIEGLER J in the Witwatersrand Local Division dismissing

a claim for the purchase price of goods sold and delivered

on the ground that the transactions involved were con-

ducted in the course of illegal trading.

Towards the end of 1980 the respondent (defen

dant ) obtained a concession from Consolidated Diamond

Mines Limited to operate a take-away and restaurant

business in Oranjemund in South West Africa. He arranged

with Harry Smith, the manager of a wholesale business

conducted in Kowie Cloete Street in Springbok, Namaqua-

land, under the style of Gelb Brothers to sell to him

such supplies as he required from time to time on thirty

days credit. He commenced trading under the style

of /3

-3-

of the Desert Inn towards the beginning of 1980 and

purchased cigarettes, cold drinks, sweets, groceries and

other foodstuffs from Gelb Brothers up to May 1981

when he ceased business. He failed to pay for the

goods he purchased during the period March 1981 to May

1981 and it is common cause that he owes R25 785,44 in

respect thereof.

The appellant company (plaintiff) claiming to

be trading as Gelb Brothers instituted action against the

respondent for payment of the purchase price of the goods

so purchased by and delivered to the respondent. The

respondent in his plea in effect denied that he purchased

the goods from the appellant and that he owed the

appellant /4

-4-

appellant any money.

On the date when the trial was to commence the

court allowed an application for an amendment of the

declaration so as to allege that a company known as

Metro Cash and Carry (Proprietary) Limited (MCC) and not
the appellant sold and delivered the goods to the respondent and that MCC had ceded its claim in respect of the total purchase price of the goods to the appellant. in consequence of this amendment the respondent was allowed to amend his plea to raise the defence that the claim of the appellant was unenforceable because MCC when it sold and delivered the goods to the respondent was trading illegally. The defence was based on the

following /5

-5-

following allegations:-

At all material times hereto, ie during the period March 1981 to May 1981, Metro Cash and Carry carried on business by selling or offering or exposing for sale goods, wares, foodstuffs, produce or livestock, such goods including aerated or mineral waters, cordials, syrups or other beverages of a like nature, patent and proprietary medicines and inflammable material, from or on its fixed business premises at Kowie Cloete Street, Springbok (the premises).

Metro Cash and Carry accordingly carried on at the premises the business of a general dealer as defined in Item 3 of the first schedule to the Registration and Licensing of Businesses Ordinance Number 15 of 1953 (Cape) as amended (the ordinance).

In terms of Section 3 of the ordinance

Metro /6

-6-

Metro Cash and Carry was prohibited from carrying on such business unless it was in possession of a certificate of registration and a licence issued to it in terms of the ordinance.

d Metro Cash and Carry was not in possession of such a certificate of registration or licence in respect of the premises at the said material times.

e In terms of Section 21 of the ordinance

any person who contravenes or fails to comply with any provision of the ordinance or any condition or restriction imposed thereunder is guilty of a criminal offence.

f The goods sold by Metro Cash and Carry to the defendant in respect of which the plaintiff proceeds against the defendant comprised goods referred to in (a) above which Metro Cash and Carry sold in the course of its

business /7

— 7 —

business as general dealer from or on the premises during the said material times.

g In the premises Metro Cash and Carry

committed a criminal offence in carrying on business as a general dealer from the premises and each agreement of sale between Metro Cash and Carry and the defendant in respect of which the plaintiff claims from the defendant constituted a criminal offence.

h Such agreements of sale are accordingly void for illegality and unenforceable."

In subsequent correspondence between the parties

the appellant admitted that,(i) at all material times,

that is during the years 1980 to 1984,MCC neither applied

for nor was granted any licences either in terms of

the ordinance or the Licence Ordinance of 1981 authorising

or /8

8

or entitling MCC to carry on business as a general

dealer, dealer in patent medicines or dealer in inflam-

mable substances under the style of Gelb Brothers at the

premises; (ii) MCC conducted the business referred to

in (i) above during the stated period; (iii) MCC traded

in fresh and preserved foodstuffs, patent medicines and

inflammable substances; and (iv) the appellant applied

for and was granted such a licence in each of the years

in question.

The circumstances in which MCC came to conduct the aforemen-

tioned business for its own account under the trading licence of

the appellant are the following:

The Gelb brothers had originally conducted the wholesale

business at the premises. They made the business over to a company

known...........19

—9—

known as Gelb Brothers (Proprietary) Limited (GB) of

which Gelb Management and Holdings (Proprietary) Limited

was the holding company. In 1978 or 1979 Metro Upti

(Proprietary) Limited a subsidiary of MCC acquired the

shares in GB. Thereafter pursuant to a resolution passed

on 15 May 1979 the appellant acquired all the assets and

liabilities of GB with effect from 1 March 1979. The

appellant applied for and was granted a certificate of

registration under the ordinance to carry on the business

of a general dealer, dealer in patent medicines, and dealer

in inflammable substances under the name and style of

Gelb Brothers at the premises and took out the necessary

trading licence to conduct such business.

Pursuant to a resolution of 28 February 1981

MCC ......./10

-10-

MCC acquired the business of the appellant as from 23

February 1980. The assets and liabilities of the appellant

were made over to MCC and the appellant became a dormant

company. MCC thus became the proprietor of the business

in question and from then on conducted it for its own account. MCC

took no steps to apply for a certificate of registration

under the ordinance and was consequently also not in a

position to take out a trading licence in respect of the

business in its own name.

According to Smith who at all material times

was the manager of the business in Springbok, the 1ocal

authority annually sent the necessary application forms

for the renewal of the licence to him in Springbok and

he / 11

-11-

he forwarded them to the head office in Johannesburg

The completed forms were then sent from Johannesburq

direct " to the local authority. The issued licences

were then sent by the local authority to Smith in Spring-

bok . It is common cause that MCC had since 1980

annually renewed the trading licence of the business in

the name of the appellant.

The court a quo upheld the defence raised in

the amended plea and dismissed the appellant's action.

No order for costs was made because the court disapproved

of the manner in which the respondent behaved

in opposing the action.

The /12

-12-

The appellant is now challenging the correctness

of the judgment of the court a quo substantially on the

ground that the court erred in holding that contracts

entered into in the course of his business by a trader

who carried on such business without a certificate

of registration and a licence issued to him in terms

of the ordinance, are void.

The plea sustained by the court a quo was

based on statutory illegality. Section 3 of the

ordinance provides that "no person shall carry on a

business unless he is in possession of a certificate

of registration and a licence issued to him in terms

of this ordinance." Business in this context means

a /13

-13-

a trade or occupation specified in the first schedule

to the ordinance (sect 1). The trade relevant to the

facts of this case is that specified as general dealer

under item 3 in the first schedule. The item provides

for a registration fee of R10 and a licence fee ranging

from R30 to Rl 000 depending on the average value of

the stock on hand. In terms of the item a general

dealer's licence is required by a person who carries

on business by selling bartering or exchanging, or offer-

ing or exposing for sale, barter or exchange goods,

wares, foodstuffs, produce or livestock from or on

any fixed business premises, if any other licence is

not required in terms of this ordinance for carrying

on /14

-14-

on such business, or who sells or supplies by wholesale

any medicines, drugs or poisons.

Section 21(1)(a ) of the ordinance provides

that any person who contravenes or fails to comply

with any provision of the ordinance or any condition

or restriction imposed thereunder shall be guilty of

an offence and liable on concivtion to a fine not

exceeding R200 or to imprisonment for a period not

exceeding 6 months or to both such fine and imprisonment

It is a principle of our law that a thing

done contrary to the direct prohibition of the law is

generally void and of no effect; the mere prohibition

operates /15

-15-

operates to nullify the act; Schierhout v Minister of

Justice 1926 AD 99 at p 109. If therefore on a true

construction of section 3 the contracts in question are

rendered illegal, it can make no real difference in

point of law what the other objects of the ordinance

are. They are then void ab initio and a complete

nullity under which neither party can acquire rights

whether there is an intention to break the law or not.

The first question to consider is whether section

3 on its proper construction prohibited the making or

performance of the contracts in question. Section 3 in

effect provides that no person shall carry on business

by selling, bartering or exchanging, or offering or

exposing /16

-16-

exposing for sale, barter or exchange the kind of goods

specified in item 3 from or on any fixed business

premises unless he is in possession of a certificate

of registration and a licence issued to him in terms of

the ordinance. A contravention of section 3 would

thus inevitably always involve the making of a contract

or conduct intended to induce a contract in respect

of the specified goods from or on any fixed business

premises. Such contract and conduct would be evidence

of the carrying on of the business which is expressly

prohibited. The language of the section indicates

that it is directed, not at the making or performance

of particular contracts, but at the carrying on of a

general /17

-17-

general dealer's business without a certificate of

registration and a licence.

Since the section prohibits a general dealer

from carrying on business by entering into particular

contracts on or from fixed premises without the required

certificate of registration and licence, the contracts

themselves are prohibited by implication.

As a general rule a contract impliedly prohi-

bited by statute is void and unenforceable but this rule

is not inflexible or inexorable. Although a contract

is in violation of a statute it will not be declared

void unless such was the intention of the legislature

and /18

-18-

and this is nonetheless the rule in the case of a contract

in violation of a statute which imposes a criminal sanction

The legislative intent not to render void a contract

may be inferred from general rules of interpretation

Each case must be dealt with in the light of its own

language, scope and object and the consequences in rela-

tion to justice and convenience of adopting one view

rather than the other. In the case of Standard Bank

v Estate van Rhyn 1925 AD 266 Solomon JA at page 274 stated

the position as follows:-

"what we have to get at is the intention of the Legislature, and, if we are satisfied in any case that the Legislature did not intend to render the act invalid, we should

not /19

-19

not be justified in holding that it was. As Voet (1.3.16) puts it -'but that which is done contrary to law is not ipso jure null and void, where the law is content with a penalty laid down against those who contravene it.' Then after giving some instances in illustration of this principle, he proceeds: 'The reason of all this I take to be that in these and the like cases greater inconveniences and impropriety would result from the rescission of what was done, than would follow the act itself done contrary to the law.'"

See also Swart v Smuts 1971(1) SA 819(A) at pages

829C to 830C and Dhlamini en 'n ander v Protea Assurance

Co Ltd 1974(4) SA 906(A) at pages 913H to 914C.

The intention of the legislature must be

ascertained from the statute as a whole and no single

consideration /20

-20-

consideration, however important it may seem to be is

necessarily conclusive. In the case of McLough1in NO v

Turner 1921 AD 537 Innes CJ at page 544 in construing a

prohibition in a revenue statute remarked as follows:-

"This is a revenue statute and it is a wel1 recognised rule of construction that the mere imposition of a penalty for the purpose of protecting the revenue does not invalidate the relative transaction ... But, of course, the Legislature may prohibit or invalidate the transaction even where the sole object is to protect the revenue. And if that intention is clear effect must be given to it. But the literal meaning of the language used is not always decisive on the point."

It is now necessary to consider the whole

context and purpose of the ordinance in the light of

these......./21
-21-these principles.

1

The purpose of the ordinance is to provide a

system of control for the 54 classes of business specified in the first schedule to the ordinance by means of certificates of registration and licences issued by the local authority.

The control is exercised in respect of both

the suitability of the person to be in charge of the

business and the suitability of the premises from or

on which the business is to be conducted or at which

the goods traded in are to be stored, depending on the

nature of the particular business.

A /22

22-

A person desiring to obtain a certificate of

registration must apply to the local authority for the

registration of such business and the application must

contain information of the plan of the premises where

the business is to be carried on if the premises are

stil1 to be erected or are to be reconstructed and such

other information as the local authority may desire in

order to decide upon the suitability of the applicant

or the premises for the carrying on of the proposed

business {sect 4(1)).

Upon receipt of the application the local authority

must obtain a report on the suitability from a public

health point of view of the premises and enquire from

the /23

-23-

the police whether there is anything known against the

owner of the business or in case of a partnership or

company, each partner or director, as the case may be,

and also of the manager of the business (sect 5).

A local authority must refuse the application

if in its opinion the applicant or the person who will

be in actual control of the business is not a fit and

proper person to carry on the proposed business, whether

by reason of his character, his past conduct, the un-

cleanliness of his habits or methods, or for any other

reason (sect 6(3))b)) or if the premises are not suitable

for the purposes of the proposed business, whether as

regards the size, character, construction, lighting,

ventilation /24

-24-

ventilation, accommodation or in any other respect

(sect 6(3)(c)). There are a number of other stated

grounds upon which an application must be refused,

grounds clearly intended for the protection of the

public and more specifically members of the public

who wil1 do business with the owner or the person in

actual control of such a business.

When the application is granted a certificate

of registration is issued to the applicant containing

the full name and race of the owner of the business

or in the case of a partnership or company the full name

and race of each partner or director, as the case may

be, and also the full name and race of the manager, if

any, of the business (sect 7(1)). A local authority

which /25

-25

which has issued a certificate of registration to any

person must on application by such person and payment to

it of the licence fee prescribed in the first schedule

issue to such person a licence authorising him to carry

on the business in respect of which such certificate was

granted (sect 7A(1)). The licence lapses on the 31 st day of

December of the year for which it was issued and must be

renewed during the month of January next succeeding the

date on which the licence lapsed. A holder of a licence

who fails to renew the licence is in addition to the

licence fee, liable for payment of a penalty calculated

at the rate of such licence fee for every month or part

of a month during which such fee remains unpaid.

The /26

26

The payment of the penalty does not absolve him from

criminal liability arising from a failure to renew

his licence nor does the fact that he has been criminally

punished in connection with such a failure absolve him from

liability for payment of the penalty (sect 7A{4J).

A certificate of registration lapses upon

the transfer of the business to some other person (sect 12).

If a new director is appointed for a company before the

thirtieth day of June in any year the certificate of

registration issued in respect of the business carried

on by such company lapses on the thirty first day of

December of the year in which such new director was appointed

or if such new director was appointed after the thirtieth

day /27

-27-

day of June in any year such certificate of registration

lapses on the thirty-first day of December of the following

year (sect 13(1)). A certificate of registration

issued to a partnership lapses upon admission of a new

member to such partnership. If a member of a partnership

dies or retires the certificate of registration lapses

provided that the remaining partners are entitled, upon

payment within one month of such change of a fee equal

to one quarter of the fee ordinarily payable on application

for a certificate of registration, to obtain transfer of

the certificate of registration (sect 14).

In the event of the death of a person to whom a certi-

ficate of registration was issued such certificate may

be transferred to the wife or husband of such person

or /28

-28-

or to the executor of his estate, subject to the payment

within three months of the death of a fee equal to one

quarter of the fee ordinarily payable on application for

a certificate of registration. In the event of the

insolvency, assignment or other form of legal disability

of a person to whom a certificate of registration was

issued or in the event of the winding up or placing

under judicial management of a company to whom a cer-

tificate of registration was issued, such certificate may

be transferred to the trustee, assignee, curator bonis,

liquidator or judicial manager as the case may be

subject to the payment within 3 months of such occurrence

of a fee equal to one quarter of the fee ordinarily

payable /29

-29

payable on application for a certificate of registration

{sect 15).

Any change in a business including the parti

culars specified in the certificate of registration

issued in respect of that business, and the termination

of any business must be reported to the local authority

by the person to whom the certificate was issued. Upon

receipt of such a report the local authority must

amend its business register which it is enjoined to

keep in terms of section 2 of the ordinance accordingly

(sect 17).

As is evident from these provisions the ordinance

is /30

-30-

is almost exclusively concerned with the running of the businesses

specified in the first schedule by suitable persons on

suitable premises in the public interest. The real

control is exercised by a system of registration which

becomes necessary when there is some change in the owner-

ship of the business. The annual licence is the authority

to carry on business on the premises in question and is

only issued to a person in possession of a certificate

of registration. The licence and the certificate there-

fore serve different purposes.

The prohibition in section 3 is directed

not at the making or performance of particular contracts

but at the person who carries on business without a

certificate /31

31-

certificate of registration and a licence and on a proper

interpretation of the ordinance this is necessary to

make the control of the local authority over the specified

businesses effective in the sense envisaged in the

ordinance. The ordinance does not purport to regulate

the business relationship between the trader and his

customer. Ordinarily there is nothing illegal in a

contract of sale, barter or exchange in respect of the

goods specified in item 3 and it is the person who carries

on business by entering into these contracts from or on

fixed business premises without a certificate of registra-

tion and a licence who breaks the law and commits an

offence. Unless the customer knows that he is contracting

with /32

-32-

with a person who is committing the offence he is in

all respects an innocent party to the contract. One

of the objects of the ordinance is to protect members of

the public, particularly members of the public who do

business with a trader. The prohibition in section 3 and

the penalties provided in section 21 are intended to make

that protection effective.

To construe section 3 read with section 21{1)(a) as af-

fecting contractual rights and as rendering the specific contracts

concluded by the trader with his customers void and unenforceable

would cause grave inconvenience and injustice to innocent members of

the public. It would inevitably follow that innocent customers

will be without their contractual remedies and will for

example /33

-33-

example have no claim for damages against the guilty

trader in respect of defective goods sold and delivered

or goods not conforming to a guarantee given in respect

thereof.

As is apparent from the provisions of the ordi-

nance a certificate of registration and a licence can

lapse for different reasons, reasons which are not

necessarily clear or obvious to customers. It is

inconceivable that the legislature could have intended

that the validity of the contracts of customers should

be dependent upon such a variety of contingencies.

The question that remains is whether the legis-

lature /34

-34-

lature in addition to the penalties provided in section

21(1} (a) intended to render the trader's contracts

void and unenforceable in order to deter him from trading

in contravention of the provisions of the ordinance.

The contracts which a trader concludes in the course

of his business generally do not involve moral culpability.

The section provides penalties for the illegal trading

but it must be remembered that when a person is charged

with a criminal offence the court always has a discretion

as regards the sentence and a particular accused may

be and frequently is simply given a caution and discharge.

But in the law of contract these factors have little

weight. Either the law has been broken or it has not

In /35

-35-

In the former event the contract may be treated as illegal

and that is the end of the case. The use of contract

law to supplement the deficiencies of the criminal law

has serious disadvantages which outweigh any utility

it has in this respect. These disadvantages are

principally that contract law lacks the flexibility

of criminal law in regard to punishment. A trader

may therefore by sheer inadvertence or negligence fail

to renew his licence and find that he has traded illegally

The sentence on a conviction could in the circumstances

be trivial but if he had given credit for the purchase

price of goods sold during the period he traded without

a licence the consequences could be an unmerited windfall

for /36

-36-

for the purchaser and a considerable hardship for the

trader utterly incommensurate with the gravity of the

contravention committed by him if the contracts were

to be regarded as void and unenforceable.

In the case of Pottie v Kotze 1954(3) SA

719(A) Fagan JA considered the mischief which the legis

lature wished to prevent by a prohibition in a certain

ordinance and at page 726 -727 said:

"The usual reason for holding a prohibited act to be invalid is not the inference of an intention on the part of the Legislature to impose a deterrent penalty for which it has not expressly provided, but the fact that recognition of the act by the Court wil1 bring about, or give legal sanction

to /37

-37-

to the very situation which the Legislature wishes to prevent."

Referring to the rendering invalid of contracts

as a deterrent penalty the learned judge also remarked

as follows at 727 E-G :

"A further compulsory penalty of invalidity would - as the cases I have referred to show - have capricious effects the severity of which might be out of all proportion to that of the prescribed penalties, it would bring about inequitable results as between the parties concerned and it would upset transactions which, if the safeguard of an examination for roadworthiness can be enforced (as it can be under the sections I have mentioned), the Legislature could have had no reason to view with disfavour. To say that we are compelled to imply such consequences

in. . .. . ./38

-38-

in the provisions of sec. 13 bis seems to me to make us the slaves of maxims of interpretation which should serve us as guides and not be allowed to tyrannise over us as masters."

The ordinance provides for a penalty if a

licence is not renewed after it has lapsed. It also

provides for penalties to ensure that the object of the

ordinance is not defeated or frustrated, the main object

being to control the suitability of the persons carrying

on business in the trades and occupations specified in

the first schedule and the suitability of the premises

from or on which they so carry on business. The control

is intended to protect the public and members of the

public who engage in business with such persons. The

prohibition /39

- 39-

prohibition is not against particular contracts because

there are none which may be described as distinctive

of a particular trade or occupation but against the

carrying on of business in a particular trade or occu-

pation . The object of the ordinance is thus not ad-

vanced by treating all contracts entered into in the

course of a. business of such unregistered or unlicensed

trades and occupations as void. Moreover treating

them as void will, as has been indicated above, result

in greater inconvenience and impropriety than would

follow the illegal carrying on of business.

I am consequently of the view that on a proper

construction /40

-40-

construction of the ordinance the purpose there

of is sufficiently served by the penalties prescribed

for illegal trading. The ordinance was not intended

to render contracts entered into between a trader and

his customers void. Indeed the avoidance of the con-

tracts concluded by a trader with his customer would

cause grave inconvenience and injustice to innocent

members of the public without furthering the object

of the ordinance.

The court a quo in upholding the respondent's

plea and dismissing the appellant's action purported

to /41

-41-

to rely on the case of Delport and another v Viljoen and

others 1953(2) SA 51KT) (Delport's case) on the basis

that it was expressly approved in the case of Dhlamini

en ander v Protea Assurance Co Ltd 1974(4) SA 906(A)

(Dhlamini's case) and decided that a person who trades

without a trading licence acts illegally and that such

illegal conduct is not only visited by criminal sanctions

but that acts performed in the course of such business

are legally void. The court a quo consequently decided

that the transactions which were concluded in the course

of the illegal trading of MCC were legally void and that

the appellant's claim for the purchase price of the goods

was unenforceable.

Counsel /42

-42-

Counsel for the respondent endeavoured to

support the judgment of the court a quo substantially

on reasoning which he sought to derive from the judgments

in the lastmentioned cases.

Delport's case is distinguishable and does

not deal with the validity of contracts concluded during

the course of illegal trading with innocent customers

and in effect merely decides that the carrying on of

trade is prohibited until a licence has been obtained

This decision was arrived at in the following circum-

stances . On the 19th February 1952 the Stilfontein

Gold Mining Company was granted a mining lease over

a certain piece of ground. In terms of the provisions

of /43

-43-

of the Mines Trading Amendment Act no 20 of 1941, if

the owner of ground held under mining title has requested

the Mining Commissioner in writing to set apart in his

favour a trading site on that ground the Mining Commissioner

must comply with that request provided that the business

of a general dealer has been carried on on the proposed

site for a continuous period of three years or longer

immediately preceding the date on which the mining

title was acquired, that is to say 19 February 1952

in that case. The owner of the ground made such a

request to the Mining Commissioner on the strength of

the fact that one Bezuidenhout had been carrying on a

general dealer's business on the proposed site from

the /44

-44-

the 24th January 1949, that is to say more than three

years preceding the lastmentioned date. In actual fact

Bezuidenhout had applied to the licensing authorities

in Klerksdorp under the Licences Consolidation Ordinance,

3 of 1932, for a certificate to enable him to take out

a trading licence in respect of this particular site

and the authority was granted subject to two conditions.

The first was that the building on the proposed site be pass

ed as suitable and the second was that the health of

the young man who was to run the business was to be certi-

fied as satisfactory. The two conditions were complied

with by the 24th February 1949 and trading on the site

de facto commenced on that date. The trading 1icence

was /45

-45-

was however not obtained until the 4th March 1949 which

meant that trading on the site was without a licence

until the 4th March 1949. If trading only commenced

on the 4th March 1949 then trading was not carried on

on the site for a continuous period of three years and

the Mining Commissioner need not have complied with the re-

quest of the owner of the ground. The Court was only

concerned with the question whether for purposes of the

aforementioned Act trading on the site commenced on

the 24th February 1949 or the 4th March 1949. The

Court, after considering the provisions of the Licences

Consolidation Act, 32 of 1925, came to the conclusion

that the provisions of the Act prohibited the carrying

on /46

-46-

on of a trade until a licence had been obtained and accord-

dingly held that lawful trade on the site commenced

only from the 4th March 1949 and since that was less

than the required three year period the Mining Commis-

sioner did not have to comply with the request of the

owner of the land. The court in order to arrive at

this conclusion referred to a passage in Craies on

Statute Law at page 522 and held that the relevant Act

was not a revenue statute and that it was an Act inter

alia to regulate trade and the issue of trade licences

was a jealously-guarded affair.

In the Dhlamini case the court was also con-

cerned with illegal trading but the case is distinguishable

in /47

-47-

in that the court was not called upon to consider the

validity of contracts concluded in the course of such

trading with innocent customers. The question which the

court had to consider was whether a person injured in a

motor collision as a result of negligence was entitled to

claim as delictual damages loss of earnings and future

loss of earnings based on income derived and to be derived

from her illegal trading as a hawker by selling fruit

without a hawker's licence. Counsel for the respondent

who resisted the claim for the damages relied upon the

Delport case and the court merely referred to it and

the reasoning of that court as being a case dealing

with the effect of trading which was illegal under the

provisions /48

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provisions of the same legislation which was then

before the court. The court (at pages 913F to 915C) con-

sidered the legal principles that applied to such a

claim and after referring to authorities concluded

(at page 915B-C):-

"Skade wat bereken word volgens die maatstaf van inkomste verkry uit 'n aktiwiteit wat teen die goeie sedes of wat misdadig is, sal dus nie ver-goed word nie omdat dit teen die publieke beleid sou wees om dit wel te vergoed. Hierdie reel sou ook van toepassing wees op inkomste van 'n kleurlose statutêr verbode aktiwiteit (kleurloos in die sin dat dit nie as misdadig of teen die goeie sedes beskryf kan word nie) wanneer die inkomste van so 'n aktiwitiet nie afdwingbaar is nie weens ongeldigheid. Vergoed-ing van gederfde inkomste van so 'n

aard /49

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aard sou ook teen die publieke beleid wees. ...

Die verkoop van vrugte op sigself is volkome wettig. Indien die verkoop van vrugte onderhewig gestel word aan die besit van 'n lisensie wat op sy beurt uitgereik word met inagneming van oorwegings van openbare gesondheid, of ander oorwegings van openbare belang, sou kon bevind word dat enige verkoop van vrugte sonder lisensie ongeldig is. Indien dit die geval sou wees, sou eerste appellante (eiseres) haar eis gebaseer het op nie-regmatige inkomste, en sou haar inkomste van dieselfde aard moet beskou word as die inkomste verkry deur, bv. 'n dief, wie se inkomste as nie-regmatige inkomste beskou moet word. Dit word namens appellante toegegee. Die vraag is dus of oorwegings van openbare belang 'n rol speel by die ver-leen van 'n marskramerslisensie . "

The court then proceeded to consider the pro-

visions /50

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visions of the legislation in terms of which a hawker's

licence was issued and concluded (page 917D-E):-

"In die lig van hierdie wetgewing moet die uitreiking van 'n lisensie aan 'n marskramer m. i . beskou word as 'n handeling deur die plaaslike in-stansie waarby oorwegings van openbare belang en veral van volksgesondheid 'n belangrike rol speel . ... Na my mening het die Wetgewer beoog dat daar geen handeldryf mag plaas-vind dear 'n marskramer sonder lisensie nie. Om dit wel te doen is nie alleen strafbaar nie, maar, weens belangrike oorwegings van publieke beleid, behoort die gevolge van so 'n handeldryf ook nie regsgeldig te wees nie.

Na my mening was die inkomste van die eerste appellante dus nie-regmatige inkomste."

The court in this case did not intend nor purport to

decide . . /51

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decide on the validity of contracts concluded with

innocent customers in the course of such illegal trading

Different considerations would have applied and it would

have been necessary to construe the legislation in order

to determine whether the legislature intended to render

such contracts void and unenforceable. That was not

necessary in the circumstances of the case. The fact

that the court did not recognise income derived from

illegal trading as affording a proper basis for the

award of damages mainly on grounds of public policy.

also appears from the case of Santam Insurance Ltd v

Ferguson 1985(4) SA 843(A) in which the Dhlamini case

was followed. At page 850B-D Joubert JA remarked

as /52

as follows:-

-52-

"Na my mening is dit duidelik in die lig van sy aangehaalde bepalings dat die ordonnansie nie suiwer fiskale wetgewing is nie. Die verbod om die besigheid van duikklopwerk binne die regsgebied van 'n plaaslike owerheid sonder lisensie te dryf, is ook nie 'n kleurlose statutêr verbode aktiwiteit nie aangesien oortreding van die verbod strafbaar as 'n misdryf is, soos hierbo vermeld. Dit is verder duidelik dat baie belangrike oorwegings van publieke belang met betrekking tot gesondheid, veiligheid, brandgevaar en die woongeriewe van die omgewing 'n belangrike rol speel by die uit-reiking van 'n lisensie aan 'n duikklop-per. Dit volg dan dat waar die besigheid van duikklopwerk sonder lisensie plaasvind die gevolge van so 'n besigheid nie regsgeldig is nie

en /53

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en dat die inkomste wat daardeur

verkry word nie-regmatige inkomste is volgens die beslissing van hierdie Hof in Dhlamini en Ander v Protea Assurance Co Ltd 1974(4) SA 906 (A)..."

Delport case and the Dhlamini case were

both concerned with a contravention of the law by a par

ticular person and in both of them public policy was

the principal consideration. Having regard to the

intention of the legislature as it appears from what

has been said above, public policy does not demand that

transactions concluded by unlicensed traders should be

visited with nullity. The two cases are accordingly

not applicable to the facts of the case

under /54

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under consideration and the court a quo erred in relying

on them in dismissing the appellant's claim for the

purchase price of the goods sold and delivered to the

respondent in the course of the trading without the

certificate of registration and the licence.

The provisions of the ordinance did not render

the contracts concluded by MCC with the respondent in

the course of its illegal trading void. It was common

cause that MCC sold and delivered to the respondent

goods to the value of R25 785,44 for which he has not

paid.

Because of the comments which the court a quo

in /55

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in its judgment made about the respondent, counsel for

the appellant asks that the costs in the court a quo

be awarded on the attorney and client scale. The

comments related mainly to the defence raised in his plea

and in the affidavit with which he opposed an application

for summary judgment. The defence in effect was that

he did not purchase anything from the appellant and that

he did not owe it anything. This turned out to be

the position when the appellant subsequently amended

its declaration to allege that MCC sold and delivered

the goods to the respondent and that MCC ceded its claim

for the purchase price thereof to the appellant. Counsel

for the appellant pressed this request but faintly and

I /56

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I do not consider this an appropriate case for such

an award.

In the result the appeal succeeds with costs

and the judgment of the court a quo is altered to read:-

Judgment for the plaintiff in the amount of R25 785,44 with interest thereon at the rate of 11 per cent per annum from the 19th November 1981 to date of payment and costs of suit.

JUDGE OF APPEAL
RABIE CJ) JANSEN JA) TRENGOVE JA) VILJOEN JA)

concur